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Bush: U.S. Economy in Tough Times; Tibetan Protests Turn Violent; Iraqi Soldiers Want to See Democrat Elected; Senator Schumer Responds to President Bush's Economy Speech; Africa, UAE Fret Rising Costs

Aired March 14, 2008 - 13:00   ET

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

DON LEMON, CNN ANCHOR: Gasoline hitting a record high. And this is the fourth day in a row we can say that. Prices went up again as you slept last night. The nationwide average for regular -- guess what? -- $3.28 per gallon, and that's according to AAA.
BRIANNA KEILAR, CNN ANCHOR: Oil hit $111 a barrel this week, and that could spoil some fairly good news about inflation. The Labor Department reports consumer prices did not go up last month, but oil isn't the only potential spoiler.

LEMON: And the credit crunch torpedoes stocks this morning. A major investment bank apparently was on the brink of financial disaster. Now the Fed is coming to the rescue. Lots of bad financial news today.

KEILAR: Yes.

LEMON: And you want to pay attention to it, because it's going to affect your bottom line and your wallet.

Hello, everyone. I'm Don Lemon, live at the CNN world headquarters here in Atlanta.

KEILAR: And I'm Brianna Keilar in today for Kyra Phillips. We are tracking the economy, "Issue No. 1," in the CNN NEWSROOM.

LEMON: So just a short time ago, President Bush told the Economic Club of New York the U.S. is going through a tough time. But he put his faith in the Fed and the Treasury Department to set things straight.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: This morning, the Federal Reserve was supportive of the Treasury Department, took additional actions to mitigate disruptions to our financial markets. Today's events are fast-moving, but the chairman of the Federal Reserve and the secretary of the treasury are on top of them and will take the appropriate steps to promote stability in our markets.

(END VIDEO CLIP)

LEMON: White House correspondent Ed Henry is traveling with the president. He joins us now from New York -- Ed. ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Well, Don, you can see the president during this speech, really struggling with exactly how to characterize this economic downturn. He talked about uncertainty. He talked about tough times, a rough patch, but he would not use the "R" word, recession. He realizes that could really damage his legacy, if there is a recession this year. It could also devastate the campaign of his friend, Republican Senator John McCain.

Of course, Mr. Bush saw his own father in 1992 suffer and lose reelection because of a recession here in the United States. So Mr. Bush wanted to show that the government is taking action.

He touted those tax rebates he signed into law, the economic stimulus plan that will affect 130 million homes. But those rebate checks not going out until May, so in the short term, consumers aren't getting a lot of relief. So even in the face of these low retail sales numbers, the low consumer confidence, the rising oil prices you talked about, the president trying to strike an optimistic tone.

(BEGIN VIDEO CLIP)

BUSH: So I'm coming to you as an optimistic fellow. I've seen -- I've seen what happens when America deals with difficulty. I believe that we're a resilient economy. And I believe that the ingenuity and resolve of the American people is what helps us deal with these issues, and it's going to happen again.

(END VIDEO CLIP)

HENRY: So you see the president trying to suggest that a rebound might be around the corner for the economy, not wanting to talk the economy down further with pessimistic talk about it.

But back in Washington, you have Democratic leaders like Rahm Emanuel already saying they heard nothing new in this speech and that what the country needs right now is not more speeches but better economic policies that are going to help middle class families. That's why, obviously, we're hearing a lot of that rhetoric fly around in the presidential campaign on all sides, Don.

LEMON: All right. You mentioned Rahm Emanuel and Democratic leaders, as a matter of fact. Ed Henry, thank you very much for that.

Chuck Schumer, Democratic leader, going to come out and speak at about 1:30 to give the Democratic response to the president's speech today. We'll bring that to you right here in the CNN NEWSROOM.

KEILAR: President Bush's speech comes amid the backdrop of a stock market that has been jolted by fresh worries about the credit crunch. And Susan Lisovicz is at the New York Stock Exchange with the latest on that.

Hi, Susan.

SUSAN LISOVICZ, CNN CORRESPONDENT: Hi, Brianna. Well, we are seeing a rare event on Wall Street, even in these turbulent times. Shares of Bear Stearns, one of the largest investment banks in the country, are in free fall right now, plummeting 39 percent. At one point they had lost half their value in one day, this after another emergency move by the Federal Reserve, along with the competitor, JPMorgan, to provide a short-term bailout and work on a more permanent solution for Bear.

Just two days ago, the CEO for the company denied he was in trouble despite reports of major liquidity issues. Today the company says the situation has, quote, "significantly deteriorated," end quote, in the last 24 hours.

Bear Stearns, and other big brokerages report their earnings next week. Analysts warning it could get ugly, while we could say what's happening today is ugly.

The Dow industrials fell 300 points, was the low of today's session. Right now off it, but still triple-digit losses, despite a better-than-expected inflation report that was expected to be the major news of the day. The Blue chips off 234 points. The NASDAQ is down 54 points, each down at least 2 percent on the session.

And at this point Bear Stearns going through the worst one-day sell-off in its history, even surpassing what we saw in the '87 crash. This is, you know -- this is really an extension of all the problems that we saw, Brianna. Started in the housing market, but it certainly did not stay there. And this is a big financial company, and obviously, when you see a financial company of this size on the ropes, people get nervous.

KEILAR: Yes, they pay attention, that's for sure. Susan Lisovicz there for us at the NYSE, thanks.

LISOVICZ: You're welcome.

KEILAR: And as the polls and the voters are telling us, the economy is "Issue No. 1" in the race for the White House. So what would John McCain, Hillary Clinton and Barack Obama do to get things humming again?

Well, among other things, McCain wants to chop the corporate tax rate from 35 percent to 25 percent. It also would let companies take a first-year deduction on equipment and technology investments.

The mortgage mess is a key concern for Clinton. She would set up a $30-billion emergency housing fund to help states and cities. She also wants a 90-day freeze on subprime foreclosures and a five-year freeze on subprime interest rates. She wants to spend $25 billion to help needy families pay for heating bills.

And Obama would pump $75 billion into the economy through tax cuts and direct spending targeting working families, seniors, homeowners, and the unemployed. He would give immediate $250 tax cuts to workers and their families and temporary $250 bonuses to seniors in their Social Security checks. LEMON: So those are the proposals.

KEILAR: They are proposals.

LEMON: That's what they say they would do, right. But gas prices right now, Brianna, they are soaring because the dollar has stumbled. And we want to hear from you.

What are you doing to save? We want to hear how you're changing your habits. Are you not buying milk so that you can buy gas? Whatever it is you're doing, e-mail us at CNNNEWSROOM@CNN.com. We'll read some of your responses, straight ahead, right here in the NEWSROOM.

KEILAR: And coming up in the NEWSROOM, we'll look at a world of hurt, economically speaking, from Africa to the Middle East, to Asia.

Back in this country, we'll tell you how the mortgage crisis is driving some desperate people to torch their homes, if you can believe that, rather than face foreclosure. And one of our experts will talk about the "R," word. That's right, "recession." He says we are definitely headed there.

LEMON: Time now to talk politics. Leading our political ticker today, a possible breakthrough in efforts to hold a Democratic primary revote in Michigan. A Democratic source tells us it would happen on June 3. And the Democratic Party, well, they would have to foot the bill for it.

Voters would have to identify themselves as Democrats and certify they did not vote in Michigan's Republican primary in January.

It is a different story in Florida. Party officials there have floated a mail-in do-over, but that idea hasn't gone over very well.

(BEGIN VIDEO CLIP)

KAREN THURMAN, CHAIRWOMAN, FLORIDA DEMOCRATIC PARTY: It's not going to do the state or the Democrats in this state any good if it's not something that we all can agree to.

We're trying to put the suggestions out there. You know, clearly, when we made the decision to go on January 29, it was a joint effort by all of us. What I want to see happen more than anything is to make sure that the voices of Florida Democrats are heard, and if this is one way to do it, then that's fine. If not, let's get to a resolution.

(END VIDEO CLIP)

LEMON: Florida's congressional delegation calls the plan unrealistic and opposes -- opposes -- a new primary of any kind.

OK, Hillary Clinton is picking up a big endorsement ahead of next month's primary in Pennsylvania. Sources close to her campaign tell us Pittsburgh Mayor Luke Ravenstahl will endorse Clinton today. At 28, he is the country's youngest big-city mayor. Clinton already has the support of Pennsylvania's governor and the mayor of Philadelphia.

Actors Ben Affleck and Matt Damon are going to judge a new contest by the political action group MoveON.org. The group is asking members to submit TV ads saying how they're inspired by Barack Obama, who MoveOn.org is endorsing. The winning ad will be announced before next month's Pennsylvania primary.

All the latest campaign news is available right at your fingertips. Just go to CNNpolitics.com. Plus analysis from the best political team on television. That and more, CNNpolitics.com.

KEILAR: A warrantless surveillance bill is back out in the open on Capitol Hill today. Last night the House shut the doors and talked about classified intelligence gathering in private. This was the first closed-door session in 25 years; actually, only the third since 1830, if you can believe that.

Republicans said they wanted to use classified information to argue to argue against the bill, backed by Democrats, which doesn't protect telecommunications companies from lawsuits over eavesdropping they permitted after 9/11.

(BEGIN VIDEO CLIP)

REP. ADAM PUTNAM (R), FLORIDA: Give those who -- who stand on alert as the guardians of our freedom and liberty -- liberty and security on a daily basis, what they need to continue to keep us safe. Don't extend the 27 days of darkness for another two weeks.

REP. JERROLD NADLER (D), NEW YORK: Let's not hear any remarks on this floor from that side about how we're dark because the act expired. It expired because they made it expire. They voted against a 21-day extension that we could have renewed, if necessary, until we got this all figured out. So let's not hear anymore less-than-honest assertions about we're dark, we're unprotected and it's the Democrats' fault.

(END VIDEO CLIP)

KEILAR: The Senate did vote to protect phone companies from lawsuits. The House vote is expected in just a few minutes. President Bush is promising to veto this House version, should it reach his desk.

LEMON: Protests in one of the world's most beautiful and remote countries take a bloody turn. Gunfire, tear gas and rock throwing are all reported today in the capital of Tibet. We've got the latest for you.

KEILAR: In Baghdad, Iraqi soldiers talk with our Kyra Phillips about their country and its rocky road to democracy. A key concern: what kind of future will their children have?

(COMMERCIAL BREAK)

KEILAR: It's 14 after the hour, and here are three of the stories we're working on in the CNN NEWSROOM.

A 69-year-old woman walking on the tracks, railroad tracks, was hit by a high-speed Amtrak passenger train in Connecticut this morning. She was injured, her dog was killed, and she told police she thought the train was on an adjacent track.

A stern warning for thousands of Buick and Pontiac drivers: do not park your car in a garage until it can be fixed. GM is recalling more than 200,000 Buick regal GS and Pontiac Grand Prix GDP sedans, model years 1997 to 2003, because more than 200 of these cars have caught on fire because of oil leaks.

Iran is holding parliamentary elections today. Many moderate candidates have been barred from running, and hardliners are expected to prevail.

LEMON: All right. So this place, we know, should be known for peace. Right? But that is not what is happening here lately.

Buddhist monks demonstrating for independence from China. Ethnic Tibetans join in, and soon -- soon streets are filled with screams, with gunfire, with rioting. And so far the Chinese government has refused to allow CNN to even enter Tibet.

Our John Vause brings us what he knows. He's in Beijing.

(BEGIN VIDEOTAPE)

JOHN VAUSE, CNN CORRESPONDENT: The latest information from our sources in Lhasa tell us that the streets are basically deserted, except for patrols by police cars and armored military vehicles.

We're told fires are still burning and phone lines are still down, but electricity has been restored. And the situation there now is described as relatively calm. But these protests do appear to be spreading to the east of the country.

CNN received these photographs from Gansu province, where there is a large Tibetan population. According to Students for a Free Tibet, about 2,000 protestors took to the streets earlier today. They were there for about three hours. They flew the Tibetan flag and called for an independent Tibet. All of this comes after days of unrest in Tibet after monks, who were marking the 49th anniversary of a failed uprising against Chinese rule.

And what could be worrying here to Beijing is that these demonstrations are being joined by ordinary Tibetan civilians, lay Tibetans. The targets here are ethnic Chinese. We've been told by one Chinese woman that she was attacked by Tibetan rioters. Her injuries sent her to hospital.

Also under fire here, Chinese-owned businesses, as well as government offices, and also the security forces.

According to U.S.-based human rights groups, the three main monasteries on the outskirts of Lhasa have now been surrounded by Chinese troops, and they've been sealed off.

We've also heard over the last couple of days, according to human rights groups, that more than a dozen monks have been rounded up and arrested. And there are reports, unconfirmed, that at least two people have been killed.

Beijing has now moved to seal off Tibet, banning foreigners and journalists from traveling there. Flights and train services have also been canceled.

John Vause, CNN, Beijing.

(END VIDEOTAPE)

KEILAR: They don't have a say in who becomes the next American president, but they do have an opinion. Troops of the Iraqi army. Who would you think they support in November? We sat down with them and asked.

(COMMERCIAL BREAK)

KEILAR: Whoever is inaugurated next year as president will inherit an almost six-year-old war in Iraq. And while it's not "Issue No. 1" in the debates or stump speeches or campaign ads, you better believe the war is first on the minds of those fighting it and their families. This goes for the Iraqi men and women in uniform, as well. So who would they like to see as the next American commander in chief?

The NEWSROOM's Kyra Phillips did something brilliant and revolutionary. She asked them what they thought, and she's joining us now from Baghdad.

Hi, Kyra.

KYRA PHILLIPS, CNN ANCHOR: Hi, Brianna.

I mean, you've covered the White House. You know all about politics in the U.S. We're always talking to U.S. troops here in Iraq. Well, for a long time now I really wanted to sit down with Iraqi troops, but it's been so hard to get access.

So for the first time, without any public affairs officials, any minders, anybody telling these troops what to say and what not to say, we did get on to the Al-Musana (ph) base, and we were able to talk to Iraqi soldiers for the first time, uncensored, about the presidential election, if they're following the candidates, if they even care who becomes the next U.S. president.

And here you go, Iraqi soldiers in their own words.

(BEGIN VIDEOTAPE)

PHILLIPS (voice-over): In step and preparing for their various missions, these Iraqi soldiers are also following every step of the U.S. presidential election.

(on camera) Is there a certain candidate in the U.S. that you're following?

AHMED MANSOUR, 6TH DIVISION, IRAQI ARMY (through translator): the truth is I pay attention to the Democratic Party. Even more, Hillary Clinton.

PHILLIPS: Why?

MANSOUR (through translator): Because I like her personality. Because she's new. In America, you need something new; a new female president. We saw and lived under the Republican Party, under Bush. We would like to see what the Democrats have to offer.

PHILLIPS: Ali, why are you paying attention to the elections in the U.S.?

ALI SALEH, 6TH DIVISION, IRAQI ARMY (through translator): I want to compare their democracy with ours. I want to see the differences between them and us. I want to see the way they vote. Are they unorganized and a mess like us? Or better?

PHILLIPS: Do you want a Democratic president or a Republican president?

SALEH (through translator): Democrat is better than Republican. We are living under the Republicans. We know the situation. It's difficult under the Republicans.

PHILLIPS (voice-over): These are troops from the Iraqi army's 6th Division: engineers, weapons and bomb experts, along with medics.

(on camera) Is there a certain candidate that you're paying attention to?

ALI MOHAMMED, 6TH DIVISION, IRAQI ARMY: Clinton.

PHILLIPS: If you had a chance to sit down with Hillary Clinton, what would you tell her you need in Iraq?

MOHAMMED (through translator): I would ask her to help compose a book about democracy and send it to the Iraqi politicians. It would help.

ALAA AHMED, 6TH DIVISION, IRAQI ARMY (through translator): The elections are directly connected to the future of Iraq and the pulling of U.S. forces from Iraq. Democracy in Iraq is new. We don't know much about it. We need practice. Our stability is not easy to fix.

PHILLIPS: Do you have a favorite candidate?

AHMED: Obama.

PHILLIPS: Obama?

AHMED (through translator): He's practical, and he loves to serve his country.

PHILLIPS: If you could sit down with Obama what would you tell him you need from him?

AHMED (through translator): I would ask him to pay attention to the Middle East and the Iranian and American conflict that's happening on Iraqi land. That is affecting Iraq and needs to be addressed.

PHILLIPS: Why are you so concerned about Iran?

AHMED (through translator): They are our neighbors; they affect us directly; and this is important to Iraqis.

PHILLIPS: There's been lots of talk about how Iran is affecting this war, funneling terrorists, weapons.

AHMED (through translator): Of course we believe that. We have proof that the Iranians helped the terrorists by giving them money, weapons and many other things.

PHILLIPS (voice-over): These soldiers are speaking candidly in a way they never could have under Saddam Hussein.

(on camera) Sam, what did you learn from the U.S. troops?

WESSAM FADEL, 6TH DIVISION, IRAQI ARMY (through translator): We learned discipline.

PHILLIPS: Why is discipline so important?

FADEL (through translator): At the fall of the regime there was no government, no one leading our people, no discipline. We gained military experience from the Americans. We did not have car bombs, snipers, criminals killing people. We learned from the Americans how to handle this.

These people are threatening us and our troops. We couldn't stand on the street without someone trying to kill us. But we learned how to control, identify criminals that were harming us.

MANSOUR: The hardest thing for us is what we see. Look at what's happening. Our people are getting hurt. We don't have electricity. Our young people don't have simple things like a job, electricity. We have oil, and we are poor and jobless.

We want new companies to trust Iraq and invest in Iraq. We want jobs for our young people so they don't join these terrorists. That is the hardest part.

PHILLIPS (voice-over): A hard-fought war. These young soldiers say they're willing to risk their lives.

(on camera) How will a real democracy make your life better as an Iraqi?

TAHA IBRAHIM, 6TH DIVISION, IRAQI ARMY (through translator): Freedom. Without democracy we will have no freedom.

(END VIDEOTAPE) PHILLIPS: And Brianna, just to be clear, I asked each one of those soldiers, "Are you following any of the Republican candidates? Do you want to talk about John McCain? Do you think a Republican should step into the White House in this next election?"

Every single one of them, no. They said, "We're living a Republican war. We want to see change, and we think that a Democrat needs to be in office to offer a difference here." It was pretty eye- opening.

KEILAR: Yes, and it really struck me, Kyra, how that one soldier said he wants Hillary Clinton to write a book about democracy and send it to Iraq. It's obviously such a new thing for them. There's some uncertain there.

But I'm also wondering, when you talked with these soldiers, did they tell you any stories about raids they've conducted or arrests that they've made?

PHILLIPS: Yes. And just to add to your point, that was interesting for me, too. A lot of these guys, we've never -- they've said to me, "We've never had the chance to vote. We aren't even quite sure what a democracy means. We've been reading about it. We've been studying it. We've been trying to watch the American news."

So it's like they're growing up and going through school again and learning about three branches of government, you know, something that we learned when we were in grade school. So that was an interesting dynamic.

Back to the arrests of terrorists. A lot of them talked about "We need a judicial system. Where's the court system? We're going out. We're arresting these terrorists, and we want to see something happen to them. A lot of them are getting back on the street."

So they really want to see that as a part of the democracy: the court system and the judicial system in place. These guys are either put to death, or they're put away for life.

KEILAR: Such an interesting perspective from them. Thanks for getting that. Kyra Phillips for us in Baghdad.

PHILLIPS: Thanks.

KEILAR: And there are so many stories, as well, coming from Iraq. Stories of strength and perseverance from the women who are living in Iraq. These are stories not told until now.

Join Arwa Damon and witness Iraq through the eyes of these women. "ON DEADLY GROUND: THE WOMEN OF IRAQ" airs this Saturday and Sunday at 8 p.m. Eastern only on CNN.

LEMON: Well, everyone's talking about the economy. The president did earlier at the Economic Club in New York. And now, in about three minutes, we're expecting Democratic leaders to speak out, in particular Chuck Schumer. And we see a live picture of the podium there, getting ready for that press conference. As soon as it happens, we'll bring it to you right here in the CNN NEWSROOM.

Meantime, the dark side of fighting foreclosure.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I feel sorry for all the other people that are facing this but don't do what I did.

(END VIDEO CLIP)

LEMON: Up against a wall and burning down the house.

(COMMERCIAL BREAK)

KEILAR: We've got our eye on Washington at this hour, waiting for Democratic leader Chuck Schumer to speak there. Basically he's going to be issuing a bit of a rebuttal to some comments that President Bush made on the economy earlier. President Bush spoke at the National Economic Club in New York basically saying that he opposes a large-scale government intervention to bail out homeowners who are caught up in the mortgage crisis, also urging congress to extend his tax cuts that are set to expire here in a few years.

Again, we are waiting for Democratic leader Chuck Schumer to make some comments. When he goes live we'll bring them to you.

LEMON: Speaking of the economy, gas prices might be hitting Americans in the wallet but pricey commutes haven't turned into angry protests, at least not yet.

Africa is a different story and in the United Arab Emirates the cost of living is going through the roof, in part because of the U.S. dollar. Here's our "Global Economy Watch."

(BEGIN VIDEO CLIP)

CHRISTIAN PUREFOY, CNN CORRESPONDENT: Hi, I'm Christian Purefoy in Nigeria. The high price of oil is actually helping bring up an economy that's dependent on oil for 95 percent of its foreign exchange.

Elsewhere in West Africa the picture is very different with a series of riots and demonstrations across the region. In neighboring Cameroon, a week of violence after the government raised petrol prices. And a government crackdown after riots against the high price of food in another area.

All these riots and demonstrations are against governments who people feel have done enough to prepare them for the high price of the most basic commodities, petrol and bread.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

WILF DINNICK, CNN CORRESPONDENT: I'm Wilf Dinnick in Dubai where they supply one-quarter of the world's construction cranes are here. This currency is tied to the U.S. dollar. They did that to create civility to attack foreign investors.

The problem is if the dollar falls the more expensive it is for these people to import things and they import almost everything. Prices are going through the roof. Goods and services very expensive. Rent has skyrocketed. The government and their economists now figuring out how to avert this crisis.

(END VIDEO CLIP)

LEMON: Coming up, we'll take a look at what the tanking dollar is doing in Israel and see how gas prices are hitting the poorest of the poor in India.

KEILAR: You can't be kick out of a house that burned down. A lender can't repossess it, it can't be auctioned off. But that said, none of that makes arson a smart choice for homeowners facing foreclosure. However, it is a choice that more people are making.

Here's CNN's Chris Lawrence.

(BEGIN VIDEOTAPE)

CHRIS LAWRENCE, CNN CORRESPONDENT: The bank was just days away from taking this home when the owner took matters into her own hands.

CHERYL: If I could take it back, I'd take it back in a minute.

LAWRENCE: Cheryl was sentenced last month for setting fire for her Michigan home. She thought insurance money could help her catch up on past due house payments. In California, insurance officials say the number of fires linked to foreclosure doubled last year, 7 of 14.

In Colorado Springs, this foreclosed home went up in smoke the same day the owner was scheduled for eviction.

UNIDENTIFIED FEMALE: He intended to burn the house down, that he was not going to allow them to do this to him or allow them to have it.

LAWRENCE: The owner pleaded guilty to attempted arson. Do you think this is the last time you'll see something like this?

UNIDENTIFIED MALE: I think it will still happen again.

LAWRENCE: Sure, if Kevin predicts these crimes will continue to rise as the economy falls. He says investigators now immediately consider arson, even when a burning home is simply up for sale. How does someone do something like that?

UNIDENTIFIED MALE: Through desperation. For the people that are doing this, they're good people. You know? These are not bad people. And they're desperate.

LAWRENCE: Desperate enough to risk jail time, though most only get probation.

UNIDENTIFIED FEMALE: He barely has a dime to his name.

LAWRENCE: After a conviction, homeowners still owe the bank hundreds of thousands of dollars.

UNIDENTIFIED FEMALE: I feel sorry for all the other people that are facing this, but don't do what I did.

LAWRENCE: The damage doesn't stop there. Even neighbors end up getting burned when higher insurance premiums are passed on to them.

Chris Lawrence, CNN, Colorado Springs.

(END VIDEOTAPE)

LEMON: The president spoke out about the economy not long ago. Now Chuck Schumer, Democratic leader, speaking out now.

(JOINED IN PROGRESS)

SEN. CHUCK SCHUMER, DEMOCRATIC LEADER: More and more like Herbert Hoover, sort of whistling a happy tune as the economy heads south.

We all know we're in a recession, and the question is how deep and long it will be. And as long as the president stays in his ideological straight jacket and says that we're not going to deal with the problems caused by this economy, we're not going to get much better. So the president's speech was completely disappointing.

We have a crisis in confidence in credit. Credit is confidence. Credit is the ability of people to believe that what they're buying will be worth something. And when there is a crisis in confidence of credit, you need the federal government to do things to re-assure people that things will get better. And yet, when the president says that everything is fine, when the president says he will not do simple things like deal with the foreclosure crisis, he's not going to make the economy much better.

Even today, Mr. Bernanke disagreed with the president. The president said "We should allow the large number of vacancies in housing caused by foreclosures to remain." Mr. Bernanke said we ought to do something about it. We in the Senate agree with Mr. Bernanke. That's why we've proposed a housing program that deals with the bull's-eye of this crisis, which is mortgage foreclosure.

Things are worse now because the president's proposals are always a day late and a dollar short. The kinds of things we were calling for nine months ago he's beginning to call for now. But his reluctance to roll up his sleeves and deal with this crisis stands in the way of any kind of real recovery.

The bottom line, it seems as if the president is on a different economic planet than most Americans. It seems that the president is on a different economic planet than most New Yorkers. We've heard the same speech we've been hearing for months, but on a very different day.

I think that's it. I now will answer questions. I just want to make sure that I've made the points I want to make. Leaving anything out? No.

Go ahead. Questions?

Well, I think what most Americans see is the president regards the number one priority in this country as the war in Iraq. Most Americans regard the number one priority as the economy. And the white house continues to focus resources, energy, time, on Iraq when they should be spending far more time dedicated to our economy.

QUESTION: Would you comment please on the bailout, the concerns by the fed?

SCHUMER: Yeah. Again, the bottom line is credit equals confidence. And because financial firms have to refinance every day, if people lose confidence in credit, we're going to have trouble beyond Bear Stearns in most financial firms. And so there has to be a solution.

The temporary solution that the president talked about today is not going to solve the problem. Sorry. The temporary solution that the fed implemented today is not going to solve the problem until people start gaining confidence in credit, and that starts with dealing with the mortgage crisis and the foreclosures and the parade of horribles that emanate from them. Things aren't going to improve.

So this is sort of a temporary band-aid that doesn't get to the heart of the issue, which is the lack of confidence in credit because financial firms have to refinance often every night, every week, every month, when there is a confidence of -- when there is a crisis in the confidence of credit, it can spread, even to firms that might be in fundamentally good shape.

And the problem that this administration has, above all, they have not contributed to any confidence in the economy and in credit. They have not contributed to the view someone is in charge and knows what they're doing. In fact, the president's speech today is going to make people less confident because he seems to be talking a totally different tune than all the economics.

LEMON: There Senator Chuck Schumer really launching, lighting into the president there and going on to say, you know, he's in an economic straightjacket and that he compared him to Hoover. What did he say? This is the -- the president is on a different economic planet.

All kinds of things about the president and really sort of cliches, but basically disagreeing with the president today, and also saying that there should be some sort of help for people in the mortgage crisis, which the president is urging congress not to do. It is very interesting to hear this, not surprising.

KEILAR: No. I mean on one hand you have Democrats who want government intervention, and then you have Republicans and President Bush, who are saying, no, we don't really want this wide scale government intervention. That's what we expected, that's what we heard from President Bush earlier today and Chuck Schumer right now.

LEMON: We are also keeping our eye on the fed chairman, Ben Bernanke, is also speaking today. It is a very busy day when it comes to economic news and also the government, our leaders, the president spoke out this morning. There is Chuck Schumer there still holding his press conference.

And again as I said, Ben Bernanke the Fed Chairman also talking today. We'll see what develops, if anything, from all this. President said it should get better once people start to spend those rebate checks that are going to go out soon.

The economy of course is "Issue #1." We'll bring you all the latest financial news next week. That will happen at noon. If you need to know information on the mortgage meltdown, credit crunch and more, "Issue #1" next week, 12:00 p.m. Eastern, Monday through Friday, only here on CNN.

KEILAR: The dreaded sinus infection. The pain, the pressure. It is such torture. You know, it gets you right up in your forehead, right under your eyes. Terrible. Grab your meds and pay attention, because we've got new information for sinus suffers.

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KEILAR: Sinus infections. They can stick around for days, even a week or more. Pain, sneezing, stuffy head. Patients want relief. Doctors want to help. But new research is making doctors rethink a common treatment.

CNN medical correspondent Elizabeth Cohen is here to fill us in on that.

What's going on?

ELIZABETH COHEN, CNN MEDICAL CORRESPONDENT: Antibiotics. That's what we're talking about. That's the common treatment that you just mentioned. We all know it, you have a sinus infection or symptoms of one, you show up. Chances are that's what your doctor is going to give you, but is that the right treatment?

There's been a lot of questions about this over the years. Some researchers looked at a whole bunch of different studies, kind of pooled all the data. What they found is that for every 15 patients who are prescribed an antibiotic, the antibiotics help only 1 out of every 15. Now, it doesn't mean the other 14 continue to stay sick. They probably have a viral infection so it goes away on its own.

So the problem here, according to folks that do this kind of research, is that a lot of people are getting antibiotics, and it's not helping them and it hurts everybody. That increases antibiotic resistance for all of us which means it won't work when you need it.

KEILAR: I mean 1 out of 50. That's baffling. But for those 1 out of 15, how can you tell if you really need an antibiotic?

COHEN: Right because I've talked to many people today who said I have a sinus infection and antibiotics helped me. I would have been very upset if my doctor refuses to give it to me.

Here are questions your doctor may ask you when you come in and say I feel like I have a sinus infection. Given that doctors are more hesitant to prescribe antibiotics, have your symptoms been going on for a while, seven to ten days or more? Have you had a fever for about five to six days? Do you have colorful, sort of green-brown mucus and a post nasal drip? If you don't, your doctor may say to you I know you want an antibiotic but I don't think it will help you, I'm not going to give it to you.

KEILAR: If you have a sinus infection, you're in a lot of pain. It's here. It's here. We all know. Is there anything you can do without antibiotics?

COHEN: There are definitely things that you can do. You can try regular old pain relievers such as ibuprofen or acetaminophen which is Tylenol. You can also put a heating pad on your face. That might help on the areas that hurt. You can also try a humidifier in your room. That can help as well. Or a decongestant. Those work well, too.

KEILAR: Those are all good tips. I know we have some people in the NEWSROOM who are probably racing off to get those for them. All right. Elizabeth Cohen, thanks so much.

LEMON: Well, we heard how an aspirin a day is heart healthy, new research suggests it may also cut the risk of asthma in older women. The study looked at 40,000 nurses age 45 and up. They took one baby aspirin every other day. Researchers found a 10 percent reduction in new asthma cases. They aren't recommending aspirin for women who already have asthma.

For decades, marijuana has been called the gateway drug, a path to addiction. But these days the drug of choice can be found in any home, ordinary household cleaners. Ordinary household cleaners. A new government study shows kids as young as 12 are using inhalants. We're talking 1 in 10 eighth graders.

How can you tell? Smell their clothing. Look for paint stains. And look, of course, for empty canisters. And just obviously talk to your children about that.

OK. We told you about that warrantless surveillance bill back. It was back out in the open on Capitol Hill today. There was a closed session last night that they can discuss. The house is voting on that bill now. We should expect to hear how they voted in a few minutes.

Those are live pictures that you are looking at now of the house voting on that warrantless surveillance bill that was closed session last night. Obviously there were some things in there that they wanted to discuss. They didn't want the public to know about. We'll let you know how it turns out after a quick break. (COMMERCIAL BREAK)

LEMON: OK. This just coming across the news alert and I'm told I should get straight to Jamie McIntyre, senior pentagon correspondent, because it involves a high-level al Qaeda person, someone who is known to know Osama Bin Laden.

Jamie?

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: That's right. The Pentagon announcing this afternoon that it has taken custody of a man named Mohammad Rahim described by the CIA as a tough-seasoned jihadist, a senior person who aided, according to the United States government, in the escape of Osama Bin Laden from Afghanistan back in 2001 and who has been a key member of al Qaeda since then until his capture some time in the summer of 2007.

The U.S. is not saying where Mohammad Rahim was held until now, but they are announcing that earlier this week he was transferred from CIA custody to the pentagon where he will now be kept at the U.S. detention facility in Guantanamo, Cuba.

He is described as a very senior person in al Qaeda who sought to get chemicals for the attack against U.S. troops, who sought out access to people who had access to the U.S. military and he was part of the CIA's interrogation program.

It is the first transfer from the CIA to U.S. military custody since April of last year. Again, part of the significance of this is it confirms the fact that the CIA is holding people that we have no idea where they are and how they're being interrogated until they're transferred to U.S. military custody which the U.S. military operates under stricter rules of interrogation, that specifically bars things such as the notorious interrogation technique known as waterboarding.

LEMON: Jamie, I was going to ask what it all means and you explained it there in the last part. Thanks very much for that. We'll check back later on.

KEILAR: Want to get you now to Washington to the House of Representatives where a vote is currently under way. This is on the Bush administration's warrantless wiretapping program. What you have here is legislation in the house. It doesn't have retroactive immunity for telecommunications companies that assisted intelligence agencies after 9/11. This would not protect those companies from lawsuits, and this is a huge sticking point.

President Bush says if legislation like what is being voted on right now gets to his desk, he's going to veto it. Now the senate has passed a plan that does have retroactive immunity. That's what President Bush wants to go through congress. This legislation for his warrantless wiretapping program, will it last. This is a contentious issue between President Bush and the Democrats. We'll bring you the final outcome of this vote after a break.

(COMMERCIAL BREAK) LEMON: Well gas doesn't only hurt when you fill up and that's exactly what happened to an 83-year-old woman in New Mexico when she used it on a man who tried to snatch her purse. She was filling up at the time so the nozzle turned out to be a very handy tool for her. She says the 20-year-old suspect was no match for her.

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BERNIE GARCIA, FOUGHT OFF ROBBER: I don't even -- they look at young punks. Skinny and not even built. I could have taken him any day of the week.

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LEMON: And for what it's worth, Miss Garcia said she didn't spill any gas when she smacked the guy with the nozzle.

KEILAR: Just because Kathleen McKel has lived a long life, doesn't mean she's too old for the thrill of a lifetime. The Utah grandma celebrated her 81st birthday by jumping out of an airplane over Australia. At first she was just going to watch her 20-year-old grandson jump, but then she thought, hey, what the heck. Why not me?

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