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American Morning
Republicans Take the Brunt on Economic Crisis; Senate Debates $700 Billion Rescue Plan; Deregulating Health Care: Fact or Fiction?; Interview With Senator Hillary Clinton
Aired September 23, 2008 - 07:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KIRAN CHETRY, CNN ANCHOR: Well, the haggling over President Bush's enormous financial rescue plan is proving that time really is money. The markets taking another triple-digit hit, down some 370 points yesterday as investors wait for action on this bailout. So is action needed immediately to avoid an even bigger crisis?
Joining me from Capitol Hill this morning is Senator Christopher Dodd, the chairman of the Senate Banking Committee. He's also offering a revised plan of his own.
Welcome, senator. Thanks for being with us this morning.
SEN. CHRIS DODD (D), CHMN., SENATE BANKING CMTE.: Thank you very much.
CHETRY: You know, talk about waking a sleeping giant, we have almost 2,000 blog posts on CNNMoney.com about this bailout alone. Many people are outraged about it. They feel the government is spending $700 billion or more to reward bad behavior. What can you do to assure people that this is the right thing?
DODD: Well, I'm not sure it is at this point. That's why we're having this hearing this morning. We'll have Secretary Paulson and Ben Bernanke, the chairman of the Federal Reserve, before the Banking Committee to explain this plan, why it's necessary, and where we go from here. They basically have been asked for a blank check of $700 billion for the next several years here to buy a lot of bad instruments out there in these institutions. And I have a lot of reservations about it. We're trying to put some safeguards in for taxpayers, homeowners, as well. Obviously, a greater accountability provisions.
I'm angry as well. This didn't have to happen. This was not a natural disaster. As I've said, it was a preventable, avoidable situation. But we are where we are and obviously, our economy is teetering.
We've been warned that we're very fragile. There could be a complete collapse in all of this. So we need to get it straightened out or it gets worse. And pension funds, retirement accounts, 401(k)s, jobs -- all of this could be in worse shape if we don't act.
CHETRY: Right. So --
DODD: That's where we are today. CHETRY: I know you're -- you have a revised version yourself.
DODD: Right.
CHETRY: And we'll get into some of what you're talking about. But do you believe that in general a bailout needs to happen?
DODD: Something needs to be done here. I don't know if it's at this magnitude or even if what we're talking about inside, that is the specifics of this, make the most sense. But clearly, something needs to be done. We can't lurch from weekend to weekend with one failed institution after another watching our economy decline, the stock market collapse, the price of oil continue to rise. It isn't just our own country, this has global implications for us as well.
CHETRY: Right. Let's talk --
DODD: So some steps need to be taken.
CHETRY: All right. Let's look at some of the things that you want added or in some cases taken out. Under yours, you feel that there should be some foreclosure assistance. That if Wall Street is getting some help, Main Street should be getting some help, too, especially for those struggling homeowners.
You also want limits on executive compensation. Meaning, you don't want these CEOs to be getting millions of dollars in packages for a failed company.
And thirdly, you talk about an oversight board over the treasury.
DODD: Right.
CHETRY: Why are these so important to include and what if they end up costing more?
DODD: Well, let me tell you why. First of all, we have almost 10,000 foreclosures occurring every day. For the last 18 months on a daily basis, I've had 65 hearings since January of 2007 begging the administration of this to do something about the foreclosure problem. And they admitted today that if you don't deal with 10,000 foreclosures a day, that's the bulk of these bad debts that are out there. So you need to do something about that to stop the hemorrhaging. That's number one.
Number two, I'm not going to give a check for $700 billion for 41 days to this secretary or any secretary without safeguards built in, accountability, transparency, oversight. That's just not going to happen.
CHETRY: Right.
DODD: And thirdly, of course, taxpayers deserve to be first in line in all of this. I'm going to write this so at the end of the day watch some handful of chief executives walk away with multimillion dollar contracts. You'll have people storming this building if we don't understand that people are fed up with that kind of behavior. So that's going to be a part of this as well.
CHETRY: You know, you yourself just said this is not a natural disaster.
DODD: Right.
CHETRY: And a lot of people have been asking why didn't Congress see this coming. In fact, this is a quote from Henry Paulson, the treasury secretary, back in July. This was during the time of the Fannie and Freddie bailout. People thought maybe that was the beginning and the end of this.
He writes, "Remember, our economy has got very strong long-term fundamentals, solid fundamentals. And, you know, your policy makers are (ph) here, regulators, were being very vigilant."
How can the argument be made that there was vigilance when we're seeing the bottom fall out of the market?
DODD: That's a great question. Back in 2005, Mike Oxley, the Republican chairman of the Finance Committee in the House, along with Barney Frank and Paul Sarbanes, who was the previous chairman of the Banking Committee, the Democrat tried to do just that. The administration opposed the bill, and it was defeated on a party line vote here in the Senate.
So I know the history very, very well. And when you had cops on the beat not doing their job, basically an eight year coffee break, by and large, where you had legislation on the books and regulations not being enforced, where you had the regulators sitting back as these loans were being made with no documentation, luring people into subprime mortgages, predatory lenders taking advantage of the situation, that's how these all unfolded.
CHETRY: Right. And I just want --
DODD: It's not a mystery, however.
CHETRY: And I just want to ask you quickly before we leave, because we're running out of time. But I do want to ask you, is there anything in this bill, safeguards, that you guys are aiming for to make sure this doesn't happen again? All the things you listed off the predatory loans, everything that was taking place, is there any room for regulation or more oversight in this bill?
DODD: Probably not in this bill because we're trying to act quickly and that's part of the problem here. But as I've said over and over again, I'm prepared to act quickly but I'm not going to act irresponsibly in this. It needs to be done correctly as well. If that takes a little longer, so be it.
CHETRY: OK.
DODD: We're going to have a new election in 41 days and a new secretary probably in a matter of five or six weeks, and you and I can't even begin to guess who that might be. Turning over a check of this magnitude not only to this secretary but his successor without building in those safeguards, I think would be the height of responsibility.
CHETRY: Oh, we have to leave it there. I want to thank you for joining us this morning.
Senator Chris Dodd, thanks.
DODD: Thank you very much.
ROBERTS: One on one with Hillary Clinton. The former candidate live on the state of race, the economy and whether she should have been Barack Obama's running mate.
You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
ROBERTS: Ten and a half minutes now after the hour, and time to fast forward to stories that will be making news later on today.
Evaluating the government's response to Hurricanes Gustav and Ike. The Senate Committee on Homeland Security is going to look into all of that. At 10:00 this morning, the mayors of Galveston and Houston will speak.
President Bush addresses the United Nations General Assembly at 10:30 Eastern this morning. After that, Mr. Bush will spend the rest of the day in private meetings, including get togethers with U.N. Secretary General Ban Ki-moon and the coalition from Iraq.
Later on today, Iran's president, Mahmoud Ahmadinejad, takes the stage at the U.N. That will be at 5:30 this afternoon. Several anti-Iran rallies are planned ahead of his speech. As you remember, Sarah Palin was scheduled to attend one but was uninvited after Hillary Clinton cancelled her appearance.
And a trucker's advocacy group plans to hold a convoy on Capitol Hill later on this morning. Truckers and Citizens United wants Congress and President Bush to pass legislation to lower diesel prices. The group says the protest could tie up D.C. traffic for several hours. So if you're headed to the Capitol today, be aware of that. That's what we're following for you this morning -- Kiran.
CHETRY: John, thanks.
You know, we're going to check in with the truth squad right now. Each day we research statements and ads that come from both campaigns and we do our best to sort fact from fiction.
Alina Cho has been looking at all of this for us. Today, it's about health care and, of course, issue number one, the economy.
ALINA CHO, CNN CORRESPONDENT: Two very, very important issues. Kiran, good morning. Good morning, everybody. And we start this morning with a hot topic right now, deregulation. Hot, of course, because of what's been happening on Wall Street. But recently, Barack Obama has been tying it to John McCain's position on health care too. Here's Obama Sunday in Charlotte, North Carolina.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Now this deregulator wants to turn his attention to health care. John McCain says he wants to do to the health care system what Washington has done to the banking system. The radical idea that government has no role to play in protecting ordinary Americans has wreaked havoc on our economy.
(END VIDEO CLIP)
CHO: So, is it true? Well, it is true that McCain has frequently supported deregulation. Many people know that. And some aspects of that deregulation are widely blamed for the current problems on Wall Street today.
And during the same speech on Sunday, Obama quoted from something McCain wrote for the insurance magazine "Contingencies." McCain said, "Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking would provide more choices of innovative products less burdened by the worst excesses of state-based regulation."
Now, if you listen to that it sounds as if Obama might be right on this one. But, if you look at it deeper, you find what McCain is calling for. State deregulation is only part of the deregulation that reshaped the banking industry. McCain has not proposed reshaping the health care industry in all the same ways as banking.
And while a frequent fan of deregulation, McCain has called for a high level oversight board to deal with the problems on Wall Street. So, implying as Obama did that McCain believes the government has no role to play in protecting ordinary Americans, is at best a reach.
So the verdict from the truth squad on this one, you guessed it, oh, my goodness, sound effects.
(LAUGHTER)
CHETRY: Where did you get that one?
CHO: Misleading. Can't take credit for that. And, of course, as always we are checking up on both sides.
(CROSSTALK)
CHETRY: Sounds like the sound before coyote falls off the ledge.
CHO: The sound still reeling on that one. Next hour, guys, we're going to take a closer look at McCain's claims that Obama has no plan to deal with the economy. Of course, that's a common criticism leveled against Obama that he's short on details. But on the economy, is it true? We're going to check it out. We'll bring you the answer in the next hour.
ROBERTS: Yes. We'll also be talking with his economic adviser, too, coming up at the end of the hour.
CHO: I'll look forward to that.
ROBERTS: So we'll look at that and question him as well.
CHETRY: And what's the next -- what's the next least truthful after misleading?
CHO: False.
CHETRY: False? I hate to hear what the false sound effect is if that one was misleading.
CHO: Yes. We'll wait and see.
CHETRY: Thanks, Alina.
ROBERTS: World leaders, heads of state and rock stars.
(BEGIN VIDEO CLIP)
ZAIN VERJEE, STATE DEPARTMENT CORRESPONDENT: Whether it's a superpower or a tiny nation, everyone comes to the United Nations with an agenda and to get their 15 minutes in the spotlight.
(END VIDEO CLIP)
ROBERTS: President Bush and Iran's leader in the same town sharing the same stage. Zain Verjee joins us live on the big showdown at the United Nations.
You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
ROBERTS: Well, right now, Congress is haggling over a historic Wall Street bailout. What form will the final deal take and will it be enough to both calm the markets and prevent a future crisis?
Joining us now to talk more about this for the first time since the primary season ended is New York Senator Hillary Clinton.
Senator, it's great to see you. Thanks for being with us this morning.
SEN. HILLARY CLINTON (D), NEW YORK: Thanks, John. It's great to talk to you.
ROBERTS: So President Bush is urging swift action on this measure. He says, "The whole world is watching to see if we can act quickly to shore up our markets." Do you trust him to do the right thing here because some members of Congress are likening this to the run up to the Iraq war? The administration is saying trust us here.
CLINTON: Well, John, I think we could have done better had we started acting nearly two years ago when I and others said that this crisis was looming on the horizon and we had to do something to help people stay in their homes and begin to deal with these mortgages that, unfortunately, were, you know, not in the best interest of either homeowners or our economy.
Well, we are where we are now and we do have to take action. But I think it's important that Congress is driving a hard bargain with the administration and not just saying OK, we'll do whatever you want because we want to make sure that taxpayers have some control over the purse strings and they're not just left holding the bag of this huge bailout.
So, I think we are going to have to come to agreement and there's a consensus to that, but we also want to inject some reality-based checks and balances and not just give the administration a blank check.
ROBERTS: Many of your fellow Democrats are insisting that this bailout include more oversight on the Treasury Department, as well as on the financial services market, limits on executive compensation. You agree with those ideas. But do they need to be in this immediate bailout?
CLINTON: Well, I do agree with those ideas. And I'm putting forth proposals again like I did during the campaign about what I think should be done with these challenges. And the reason I agree with that is that we can't just go back to business as usual and hand over $700 billion of the money that people send into their government.
ROBERTS: Right. But do they need to be in this immediate rescue?
CLINTON: Well --
ROBERTS: Or could they be left for the future?
CLINTON: Well, what I have said is I'd like to make sure we have oversight and accountability in this immediate package. I do think we have to have conflicts of interest provisions because a lot of the people who are going to be working with the treasury come out of the very same banks that are going to be asking for money for the bailout.
We also have got to give authority to rewrite these mortgages so that we go to the root of the problem. Now some of the big issues like new regulations, which we have to have a new framework for the 21st century, the creation of a special entity that I've recommended, the Home Owners' Loan Corporation, similar to what we did during the Great Depression, we can't get that done in the next week or two. But we need a commitment from treasury and the administration that we will get back together as soon as this election is over and try to put in place the building blocks for what I think is a more comprehensive solution.
ROBERTS: Let me ask you about that Home Owners' Loan Corporation, as you said, similar to something that happened during the Depression which helped a lot of people out. You also would like a moratorium on foreclosures. You want to see a freeze on interest rates as well.
Critics have said, though, that might encourage some people to default on their current mortgages, people who might not have (ph). And it also raises the issue, how do you decide who gets bailed out and who doesn't?
CLINTON: Well, the fact is, we're going to have to do that. That's what the treasury is going to have to begin to unravel. We have another government agency called the FDIC. They're doing that right now with the defaulting mortgage assets from a failed bank called IndyMac.
There's no getting away from the fact we have to go after the root cause here and try to rewrite these mortgages. And I find it fascinating that when I was calling for freezing interest rates and stopping home foreclosures so that we could get a breather a year ago and try to figure out how to manage this impending crisis, I was told no, that would be bailing out irresponsible homeowners. So we turn around, we're going to bail out irresponsible lenders. Well, we've got to do both...
ROBERTS: Right.
CLINTON: ... because we've got this market crisis and we got to restore confidence.
ROBERTS: On that point, if your plan had been followed and the Treasury Department had gone in and bailed out these individual homeowners a year and a half, two years ago, could we have avoided this whole crisis? Would it have been cheaper?
CLINTON: It would have -- well, look, you know, hindsight is 20/20. I think we could have avoided the worse of it. We would have begun reining in the lenders Even Secretary Paulson recommended about a year ago some toughening of regulations. So the administration was recognizing that Wall Street and all of the lending institutions, you know, were on slippery ground and were frankly out of control in many ways.
So, yes, I think we could have managed this in a more sensible way that would have not cost as much and certainly would not have thrown our entire global marketplace into such a panic where people won't lend to each other, where trust has been destroyed, where nobody knows how much value any of these assets have in their portfolios or anybody else's.
ROBERTS: Senator, everybody is pointing fingers in a number of different directions. I talked with Speaker Pelosi the other day. She said the Democrats bear absolutely no responsibility in this.
But if you go back to 1999, the Gramm,-Leach-Bliley Act, that a lot of people say started this whole ball rolling. In the House, 138 Democrats voted for that. One Democrat voted for it in the Senator. Your husband signed it. I mean, do Democrats, do they get off scott free here with all this?
CLINTON: Well, I think that everybody has to take responsibility, but the great bulk of the responsibility rests with this administration, and with the ideology that the Republicans have been promoting since they took over the Congress in 1995. You know, they never met a regulation that they thought was worth implementing. They really believed in almost faith-based way in the power of the marketplace.
And we have learned our lesson repeatedly in our country. It's human nature. If you take the rules away or if you have weak rules, then people are going to take advantage...
ROBERTS: Right.
CLINTON: ... and that's what happens in markets.
ROBERTS: But again -- again, many Democrats voted to take those rules away. Your husband could have vetoed the bill even though it might have been overridden. You could have done it symbolically. Instead, he chose to sign it.
CLINTON: Well, but there were reasons. There were positive reasons. What I believe the failure in '99 was, is that once you remove some of those barriers between banks and investment banks and the kind of business that could be done by banks, that there needed to be a new regulatory framework. But there was no appetite in the Republican Congress or with a Republican president to take the second step.
ROBERTS: Right.
CLINTON: That's why I am advocating right now that if we put money into the market, that's only the beginning. And it needs to be done the right way and we have to hold everybody accountable...
ROBERTS: Right.
CLINTON: ... unlike what's been done for the last eight years.
ROBERTS: Senator --
CLINTON: And then we have to continue to do the building blocks that are necessary so this doesn't happen again.
ROBERTS: Time is growing short here and a lot of people want me to ask you a little bit of a political question here -- an absolutely political question.
Many people are looking at the closeness of this race. They are wondering what would have happened, where would this race be if Barack Obama had chosen you as his running mate. Your husband yesterday on "The View" said, "She would have been the best politically, in terms of choice, at least in the short term because of her enormous support of the country. Would Senator Obama be further ahead if he had chosen you as his running mate? And did you really want the job?
CLINTON: Well, I have always said that it was Senator Obama's choice, and I think his choice was a good one. Joe Biden is a friend of mine. He is a champion of working people. He is a great strategist about what's going on around the world. And our team is just such better, so much better prepared to take on the challenges that we face now than the McCain/Palin team.
ROBERTS: Did you want the job?
CLINTON: Well, it's not something you want or don't want. It's up to the presidential candidates to make a choice. And I've always said that I was going to support this ticket and I was certainly going to support the choice that Senator Obama made.
ROBERTS: So you would have taken --
CLINTON: And I think it was a good choice.
ROBERTS: So you would have taken it if offered?
CLINTON: You know, I'm not going to hypothesize about something that didn't happen, John. What I want to do is make sure that voters understand the stark differences between our candidates and the Republican candidates. And if you like what's gone on in the last eight years and if you're happy about this Wall Street meltdown, and having to put $700 billion into trying to rescue these banks so that we can keep lending and keep the economy afloat, then I think you have a ticket on the Republican side. But I don't believe most Americans want to buy into that.
ROBERTS: Senator, we have to go. Other people are waiting to talk with you. But thanks very much. It's great to catch up with you. It's been a long time.
CLINTON: Thanks, John. Good to talk to you.
ROBERTS: Appreciate it.
Twenty-seven minutes now after the hour.
World leaders, heads of state and rock stars.
(BEGIN VIDEO CLIP)
ZAIN VERJEE, STATE DEPARTMENT CORRESPONDENT: Whether it's a superpower or a tiny nation, everyone comes to the United Nations with an agenda and to get their 15 minutes in the spotlight.
(END VIDEO CLIP)
ROBERTS: President Bush and Iran's leader in the same town sharing the same stage. Zain Verjee joins us live on the big showdown at the United Nations.
You're watching the "Most News in the Morning." (COMMERCIAL BREAK)
ROBERTS: Thirty minutes past the hour and here are this morning's top stories. Out of gas in Atlanta. A fuel shortage causing major problems has frustrated drivers wait an hour or longer to fill up. And the lines at gasoline stations blocked roads and created traffic jams. In some places police had to break up fights between frustrated drivers.
Stock markets around the world falling sharply this morning following a big drop here in the U.S.. Yesterday, Hong Kong's main index fell almost 4 percent. Markets across Europe are trading lower so far today. U.S. stock futures pointing to mixed opening for today's trade.
British Airways stops flights to Pakistan. The airline blames security fears after a huge bomb killed 53 people at the Marriott Hotel in Islamabad over the weekend. The airline had flown at least three flights a week between London and Islamabad.
KIRAN CHETRY, CNN ANCHOR: Well, the debate is still raging on Capitol Hill over this proposed $700 billion bailout of banks and it's not just democrats voicing concerns over the President's plan. In fact a growing chorus of Republicans also saying this might not be the right idea. Leading Republican senator who calls the proposal misguided and completely unacceptable is Republican Senator Jim Demint and he joins me this morning from Greenville, South Carolina. Senator Demint, thanks for being with us.
SEN. JIM DEMINT (R), SOUTH CAROLINA: Good morning, Kiran.
CHETRY: I want to ask you, first of all, why are you opposed to this bill? To this proposed bailout?
DEMINT: Well, the government has done about everything it can to bring this economy down and now it's telling us that it can fix it with trillion dollars more in debt. If you look at what we've done over the last ten years, cut off our own energy development, create the highest corporate tax rate in the world or one of them. And laws like Sarbanes-Oxley that chase capital offshore and then this easy credit, government guaranteed mortgages that we have spread all over the country over the last 10, 15 years, now everyone is wondering what happened.
The problem with this proposal is it doesn't identify the cause of the problem. And if you don't understand what's really causing the problem, you can't fix it. They are just throwing money at this without the guarantees that will get government out of this. My concern, Kiran -
CHETRY: Well, Senator, many of them are saying that they do know what the problem is. It was deregulation that allowed for these investment houses to do what they did, to repackage and re-sell. And it was the leniency within the subprime as well that allowed so many people to get these loans that they ended up not being able to afford. DEMINT: That is exactly the wrong reason and that's one of the reasons I'm so opposed to this. They are saying this is failure of the free markets of capitalism when, in fact, this is a failure because government injected itself into the free market, created this easy credit, these guaranteed loans, and these loans are what have turned into the bad paper that are bringing all these financial institutions down.
The deregulated financial institutions are the ones that are still standing, the ones that took the openings that the government provide. And for us to come in now and say this is a problem with freedom, with free markets and the government is going to fix it is completely opposite from what has actually happened. Unless we are willing to face up to the fact that this is a problem with the federal government, basically undermining the free enterprise system. I'm not going to support a proposal that socializes our credit system in America.
CHETRY: So you're basically still saying that deregulation is the way to go?
DEMINT: Well, deregulation will let the free market work but only if the federal government gets out of the business of creating this easy credit, these guaranteed loans, these mandates on banks that they make loans to people they know can't afford them which is really what's been going on for more than ten years in America. We need to back out of this and allow the free markets to work. Once you take the risk out of free enterprise, you have the kind of behavior we've seen on Wall Street. Greed takes over. But if you allow the natural risk that comes from investing, then there's accountability built into the system.
But the government has come in and removed that accountability with taxpayer guaranteed loans and now they are talking about a trillion dollars more money that we're going to throw at this problem and with the debt that we already have as a country, Kiran, I'm afraid the rest of the world is going to lose confidence in the dollar.
CHETRY: Senator, I'm interested to know, though, what is your plan of action then? Most leading economists say that while this is not ideal by any means and this is unfortunate to take a hands off approach would be the worse thing to do. That the markets would really come crashing down. So where do you move forward? What's your proposal?
DEMINT: Well there's no question we have a serious problem. But there's some structural thing we should do now immediately such as lower our corporate tax rate, lower the capital gains rate or eliminate it so we can encourage more investment, more people putting money back into the markets. If you eliminate a section of Sarbanes- Oxley that will create more capital formation. Things that we should have done years ago we need to do quickly.
And if we can do a trillion dollar bailout quickly we can come in and make these structural changes. And if we need to look at what the government needs to do in this case, but we need to move the government back out of a system and let it correct in a way that is more natural than throwing money at it. Now, again, I think we're going to have to go through some difficult times one way or another. But to devalue our dollar and undermine our economy with this huge government bailout without making the necessary structural changes that let the free markets work.
CHETRY: And Senator, are your going to filibuster any possible bailout bill?
DEMINT: Well, we haven't decided what we're going to do. I'm not going to - if the majority of the Senate wants to throw more money at this there's no way I can stop it. But w can force an open and honest debate on exactly what we're doing. Keep in mind that we've already been told this year that $150 billion of rebate checks would fix it. You know, then we were told a blank check to Fannie Mae and Freddie Mac would fix it.
CHETRY: Right.
DEMINT: And now we're being told another trillion dollars would fix it. The fact is we're not getting good information and we can't go ahead with this massive debt for our country unless we know what we're doing. And I believe the government broke this. I don't think the government can fix it. What we need to do is get the government out of it and stop undermining our economy.
CHETRY: All right. We'll have to leave it there. But I thank you for your point of view this morning. Senator Jim Demint. Thanks.
ROBERTS: 36 1/2 minutes now after the hour. Of course, the question of the day and the question of the week and maybe even this year is why are we bailing out Wall Street? Our Ali Velshi is here with some answers. Hey, Ali.
ALI VELSHI, CNN, SENIOR BUSINESS CORRESPONDENT: Well, John, Senator Demint is part of a very, very small but growing minority of people who think the government shouldn't be doing this. I'm going come back and tell you why I think it's important that something gets done just to get us out this mess.
(COMMERCIAL BREAK)
CHETRY: And welcome back to AMERICAN MORNING. You know, this fierce debate continues on Capitol Hill. And as you said, Jim Demint one of very few in Capitol Hill who believes that it should be a completely hands off approach.
VELSHI: And with each moment that this deal is not done you're getting more people taking that view. The government should be hands off. Let me explain to you what we mean by a credit freeze. Credit markets are almost frozen right now. That means banks which typically lend to each other don't do that. that means that companies that need to raise money, companies that employ people can't borrow money. That means home lenders can't resell mortgages that they issue to you. So that they can get more mortgage to issue out to other people. That means that mortgage rates are likely to go up and loans generally, car loans, auto loans, student loans, home loans, they all become harder to get.
Now, I want to explain to you, if you follow that logic that we shouldn't do anything and banks and other companies continue to fail there are 14 million people in America directly employed by the financial services industry and things related. 834,000 people employed in residential construction. 568,000 employed by furniture and furnishings for home. 1.2 million employed by places like Lowe's and Home Depot and building material stores. And about 11 million people employed by the financial sector.
So even if a tiny portion of those people were out of work because the government did nothing, our unemployment rate would shoot up. We go from 600,000 jobs lost to possibly over a million this year and maybe two million by the end of next year. So while it's a remarkable academic theory to suggest that the government shouldn't be involved, that's a debate for later. That is not a debate for now. There's no choice but for something to be done and something to be done soon, right now.
ROBERTS: How quickly does it need to get done?
VELSHI: Well, I've been told that we have about seven days of these credit markets being frozen that we can handle. I mean, there's always some understanding that you can go with the expectation that something is going on. Maybe this isn't the deal. But something has to be done and we probably have a week.
ROBERTS: All right. Ali, thanks for that. You're a wake up call this morning.
'Tis the season for late night political laughs. But critics say "Saturday Night Live" is too one sided this year. We take a look at who is taking the most hits.
CHETRY: And the White House and Congress wrestling as we said over this $700 billion bailout and there's another fight on the card. John McCain and Barack Obama. Both men's chief economic advisors join us with the campaign's plans for pulling the economy out of the ditch.
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ROBERTS: Protesters with Israeli flags yelling stop Iran now outside of the United Nations. Young Jewish protesters showed up by the bus load yesterday. Iranian President Mahmoud Ahmadinejad scheduled to address the United Nations at 5:30 this afternoon. President Bush will also make his final address to the world body at 10:30 this morning. There's some major issues at stake for this general assembly. It is U.N. week here in Manhattan. We love what it does to the traffic. State Department correspondent Zain Verjee here with us now. Good morning, what's on the agenda?
ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Well, John, Governor Sarah Palin is one major thing on the agenda today. She is going to be introducing herself to world leaders and really taking a crash course in foreign policy. She may need one on the United Nations General Assembly. (BEGIN VIDEOTAPE)
VERJEE (voice-over): New York is a beehive for thousands of foreign diplomats. Their grip and grin photo ops good for home audiences.
UNIDENTIFIED FEMALE: Thank you.
VERJEE: The massive security motorcades and grid locked traffic making New Yorkers cranky. Ah, It's United Nations week again.
VERJEE (on-camera): Whether it's the superpower or a tiny nation, everyone comes to the United Nations with an agenda and to get their 15 minutes in the spotlight and make their case to the world.
VERJEE (voice-over): In an age of e-mail and cell phones, world leaders still travel thousands of miles for a face to face reunion with the who's who of diplomats. But they aren't the only rock stars here. Celebrities like Bono come to promote their cause.
BONO, SINGER ACTIVIST: Only an idiot at this point would turn away from Africa as an important and enlightened as well as enlightened self interest.
VERJEE (on-camera): Secretary of State Condoleezza Rice is holding court at the luxurious Waldorf Astoria. All week she greets a steady stream of world leaders. She will hold short meetings behind closed doors. But how much gets done is really a question mark.
VERJEE (voice-over): In such close quarters there's always the danger of bumping into the enemy. President Bush who is pushing sanctions on Iran over its nuclear program will be sitting just a few feet from Iranian President Mahmoud Ahmadinejad. And Russian President Dmitri Medyedev comes to New York just days after Rice ripped Russia on its military action in Georgia.
All of them protected by American Secret Service. Even Bolivia's President Evo Morales who just kicked out the U.S Ambassador from his country. The forum has its own special drama. Remember Morales holding up a cocoa leaf at the U.N.? And Venezuela's President Hugo Chavez comments comparing President Bush to the devil. The curtain just opening on this year's show.
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VERJEE: And it's the United states that gives the most money to the United Nations to keep it up and running. John.
ROBERTS: I wonder why they don't move the whole thing to Broadway.
(LAUGHTER)
VERJEE: It's going to be a good show. It always is.
ROBERTS: Zain, thanks so much.
VERJEE: OK. CHETRY: Still ahead, John McCain or Barack Obama, both presidential hopefuls are trying to win your vote by saying they are the ones who know how to protect your money. But who really has the best plan? We're going to be talking with each candidate's top financial advisor live just ahead.
Also, running out of time. That's what the nation's top military officer was saying about Afghanistan. He wants more troops. And he wants them now. What else he says he needs? Still ahead.
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CHETRY: Welcome back to AMERICAN MORNING. "Saturday Night Live" has poked fun at presidents and presidential candidates since it's very first season all the way back in 1975. Well, this election year may be its biggest one yet. One of the shows original writers is now a democratic candidate for Senate. And the show even got credit for a Hillary Clinton bump earlier.
But critics say it's leaning too far to the left. CNN's Casey Wian is checking the facts for us.
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CASEY WIAN, CNN CORRESPONDENT: Former "Saturday Night Live" cast member Tina Fey's dead-on impersonation of Sarah Palin is now part of TV or internet history.
TINA FEY AS GOV. SARAH PALIN, ACTRESS/COMEDIAN: I can see Russia from my house.
WIAN: Backstage at Sunday's Emmy Awards ceremony, Fay hinted she's no fan of the Republican vice presidential candidate.
FEY: I want to be done playing this lady November 5th. So if anyone can help me be done playing this lady November 5th, that would be good for me.
WIAN: Another "SNL" alum, Minnesota Democratic Senate candidate Al Franken spoke with the show's executive producer Loren Michaels about an idea that led to a skit poking fun at Senator John McCain.
An actor plays McCain supposedly recording campaign ads.
UNIDENTIFIED MALE: Obama supports tax cuts for pedophiles.
UNIDENTIFIED MALE: Does he?
UNIDENTIFIED FEMALE: Well, there's no way to identify all pedophiles. Percentages are, if you cut taxes it's going to benefit at least a couple of them.
JOHN MCCAIN: I'm John McCain. I approve this message.
AL FRANKEN (D), MINNESOTA SEN. CANDIDATE: You say I'm Al Franken and I approve this message, I take that voice seriously. And I said to Loren it must be very hard for John McCain to do that, considering how misleading these ads are.
WIAN: Some conservatives are outraged by another skit actually ridiculing "The New York Times" that references incest in the Palin family. They accused "Saturday Night Live" of bias against the Republican candidates. A "Saturday Night Live" spokesman would not comment for this report but an examination of transcripts for the 2007 and 2008 season indicates the show is a nearly equal opportunity tormentor.
"SNL" has aired eight skits mocking McCain or Palin.
UNIDENTIFIED MALE: Oh, I think there's a lot of truth in what Hillary says. I really do.
WIAN: Obama has been the subject of seven parodies, including one in February ridiculing CNN for alleged pro-Obama bias.
UNIDENTIFIED FEMALE: Like nearly everyone in the news media, the three us are totally in the tank for Senator Obama.
WIAN: "Saturday Night Live's" most frequent political target, Senator Hillary Clinton. She's been lampooned ten times in the past year.
SEN. HILLARY CLINTON: I invite the media to grow a pair. And if you can't, I will lend you mine.
WIAN: Casey Wian, CNN, Los Angeles.
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CHETRY (voice-over): Your money, your vote.
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: We need a plan that helps families stay in their homes.
CHETRY: Stocks slide and the polls shift. We go beyond the politics and promises.
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Get this country back on track.
CHETRY: To find the candidate that can help you on the most news in the morning.
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ROBERTS: Five minutes now to the top of the hour. And welcome back to the most news in the morning. "Issue number one," the financial crisis creating plenty of anxiety on Main Street as well as on Wall Street. In the latest CNN opinion research corporation poll 81 percent of Americans believe the economic conditions right now are poor, 19 percent say conditions are good. 40 percent say they are very worried that the economy will fall into a deeper hole if the government does not take action. 39 percent are somewhat worried. As more details emerge on the federal bailout of Wall Street, presidential candidates John McCain and Barack Obama scramble to convince voters they would be the best president to manage the troubled economy. To find out more about this now. Joining me now from Chicago, the chief economic adviser to Senator Obama, Austen Goolsbee, and from Arlington, Virginia this morning, top McCain economic adviser, Douglas Holtz-Eakin.
Gentlemen, good to see you this morning. Douglas, let's start with you. In a week, Senator McCain has gone from saying that the fundamentals of the economy are strong to now saying that the economy is in a major crisis. What would he do to stop the bleeding on Wall Street?
DOUGLAS HOLTZ-EAKIN, MCCAIN ECONOMIC ADVISER: Well, John McCain laid out a plan last Friday that took a proactive approach to institutionalizing the kind of help these troubled financial institutions seem to need, instead of waiting and doing a reactive fashion. Set up a system where they can come, get some help, get a little bridge loan, work out their distressed assets and protect the taxpayer, have some genuine oversight of what's going on, minimize the amount of Main Street dollars we throw into this Wall Street problem. He laid out a complete plan.
ROBERTS: So very similar to what the Treasury Secretary suggested.
HOLTZ-EAKIN: Well, he's trying to make sure that when the final legislation is agreed to the taxpayer is protected. As he said yesterday, what he saw out of Secretary Paulson was the ability to write a trillion dollars check with no oversight whatsoever. That's unprecedented in American history. Senator McCain would like to see some oversight and some genuine checks on the ability of one person with that kind of authority.
ROBERTS: Austan Goolsbee, the McCain campaign has been criticizing Senator Obama for not coming forward with a plan. So what is the plan?
AUSTAN GOOLSBEE, : Well, look, two days before Senator McCain outlined his "specific plan," Barack Obama laid out a six-point detailed plan of how we needed to re-establish oversight in the financial markets. It followed on six months in which he had been putting forward further detailed ideas and talking with experts like Paul Volger, Warren Buffett, et cetera. Now I went on the website of John McCain to look at the detailed plan because I was a little surprised when I heard Doug talking about that. And I printed it out. And it is this. That is the detailed McCain economic plan. It's literally ten lines long. That's the whole details of the plan.
ROBERTS: Let me stop you there, for a second, Austan, because we want to know about Senator Obama's plan. It is true is it not that he has been holding off on releasing many details of his plan, waiting to see what happens in Congress.
GOOLSBEE: No. Hold on. On Tuesday of last week, Barack Obama put forward a very detailed six-point intricate plan of exactly how to re- establish public oversight. And I can go through with you each of those six points if you'd like. What he said regarding the Paulson plan, just as McCain has been looking at the details of what Paulson put forward. Each of them is putting forward conditions that we both recognize the crisis and we're saying what needs to be added or subtracted from what they have put forward. That is quite different from their own economic plan. Obama's has been detailed, McCain is not.
ROBERTS: Of course, one of the big issues that this bailout raises is will either one of the candidates be able to fulfill their campaign pledges. You know, we're adding another $700 billion at least to the national dealt. And Douglas Holtz-Eakin, will John McCain be able to afford to go forward with his tax cuts should he become president?
HOLTZ-EAKIN: Well, I think the good news is that John McCain understands that we have to get this economy going and that his plan to create jobs is what we need past this immediate crisis -
ROBERTS: But can he go forward with the tax cuts?
HOLTZ-EAKIN: That's the most important thing is to get the economy going. I want to point out that it would be a bad idea if Senator Obama fulfill his pledge to raise taxes on small business, which is our only source of job creation and raise taxes on dividends and capital gains. The market has already gone south 370 points. We don't need those additional bad influences on the outlook right now.
ROBERTS: All right. Let's point out too, Austan, that Senator Obama also wants to cut taxes on the majority of American taxpayers, raise taxes on people who make more than $250,000 a year, raise the FICA withholding for those people as well. Austan Goolsbee though, can you afford to go forward with those tax cuts?
GOOLSBEE: Well, Obama's plan is fully paid for and before this ever happened would have reduced the deficit according to the Tax Policy Center in Washington. And John McCain's plan would add almost $350 billion a year to the deficit. The correct question is, is John McCain's plan going to be abandoned because it would run up of deficit.
ROBERTS: All right. Austan Goolsbee, Douglas Holtz-Eakin, good to talk to you this morning. Thanks very much for being with us.
GOOLSBEE: Thanks, John.
ROBERTS: Appreciate it.
HOLTZ-EAKIN: Glad to be here.
