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LOU DOBBS TONIGHT

Independents Day: Awakening the American Spirit

Aired February 4, 2008 - 20:00   ET

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


ANNOUNCER: This is a special edition of LOU DOBBS TONIGHT: "Independents Day: Awakening the American Spirit."
Live from New York, Lou Dobbs.

LOU DOBBS, CNN ANCHOR: Good evening, everybody.

The presidential campaign is at a pivotal point. Tomorrow, voters in 24 states coast to coast and American Samoa take part in primaries and caucuses. This Super Tuesday could shake up the entire presidential contest for both parties.

The contests being strongly influenced by group and identity politics. Many of the candidates pandering to the interest of a minority of voters, rather than the national interests, the common good. That's raising concerns that our next president, whomever it should be, will be beholden to powerful socio-ethnocentric interest groups, special interests, and, of course, corporate America.

We have extensive coverage here tonight on the role of an independent nation and an independent people.

We begin with Bill Tucker in Atlanta, Bill outside of Ebenezer Baptist Church, Martin Luther King Jr.'s church -- Bill.

BILL TUCKER, CNN CORRESPONDENT: Lou, this is the church where Martin Luther King gave rise to the civil rights struggles here in America 40 years ago. And there is no doubt that we have come a long way in those 40 years.

But, Lou, there also is no denying that race still plays a very pivotal, important part of contemporary politics.

(BEGIN VIDEOTAPE)

TUCKER (voice-over): Senator Barack Obama, a black man, an African-American, is in a position to win the Democratic Party's presidential nomination and to potentially even become the president of the United States. As thrilling an opportunity as many might see it and despite the chance, we haven't left the issue of race behind us yet.

The strongest line may be the one between black and white.

REV. RAPHAEL WARNOCK, EBENEZER BAPTIST CHURCH: I don't think it's either/or. I do think that, for some very clear, historic reasons, race is, in a sense, the enduring problem, America's original sin. And the thing that you really have got to get across about race in America is -- is that we're talking about systemic, institutionalized injustice that is calcified and reinforced at every level of society.

TUCKER: And it is those systemic issues which help define a vote that can be viewed along racial lines.

SEN. NAN ORROCK (D), GEORGE STATE SENATOR: It's a common place to see people who share an identity voting similarly. There is a black vote. There is a Latino vote.

TUCKER: And groups to pigeonhole those votes. The Pew Hispanic Center reminding politicians that there are more than five million Hispanic voters in California, 750,000 in Arizona. The Asian and Pacific Islanders Voting Group reminding politicians that they represent 5 percent of the U.S. population.

ANDRA GILLESPIE, EMORY UNIVERSITY: We can discern that there are people who vote based on certainly identities. And it's not just their racial or their ethnic identity. People can vote on their religious identity, their regional identity, their gender identity, and all of these other sorts of categorizations.

TUCKER: And each group implies that all members vote exactly the same. Yet, there are some signs that voters are perhaps growing tired of the politics, that they want something more.

UNIDENTIFIED MALE: What this country needs is good leadership, leadership with integrity, leadership with vision, leadership for all the people. Who is going to do that for America? We're not quite sure just yet.

TUCKER: And that indecision with a diverse field to choose from might just cut to the heart of what the civil rights struggles of the late '50s and '60s were truly about, in the words of the late Martin Luther King.

(BEGIN VIDEO CLIP)

MARTIN LUTHER KING JR., CIVIL RIGHTS LEADER: ... a nation where they will not be judged by the color of their skin, but by the content of their character.

(END VIDEO CLIP)

TUCKER: And, unfortunately, Lou, politicians looking to gain any edge they can are all too eager to exploit those racial, those ethnic, and those gender identities because it's a convenient and expedient strategy that, in the past, has worked to get them votes -- Lou.

DOBBS: Bill, thank you very much -- Bill Tucker from Atlanta.

Joining me now with their perspectives on the issue of group and identity politics and this wild contest for the party's presidential nominations, I'm joined by three of the best political analysts in the country, Errol Louis, columnist, "New York Daily News," member of the editorial board, Miguel Perez, nationally syndicated columnist, and Carol Swain professor of political science, professor of law at Vanderbilt University, author of "Debating Immigration."

Professor, good to have you with us.

CAROL SWAIN, AUTHOR, "DEBATING IMMIGRATION": Thank you.

DOBBS: In Bill Tucker's report talking about group and identity politics being carried out in this country simply because it works, what's your reaction?

SWAIN: I think it's gone too far and that unless we can get Americans to start thinking in terms of what's in the national interests, that we're headed down a very dangerous road because the next logical extension is white identity politics overtly. And if you have white identity, black identity, Asian identity all competing, I don't think that anyone comes out ahead, and that it doesn't serve the national interests at all.

DOBBS: Errol, your thoughts?

ERROL LOUIS, "THE NEW YORK DAILY NEWS": I think we're on the cusp of something new.

When I go around and look at the Obama campaign and how it's been performing, there was one remarkable moment in South Carolina where 1,000 people in the room where he was holding his victory speech were chanting: "It's not about race. It's not about race."

I was sitting there in the press gallery and watching all of my colleagues sit there and write about how a racial dynamic sort of pervaded the entire race. So there's a disconnect. There are -- I think, we're on the cusp of an interesting moment where some voters are trying to break out of the old mold in which -- especially in the cities -- Irish voted Irish and Italian voted Italian. I think people are taking a different look, scrambling some of the old categories.

SWAIN: Well, it's certainly the case that young white voters are trying to transcend race. And I see a great effort among them to do that.

But I don't believe it's coming from all quarters. I think, for minority groups, that we're so accustomed to thinking about ourselves as separate, as group interests, that we cling to it and we embrace it more than the other groups, perhaps.

DOBBS: Miguel?

MIGUEL PEREZ, SYNDICATED COLUMNIST: I sort of agree. But, at the same time, there are issues and there are things that concern us, minorities, that perhaps don't concern the general population, and we do need the politicians to come around to our neighborhood every once in a while and address those issues.

So, I don't see a problem with ethnic politics. In an ideal world we would be just like, hey, what's best for all of us as Americans? But that melting pot hasn't quite completely melted yet.

SWAIN: But we're not trying to make it melt.

PEREZ: In fact, I don't think it's a good idea to have a melting pot. I think it's very nice to have a salad bowl, where everybody retains his own ethnic flavor. So, and so you have to deal with all those ethnic groups when politics comes around.

DOBBS: We're going to have to change a lot of national poetry if we go to salad bowl.

(LAUGHTER)

DOBBS: Professor Swain, you were saying?

SWAIN: Just that the country, by 2050, around that time, the country will become majority minority. And if whites in large numbers embrace the politics that minority groups espouse now, it seems to me that we will not get ahead, that it will be very divisive, more divisive than it is now, and that we should be trying to transcend race, not trying to accentuate it, the way some individuals are.

PEREZ: But now that we are beginning to gain numbers and the power, now it's, oh, now we have to be concerned about the white folks claiming what is right for them.

SWAIN: I don't see...

PEREZ: In fact, it's time for us to claim what is right for us.

SWAIN: We need to become Americans, just plain old Americans, not hyphenated Americans. Americans.

(CROSSTALK)

LOUIS: Let's keep in mind that a lot of this is the baggage, the unresolved issues that stem from residential segregation, especially in the cities.

A couple of miles north from the studio here is Harlem. And you can say, well, I'm not pandering to blacks. But you know what? If you want to do something for that very large community up there, there's a predominantly black neighborhood there.

And it's done through years of social forces, economic forces, lack of enforcement of fair housing, lots of different reasons for it.

DOBBS: One of the reasons for it is, the status quo is preferred by a lot of folks who are the power brokers in that community, just as in any other.

The fact that we have not had a broadly diversified racial and ethnic society, we have the world's greatest diversified society, but not always broadly distributed across our society. And that rests on the backs of a lot of people, both within the minority community, as well as the white majority community. We're going to be talking with Errol Louis and Miguel Perez and professor Carol Swain here throughout the broadcast. They're going to be here -- and we thank you for being so -- to offer their perspectives as we go through this hour.

And also ahead, most presidential candidates trying to avoid any discussion of one of the biggest national issues facing the country, one of the biggest social and economic issues, illegal immigration and border security. We will have that report and new concerns about e- voting and the integrity of this country's voting system on the eve of Super Tuesday.

That's right. Our democracy remains at risk from yet another quarter.

Stay with us. We will be back with much more.

(COMMERCIAL BREAK)

DOBBS: Port security, border security, illegal immigration ranking among the top issues for voters this presidential campaign year, but they are issues that most of these presidential candidates are trying to avoid. With deadly drug violence in Mexico spilling over the border into this country, our wide-open borders an issue no one can afford to avoid.

Casey Wian has our special report.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): The Border Patrol says it arrested Martin Lorenzo Bonyos (ph), an illegal alien, Saturday night near Yuma, Arizona. And he was carrying a sawed-off shotgun, $2,600 and small amounts of methamphetamine and marijuana.

It was his 24th arrest for immigration-related offenses, according to the Border Patrol. The case underscores the reinvolving door that continues all along the U.S. border with Mexico. Despite billions of federal dollars, thousands of new Border Patrol agents and National Guard troops, hundreds of miles of fencing, and dozens of high-tech programs.

The Bush administration says a decline in apprehensions of illegal aliens is evidence its border strategy is working. The president is requesting $12 billion, a 19 percent increase, for next year.

MICHAEL CHERTOFF, HOMELAND SECURITY SECRETARY: This is part and parcel of what has been real progress toward getting the kind of border security, control of the border, that we haven't had for 30 or 40 years. So, I wanted to tell the public early that the president is continuing to stay on course with his promise to move towards border security, and we're backing it up with real money and real assets.

WIAN: But that move toward border security is happening too slowly for some. California Governor Arnold Schwarzenegger wrote Bush on Friday asking that the temporary deployment of National Guard troops to the border be continued because the job is -- quote -- "only half complete," adding, "We cannot afford to jeopardize the safety and security of our fellow Americans by removing personnel prematurely."

Efforts by the United States and Mexico to fight drug smuggling cartels have triggered more violence.

TOM FITTON, PRESIDENT, JUDICIAL WATCH: It's nothing short of a civil war in some of these border towns in Mexico. And is our government prepared for the drug runners and the alien smugglers that are going to be pushed out as a result or the Mexican military flexing its muscle on our southern border?

WIAN: Border Patrol agents are being attacked in record numbers. And one was killed just two weeks ago by a fleeing smuggler just west of Yuma, not far from the Border Patrol checkpoint where Lorenzo (ph) was arrested for the 24th time Saturday night.

(END VIDEOTAPE)

WIAN: All of the major presidential candidates promise to secure the border. President Bush has made the same promise, unfulfilled, for nearly seven years -- Lou.

DOBBS: Thank you very much, Casey Wian, from Los Angeles.

Joining me now again, our contributors here, Errol Louis, Miguel Perez, Carol Swain.

Professor, why is it that the national news organizations in your judgment are not focusing and forcing these candidates to deal with the issue of illegal immigration, a war on drugs that is being lost in part because we are not securing that border with Mexico?

SWAIN: It really bothers me that the national media has so much influence.

And I can only say it's because most of the mainstream media tends to be very liberal. And the conservative media, when they address the issue, they are dismissed as haters. And it's an issue that, I think, for the liberal media, that they pretty much know what they want. And they are in favor of amnesty. And they are not going to push the candidates on the issue.

MATTHEWS: Errol, do you agree?

LOUIS: Yes, I think part of where this comes from, if you're talking about national media, because New York City is the headquarters for much of the national media, as you know, this is an open-borders town. It doesn't play out here...

MATTHEWS: With an open-borders mayor.

LOUIS: Sure, and not the first. And is not the -- it doesn't play out this way in the same way as you see this armed chaos on the southwest border. DOBBS: Right.

LOUIS: It hasn't a different feel here. It's relatively benign in a lot of ways. The costs are not in your face, the way they are in other parts of the country.

And, so, I think, you know, you ask the average editor or producer here, and they say, illegal immigrant, well, sure, they're around here. But they kind of blend in with everybody else, which is the way it looks in New York City.

DOBBS: The reality of what they're saying is, in many cases, they're cleaning up the skyscraper that the work is taking place in. And they find it convenient to ignore the reality of illegal immigration.

What are your thoughts, Miguel?

PEREZ: Well, I'm not an open-border guest on the program.

But I do...

(CROSSTALK)

DOBBS: You're a journalistic guest, and a damn good one, if I might say so.

PEREZ: Thank you. Thank you.

But I do agree with a plan for legalization, as you know, what you call amnesty and I call legalization, Lou. We have been through this.

But, you know...

DOBBS: I'm just thrilled you don't want those open borders.

(LAUGHTER)

PEREZ: No, no, listen, I recognize. And I said this on the program many times. I recognize that we have to secure the borders. I recognize that we have a drug war on the border now that is complicating things even more.

I recognize that there's a threat of terrorism coming through all of our borders that we really need to worry about. I recognize all of these things are important, necessary, urgent. But we still need to recognize that there are 12 million illegal immigrants here. And we need to find a way to deal with them as well in a compassionate way. That's all I'm about.

SWAIN: I would like to see the candidates deal with the fact that, in some parts of the country, there's a war between African- Americans and Latinos, with Latino gangs targeting even innocent African-Americans that happen to walk in the wrong place.

The Democratic candidates ought to be dealing with that because those are two major blocs of their constituency.

PEREZ: No. Blacks and Latinos should be dealing with that. And we should not...

SWAIN: Yes, you're right. You're right. You're right.

PEREZ: ... be exacerbating the problem. We not should be creating a war that doesn't except in Los Angeles...

SWAIN: The politicians need to deal with it.

PEREZ: .... between a few gangs.

(CROSSTALK)

PEREZ: Frankly, those Latino gang members should be the first ones that should be rounded up and deported out of the country, so that we do not have this divisiveness between blacks and Latinos, because we should be working together as a coalition.

SWAIN: I agree.

DOBBS: Can I say that one of the great problems that we're having in this country right now is we're not dealing with the facts. We're not dealing with the empirical evidence that we have a society that is right now far short of the great society that we were promised in this country 200 years ago.

We have leaders. We were talking about group and identity politics earlier. This should not be -- this is not a Latino issue. This is not a black issue. It's not a white issue. It's a fundamental issue of American society. And we are tolerating a level of not only instability, but a level of criminality in our major cities, whether it's Los Angeles, whether it's New York, whatever city it is, that is inexcusable.

But to go back to the point, why are we permitting a war on drugs that is destroying millions of American lives, Latino, white, Asian, black, in this country? And the principal source is that border with Mexico. And the reason -- and I think everyone on this panel understands it -- is that it's convenient to commerce to keep that border open for the purpose of illegal immigration, for the purpose of commerce.

Am I wrong?

PEREZ: Well, if that's the case, you're right, and we should not do that. We should allow only the immigrants who want to come into this country legally from now on. And I agree with that completely.

But at the same time, let's deal with the complete problem. That's what comprehensive is all about. It's dealing with the complete problem, so that in the future I will be on your side all the time, Lou, and I will say, Lou, from now, let's deport every single illegal immigrant that comes into this country.

DOBBS: I have never called for deportation at all.

PEREZ: Well, I will. I will call for deportation for future illegal immigrants, for future illegal immigrants.

(CROSSTALK)

(LAUGHTER)

LOUIS: Make a note of that.

DOBBS: Janet Murguia is going to want to talk to you, too.

PEREZ: Well, I will talk to her.

(LAUGHTER)

DOBBS: All right.

We're going to be back with our panel throughout this broadcast.

Up next, voters in 24 states going to the polls tomorrow, and unreliable electronic voting machines may be what you vote on. Our democracy is at risk.

We will have that report and a unique approach for an urban school district which wants to hold its teachers accountable: Fire the bad ones. We will hear from not only the administration, but the teachers unions, here later.

Stay with us. We're coming right back.

(COMMERCIAL BREAK)

DOBBS: We have been reporting on this broadcast now for years about the problems associated with electronic voting that do not, those machines that do not have verified paper trails.

As a matter of fact, we have reported on this issue more than any other broadcast in the nation. Incredibly, on the eve of Super Tuesday, there are still more than a dozen states still that are being called high-risk states because of their paperless electronic voting systems.

Kitty Pilgrim, who has done most of our reporting on this issue, tonight reports on the many states where voters will have absolutely no guarantee that their votes will count tomorrow.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): To critics of electronic voting machines, it's faith-based voting. Touch the screen, pick the candidate, and hope it's all recorded accurately, walk away and never know.

Because some electronic voting machines leave no paper trail, there is no way to double-check the vote. WARREN STEWART, VERIFIEDVOTING.ORG: You're just trusting that the software does what it is supposed to do. And when there's no way of -- there's no safety net, there's no safeguard to fall back on, that's a high risk.

PILGRIM: Common cause and VerifiedVoting.org evaluated the performance and safeguards of electronic voting machines in the primaries.

SUSANNAH GOODMAN, COMMON CAUSE: Depending on what states do between now and the general election, there will still probably be 15 states or more where voters will be voting on machines where they can't do a recount and they can't do an audit. And if the voting machines crash, the votes will be gone.

PILGRIM: New York, which still uses mechanical lever machines, also ranked high-risk because there is no paper records.

However, unlike electronic machines, if there is a malfunction, it is a mechanical problem, isolated to one machine at a time, and not multiple machines that use the same software.

In other states, some precincts count paper ballots on electronic optical scan machines. A hand count can be done for a certain percentage of the vote to verify results. Some states require audits of those paper ballots and automatically hand-count a portion of the vote. New Jersey, which is high-risk, has adopted an audit system considered excellent by Verified Voting, and it's scheduled to be in place for the general election in November.

(END VIDEOTAPE)

PILGRIM: Now, all that paper takes more time to count, but does help to assure accuracy.

In the case of California, election officials have already warned it will take longer to tabulate the results because of the paper ballot, but, Lou, it's well worth it.

DOBBS: Fifteen states, I mean, that's incredible.

PILGRIM: That is incredible. That we're at this moment in this election cycle and we still haven't solved this program is just unbelievable.

DOBBS: Well, as well as everything else works in government in this country right now, I'm not sure that we can call that faith- based. I can't imagine there's much faith in that system.

One hopes that, before November, we will have this at least -- well, more on the way to a solution, if not an actual solution. I don't want to get over my skis here and Pollyannish in what we can get accomplished.

Thanks very much. Appreciate it, Kitty -- Kitty Pilgrim. Coming up here next: the battle to save our public school systems from outright collapse. The city of Chicago is now proposing drastic action. We will be taking a look at the challenges facing public schools in Chicago and across the country.

Also, the housing crisis is worsening. The war on the middle class is worsening. We will have a special report on one homeowner whose American dream has been shattered.

One of the most country's most distinguished economists, former Federal Reserve Vice Chairman Alan Blinder, will join me here to talk about what we can do to help working men and women and their families live the American dream.

Stay with us. We're coming right back.

(COMMERCIAL BREAK)

DOBBS: As everyone who watches this broadcast knows, I strongly believe, fervently believe, that our public schools in this country are our greatest equalizer in this society. The Chicago public school system is now proposing a radical new plan to battle what is a national failure in our public schools. In one Chicago school last year 95 percent of the students failed the state's academic exam. Now, that school system wants to fire teachers in eight failing schools.

Joining me now, Arne Duncan is the CEO of the Chicago Public Schools. That's right. I said the Chief executive officer. None of that superintendent stuff. He's the CEO, and he says he has a moral obligation to challenge the status quo when it's not working. And Marilyn Stewart, president of the Chicago Teachers Union, who says teachers alone should not bear the blame. Other issues contribute to failing schools, she says, such as overcrowded classrooms, poor funding, unstable neighborhoods. And we are delighted, Marilyn, to have you with us as well. Thank you.

MARILYN STEWART, PRES., CHICAGO TEACHERS UNION: Thank you.

DOBBS: Arne Duncan, let me begin with you. You've been in charge of those schools for better than six years. Why take this action now?

ARNE DUNCAN, CEO, CHICAGO PUBLIC SCHOOLS: The vast majority of our schools are getting better every single year, Lou. We've seen dramatic gains, but we have over 600 schools. If you have a handful of schools that are still struggling, that have resistant to change, we have to do something better for those children. We have to do something now. I feel a huge sense of urgency.

The past two years where we've turned around schools, we've seen significant increase in test scores. And the school we turned around just this fall, attendance is up eight percent. That might not sound like a lot but the average child in that school is going to school 12 more days this year. Two and a half more weeks. DOBBS: I've got to ask you this, Arne. Are you paying those teachers more? Are they being paid for performance in those schools that are improving?

DUNCAN: We're paying them the same, but we are creating some incentives as well. We've been able to attract great, great talent to the heart of the inner city, where to often unfortunately, talent has fled. And the worse thing is that talent matters. You have to get the best and the brightest to work with the children who need the most help. And again, you have to do it now.

DOBBS: Marilyn Stewart, do you object to what Arne Duncan is saying because it sounds pretty reasonable?

STEWART: Well, the thing about it is no one is resistant to change. We want collaboration work and we've proven that collaboration works. And the schools he's talking about -- there's supposed to be a board union agreement to talk about the very things he says, turning around schools. You know, talent does matter. What he's proposing is to fire the best and the brightest teachers he has recruited to come to the schools.

One of the schools that suddenly he's restructuring, 81 percent of the teachers are already new. They've only been there two years. You've already turned around that school, and the teachers say you're going to rehire me. I'm the person that you're talking about turning around, so we're talking about creating stability and collaborating and replicating what's working in our system.

DOBBS: What about that, Arne?

DUNCAN: Again, you have to bring in the best and brightest. Great teachers will find jobs in those schools or elsewhere. But where the status quo is not working, we have to challenge it. Students have one chance at a very high quality of education, and we've proven this can work. We've proven dramatic -- we've seen dramatic gains in schools in a short amount of time. Lou, when the vast majority of our schools are getting better, we can't hide behind that collective success. We have a handful of situations where it is not working.

DOBBS: Yes.

DUNCAN: We have to do something better now.

DOBBS: All right. I want to ask you both this question if I may. The reality is that every education expert I talked to in the country says we're going to have smaller classroom size. We've got to pay teachers for their performance. We've got to get rid of the teachers who are inadequate. Can you all pull or less around that idea. I can understand wanting to fire a teacher for failure. I can also, however, understand wanting to fire an administrator who doesn't have his or her act together and is failing the entire system.

DUNCAN: Lou, I think we can agree on the vast majority of those things. Unfortunately, we both live in a state, Illinois, that is 49th out of 50 states and the amount of money going to public education is a dismal funding record. We're doing everything we can to challenge the status quo in our individual schools in the city and around the state. Our goal is to be the best big city school system in America, and we're not going to rest until we get there.

STEWART: And you can't do it by firing the best and the brightest. You've already hired those people. It's the same teaching pool. You're saying if a person can't work at one school which you're going to fire them, and you're going to allow that lousy teacher to work at another school in the system. That is not working.

DUNCAN: Yes.

STEWART: We've been collaborating on things that are working. We know what works. I'm a teacher. I've been in the system over 30 years. We know what's working and collaboration does work.

DUNCAN: Right. Lou, let me just be really clear. What happens in Chicago is different structures and other cities, and this is very, very important. We don't have bumping rights, and so good teachers in schools are struggling and may get hired elsewhere. And that's fantastic, but they may come back to their existing school. Bad teachers don't find jobs in the free marketplace and that's healthy. One of the schools we originally turned around five years ago, Williams Elementary, we brought back one little teacher. She was phenomenal, and I learned a lot by listening to her and her talking about the dramatic change in culture before and after.

(CROSSTALK)

DOBBS: What about what Marilyn said --

STEWART: And what about the work --

DOBBS: Marilyn, I'm sorry. I'm just curious, Arne, Marilyn raises a great point. Are you talking about teachers failing in one school then being moved to another school?

DUNCAN: No, what I'm saying, in any struggling school there are obviously some good teachers. Those good teachers have a chance to get hired either back or a different school. Teachers that aren't as strong don't get hired back.

STEWART: We're not talking about that population.

DUNCAN: Principals hire (ph)-- principals hire in the free marketplace and that's a very, very healthy thing...

DOBBS: Marilyn?

DUNCAN: ... for the system and for our children.

STEWART: Earl Elementary School, they fired the coach not the team. The school, for two years, the school has turned around, and they're making fantastic growth. He's actually bragged about the Earl Elementary School. That was a turn around model that works. UNIDENTIFIED MALE: Right.

STEWART: You supported the staff that was there, and they're making phenomenal growth.

DUNCAN: Lou, again, it's really important. This isn't about the union. It's not about me. It's about what's right for children, what's right for our students.

STEWART: The union are the teachers. We're the teachers.

DUNCAN: Yes. What, Lou, I really encourage you to do is to come out to Sherman Elementary School which we turned around two years ago. Come out to Harvard (ph) Elementary which we turned around this year.

STEWART: Sherman Elementary.

DUNCAN: Talk to the children. Talk to the parents.

DOBBS: Well --

DUNCAN: Ask them why they think this is so important.

STEWART: Thirty percent of the teachers left Sherman Elementary School. How does that create stability? You attracted the teachers there, and they left under their own accord. Why did they leave? That is not a stable system.

DUNCAN: Again, we're equivalent of the little things. We had a couple of teachers become assistant principals. One of those teachers actually becoming a new principal, one of the new turnaround schools.

STEWART: You want teachers -- you want teachers to stay in there if they're doing a fantastic job. You cannot -- education is about creating stability in relationships.

DOBBS: Let me ask you both this.

STEWART: Yes.

DOBBS: Can I take you up on that offer to come out there? We'll come out there and I would like to spend a few days out there.

STEWART: Absolutely.

DUNCAN: I would love to. Come to Harvard Elementary which we turned around this year.

DOBBS: I want to see some schools that are not turned around, too.

STEWART: Yes, go to Earl School. Go to Miles Davis Elementary School. Go to Fulton Elementary School. These are schools that are turned around, and they're trying to turn them around again.

DOBBS: We'll take you up on that offer. I want to ask you this -- are you guys capable of working together?

STEWART: We have worked together. We've --

DOBBS: And to solve this problem?

STEWART: We've worked together. We have a fresh start program. We worked together to turn around eight struggling schools which have 20 percent double-digit gains in the three years we've worked together to collaborate. That's why I'm saying collaboration works, and we know it works. We just need the district to work with us and stop for whatever the other agenda is, stop creating chaos in our schools.

DOBBS: Arne wants -- Arne wants to fire teachers who don't perform. Can you get behind that, Marilyn?

STEWART: I'm sorry. You shouldn't have fired them in the first place. I've never hired a teacher, and the teacher we're talking about are not the teachers who are not performing. He's saying they're good teachers, they just can't work there. They can work at another school.

DOBBS: Let me ask you, though, again. They're there. They're working. Can you get behind the idea that if they're not working to standard and not doing their jobs that they should be fired?

STEWART: No one has a vested interest in confidence. If someone is not doing their job they should not be working in the system. But the principals hire the teachers. I've never hired a teacher.

DOBBS: All right.

STEWART: We support due process and educational reform.

DOBBS: And I bet you haven't hired a principal either, Marilyn.

STEWART: Absolutely.

DOBBS: Arne, is that the basis to move forward? Have you got enough there that you guys can work together and really get this started?

DUNCAN: We work together in all kinds and all kinds of things. We disagree around the margins. We support more charters for Chicago. The union doesn't. We think in these situations this is absolutely the right thing to do for children. We have lots of great collaborations. We're trying to make Chicago nationally --

STEWART: Replicate what's working.

DUNCAN: Let me please finish. We're trying to make Chicago the nationally board certified Catholic country working very closely together on that. We happen to disagree in this situation. But I think we have to do something dramatically better. We have to challenge the status quo, and we have to do it with a real sense of urgency.

DOBBS: There's one question I've got to bring up for both of you.

STEWART: Sure.

DOBBS: We're talking about a 35 percent graduation rate in Chicago from high schools.

DUNCAN: No, it's significantly higher than that, Lou.

DOBBS: In 2000. The latest number we had was 2004.

DUNCAN: Yes.

DOBBS: How much has that improved?

DUNCAN: It's over 50 percent. We have a long way to go.

DOBBS: Can I say to you -- can I say to you -- and this is why I'm delighted to take your invitations up and be with you all. And I'm talking about relatively soon because our audience cares a great deal about the future and the future of these young people.

DUNCAN: Right.

DOBBS: How can we talk about a 50 percent graduation rate improvement?

DUNCAN: Right.

DOBBS: This is just so -- and it's nationwide. I'm not picking on Chicago or any other -- we're just failing a generation of young Americans.

DUNCAN: Lou, I think this is why this is so important. This is a national problem. What we're doing here in Chicago should be going on around the country across America, but no one else is doing it. This is a national model that should be looked at again where we have to do something dramatic.

(CROSSTALK)

STEWART: Lou --

DUNCAN: You get the last word.

STEWART: Lou, the things that are working around the nation from New York to California is collaboration with the school districts and the teachers unions. Those models and success rates are proven. When we collaborate, we can turn around our struggling schools. Education does matter, and talent matters and we have that talent.

DOBBS: All right. Well, I'm going to look forward to meeting that talent that both of you referred to so admiringly, and I want to say how much I admire both of you for being here and for all you're doing for those young people in Chicago, and I know the frustration. Let me rephrase that. I can imagine the frustration that you both experience on a daily basis. We thank you for doing what you can for those folks.

DUNCAN: Thanks for having us.

(CROSSTALK)

STEWART: Thank you.

DOBBS: Arne Duncan, thank you. Marilyn Stewart, we're going to be out taking you up on that invitation.

STEWART: Thank you very much.

DUNCAN: Thank you.

DOBBS: Coming up next here the American dream. Dash for many of our hard working families in this country. We'll have a special report. I'll be talking with one of the country's leading economists about what is this housing crisis, this mortgage meltdown, this credit crisis. What does it mean to be middle class in America?

And later, the candidates' plans to right this economy and help that middle class. We'll hear from three of the best political thinkers in the country. Stay with us. We're coming right back.

(COMMERCIAL BREAK)

DOBBS: Our subprime mortgage crisis is taking a tremendous toll on our middle class. Millions of homeowners now facing foreclosure. But lost in all of the numbers and the statistics are the stories of the individuals who are seeking the American dream, and in some cases losing it. Many Americans now face the loss of everything they've worked so hard to achieve. Christine Romans has our report.

CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): 33-year-old Sheril Sinclair has dreamed of owning her own home since she was 15 years old. Now, she's afraid she'll lose that house, a duplex that she and her daughter, her two sisters and her dad live in. She earns $38,000 a year. With no trouble, she got a mortgage last year on this $700,000 house.

SHERIL SINCLAIR, HOMEOWNER: I look at it as selling my soul to the devil not knowing. Just wanting a home, wanting the comfort, wanting the warmth, you know. Just having that white fence, I guess. But in reality, having it and keeping it seems highly impossible.

ROMANS: Sinclair is now two months behind on her mortgage payment of about $7,000 a month. She says she was pushed into a loan she didn't understand and ultimately couldn't afford. Her bank and her mortgage broker both deny they acted irresponsibly. Like hundreds of homeowners around the country, Sinclair says she unknowingly signed a loan for an adjustable rate mortgage.

SINCLAIR: I wanted to give my family what I wanted, what we all wanted, what we all yearn, what we all needed. We were in a three- bedroom apartment for years. You want the space. You want the luxury. You want your kid to enjoy having her own room or backyard. ROMANS: She admits that she was naive and says her thirst for the American dream was blinding. Now she knows that her income was not enough to pay for a house like hers. Homeowners like Sinclair walk through the doors of the neighborhood housing services of Jamaica every day. The nonprofit organization tries to help Queens residents save their homes.

CERINELLY DISLA, HOUSING SVCS. OF AMERICA: A lot of them were led to believe that refinancing is very easy. No problem you can refinance in two years. The ones they knew they had an adjustable rate mortgage. Oh, you can refinance. No problem. But the reality is that if your income is -- you cannot verify your income, it's going to be hard for you to refinance and get out of that adjustable rate mortgage.

ROMANS: Sinclair's city council member calls his Queens District ground zero for foreclosures in the New York City area.

LEROY COMRIE, NEW YORK CITY COUNCIL: Unfortunately, in minority communities all around the country, they have been the hardest hit because they don't have the access to financial information and they have not been doing the financial counseling that you would get in other communities. They're just going for the quickest, most expedient loan possible then they wind up getting burned every time.

(END VIDEOTAPE)

ROMANS: Councilman Leroy Comrie says it will take maybe another two years to assess the blight and devastation caused by foreclosures in his neighborhoods. Foreclosure is a fate Sheril Sinclair hopes to avoid, Lou, but probably can't. She's got some big mortgage payments, and she does not have the income to cover those.

DOBBS: That's insane. An income of what?

ROMANS: $38,000 a year.

DOBBS: And a mortgage --

ROMANS: Yes, $700,000. And, you know -- you know, she said she --

DOBBS: And a down payment of?

ROMANS: $10,000, I think she put down.

DOBBS: What kind of fantasy land are people living in?

ROMAN: You know, she said these guys in suits told her that she could do it. This is how she could figure it out. She signed that plan. And the American Dream (ph), now she feels embarrassed. She's naive. But you know, the thing is that I've interviewed a lot of people who are losing their homes.

DOBBS: Right. ROMANS: And she doesn't look like she qualifies for the government program for getting people back on track. A lot of other people don't do -- Hope Now because she's already behind. Now, she's already two months behind. Once you get behind, it's just, it's harder and harder to catch up.

DOBBS: So this great program, Hope Now, means that if you really need help desperately, you probably can't have it.

ROMANS: You need to call before you're in trouble apparently.

DOBBS: Unbelievable. The thing that I -- your heart goes out to her and to other families in the same position. But what I say la la land, wonderland.

ROMANS: Right.

DOBBS: For us to have a government that isn't regulating financial services...

ROMANS: Right.

DOBBS: ... to the that these scumbags can go out and do that to people and to pocket all of those fees and know that this woman is destined for devastation.

ROMANS: She had $40,000 some including cost. And, you know, if you were selling stock to somebody, the SEC would come in. I mean, you would go to jail for selling people stock that's not suitable for them to have in their portfolio, but not selling somebody a house that's not suitable for them to ever be able to pay for.

DOBBS: And unfortunately, this story will only get worse.

Christine, thank you very much, Christine Romans.

In a moment here, one of the country's most distinguished economists, Alan Blinder tells us how middle class Americans can still live the American dream. Coming up at the top of the hour, "LARRY KING LIVE." Here's Larry now to tell us what is ahead. Mr. King?

LARRY KING, HOST, "LARRY KING LIVE": Thank you very much. Guess who is back, Lou? It's Bill Maher. He's going to talk football Giants and political Goliaths and anything else that's on his mind. He's funny. He's irreverent. He's Bill Maher, and he's with "LARRY KING LIVE" at the top of the hour. And I picked the Giants last Friday night. You can look up the tape, Lou.

DOBBS: I'm going to do that. Hey, I'm going to do that. I trust you, but I'm going to verify because I just heard from everybody in New York that they picked the Giants last Friday.

KING: I'm on tape.

DOBBS: All right, buddy. Thanks a lot, Larry. Look forward to it. Up next, one of the country's leading economists joins me. We'll be talking about a nation's financial crisis, this nation's middle class and what the future holds. Stay with us. We're coming right back.

(COMMERCIAL BREAK)

DOBBS: Joining me now, one of the nation's leading economists and certainly one of the economists for whom I have the greatest respect, Alan Blinder, former vice chairman of the Federal Reserve, former presidential adviser. Good to have you with us, Professor Blinder.

PROF. ALAN BLINDER, FMR. PRESIDENTIAL ADVISER: Thanks. Good to be here.

DOBBS: Let me ask you, first of all, we have been reporting on this housing crisis now for literally months. It does not seem to be getting better. Give us your assessment.

BLINDER: No, I think it's not getting better. I mean, I think it's getting worse for a couple of reasons. First of all, you've got these rolling defaults and foreclosures and resets the higher interest rates that people can't afford. Secondly, in terms of the financial super structure that's built above it or this alphabet soup of derivatives, CDOs, CMOs, you know the works.

DOBBS: Right.

BLINDER: The markets there are frozen. They're not functioning. So it's not getting better.

DOBBS: And whether we're talking about the leverage buyout, the very advanced Wall Street financings that are routine in normal times, whether it's the funding for leverage buyouts, the collateralized debt obligations you refer to, now all of the bonds that were created around the mortgage industry that we're now all learning are basically worthless, whether it's the debt swaps. We're looking at a trillion dollars by many estimates that we're going to have to unwind in this financial system. How bad will the pain be first in terms of the financial system, and then for working men and women in this country as a result?

BLINDER: Well, first of all, they're not worthless. These things have gone down in value.

DOBBS: Yes.

BLINDER: So you shouldn't write off the whole amount. But the estimates I've seen tend to run around $200, $300, $400 billion. Now, that's really money. But the values -- these mortgages don't become worth zero when they go on to default.

DOBBS: Right.

BLINDER: But there is a substantial amount of loss, which you could think of as a loss to the whole economy because if you foreclose a house, both some combination of the lender and the borrower are losing because that house is going to be worth less money. And, indeed, that neighborhood is going to be worth less. That, you know, that's the sort of fundamental value destruction and the rationale for trying to step in there with a program, I'm afraid, that has to be a lot bigger than Hope Now to step in this tide of foreclosure.

(CROSSTALK)

DOBBS: Larger than -- larger than the 150, approximately $150 billion stimulus package that is awaiting Senate action. How big a package do you think it would be appropriate at this point?

BLINDER: I think, you know, I think they're talking around the right number, about one percent of GDP which would be 140, so 150. The number is OK. I was quite disappointed that they didn't put extending unemployment benefits.

DOBBS: Right.

BLINDER: It's a standard thing to do in hard times and adding to food stamps.

DOBBS: Right.

BLINDER: That said, I think the package is decent. There's a lot of real stimulus in it. It's not just smoke and mirrors.

DOBBS: Recession. Is it here? Is it about to arrive? Is it unavoidable? Is it inevitable?

BLINDER: If it's already here it's unavoidable. It's not so clear that it's here. And as you probably know, Lou, the data come in with a lag, and we actually declare recessions often after they're over.

DOBBS: Yes.

BLINDER: I don't think we're in a recession yet. I would candy cap it at something like a 50/50 shot whether we'll actually be in a recession. But I think the broader point is we're in difficult times, and if we grow -- you know, the last quarter was positive 0.06 percent. That's very poor. If it was negative 0.06, we'd call it a recession. But positive 0.06 is bad underperformance of the economy.

DOBBS: Professor Alan Blinder, we thank you very much. Good to talk with you.

BLINDER: Glad to be here.

DOBBS: Coming up next we'll be talking with three of the sharpest political minds. You already know them. Stay with us. We're going to continue the conversation.

(COMMERCIAL BREAK)

DOBBS: We're back with Errol Louis, Miguel Perez and Professor Carol Swain. Professor, your thoughts as we conclude here tonight?

PROF. CAROL SWAIN, CNN CONTRIBUTOR: I think that we're going to have a long few months ahead of us.

DOBBS: In what regard?

SWAIN: Well, if there's no clear frontrunner tomorrow for the Democrats, I think that's it's going to be long and protracted, and with the Republicans I think that -- I think the Democrats will be the ones to watch because it seems like the Republicans have pretty much worked out who their frontrunner is. I think McCain/Huckabee would be a dream ticket for them.

DOBBS: All right. Errol Louis, your thoughts?

ERROL LOUIS, NEW YORK DAILY NEWS: I think, yes, Professor Swain is right in the sense that the Republicans are closing down their operation in some ways. They're going to have a nominee, I think, much sooner than the Democrats. The Democrats by fighting district to district all across the country, I think, are waking up a lot of energy, a lot of independence, a lot of young people. I think it's got to be good not only for the party, but for the country, and I think that's going to be the dynamic to watch tomorrow on Super Tuesday.

DOBBS: All right. Do you agree?

MIGUEL PEREZ, SYNDICATED COLUMNIST: Yes, I do, I do. But I live in New Jersey and I'm not going to get to vote tomorrow because I'm an independent. Unfortunately, you know, you're recruiting an army of independents, Lou, and what do we do tomorrow? I mean, we have to change so many things about our electoral process.

DOBBS: I couldn't agree with you more, and I do thing that we should change the laws. But this is what happens when two partisan entities or Democratic Republican parties control the electoral process. The fact is they're delivering to us candidates that we should, all of us independents, I believe, we independents should take great pride in the fact we won't be voting for this --

SWAIN: I'm an independent, and I'm voting tomorrow.

DOBBS: OK. And I'm not going to ask you who you're voting for. But --

SWAIN: Lou (ph) --

DOBBS: Well, just so the nation isn't, and we admire your spirit as always. Final thought, Professor Swain? Is that your final thought?

SWAIN: Yes.

DOBBS: All right. Errol, you get one more shot here.

LOUIS: Oh, sure. Look, tomorrow is going to be fascinating and the next big jump after that is going to be the so-called Potomac primary. Two weeks from tomorrow, Virginia, Maryland and Washington, D.C. all vote. That's going to be a hyperactive primary on the Democratic side.

DOBBS: On the Democratic side, Republican side, are we going to see a clear statement as to who the frontrunner is, the nominee will be as a result of the Super Tuesday tomorrow?

LOUIS: Tomorrow? Almost no chance on the Democratic side. Very likely on the Republican side.

PEREZ: I agree. It will be McCain for sure. And tomorrow, I think Mr. Romney will finally see the light and bow out. Finally, after tomorrow...

UNIDENTIFIED MALE: Whoa.

(CROSSTALK)

PEREZ: I think so. I think Romney is done.

SWAIN: I think it's a disgrace --

DOBBS: All right.

SWAIN: I think it's a disgrace the way the media shut out Huckabee prematurely.

DOBBS: Two final thoughts for Professor Swain, and we appreciate it. Thank you for being with us, Errol. Thank you very much, Miguel.

PEREZ: Thank you.

DOBBS: Thank you for being with us. "LARRY KING LIVE" begins right now.

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