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CNN ELECTION CENTER

Federal Bailout Plan Stalls on Capitol Hill

Aired September 25, 2008 - 20:00   ET

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


JOHN ROBERTS, CNN ANCHOR: And good evening, everyone. Campbell Brown is off tonight.
Tonight in the ELECTION CENTER, breaking news and history in the making. The Wall Street bailout has stalled on Capitol Hill. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke are due on Capitol Hill right about now to try to get that deal back on tracks.

All of it comes after President Bush, the presidential candidates, and congressional leaders from both parties sat down at the same table at the White House, but could not get on the same page. And so the carnage apparently resumes on Wall Street.

We have this just in. J.P. Morgan Chase and Company is close to a deal to acquire most of the operations of beleaguered thrift Washington Mutual. We're following this fast-breaking story very carefully.

What does it mean for tomorrow's first presidential debate at the University of Mississippi? John McCain and Barack Obama are spending the night in Washington. Will they be off to Mississippi tomorrow? We don't know at this point.

It's been a dramatic day of surprising twists. We will consider the fallout for the presidential race and for the country tonight.

A lot of important news breaking this hour.

Let's start with our senior business correspondent, Ali Velshi, who is checking in to the WaMu story, the biggest savings and loans in America.

Where does it look like this deal is at?

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: All right.

Reports are that the deal has gone through, that there's an acquisition of Washington Mutual, as you said, the biggest thrift, the biggest savings and loan in the country, by J.P. Morgan Chase.

Now, let me tell you what we know right now. There are those reports. We know that within the hour we are expecting an announcement. And at 9:15, J.P. Morgan Chase is holding a press conference. Now, what we're hearing is that it is the deposit accounts, the banking side of Washington Mutual, that's being acquired by J.P. Morgan. We're still not clear as to what's happening to the mortgage side. Many of you have mortgages with Washington Mutual.

Typically, mortgages are easily acquired. In fact, even if you had a mortgage with them, it was probably resold to someone else. So, we're going to find out about for that. But those of you who have been calling and e-mailing and asking for the last few weeks what is happening with Washington Mutual, we knew they were unable to sell themselves. They had tried and tried and tried, and it wasn't working.

Late this afternoon, they faced a credit downgrade, which makes it virtually impossible, given the climate that we're in, with a credit freeze-up, to make a sale. We understand that the government stepped in to broker this deal.

We will work the story and get you more information. I should tell you, if you are a banking customer of Washington Mutual, your money is safe under a deal of this sort. You money was safe anyway. We will tell you the details of this as soon as more of them become available -- John.

ROBERTS: Looking forward to it. Ali Velshi with the breaking news for us tonight -- Ali, thanks so much. Don't go away. We will come back to you a few minutes from now as well.

We told you just a moment ago, on Capitol Hill, negotiations over the mammoth $700 billion Wall Street bailout have stalled. The best political team on television is working overtime to cover every aspect of this huge story.

We start tonight in Washington, where our Jessica Yellin is on Capitol Hill, Ed Henry at the White House, where he was monitoring today's developments with that big meeting going on with the two presidential candidates and the leaders from Congress.

Jessica, as we speak, Fed Chairman Ben Bernanke, the treasury secretary headed back up to Capitol Hill. What's the mission tonight? What are you hearing from your sources?

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: John, my sources tell me that Harry Reid, the Senate majority leader, called up Henry Paulson at the Treasury Department and said, look, come down, take a meeting, keep this process going.

And what is happening is, he's sitting down, along with Bernanke, with members of both the House and Senate, Democratic and Republican conferences. Each person in leadership has been allowed to pick one person to represent their body, so Chris Dodd for the Democrats and Barney Frank are going to be there. But they could see a replacement of the people who have been representing the Republicans.

They might be replaced with two people who can get their conferences to go along a little more effectively than what we have seen so far today. And the real mission here is to actually reassure the markets tomorrow morning when we wake up that this is not dead, that this is continuing to move. This might be a hiccup, but things are in process, just in a very Capitol Hill way -- John. ROBERTS: Jessica, it's amazing how much things changed from early this morning. It sounded like Democratic senators were putting forward the finishing touches on a listen.

Let's listen to what Senators Chris Dodd and Bob Bennett said earlier today.

(BEGIN VIDEO CLIP)

SEN. ROBERT BENNETT (R), UTAH: We now expect we will, indeed, have a plan that can pass the House, pass the Senate, be signed by the president, and bring a sense of certainty to this crisis that is still roiling in the markets.

SEN. CHRISTOPHER DODD (D), CONNECTICUT: We want to do what's correct and right in the next few days. We can't say exactly when. We have reached a fundamental agreement on a set of principles.

(END VIDEO CLIP)

ROBERTS: Jessica, what happened between then and now?

YELLIN: Sea changes in it, John.

What happened is, the House Republicans came out and said, whoa. They were very unhappy with that press conference. They said that nothing that was spoken in that meeting was agreed upon by the entire House Republican group.

And what they're particularly upset about, they say, is they want this financed by private money. They don't want the $700 billion bailout to come from taxpayer funds. They want private investment to be allowed to flow into that bailout package and they would have to create all sorts of specialty regulations and tax loopholes to allow to happen.

It's an entirely different package they're proposing. And it really would stall this thing and change it entirely.

ROBERTS: Jessica Yellin for us on Capitol Hill -- Jessica, thanks.

Let's turn to Ed Henry who is at the White House.

Ed, the president sounding very upbeat at the start of that meeting, the photo-op off the top. He said, my hope is that we can reach an agreement very shortly, all smiles for the cameras. But what happened after they kicked the media out?

HENRY: John, I was a pool TV reporter. I went in there.

And you're right. It was sort of electric to go in there and see both presidential candidates, a rare meeting with the current president, both guys who want to take his job in the next few months.

But it quickly, I'm told by sources on both sides of the aisle, became very contentious. Republican and Democratic officials say it really centered on the fact that Barack Obama, the Democratic presidential nominee, was pressing John Boehner, the House Republican leader, and Treasury Secretary Henry Paulson about these proposals Jessica was reporting on, about conservative House Republicans saying that they want more accountability added here. They want less exposure for taxpayers. They don't want bad debt basically just being dumped on taxpayer.

Obama pressed Boehner and other Republicans there to give him more details on this and find a way to come together. Boehner basically said he didn't see a way out just yet, that he needed to go back, talk to his House Republican colleagues and try to buy more time to try to work this out.

So, the bottom line is, they all went in there, or most of them anyway, thinking that they were very, very close to a deal, and instead they're pretty far apart right now -- John.

ROBERTS: Yes, Ed, what happened in that meeting all depends on the prism that you're looking it through.

Some people are saying -- Democrats mostly are saying that it threw a roadblock into the whole process. Some Republicans are saying that there was progress; we're moving forward here.

What is the administration's take on all of this?

HENRY: I spoke a short time ago to a senior White House official who put it to me straight and said, look, this is not going to pass unless we get at least 100 House Democrats and 100 House Republicans on board.

The Democratic leaders think they may be close to getting 100 House Democrats or more on board. They're not there yet, but they're close, whereas the House Republicans are nowhere near close, nowhere near close getting 100 House Republicans.

And so the bottom line is the administration is running out of options to turn these House Republicans over. You know from covering the very beginning of this administration, the president used to get whatever he wanted basically from Republicans on the Hill. Now he sends Vice President Cheney up there a few days ago. That doesn't really work. The president addresses the nation last night. That doesn't work.

He brings them in for this bipartisan meeting. It doesn't appear that's working either, John.

ROBERTS: A lot of House Republicans turning their back on the president tonight, Ed.

Thanks very much, Ed Henry, Jessica Yellin, covering all of the machinations there in Washington.

Coming up next, getting the bailout back on track, can they do it? We're going to talk with House Majority Leader Steny Hoyer. Don't go away.

(COMMERCIAL BREAK)

ROBERTS: We're back with breaking news on the ELECTION CENTER.

Just minutes ago, House Majority Leader Steny Hoyer said that, for any kind of Wall Street bailout to work, the deal has got to be bipartisan. He is up on Capitol Hill tonight for the continuing negotiations, but taking a minute out of his very, very precious time to talk with us.

Mr. Majority Leader, thank you very much for your time. We know how busy things are.

You were at a press conference just a moment ago with the chairman of the House Financial Services Committee, Barney Frank, at which Congressman Frank said, clearly, John McCain slowed this process down during that White House meeting. Would you concur?

REP. STENY HOYER (D-MD), MAJORITY LEADER: Well, I don't think that's the issue. He was asked that question. That was his comment. You're accurate.

But, really, the focus needs to be how we go forward from this point in time. I don't think the meeting with Senator McCain was particularly useful. I'm not sure why that was included. Neither Senator Obama nor Senator McCain had been involved. Senator Obama reached out to Senator McCain to do a bipartisan statement to help restore confidence and calm. I'm not sure this meeting did that.

(CROSSTALK)

ROBERTS: Well, can I ask you what Senator McCain did during that meeting to, as Congressman Frank said, slow things down?

HOYER: Well, no, Senator McCain -- I think what Congressman Frank meant by that comment was, Senator McCain made the observation the House Republicans certainly had the right to come up with alternatives. Obviously, nobody needed to be informed of that. Clearly, they do have that right.

But we have been working together for the last seven days, at the request of Secretary Paulson, Chairman Bernanke, and the president, to work on getting an agreement, because a crisis confronts the country of financial stability and confidence.

ROBERTS: Right. So what happened today?

HOYER: And, so, working together was critically important.

As you saw earlier today, Senate and the House, Democrats and Republicans, came together and said that they thought we had an agreement and a way forward. This afternoon, House Republicans determined that was not the case. ROBERTS: So, well, what are the sticking points here? Have they told you what they want, what they need in the deal to be able to sign on to it?

HOYER: No. They have not. And nor have they given that to Barney Frank, our chairman of the committee.

Apparently, they did not mention this to Secretary Paulson or Chairman Bernanke yesterday, when we had hearings in the House on this issue. And a number of the people who are apparently proponents of the alternative were in the room.

But let me stress, we have a crisis confronting the country. We need to work together to try to solve this crisis and respond to it. The president sent down a bill. Secretary Paulson sent it down Saturday morning. That's when we got it, early Saturday morning. We have been working ever since to improve the bill, to put in taxpayer protections, to put in our oversight committee, to make sure that taxpayers could be included in any upside, in any equity positions.

ROBERTS: So, Congressman...

HOYER: Yes.

ROBERTS: ... what -- so, what happens tonight? We understand the Fed chairman, Ben Bernanke, and the secretary of the treasury, Henry Paulson, are going back up there to meet with you all.

HOYER: No, I don't think they're meeting with you all. I think they're meeting with the House Republicans...

ROBERTS: Ah.

HOYER: ... is my understanding. And they don't have a meeting scheduled with us.

I'm sure we will talk tomorrow. But I think they're coming up to talk to the House Republicans, who have frankly not at this point in time supported in any degree of numbers the administration's request or Secretary Paulson's request, unlike, by the way, the Senate Republicans, which have.

And I think the Senate Republicans, the Senate Democrats, and the House Democrats are essentially trying to work this issue, so we can respond as quickly as possible. But we're going to be here tomorrow. We're going to be here Saturday. We're going to be here Sunday. We're going to be trying to work this thing, so that we can respond to this crisis.

ROBERTS: All right. We will keep watching it.

HOYER: OK.

Congressman Steny Hoyer of Maryland, thanks very much for being with us tonight. Appreciate your time, sir.

HOYER: Thank you.

ROBERTS: Let me now turn to Senator Richard Shelby. He is the ranking Republican on the Senate Banking Committee. He left the White House meeting and told reporters, we have not got an agreement. There's still a lot of different opinions.

Senator Shelby, good to talk to you tonight.

Where does this all stand?

SEN. RICHARD SHELBY (R), ALABAMA: Well, it is in limbo right now.

I was at the meeting at the White House for an hour -- it went on for an hour or so. And, of course, I voiced my opposition basically to the fundamental problems with the Paulson plan, and I made no -- made everybody realize that I didn't support the Paulson plan. I thought it was fundamentally flawed, that I wished we would look at some other plan.

ROBERTS: Right.

SHELBY: And, of course, we came out of the White House meeting with no agreement. And I don't know what will happen.

But I do want to share with you here.

ROBERTS: Sure. Go ahead.

SHELBY: I have in my hand a letter with over 200 of the most eminent economists in the United States of America, from University of Chicago, Harvard, Yale, Stanford, you name it, right here to the leadership, saying, do not adopt this Paulson plan. It's fundamentally flawed. It's going to have a layer of debt on our children. We don't know if it's going to work. It doesn't look fair. We should not rush to judgment on this. We should be linear about it, basically.

ROBERTS: But, Senator, I thought that you weren't going to adopt the Paulson plan, that new legislation was being written up that would deliver the money in a series of tranches. There would be oversight. There would be guarantees that taxpayers would get repaid when these liquid assets are -- are finally disbursed.

We heard from -- from Congressman Hoyer just a second ago that, this morning, or even early this afternoon, it looked like there was an agreement on a deal. What happened?

SHELBY: Well, obviously, what happened is, there's no agreement, not yet. And I hope there will...

ROBERTS: But how did that happen?

SHELBY: Wait a minute. I hope it won't be an agreement, if it's based on the structure of the Paulson plan, or the son of Paulson, because I think it's not a good plan. It is wrong. ROBERTS: So, I mean, what is wrong with son of Paulson, as you put it, with these guarantees in it?

(CROSSTALK)

SHELBY: What's wrong with it?

If you look at it, if over 200 of our brightest economists tell you that it is fundamentally flawed, and we shouldn't do it, I think we better be listening.

ROBERTS: But, with respect, Senator, were they looking at the original Paulson plan, that three-page plan, or what they looking at what was crafted today?

(CROSSTALK)

SHELBY: They're looking at all aspects, what was crafted, what they're trying to do. But it's all structured around the Paulson plan.

ROBERTS: Right. OK.

So, let me ask you this question. Congressman Hoyer said a second ago Republicans in the House at least have not told him what they want in a plan. What do you think needs to be in a plan?

SHELBY: Well, I think that we ought to listen to the economists, not just the Fed, who we are losing confidence in every day.

And the administration and the secretary, I believe that they don't know what they're doing. They're jumping from crisis to crisis. And we better be careful. This is a big, big deal.

ROBERTS: So, what do you say, then, to the treasury secretary and to the chairman of the Fed, who were up there on Capitol Hill a week ago and warned you that, if you don't do something quickly, you risk a complete collapse of the markets? They're saying, this has to be done fast. President Bush was out there on national television last night saying there could be a panic in the markets if this is not addressed quickly.

SHELBY: Well, the other economists don't believe that.

They believe that the market will correct itself. But, if we do, do a bailout, it shouldn't be a structure like we have offered.

ROBERTS: So, let me just get this straight. So, you do not believe President Bush?

SHELBY: Well, I didn't say -- I don't -- President Bush is not an economist. He is the president of the United States.

ROBERTS: But he was the one out there warning last night of panic.

SHELBY: And, four months from now -- wait a minute -- he won't be the president of the United States four months from now.

Paulson won't be secretary of the treasury. And I don't know how long Bernanke will be at the Fed. But I can tell you this. I wouldn't support any plan like that. And that's what a lot of the problems are today.

They're trying to rush this plan through to borrow nearly a trillion dollars. If you think that's good, you better listen to these economists.

ROBERTS: So, then, Senator, again, if I could get this straight, so are you telling that Republicans on Capitol Hill are turning their backs on this administration?

SHELBY: No. I didn't say that at all. I think those are your words.

I don't know who is turning their backs. I have turned my back on this plan. I'm a Republican. I don't -- I don't just rubber-stamp anything. And I hope the House members, Republicans and Democrats, won't either.

ROBERTS: Senator Richard Shelby, it's always good to talk to you.

SHELBY: Thank you.

ROBERTS: Thanks for taking the time, sir. I know it is a busy night tonight.

SHELBY: Thanks.

ROBERTS: So, if Washington is deadlocked, even for a little while, what will it mean for Wall Street and for Main Street? And what will the political aftershocks be?

In just a minute, I will be joined by three of the smartest minds around.

And later on, the last question that we ever expected on the eve of the first presidential debate: Will it happen?

(COMMERCIAL BREAK)

ROBERTS: We know that the opposition to the Wall Street bailout is wide and deep, so even if Washington does make a deal, will Americans accept it?

With me now from Helena, Montana, where he's been talking with state officials and everyday folks about the bailout, our chief national correspondent, John King, here in New York, Chrystia Freeland, who is the U.S. managing editor of the "Financial Times" newspaper, and, of course, our senior business correspondent, Ali Velshi.

John King, let's start with you, because you have been out talking with folks.

The House Republicans are digging in their heels. You heard Richard Shelby, as well, from the Senate just a minute ago saying, we do not like the Paulson deal.

What is being said out there in the heartland that has House Republicans and some Senate Republicans so flipped about this deal?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: They don't like it, John. They don't trust the politicians. They don't particularly give the president of the United States much credibility right now. A lot of people we're talking are saying, it sounds just like it was before Iraq. He said it was a dire warning. He said we need to act quickly. And look what happened in Iraq.

And so you get the sense out here -- at one Republican congressman's office we were at today in downtown Helena, Denny Rehberg, 55-1, the calls in against, this after the president's speech. So, they simply don't trust the politicians.

The mood very much reminds me of 1992, when Ross Perot generated so much support around the country. They're looking at Washington people out here and they say, don't believe them, don't trust them.

ROBERTS: So, Chrystia Freeland, what about this idea that -- I floated this past Senator Richard Shelby a moment ago -- that Ben Bernanke and Treasury Secretary Paulson went up to the Hill, warned of dire consequences if this bailout didn't get passed. President Bush warned of the same dire consequences last night.

Will it happen if this bailout plan isn't passed?

CHRYSTIA FREELAND, "THE FINANCIAL TIMES": Will there be dire consequences?

ROBERTS: Will there be dire consequences?

FREELAND: Well, I think that what we are going to see a little bit is a fight between the political process and the markets.

I spoke to a major hedge fund manager today, who said to me the markets are very good at applying really, really tough pressure in these situations. And even with the short-selling ban, we're already seeing the system really freezing up. The money markets have been frozen.

It's almost impossible to borrow money. So, I think we're going to see that pressure ratcheting up. And this WaMu -- apparent collapse of WaMu, it will be interesting to see what impact that has tomorrow morning.

ROBERTS: Ali, what do you think the reaction in the market will be tomorrow morning if there isn't a deal by the time that the markets open...

(CROSSTALK) VELSHI: Well, we have a complicating factor tonight, and that is this Washington Mutual apparent collapse.

If the market reads that as a collapse, you will have trouble in the markets. If the market reads that as J.P. Morgan stepping in and saving a bank from collapse, you might have some euphoria.

But the bottom line is, the markets are frozen, literally not knowing what to do on this. Let's explain one thing. We are in a recession of some sort right now. We're not going to get out of a recession because there's this rescue plan. We just may not get far worse. We're just going to free up some money. So we're in a bad place anyway.

ROBERTS: John King, what kind of deal could taxpayers sign on to, at least some of the ones that you have talked to?

KING: Well, most people, John, say they want the Congress to take its time, and they want a better explanation of what's going to happen with all their money.

Most people are quite gracious, saying I understand there are some homeowners out there who got caught up in bad loans. Maybe it's partly their own fault.

But I'm not -- I'm not averse to helping out people who are being foreclosed. I'm not averse to helping out some banks. But they want to know -- and some of the senators have said they're fighting for these safeguards -- that, when you sell these properties, the money will come back into the Treasury, that, maybe, in the end, the taxpayers won't lose $700 billion. They will get much of it back, most of it back, maybe even all of it back.

Most people say they're willing to listen. But what they see is a bunch of guys in suits in Washington who have told them lies before -- that's what they think -- going into closed deals, closed rooms, and making a deal. They want to hear all the details, because, again, the level of distrust is amazing.

ROBERTS: And, Chrystia, quick last word here. Germany's finance minister said, this whole thing is the end of America's dominance as the world's superpower. Do you believe that?

FREELAND: Well, I think it is the end of America being able to preach to the rest of the world that a highly deregulated, highly laissez-faire capitalism is the thing that works. And you heard that a lot at the U.N. I think Americans are going to have to learn a little bit about regulation.

ROBERTS: Chrystia Freeland of "The Financial Times," Ali Velshi, John King, thanks very much.

And still ahead tonight: They're getting ready for tomorrow night's presidential debate at Ole Miss. Will it happen? What the candidates are saying when we come back.

And, later on, Governor Sarah Palin visits ground zero and takes some tough questions about Russia.

(COMMERCIAL BREAK)

ROBERTS: We're hearing words like stalled and near collapse referring to the plan to rescue the nation's financial system.

Senators Obama and McCain met today with the president and with congressional leaders at the White House.

Dana Bash and Candy Crowley have got more now on the fallout for the presidential campaigns.

Dana, let's start with you and let's listen to some of what Senator McCain said after the White House meeting in an interview that he did with ABC News.

(BEGIN VIDEO CLIP, "ABC WORLD NEWS")

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL NOMINEE: Members have concerns about a bailout, frankly, of $700 billion, or an expenditure -- let me put it this way -- an expenditure of $700 billion of the taxpayers' money. This is the biggest thing of its kind, obviously, in history. They have legitimate concerns. Some of those have already been satisfied such as accountability and an oversight board and a CEO executive pay. Members are aware of the crisis situation that we're in.

(END VIDEO CLIP)

ROBERTS: Dana, Senator McCain there talked about some of what he likes. Some of what apparently was agreed to, or at least appeared to be agreed to. But Republicans still haven't tipped their hand on what it is that they want in a final bill.

He suspended his campaign, said country first, flew to Washington. What did he do all day? Congressman Barney Frank said he just slowed the process down.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Absolutely. I mean, that is definitely what the Democrats' line is. There's no question of how to end. But I'll tell you the answer to what Senator McCain did today since here in the Russell Building where I am where his office is, for about three and a half hours total on the Capitol complex, and he did spend most of his time actually meeting with those House Republicans that definitely have deep, deep concerns about this.

He went over to the House. He sat in the leaders' office and talked to some of the rank and file about their concerns. And you just heard some of that in that sound bite from McCain talking about the fact that they believe that there needs to be a provision to make sure that taxpayers really don't get the short end of the stick here and that this is definitely something that still needs to be worked out.

In terms of the hard and fast negotiations, John, McCain definitely was not in them. In fact when he got here, the negotiations which were going on between the House and Senate Banking Committee, that was actually already wrapping up. And as he arrived, the Senate Republicans who was kind of in charge of that was coming out and saying, well, we have a deal.

So there was a lot of confusion here but with regard to McCain's role, he wasn't knee deep in those negotiations. He was doing a lot more of listening and talking to some of his --

ROBERTS: Hey, Dana, I'm sorry. Let me interrupt you there a little bit. I think that the battery in your microphone is dying. Why don't we give you a second to change that out and let's go to Candy Crowley.

Candy, Barack Obama was caught off-guard yesterday. He flew to Washington this morning after the president invited him down. Was involved in that -- actually up, because he came out from Florida -- was involved in that bipartisan meeting. Let's listen to some of what he had to say afterwards about it.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: This is an extraordinarily serious moment in our country's history. And regardless of how we got into this mess, and obviously, I have got some very strong opinions about that, I think it is critical for us to work in a bipartisan way, not worrying about credit or blame to try to deal with the short-term problem.

(END VIDEO CLIP)

ROBERTS: Candy, unlike Senator McCain, Senator Obama is not suspending his campaign. So what is his campaign's plan for handling this volatile situation?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Listen, what they are trying to do, in the end, John, this is all about leadership. So there is John McCain's hard, charging, go to the barricades, let's talk about this attempt to look in control. And then there is Barack Obama and what they want is the contrast here. Cool, deliberate, above the fray.

So, the Democrats can all be out there, his surrogates saying, you know, John McCain is mucking this up. He's slowed down the process. We had a deal. He came and all fell apart.

Barack Obama doesn't go there. They want him to be looking presidential. And they believe that so far as they're looking around, they believe that most people see John McCain as trying to make politics out of that and Barack Obama as doing just the opposite. And that is the contrast they want out there.

ROBERTS: And, of course, all eyes will be on Oxford, Mississippi, tomorrow to see if Senator McCain shows up. Let's bring Dana Bash back in.

Dana, what's his campaign saying at this point? Is he going to be at Old Miss for that debate tomorrow night?

BASH: You know what? TBD. They're actually they're really not saying, John, because they really don't know. Why? Because we reported starting yesterday that he pretty much laid a line down in the sand saying that if things aren't done in terms of a deal that he's not going to go to the debate. However, however, inside the McCain campaign, they are really, really hoping that they can find a way to go to that debate because they feel like they really need a game changer and that's the way to do it.

ROBERTS: And, Candy Crowley, what about Senator Obama? Is he planning on going anyways? And what will he do at 9:00 tomorrow evening if John McCain doesn't show?

CROWLEY: Well, at this moment, I think Dana will agree, one is hard pressed to say exactly what's going to happen but here's the plan as of now. He says he is going down in Mississippi. He will be there for that debate.

There is talk of what he might do. Would there be a town hall meeting if McCain didn't show up? I mean, who knows? We didn't think that Barack Obama was going to spend tonight in Washington, but there he is. For what reason, maybe he just -- it was easier than flying back down here. Maybe he thinks something will happen tomorrow. So -- but as of right now, the plan is to go on down to Mississippi and as Barack Obama says, well, I think we should show that we can do more than one thing at a time. So that's the plan.

ROBERTS: We'll keep watching very closely. Candy Crowley for us there in Clearwater, Florida, feeling a little lonely tonight. And Dana Bash with lots of company there in Washington. Thanks very much, folks.

Still ahead, some of the most savvy political minds in America weigh in on what John McCain and Barack Obama should do about the Wall Street bailout and their very first debate.

Later on, Governor Sarah Palin's day in New York and her eye- opening answers to questions about Alaska's next door neighbor Russia.

(COMMERCIAL BREAK)

ROBERTS: Lots of breaking political news to talk about tonight. And the big question, will John McCain show up in Mississippi tomorrow night?

Let's bring in our CNN senior political analyst Gloria Borger, CNN political analyst and radio talk show host Roland Martin, who says he's going to vote for Barack Obama this year, and CNN contributor David Brody, senior national correspondent for the Christian Broadcasting Network.

Let's look at, first of all, before we look at the debate, Gloria, this whole thing that's going on at Capitol Hill and at the White House with this bailout plan. What are the politics of it all here? What's the deal? GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: I think clearly, John McCain was looking to shift the momentum a little bit. The economic issue doesn't play well for him. Two things do, bipartisanship and mistrust of government in Washington.

So he swoops in to Washington says I'm bipartisan. I can work with these folks. I can get a deal done. I can fix Washington. I can work across the aisle. That works for -- that works for him with independent voters if it can happen.

ROBERTS: Right.

And, Roland Martin, I mean, we were looking at Democrats and Republicans and it's kind of a role reversal here. The Democrats want to work with the administration. The Republicans are almost giving him the back of their hand.

ROLAND MARTIN, CNN POLITICAL ANALYST: Yes. He can't even work with his own party. I mean, look, John, the reality is this is the inner Republican fighting. And that is, they know there's a problem, they know they have to fix it but you have the ghost of Reagan saying, oh, no, free market. It's capitalism, government intervention. That's not what we do. And so, they are battling each other.

And let me tell you something. Look, I'm from Texas and these conservative Republicans, they're not going to back down and, John, this is not popular with the people.

ROBERTS: Right.

MARTIN: Nobody likes this.

ROBERTS: And, David Brody, what kind of pressure is John McCain under with the conservative base? You know, he just had them locked up there with naming Sarah Palin as his running mate at the Republican Convention. I was there. Everybody was so happy. Now, they're putting the arm on him.

DAVID BRODY, CHRISTIAN BROADCASTING NETWORK: Yes, he's under quite a bit of pressure and here's the good news for John McCain. I mean, he can come out potentially in the next 24 hours and preach fiscal discipline to say, I understand what the House Republicans are saying. Therefore, I understand what the American people are saying and that we're not just going to go ahead and roll over and get $700 billion here and instead, we're going to roll this money out a little bit more easily.

And, John, McCain can look like the fiscal discipline because, remember, there's a lot of animosity within the Republican Party, the Mike Pences of the world -- Congressman Mike Pence and other folks across the Republican spectrum, who believe fiscal spending by the Bush administration has been out of control. John McCain may be able to go ahead and capitalize on that, John.

ROBERTS: All right. We'll discuss that coming up in just a little while. We also want to talk about that debate. So hang on, guys. We'll be back with you in just a minute.

Also, still ahead, Sarah Palin takes some tough questions about Russia and Vladimir Putin. You'll want to hear this.

(COMMERCIAL BREAK)

ROBERTS: This is the ELECTION CENTER. And let's get back to our political panel tonight -- Gloria Borger, Roland Martin and David Brody. Let's talk about tomorrow night's debate and whether or not it's going to go off as planned.

Gloria Borger, last night when John McCain said he was suspending his campaign, a lot of skeptical people said, hmm, is he just trying to duck a debate that's going to be all about the economy? Where do you think he is on that tonight?

BORGER: No. You know what? I don't -- I do not think John McCain is trying to duck a debate on the economy. John McCain proposed 11 town halls with Barack Obama, so I wouldn't say that he is trying to duck a debate.

What I would say he's trying to do is change the momentum. Throw a little flare into the stadium. Have some fireworks and show people that he can cut a deal and be a leader.

ROBERTS: Right.

BORGER: And, you know, leadership he believes is his strong suit. That's what it's about.

MARTIN: John --

ROBERTS: Go ahead, Roland.

MARTIN: John, listen, first of all, the suspension of a campaign, I can't even say it, is a fraud. He didn't suspend his campaign. He's still campaigning.

But here's the other deal. John McCain woke up yesterday, saw he was down nine points. For the first time, Obama got 52 percent in one of these polls. As Gloria said, he needed to change his ball game and so this idea of pushing the debate to October 2nd, and I'm not going to show up, he's trying to play tough guy.

You know what? Take your butt down in Mississippi. You can do two things at one time and have a conversation, Senator McCain. It's not that hard.

ROBERTS: Go ahead, David.

BRODY: Well, I was going to say, I mean, good point by Roland in the sense that the danger for John McCain here is that there are going to be people all across this country just thinking about it sitting in their living rooms going, now wait a minute, I can do something in the morning and then I can do something in the evening, as well. And what is he doing exactly at 9:00 Eastern? I mean, is he having dinner? What is he doing? Is there a meeting that he has to attend to? I think that is something that on a basic level people are trying to maybe get their handle on.

ROBERTS: Right.

MARTIN: (INAUDIBLE) town hall meeting.

BORGER: You know, he's too smart. John McCain is too smart.

BRODY: Right.

BORGER: He's left himself an opening. He can get down there if he wants to be down there.

ROBERTS: What's your sense of where voters are, particularly independent voters who are looking toward this debate potentially as a mind changer? Do they want to see this thing happen?

BORGER: Of course.

UNIDENTIFIED MALE: Yes.

(CROSSTALK)

BORGER: Yes.

ROBERTS: Or do they want to see John McCain stay in Washington and work on this bailout thing?

BRODY: He wants to see it and he can have a white knight moment and ride in at the last moment. At least that's what they hope.

MARTIN: Well, look, I mean, bottom line is if I'm Obama, I'm saying, hey, John McCain, 9:00 p.m. Eastern, I'm going to be there. And if you don't show up, I'm going to turn this into a national town hall meeting and take questions while you're sitting in Washington with the rest of the Republican hacks. That's what I would say but I'm not running.

ROBERTS: Nobody says Roland doesn't love throwing the gun.

BORGER: I guess not.

(LAUGHTER)

ROBERTS: We have to go, folks. Thanks very much. David, Gloria, Roland, we'll see you a little bit later on.

BRODY: All right, John.

ROBERTS: Still ahead, Sarah Palin talks about her foreign policy credentials and Russia. Stay with us.

(COMMERCIAL BREAK)

LARRY KING, HOST, "LARRY KING LIVE": Hi, this is Larry King.

Joining me tonight, comic Chris Rock who shoots from the lip and pretty always hits the target. The campaign, the candidates no holds barred. No topic off the table. He's serious and screwy times. We're turning to a very funny, very smart guy to make some sense of it.

Chris Rock and then a major panel coming up on "LARRY KING LIVE."

(COMMERCIAL BREAK)

ROBERTS: Across the country tonight, lots of anger and distrust about the government's proposed bailout of Wall Street. Our chief national correspondent John King has found a lot of that uncertainty in the state of Montana, and that's where we find him tonight in Helena.

What did you find, John?

JOHN KING, CHIEF NATIONAL CORRESPONDENT: John, it is quite remarkable. If you want to understand why all of a sudden members of Congress are skittish, nervous about passing this big bailout, just spend a little bit of time in the small towns of Big Sky Country.

(BEGIN VIDEOTAPE)

J. KING (voice-over): Round-up day on the Rieder ranch. Moving the cattle from the hills to the corral is a sign of the changing season. A couple hundred head here, many to be sold off soon so Dave Rieder can pay the bank.

DAVE RIEDER, MONTANA RANCHER: Every legitimate rancher has to borrow 50 to 80 to maybe a quarter of a million dollars just to pay your bills.

J. KING: Eight percent interest stings, especially when you add in the soaring cost of diesel and fertilizer. But what stings more are warnings from Washington that credit here and across Main Street America could dry up if Congress doesn't quickly pass a $700 billion Wall Street bailout.

RIEDER: We're responsible for our debts out here. We pay our debts. I believe George Bush himself said they got drunk on Wall Street. Well, they ought to suffer the hangover like we have to every day out here.

J. KING: Rieder is hardly alone in saying he wasn't swayed by the president's nationally televised address.

UNIDENTIFIED FEMALE: So I take it you're against this.

J. KING: At Republican Congressman Denny Rehberg's Helena office, the morning after tally was 55 calls against, one for. Much the same across town. Democratic Senator Max Baucus by mail and by telephone hearing skepticism and mostly outright opposition.

UNIDENTIFIED FEMALE: We're waiting to see how it all comes out with the amendments attached.

J. KING: This 3,000-acre ranch has been in the family for 66 years since Dave Rieder was 4.

RIEDER: I was born during the days of FDR. And FDR said that we have nothing to fear but fear. Well, this is exactly the opposite. They're preying on our fears. If we don't bail them out, the rest of you are going to go down the tubes and we'll have another depression.

And I don't -- I don't like the idea of this fear tactics. Who knows what it's going to do to us? We don't know. It doesn't seem to be solving the problems in --

J. KING: That uncertainty is unsettling. All the more so because Rieder and many others out here listen to dire warnings from their president and just don't believe him.

RIEDER: Most of the same thing that the president did in Iraq. Oh, if we don't watch out, that will come in the form of a mushroom- shaped cloud. And there was no threat like that whatsoever. For my part, I don't believe anything that's coming out of Washington, particularly from the Oval Office.

J. KING: That mistrust of Mr. Bush and the Congress leaves Rieder feeling powerless and worried it will cost him even more when the cattle head back to the hills next spring, and he needs another loan to keep the family ranch up and running.

(END VIDEOTAPE)

J. KING: What angers many people we've talked to out here is they say they keep hearing from the politicians that all these institutions are too big to let them fail. Well, John, what everyone is telling us it is the members of Congress through all the deregulation that let these institutions get too big to begin with -- John.

ROBERTS: Interesting story. John King for us tonight. Sorry, John, in Marysville, Montana. He was in Helena earlier today. Thanks, John, very much.

Coming up next, Sarah Palin's thoughts and why people mocked her foreign policy credentials. And her first kind of off-the-cuff statements to reporters on the campaign trail. We've got that for you.

(COMMERCIAL BREAK)

ROBERTS: A rarity today for Governor Sarah Palin after touring Ground Zero in Lower Manhattan, John McCain's running mate made some unscripted remarks to reporters, even took a few questions. And tonight, in a taped interview with the CBS "Evening News," Katie Couric asked Governor Palin to clarify her views about Alaska's next door neighbor, Russia.

(BEGIN VIDEOTAPE, CBS "EVENING NEWS") KATIE COURIC, CBS ANCHOR: You've cited Alaska's proximity to Russia as part of your foreign policy experience. What did you mean by that?

GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: That Alaska has a very narrow maritime border between a foreign country, Russia, and on our other side, the land boundary that we have with Canada. It's funny that a comment like that was kind of made to -- I don't know, you know? Reporters.

COURIC: Mocked?

PALIN: Yes, mock. I guess that's the word, yes.

COURIC: Well, explain to me why that enhances your foreign policy credentials.

PALIN: Well, it certainly does because our -- our next door neighbors are foreign countries. They're in the states that I am the executive of. And there in Russia --

COURIC: Have you ever been involved with any negotiations, for example, with the Russians?

PALIN: We have trade missions back and forth. We do. It's very important when you consider even national security issues with Russia as Putin rears his head and comes in to the air space of the United States of America, where do they go? It's Alaska. It's just right over the border.

It is from Alaska that we send those out to make sure that an eye is being kept on this very powerful nation, Russia, because they are right there. They are right next to our state.

(END VIDEOTAPE)

ROBERTS: Well, with me now is CNN political contributor and Republican strategist Bay Buchanan, who is a senior adviser to Mitt Romney's presidential campaign. Back again with us as well, CNN political analyst Roland Martin, who says he's going to vote for Barack Obama, and senior political analyst Gloria Borger.

Bay, let's start with you. How do you think she did?

BAY BUCHANAN, REPUBLICAN STRATEGIST: Well, it wasn't as smooth as I'd like to see. I'll be honest. But she was fine. There's no mistakes. She spoke from her heart and gave an explanation. I think she's absolutely correct.

Anyone who's a governor of a state that's right next to another country or other states they usually have some relationships, some proximity, awareness of what's going on in those other countries.

MARTIN: Bay --

ROBERTS: So would you say the same thing about the governors then of Montana, North Dakota and Idaho?

BUCHANAN: Well, they certainly are very familiar with Canada. They do dealings there. They work very, very closely in trade arrangements, on border security. Sure.

ROBERTS: Right.

BUCHANAN: They would know Canada very, very well.

ROBERTS: Roland?

MARTIN: Bay, what was she talking about? I mean, I was sitting here going -- I don't know what she was talking about. She had no idea what she was talking about. She was dancing and dancing and well, you know, we can see across and, you know, maybe next door and we have to send them over. OK, thanks, Katie.

BUCHANAN: She made no mistake, Roland.

MARTIN: Bay -- come on, Bay.

BUCHANAN: No mistake whatsoever.

ROBERTS: All right. So give us some --

MARTIN: We were confused, Bay.

ROBERTS: Sorry, let me --

BUCHANAN: Well, let me ask you. Roland, were you more confused about that or maybe when Biden started talking about the president, Roosevelt, during the Depression...

MARTIN: No.

BUCHANAN: ... the crash and about the television set? He got no American history?

(CROSSTALK)

ROBERTS: Give me a few seconds to bring in -- Roland! Roland, Roland, give me a second to bring in --

BORGER: Let them go on.

ROBERTS: I know, it's a lot of fun to watch.

But, Gloria, give us an objective opinion here. You heard from both sides.

BORGER: Look, I think she was not on terra firma with the answer to this question. I mean, "it's not being smooth" is a nice way that Bay Buchanan put it. But I'm not quite sure what she meant to say and I think that's why they're so worried about her, John.

MARTIN: That's right. ROBERTS: So, Bay, what's going to happen October 2nd during that debate if it's still is on on October 2nd?

BUCHANAN: Are you talking about the vice presidential one?

ROBERTS: Yes.

BUCHANAN: OK. I just wanted to make sure because that one might be the presidential one.

MARTIN: No, it won't be.

BUCHANAN: I think what's going to happen is there's going to be very low expectations for her. She is a very polished and excellent debater. There's no question. She ran very tough campaigns, talked to people in Alaska. She's been on a lot of TV. I think the handlers are trying to control her too much and so she is very, very cautious and careful.

ROBERTS: Right.

BORGER: I agree.

(CROSSTALK)

ROBERTS: Roland?

MARTIN: Sorry, John.

BUCHANAN: And I think she'll be much better at the debate.

ROBERTS: We have to go, Roland. We're out of time. Sorry about that. But as Campbell Brown was saying the other night, free Sarah Palin, right?

BUCHANAN: Stay confused, Roland.

MARTIN: I'm still confused.

ROBERTS: Bay, Roland, Gloria, thanks so much.

BUCHANAN: See you later, Roland.

MARTIN: Oh.

ROBERTS: And that's all from ELECTION CENTER for you tonight. For Campbell Brown, I'm John Roberts.

"LARRY KING LIVE" starts right now.

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