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American Morning
Pressure Mounts on Insurance Giant AIG; More Drama in O.J. Simpson Robbery/Kidnapping Trial; McCain & Biden Push Their Economic Plans
Aired September 16, 2008 - 08:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KIRAN CHETRY, CNN ANCHOR: And joining us now with his reaction is senior political analyst for "TIME" magazine, Mark Halperin.
Mark, good to see you this morning.
Both of them talked about the economy. How will -- did they get specific enough, I guess, and how will it play with voters? What are voters wanting to hear?
MARK HALPERIN, CNN SENIOR POLITICAL ANALYST: I don't think either of them were very specific at all. They're both trying to feel the pain of the American voter. They recognize that this is a critical moment in the campaign. I think, historically, we'll look back at this week and say this was the beginning of the campaign and the moment when both of them were asked to step up, both tickets were asked to step and talk about issue number one, as we say here.
And there's no question that both of them recognize that this is the issue voters want to hear from them on. It's amazing to me, they still lack specifics, particularly, Senator McCain is struggling to balance optimism and concern. On the Democratic side, they're trying to balance attacking the Bush-McCain record as they would call it with specifics of what they would do to reassure voters that they could take over in just a few months. This isn't hypothetical anymore, it's actual.
CHETRY: Right. It's about 50 days away right now. And one of the things that both of them have talked about is tax cuts, whether you agree that it should be for middle class or whether you agree that it should be more trickle-down with some corporate and very wealthy Americans getting these tax cuts.
But is it even realistic to talk tax cuts at this point when we're seeing what we are seeing? Do they have to sort of rejigger their plans?
HALPERIN: Well, I think whichever the administration takes over in January is probably going to do some rejiggering including on taxes. Look, this is an argument Democrats keep losing. And on the merits, they should have a stronger argument than they've been able to make in the past. Senator McCain says he doesn't want anybody's taxes to go up.
Democrats have made in past elections or this time making a much different argument about raising taxes on the wealthiest, not raising taxes and in fact, cutting taxes on the middle class. They have not been able to convince the voters in the past that that's what they'd actually do in the last two elections. They're trying again.
CHETRY: Because if you're making the $200,000, you still don't feel like you're wealthy and -- but if you look at it from $66,000 as your household income, you're wondering what's going on.
But the other question seems to be, are they going to be able to promise everything? I mean, from health care to balancing the budget, to fixing Medicare when we're in this what appears to be a recession. It's the word that's been used today.
HALPERIN: Well, it is hard for people in our business, people who are public advocates to hold them accountable because we are in such a swirling situation when the next president takes over. What will be the right prescription on health care, on taxes, on trade, on regulation, in particular, to do the right thing? And it's hard to say that because it is such a moving target.
It would be nice, though, if they were more specific since it is relatively close. And if one of them said, you know what? I've been saying "x" but now I need to say "y" because of the changed circumstances. I think that might catch voters' attention. It's hard, though, for them to admit mistakes or for them to say, changed conditions, I need to change my policies. They'd like to have that happen in January after they've won.
CHETRY: Is that because the opposition can just seize on it instantaneously with these ads, labeling them flip-floppers?
HALPERIN: That's part of it. And it's also very late in the game to be saying, you know what, I was wrong about what I thought the right prescriptions are going to be. This is a big moment. President Bush is not particularly front and center. I think the country is looking for leadership on these issues.
And again the problem for McCain is to balance a past where he's been very skeptical of regulation with now what he's saying is a need for more but not as much as I think the Democrats want.
And again the Democrats coming off several weeks where they've been attacked, where Obama's been -- they've gone after Obama so hard, he has got to decide how does he balance with Joe Biden, talking about their positive agenda with trying to say that John McCain's record is not what's needed right now.
CHETRY: Mark Halperin, always good to see you. Thanks.
HALPERIN: Thanks.
JOHN ROBERTS, CNN ANCHOR: Breaking news this morning, pressure mounting on insurance giant AIG. The company hit by a series of credit rating downgrades as it struggles to raise $70 billion in capital. If AIG declares bankruptcy, it would dwarf yesterday's Lehman Brothers' collapse. Nervous investors wondering whether another Wall Street sell-off is shaping up. Dow futures now down 91 points. Markets open about 90 minutes' time.
Adding to the concerns, a major tumble overnight in Asian markets. Japan's Nikkei plunged nearly 5 percent, Hong Kong's Hang Seng lost nearly 5.5 percent. Both markets were closed yesterday, though, so there's a degree of playing catch up there.
A mixed bag this morning for energy. Oil falling below $92 overnight on fears of slow economic growth and a lower demand for oil. The gasoline is climbing higher again after word that it will be a few weeks before production in the Gulf of Mexico is back to normal following Hurricane Ike. The average price up more than 1 cent to $3.85 a gallon.
Today, the Federal Reserve could try to stop Wall Street's bleeding by cutting interest rates. However, economists are split on whether a cut will happen at today's meeting or if they have to wait until the next meeting. Right now, the short-term rate is 2 percent.
So, what's next in all of this? Ali Velshi "Minding Your Business" this morning. He's live on the floor of the New York Stock Exchange.
Before we get into what might happen there today, Ali, I just want to let you know that oil heading further and further toward the $60-a-barrel mark that you say is the real value for oil. You might be right, after all.
ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Yes, well, it's moving faster to lower than we would have expected. That might be helping those futures that, as you mentioned, were down 90 points. Not be lower than they are. Dow futures are a traded indication of where the stock market is going to open. And really over the course of the next half an hour or so, it will give us a real sense of how good or bad things are going to be.
There's a point this morning where those futures were actually above zero. Now, as you mentioned, the information, everything that happened in the world of business today can make your head spin. But that things we're looking at right now, we've almost put Lehman away into the corner as yesterday's news.
We're looking at AIG. This is America's largest insurer, one of the largest in the entire world, and they need to come up with $75 billion very quickly. The federal government has said yesterday afternoon they are not going to bail AIG out. And that's why the market took that second turn, bringing it down 504 points at the close, making it the worst close since September 17th of 2001, the biggest drop in terms of points.
Now, AIG got downgraded as a result of the federal government not intervening. It got downgraded by three of its credit rating agencies. That's the same as your credit going down. That means your cost of borrowing money goes up. AIG's cost of borrowing money is going to go up. Some people say it's got two or three days to line up financing. And if it were to go down, it would be much, much bigger than Lehman. So, the market's looking at that.
The market is also looking at that Fed meeting. The Federal Reserve was scheduled to meet today. It's one of their every six-week meetings. And a week ago, no one would have told you there was any chance of an interest rate cut being discussed. But because of everything that's going on, there is now a chance. In fact, there are people who bet money on these things in the market and they are betting that there is some chance that the Federal Reserve could cut interest rates.
Whether that will solve the problem remains to be seen. And that's why the Federal Reserve may not do that. But there is a lot going on right now. If you look at your 401(k) or your I.R.A., it's going to reflect in many cases. If you're broadly diversified, it's going to reflect the drops that we've seen on the market, 4.4 percent on the Dow, 3.6 percent on the NASDAQ and 4.7 percent on the S&P 500.
That's why it concerns you but we are on top of it. We'll continue to keep you posted with every one of these developments as the day continues.
John?
ROBERTS: You know, Ali, earlier this year, you're talking about how long it's going to take for all of this to shake out. People were thinking maybe early 2009. Has this pushed back that horizon now even more?
VELSHI: Well, the things that have to settle out is housing prices. They need to shake down to the bottom and this credit crisis. People are still saying it could be six to nine months. So we could still be on target. There's nobody who says we won't come out of this, John. It's just, do you as an individual and do these companies have the money to get through it while it continues to be tough times.
ROBERTS: Ali Velshi for us down there at the Stock Exchange. Ali, thanks. And, of course, we'll be staying with Ali all day long for the latest on your money here on CNN.
CHETRY: And it's the "Most Politics in the Morning" now. The Wall Street mess front and center in the Republican campaign. Senator John McCain and Governor Sarah Palin reunite today after Palin used her last solo appearance to talk about the economy. As Dana Bash shows us, she was tough on Wall Street but even tougher on Washington.
(BEGIN VIDEOTAPE)
DANA BASH, CNN CONGRESSIONAL CORRESPONDENT (voice-over): Sarah Palin didn't hesitate to point fingers at a town run by a Republican president.
GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: Our regulatory system is outdated. Washington has ignored this. Washington has been asleep at the switch and ineffective. BASH: A taste of the reform message McCain advisers call the key to winning and the biggest bonus of adding a Washington outsider to the ticket, especially in the anti-establishment Mountain West -- her first foray at campaigning alone.
PALIN: We've got a lot in common, these western states. You know, we hold together and we pull together.
BASH: Here, Palin added a few new lines to her stump speech like what she'd do in the White House.
PALIN: My mission is going to be energy, security and government reform.
BASH: She got a big response for a new swipe at Barack Obama.
PALIN: Our opponent wants to raise income taxes and raise payroll taxes and raise investment income taxes.
BASH: But independent groups say that's not true. Most Americans would get a tax cut under Obama's plan. And Palin is still repeating another claim that doesn't tell the whole story.
PALIN: And that infamous "Bridge to Nowhere," I did tell Congress thanks, but no thanks.
BASH: The reality -- she originally supported federal dollars for Alaska's infamous bridge. But McCain aides won't drop the line because those stories are drawing these crowds -- newly enthusiastic GOP voters and even some conservative Democrats like Gayle Loughridge.
GAYLE LOUGHRIDGE, PALIN SUPPORTER: I haven't been political my whole life and Palin just has got me energized up at 3:30 this morning to come see what she's got to say.
BASH: And what she has to say is still carefully scripted and her events tightly controlled. Even these home-made looking yellow signs were distributed by the campaign.
(END VIDEOTAPE)
BASH: Palin has now moved on to the state of Ohio. And she had at least one private fundraiser there. And she is, Kiran, going to hook back up with John McCain later today.
We should note that during her time here in the Mountain West, she still didn't take -- spend much time -- in fact, she spent no time with those of us in the press travelling with her despite some attempts to ask her some questions. But she will for the first time tomorrow have some Q&A with voters. She is going to with John McCain hold a town hall in the state of Michigan -- Kiran.
CHETRY: All right, Dana Bash for us from Golden, Colorado this morning. Thank you.
O.J. under fire. (BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: We were just robbed at gunpoint by O.J. Simpson.
(END VIDEO CLIP)
CHETRY: Day two in Las Vegas. The explosive evidence that could put the juice behind bars for life. You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
CHETRY: Welcome back to the "Most News in the Morning." It is 13 minutes past 8:00 here on the East Coast. Rob Marciano in Atlanta at the CNN weather center. Just back from Galveston where he had a chance to see first-hand the devastation from Ike.
(WEATHER REPORT)
ROBERTS: More drama this morning in the O.J. Simpson robbery/kidnapping trial. One of the alleged victims in the case could resume his testimony today after complaining of chest pains on the stand yesterday.
Our Ted Rowlands is following the developments live for us from Las Vegas this morning.
And Ted, right off the bat, prosecutors brought up the Goldman Family. Is that expected to be a theme at this trial?
TED ROWLANDS, CNN GENERAL ASSIGNMENT CORRESPONDENT: Absolutely, John. The prosecution is able to bring up the civil judgment against O.J. Simpson, and this is going to be their strategy throughout this case rather than have one of these memorabilia dealers be the victims here, their strategy, tell the jury that the Goldman Family is really the victim here because rightfully, according to the prosecution, all of these items that were stolen belong to them.
That will be a theme we'll see throughout this entire estimated three-week trial. Meanwhile, day one of the trial started with high drama.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: You OK?
UNIDENTIFIED FEMALE: You OK?
ROWLANDS (voice-over): With his hand on his chest, memorabilia dealer Bruce Fromong, the first witness in the O.J. Simpson trial had to stop testifying to receive medical attention.
UNIDENTIFIED FEMALE: Is the sergeant in here?
UNIDENTIFIED MALE: (INAUDIBLE). UNIDENTIFIED FEMALE: OK. Go ahead and take the jury, please, Arthur.
ROWLANDS: The day started with prosecutors laying out their case against O.J. Simpson who sat shaking his head at times as jurors were told the famous athlete was at the center of an armed robbery.
CHRIS OWENS, DEPUTY DISTRICT ATTORNEY: The true face of James Orenthal Simpson, not necessarily the one he tries to put out to the world.
ROWLANDS: Using surveillance video, recorded audio and 911 calls, prosecutors are painting Simpson as the ring leader of last September's alleged robbery at the Palace Station Hotel just off the Las Vegas Strip.
UNIDENTIFIED MALE: We were just robbed at gunpoint by O.J. Simpson. Can you send the police here, please?
UNIDENTIFIED FEMALE: Where are you?
ROWLANDS: Simpson and co-defendant Clarence Stewart are accused of stealing sports memorabilia. Simpson's attorney Yale Galanter told jurors his client was simply taking back personal items that were stolen from him years ago.
VOICE OF YALE GALANTER, ATTORNEY FOR O.J. SIMPSON: This isn't commercial assets or commercially viable property. The only person on the planet that cares about this property is this man. Right here.
ROWLANDS: The jury is made up of nine women and three men, none of the jurors are African-American.
(END VIDEOTAPE)
ROWLANDS: And Bruce Fromong, that memorabilia dealer who had chest pains on the stand had to leave the courthouse, was not able to finish his testimony. But according to his wife, Lynette, he is feeling much better and is expected to be back on the stand when court resumes here later this morning -- John.
ROBERTS: Ted, let me come back to this as reference to the Goldman Family. Is there any evidence that these memorabilia dealers were going to sell these items on behalf of the Goldman Family?
ROWLANDS: No, but there's -- basically, over the years has been a shell game going on, according to prosecutors, with assets belonging to O.J. Simpson. They alleged that they've been hiding stuff from the Goldman Family so they didn't have to turn them over after the civil judgment against Simpson. It is a re-occurring theme. And the bottom line here is, if you're a juror, you're going to think of victim as the Goldman Family is a lot easier to feel bad for than some of these characters that are going to be brought in. And there are some colorful ones.
But in the end, the prosecutors' strategy here is -- and rightfully so that the Goldman Family has this judgment against Simpson. If these things are worth anything, they're the Goldman's, not O.J. Simpson's, not anybody else, not some memorabilia dealer but the Goldman Family. They hit it on. They hit that right off the bat and we expect that to be a theme throughout this entire trial.
ROBERTS: Well, one could logically assume, though, that they might be easier to get back if they were in O.J. Simpson's possession than in the possession of these memorabilia dealers. We'll see where that argument goes, yes?
ROWLANDS: Yes.
ROBERTS: All right. Ted Rowlands --
ROWLANDS: Absolutely.
ROBERTS: Go ahead. Go ahead. Finish this up.
ROWLANDS: On the side note -- The Goldmans, on the side note, have already filed paperwork in California to get those items back.
ROBERTS: There you go. All right. It is going to go around and around. Ted Rowlands for us this morning live from Las Vegas. Ted, thanks very much.
Coming up on 19 minutes after the hour.
CHETRY: Inheriting a money problem. Senators John McCain and Joe Biden push their plans to save the economy. Live on the "Most Politics in the Morning."
(COMMERCIAL BREAK)
CHETRY: Welcome back to AMERICAN MORNING.
Wall Street waking up this morning with quite a hangover. Dow futures still in the red right now trying to recover from its 104- point nosedive yesterday, that's the worst since the days after 9/11. Couple that with the current housing and loan crisis, and it is no surprise that the economy remains issue number one for voters.
Both candidates are commenting on the economic news. Here's a little bit of what John McCain, senator from Arizona and GOP presidential candidate, said yesterday.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Our economy, I think, still, the fundamentals of our economy are strong but these are very, very difficult time.
(END VIDEO CLIP)
CHETRY: And Senator John McCain joins us now. Thanks so much for being with us this morning, senator. You know, your opponent Barack Obama seizing on the comments that you made yesterday. And so I want to ask you this morning, what did you mean when you said the fundamentals of the economy are strong?
MCCAIN: Well, what I obviously was saying, and I believe, is the American workers, the most productive, the most innovative, they're the fundamental of our economy and the strength of it and the reason why we will rebound. We will come back from this crisis.
But right now, we are the victim of greed, excess and corruption in Wall Street which is hurting them very, very badly. And unfortunately it will in the future. But I believe in the American worker and I believe the American workers, the fundamental strength and future of America.
CHETRY: You did say that greed on Wall Street was behind this situation suggesting there should be more oversight. Throughout your record, though, you've really been somebody who pushes deregulation. Are you changing your position on that?
MCCAIN: Of course not. Ask any American citizen who's been the victim of a bureaucrat or bureaucracy. I said that two years ago, that the Fannie and Freddie thing was a very serious problem and we had to work on it. And I have always opposed greed of Wall Street, and I know how we can fix this.
We have to assure every American that their deposit in a bank is safe. We have to have a 9/11 commission, and we have to fix this alphabet soup of regulatory agencies that's left over from the 1930s. We can come back from this. This is a very tough crisis. And we are the victim of a violation of the social contract between capitalism and the American citizen.
CHETRY: If you make it into the White House and you're taking a look at this, it is now in your lap. What do you propose for smart regulation to make sure that businesses can still thrive but at the same time what we saw with the subprime mortgage crisis doesn't happen again?
MCCAIN: Well, first of all, we have these regulatory agencies, some of them who were asleep at the switch for the last couple of years, or a few years, and they were designed for the 1930s. Now we have an instantaneous global financial situation and those agencies have to be consolidated and they have to be given more strength where necessary. And we have to figure out exactly how it is that we can understand a global economy where what happens in the United States of America affects the rest of the world and vice versa.
But these regulatory agencies were fine maybe in the 1930s. Teddy Roosevelt said that unfettered capitalism leads to corruption. We are seeing that now. And the social contract has been broken. It's got to be fixed. And some of that money ought to be given back, by the way.
CHETRY: I want to ask you about this, though, when it comes to tax policy. The Non-Partisan Tax Policy Center calculated the middle class would actually save significantly more under Barack Obama's tax plan than yours. How will your tax cuts, as it breaks down on income level, benefit the working class and the middle class?
MCCAIN: Well, first of all, Senator Obama wants to raise taxes. I'm not going to raise anybody's taxes. And the fact is that with my health care plan where people receive a $5,000 refundable tax credit, that will have a huge impact.
One of the greatest things that's hindering the progress of many middle-income Americans and lower-income Americans is affordable and available health care. I will do that. Every child in America, every family with a child, will receive a $7,000 refundable tax exemption for their children. And we will continue to make sure that low-income and middle-income Americans have a tax reduction and nobody has their taxes increased.
You raise taxes in tough times and certainly I'm going to restrain spending in government. And Senator Obama has plans for increasing government spending dramatically. I'll restrain spending. That's the reason why our economy is in trouble today.
(CROSSTALK)
CHETRY: Well, most of our independent economists say that Barack Obama is actually cutting taxes for about 90 percent of Americans. Do you agree with that?
MCCAIN: No, because they are taxes -- many Americans are not paying taxes at all. But the point is that keeping taxes low and restraining spending, he wants to increase and has voted for consistently increases in spending.
He has voted for in the Senate raising taxes on people that make as low as $42,000 a year. So he's been all over the map on this. And he is consistently voted to raise taxes, as well as payroll taxes, as well as others, and I'm not for that and that's my record.
CHETRY: I want to ask you about the current financial crisis. We're talking about billion dollar bailouts of the government's funding. We're talking about a growing national debt. Is it realistic to even promise tax cuts right now?
MCCAIN: I think the worst thing you can do is promise tax increases. I think if you increase Americans' taxes right now, no matter who they are, it would be a harmful blow to an already very, very serious situation. And I'm committed to keeping taxes low and restraining spending. It's not taxes that has caused a lot of the problems. It has been out-of-control spending.
I have fought to control spending. I have fought against earmark and pork barrel projects. Senator Obama has asked for $932 million of earmark projects and pork barrel projects for his state. I never asked for one.
(CROSSTALK) CHETRY: Let me just ask you a quick question because you have made this a centerpiece of your campaign, fighting against earmarks, pork barrel spending. But your bottom of the ticket, Sarah Palin, the governor of Alaska, also asked for millions upon millions of dollars in earmarks, including in budgets 2008 and 2009. So, how do you square that?
MCCAIN: Actually, she has cut and vetoed many, many bills, a half a billion dollars worth. She has cut spending. She has return money to the taxpayer. I'm proud of her record as opposing, including the Bridge to Nowhere in Alaska, and she understands very well the necessity of eliminating these earmarks. And she's done a great job of vetoing these bills that have come across her desk as governor. She'll do that in Washington. We'll change things and we'll shake them up.
CHETRY: Senator John McCain, thanks for joining us today. Great talking to you.
MCCAIN: Thanks for having me on.
(END VIDEOTAPE)
ROBERTS: So you just heard from Senator John McCain.
Coming up next, Senator Joe Biden. We're going to ask him about the economy and Obama's plans to deal with the financial turmoil. Plus, we'll take a look at how their economic plans stack up, and ask them the all-important question about earmarks as well.
You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
(BEGIN VIDEOTAPE)
ROBERTS: Joining me now from Washington is the Democratic vice presidential candidate, Senator Joe Biden.
Senator, it's good to see you.
SEN. JOE BIDEN, (D) VICE PRESIDENTIAL CANDIDATE: Hello, John.
ROBERTS: Let me ask you this question. With everything that's going on, on Wall Street and the economy right now, the Dow down 500 points below 11,000. If you were in the administration right now, what would you be doing?
BIDEN: Create jobs, keep people in their homes and increase regulatory oversight of the very people John has refused to regulate. And by creating jobs, we'd spend $600 billion on going -- $60 billion creating new infrastructure jobs, road, highways, bridges, all the things we need, keep people in their houses by allowing them to renegotiate not only their interest on their loans, but their principle on their loans and bankruptcy. Make sure that we're in a position where we start to deal with the debt. Look, John talks -- I just heard John's interview. I find it absolutely fascinating. This is the same guy who wants to continue to spend $10 billion a month on the war in Iraq when the Iraqi have $80 billion stashed away from oil prices. This is the same fellow who's been a part of an administration view he shares, that's going to hand the next president a $400 billion debt, deficit, for that year. This is the same guy who watched and presided over -- not presided over but supports Bush, says the economy's strong and we lost 604,000 jobs this year? Come on.
And the truth of the matter is, is what you heard in the last interview. Every economist points out that we give our tax breaks to the middle class. We're not raising total taxes. What we're doing is letting taxes expire for the very wealthy and putting them -- giving the middle class a fighting chance so they can compete.
ROBERTS: But, senator, at the same time though, as you said, you are raising some taxes. You'll be raising income tax on people who make more than $250,000. You would likely also raise the FICA withholding on high income earners.
BIDEN: No, no, no, not true. We would not raise the FICA withholding. We would reduce the FICA withholding. And, look, every study shows 95 percent of the people are going to get a tax cut.
ROBERTS: No, no, but would you not raise -- are you not thinking about raising the income cap on FICA withholding?
BIDEN: No. Well, yes, but that's for people over $250,000.
ROBERTS: Oh, right, well that's -- sorry, that's what I said.
BIDEN: Well, let's get it straight there, John. We're talking about people over $250,000 who are doing very well, thank you.
ROBERTS: I know. That's what I said. That was my point. That was my point. You're thinking of raising taxes on people who make more than $250,000.
BIDEN: That's right.
ROBERTS: FICA withholding and income tax.
BIDEN: That's right.
ROBERTS: With the economy the way it is right now, is this any time to be raising taxes on anyone?
BIDEN: We are transferring the tax cuts. We're raising the tax on them by letting this tax expire and flipping that tax and giving it to people who need it. So the total tax cut . . .
ROBERTS: And some people would say that's income redistribution.
BIDEN: Well, I don't care what you call It. The middle class is dying. John talks about the strength of the American worker. The American worker's been left out in the cold.
Look what's happened. We accumulated a $1 trillion debt to foreign government. We're paying the highest price we've ever paid for oil because we have no energy policy. We have the highest unemployment rate in five years. We're in a situation where middle class people are struggling. They're hanging on. And what are they doing for them? Zero.
It's been this profligate spending on the rich and Wall Street. No oversight of any consequence. And when you asked John the question a moment ago, what he was asked the question, what new regulation would you put on, he said, well, we'd have a modern regulation for the modern economy. Hey, bottom line is, if you come to the federal government, to the Fed to borrow money, we get to look at your books.
That's my money. It's the taxpayers' money. We get to look at your books, John. We get to have total oversight. You want to borrow the money? You let us see the inside of your books. Up to now, John has totally opposed that. This administration has.
And I'd ask the rhetorical question, who's the captain been at the helm for the last eight years that's driven us into this God-awful economic mess at home and abroad? It's been the Republicans. The Republican economic philosophy that John has adhered to, that's driven us into this hole. And when you have a doctor perform malpractice on you and he's been convicted of it, you usually don't hire him to do the second operation.
ROBERTS: Senator, yesterday a couple of times you dinged Senator McCain pretty hard for saying that the fundamentals of economy were sound. And at about the same time, Mayor Michael Bloomberg, from New York, was talking with Politico and he also suggested that the fundamentals of the economy are sound. Is he wrong as well?
BIDEN: Well, let me -- absolutely. Let me tell you, look, here's how I look at this stuff. I look at this stuff from the neighborhood up.
Take a look at what middle class people are going through. Tell me how it's sound that we have the highest foreclosure rates since the Great Depression. Tell me how it's sound that you had 84,000 people loss their jobs last year. Tell me how it's sound that, in fact, people can't get their kids to college. Their health care costs have gone up 87 percent.
Tell me how it's sound that middle class people have lost $2,000 in income on an annualized basis during this administration. Tell me how it's sound that you have 1 percent of the people in the United States of America making 23.4 percent of all the income in America. That hasn't happened since 1921.
It's sound if you're very wealthy. It's a disaster if you're a hard-working, middle-class family who goes from paycheck to paycheck and worry about paying your mortgage.
ROBERTS: Let me turn to the issue of earmarks, if I could, because we asked Senator McCain about that. He has made that a center piece of his campaign. You've been in the Senate for 36 years. You have only ever disclosed one year of your earmarks, that's $342 million for fiscal year '09. Why did you not disclose the other years?
BIDEN: Because it was all open in my state. I've disclosed all the time. The earmarks that the state of Delaware has gotten every single time, everyone has seen them. And we have no Walter -- you know, we have no Lawrence Welk museums, we have no bridges to nowhere in Delaware. It's all straight up.
And by -- let's put this in perspective. I love John. He says he's going to balance this budget by earmarks. If you eliminate every single earmark in the entire United States government . . .
ROBERTS: Yes, that's 1 percent.
BIDEN: That's $18 billion a year. John, what are you going to do with the other $400 billion in debt, John? John, what are you going to do with the $1 trillion additional tax cut you want to give to the wealthy? I mean, come on, this is time for a little, you know, truth lending here.
ROBERTS: I've got to get to one political question here.
BIDEN: Sure.
ROBERTS: Polls in Minnesota that came out yesterday show an even- up there. It's the most reliably Democratic state in the nation. There's a poll out that shows New York, now, within five points. John McCain is starting to peel off white women. He's also starting to attract some independents.
Senator, what's going on?
BIDEN: What's going on is that the -- his campaign is over. They got I mean their convention's over. They got a big hit. And as every independent news organization points out . . .
ROBERTS: Yes, but you didn't get a similar hit In Colorado.
BIDEN: Well, we did. We went up eight points. And we then it got wiped . . .
ROBERTS: Not now.
BIDEN: No, I got that, John. We went up -- look, we're right back where we were essentially before. And part of the reason . . .
ROBERTS: But not in Minnesota.
BIDEN: Well, but we are in other states. We're up, I think, 12 points in Iowa, for example. Another tossup state we didn't win last time. So you want to go state by state.
The bottom line is this. Look, what every independent news agency has pointed out, the ads that the McCain campaign is running since they hired the very people that went after them in 2000, in the Bush time, what happened? Where they're misrepresenting Barack Obama's record. They're misrepresenting -- for example, John had the audacity to say, when confronted with a question, isn't it true, as the economists say, that 95 percent of the people are going to get their taxes cut? What was his answer? There's a nice honest answer, well, that's true. Under Barack Obama that's true. But we like our plan better.
Instead, they're saying, Barack Obama's going to raise taxes on middle income people. They're saying Barack Obama supported sex education for kindergartners, when all he said was, we are trying to -- we should teach our kids how to avoid predators. It's very misleading and it's about -- in the public, I have confidence in them. They're going to see through this fog and remember, who's been at the helm when this ship of state has run aground. And it's been the philosophy of the Republican Party that John is a disciple of.
(END VIDEOTAPE)
CHETRY: So you've just heard from Senators Joe Biden, as well as John McCain. So how feasible are their plans to turn the economy around? We'll talk about it.
You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
ROBERTS: Forty-two minutes after the hour. We just heard from Senators John McCain and Joe Biden. How do their promises to fix the economy stack up? Joining us now from Washington, Democratic Strategist Hilary Rosen and in New York, Republican strategist Ed Rollins.
Before we get into the individual plans, is the economy now -- would seem to be first and foremost in people's mind.
Hilary, does this mean that lipstick and bridges are now in the round file?
HILARY ROSEN, DEMOCRATIC STRATEGIST: Well, it seems that it is and that's a good thing. I think voters were saying for a long time that they wanted this issue to go back to some of the fundamentals that started the overriding interest in this election in the first place. Historically unprecedented interest in this election. So the economy's going to be issue number one, I think, for the next several weeks.
ROBERTS: And on that point, Ed, when it comes to this meltdown that we're seeing in the markets, not to far down the street from where you're sitting right now, do you have any confidence that either side really knows what it's doing here?
ED ROLLINS, REPUBLICAN STRATEGIST: To be perfectly honest, I didn't hear from either side any solution to the problem that we're facing. You know for Biden to say the middle class is dying, middle class people get up every day and go to work. Since I've been a Republican in 1972, the Democrats always want to take from the rich and give to the poor. Sort of a redistribution. And I think the reality is today, working people want creation of jobs, but you don't create jobs by basically taking away from those who are productive or those that basically create jobs.
ROBERTS: And what about on the Republican side?
ROLLINS: The Republican side, I think, clearly we need to basically just settle down here and see where this thing goes. And what you need to basically -- what both candidates need to say, are you going to bail out these banks? Which I don't think the country wants to do. Are you going to basically take people that made bad decisions and reinforce them by giving them taxpayers money? And I think we should stop spending programs.
Barack Obama not only promises to give more money back to every working person, 94 percent, he promised a whole bunch of -- billions of new programs. I don't think we need new programs. We need to basically get some economic stimulus here, which is not about new programs.
ROBERTS: Hilary, John McCain's plan to cut taxes, cut taxes, cut taxes. Is that the prescription to fix what's happening on Wall Street?
ROSEN: Well, it's not. And he actually said in Kiran's interview that he didn't think taxes were necessarily the driver or the problem here. I think, you know, in some respects, John McCain sounded a little out of touch this morning. Leaders want to be optimistic. And they want people to feel that there's a shot, that there's a morning in America coming again. I think that's what John McCain is going for.
But he fails on this because, you know, six months ago, Barack Obama was talking about the financial crisis on Wall Street and its ramifications, talking about the need to streamline federal agencies, how in essence on Wall Street, creating complicated financial instruments was, you know, proving to be more successful in gaming the system than real economic growth.
And John McCain, yesterday morning, started out saying, everything's fine. By afternoon it was -- he and Sarah Palin were saying, throw the bums out. I think their message is very garbled and I think Ed is wrong. This is not about the poor people. This is about middle class folks who do get up and go to work every day, who are worried that their jobs are at stake because some other folks don't pay attention.
ROBERTS: Let me let Ed get a word in here.
Ed, on that point about throwing the bums out, if John McCain really wants to be seen as the agent of change in an ailing economy, does he literally have to throw President Bush and his policies under the Straight Talk Express? ROLLINS: I think, to a certain extent, he does. But the challenge I throw out here is, you've got a senior member, Joe Biden, did he ever introduce any legislation to basically reform the regulatory entities? He's been in the Senate a long, long time. If Barack Obama's been talking about this for six months, why didn't he throw a bill in there and basically try and start this? Democrats control the Congress. They're the ones that can rewrite the legislation and they should.
ROSEN: Well, actually, as a point of fact, as soon as the Democrats took over Congress within the last 18 months, there has been new financial regulation. It's what gave Henry Paulson the authority to step in and do what he needed to do in the housing markets already. And so, in essence, Democrats have been responsible. It was the six years of Bush in deregulation that got us into this mess. Democrats have better chance of getting us out. And polls show people believe it.
ROBERTS: This is a very important issue. We're going to keep watching it closely. Obviously, all eyes are going to be on the market today. We'll get you back to talk more about this.
Hilary Rosen, Ed Rollins, always good to see you. Thanks so much.
ROLLINS: Thank you.
ROSEN: Thank you.
CHETRY: Crisis on Wall Street. A look at what the financial turmoil means for your money and your investments.
You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
CHETRY: Got some breaking news from the business world. Ali Velshi "Minding Your Business" on the floor of the New York Stock Exchange.
What do you have for us, Ali?
VELSHI: Kiran, the Federal Reserve's injecting $50 billion into the economy in an emergency move this morning. $50 billion more than they otherwise would. That means that they buy back their bonds from dealers, investment houses, and they give them the money to keep the machinery of the economy flowing as it were.
Now this comes hours before the Federal Reserve's normal meeting, which will take place this afternoon, and their announcement that comes at 2:15. Until now we've had no expectation of what the Fed might do. But there are some people thinking that the Federal Reserve might cut rates. Right now the interest rate that the Federal Reserve controls stands at 2 percent.
We also have earnings from Goldman Sachs down 70 percent from a year earlier, but it was not a loss. They, in fact, remain profitable.
And we are keeping our eye on AIG. The company that has to come up with $75 billion in order to keep running. It had its credit rating downgraded and it is going to have some trouble raising that money. There are fears that a failure to do so could lead to a bankruptcy of AIG, which is one of the world's biggest insurer. The United States' biggest insurer. And that bankruptcy would dwarf Lehman Brothers.
Now I should tell people out there, when you're thinking about this, your insurance policies are not at risk. There are some insurance policies that might be at risk if the credit of a major company like that is in danger, but they are typically the major commercial policies. Your investments in an investment house are not at risk. They are insured up to $500,000 if they are in stocks or equities or CDs and things like that. If they are in cash, they're insured up to $100,000. And your deposits at banks, as long as you don't have more than $100,000 in individual accounts, are also not at risk.
What is at risk are your stock investments in these companies. And right now we have AIG, before the market opens, down another 30 percent. We have Goldman Sachs down about 6.5 percent. And Washington Mutual, another company whose debt has been downgraded to junk status, down 10 percent. So we are looking at a rough open again on the New York Stock Exchange. For a little while it looked OK, partially because oil prices are down again. Down to almost $90 a barrel. But the bottom line is, this market is still fearful and we are still worried about how this market's going to open in 40 minutes -- Kiran.
CHETRY: Ali, when you use the phrase "pumped $50 billion into the markets," does that money need to get paid back? Is the federal government going to get that money back?
VELSHI: It's a trade. The federal government has bonds. They buy those bonds back from the people who have bought the bonds. Those people get cash in exchange. So there's no cost to taxpayers in that transaction. All it means is that there is more money in the system for banks that have to meet obligations. Right now the cash is tight. It's the same thing at the government level, at the banking level, as it is for individual Americans. Cash is tight. Basically someone has said, we'll take collateral and we'll give you cash to keep the engine of the banking system going.
CHETRY: All right. Thanks for breaking it down for us, Ali, from the New York Stock Exchange this morning.
O.J. under fire.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: We were just robbed at gunpoint by O.J. Simpson.
(END VIDEO CLIP) CHETRY: Day two in Las Vegas. The explosive evidence that could put the juice behind bars for fife. You're watching the most news in the morning.
(COMMERCIAL BREAK)
ROBERTS: Five minutes now to the top of the hour. Welcome back to the most news in the morning.
This morning we continue our special CNN series taking a look at broken schools across the country and ways to fix the system. This morning, drop-out high. A school where almost 60 percent of kids will never graduate. Most of that due to economic factors. Chris Lawrence is taking a look at the numbers.
And, Chris, you're there in Los Angeles and people might be asking, how can something like this happen in a city that is as wealthy as Los Angeles is.
CHRIS LAWRENCE, CNN CORRESPONDENT: If only there was just one reason, John. There was a shooting nearby on the first day of school and the school had to be lock down. Some students are the children of immigrant parents who work in other countries, so they're here without their parents. There's just no easy fix.
(BEGIN VIDEOTAPE)
LAWRENCE, (voice over): It's the first week of their freshman year. And some of these girls already have one foot out the door.
ANA ROSA GUTIERREZ, FRESHMAN: They don't like school. I don't know, you just sit down, you just hear the teacher. It's boring.
LAWRENCE: Ana Rosa Gutierrez knows a lot of kids who quit.
GUTIERREZ: My brother dropped out because we needed money. He got a job.
LAWRENCE: How old was he?
GUTIERREZ: I think 16.
LAWRENCE: At Jefferson High School, 58 percent of students drop out.
UNIDENTIFIED MALE: Luis Romero (ph). Luis is absent.
LAWRENCE: The families are, for the most part, poor. About half the students are learning English as a second language. Nearly 75 percent of Jefferson's parents did not graduate high school themselves. But the school is trying to hold them accountable.
DAVID BREWER, L.A. SCHOOL SUPERINTENDENT: If their students are absent a lot, then the city attorney goes to the parents and says, listen, if you don't get your kids in school, then you could go to jail. JUAN FLECHA, JEFFERSON HIGH SCHOOL PRINCIPAL: Why were you late?
UNIDENTIFIED MALE: Huh?
JUAN FLECHA, JEFFERSON HIGH SCHOOL PRINCIPAL: Why were you late?
LAWRENCE: Jefferson's principal says students have to adopt a military mindset just to get to school and devise strategic routes through gang territories.
FLECHA: There are certain blocks where they know that it's just not safe to go through there and have to establish a very elaborate pathway from home to school.
LAWRENCE: Three years ago, the school exploded in bloody riots between blacks and Latinos. Since then, Jefferson has beefed up security and started keeping students with the same small group of teachers to form stronger bonds over the four years. It helped seniors like Ashley Romero, who raised her grades, joined the debate team and got elected class president all while being raised by a single mother without much money.
ASHLEY ROMERO, SENIOR: It never, ever crossed my mind to drop out because I always had the mentality to help my mom out.
LAWRENCE: The school is hiring 10 new teachers and a psychiatric social worker. But is it enough to encourage freshmen like Ana Rosa to stay through senior year?
GUTIERREZ: Hopefully. Hopefully I will. I don't know.
LAWRENCE: But you're not sure?
GUTIERREZ: I'm not sure.
(END VIDEOTAPE)
LAWRENCE: Yes, the school is trying to keep students like that by now allowing them to choose their own focus -- business, creative arts, teacher preparation. And there are some signs of progress. A few years ago, about half the seniors passed the graduation exam. Last year, nearly three out of four did -- John.
ROBERTS: That's a pretty good improvement. Tell you anything to try to stem that tide of drop-outs there. Sixty percent. Unbelievable. Chris Lawrence for us this morning.
Chris, thanks so much for that.
CHETRY: And that's going to do it for us today. Thanks so much for joining us on this AMERICAN MORNING.
ROBERTS: We're going to take a short break.
And coming up next, "CNN NEWSROOM" with Heidi Collins.
We'll see you again tomorrow.
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