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American Morning
$700 Bailout Plan Fails; Bailout Failure Backfires on McCain; Passing the Battered Buck to the Next President
Aired September 30, 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: Coming right up now to the top of the hour, 7:00 here in New York. Breaking this morning, President Bush will make a statement on the economic crisis right before the markets open at 8:45 Eastern this morning. Then the White House and congressional leaders will try to keep this $700 billion bailout plan alive, at least in some way, shape or form.
Yesterday, the House shocked Wall Street by shooting it down triggering a record 777 point sell-off. This morning, Senator Barack Obama released a statement saying the continued inaction would be "catastrophic for the economy and families."
Oil prices fell below $94 a barrel early this morning on economic fears. Yesterday, prices also fell more than $10 a barrel, one of the biggest one day drops ever.
And the gas shortage drags on in the southeast. Some drivers are still sitting in two hour lines waiting to fill up. Industry experts say that this could last for yet another two weeks. Stations started drying up after Hurricanes Gustav and Ike shot down refineries along the Gulf Coast.
JOHN ROBERTS, CNN ANCHOR: Well, back to our top story this morning, Dow futures rebounding this morning after the biggest one-day drop in Dow Jones history closed at 800 points wiped out gone. That means an astounding $1.2 trillion vanished from portfolios and 401(k)s. Major world markets still taking a hit this morning after the bottom fell out on Wall Street.
Japan's Nikkei closed down more than four percent. In Hong Kong, stocks rebounded from early losses. And in London, stocks are up slightly and it looks like reporting to an up day on Wall Street.
A fix for the worst financial crisis of our time is going to have to wait at least another couple of days. Congress has adjourned for the Jewish holiday, but staffers and some lawmakers are working behind-the-scenes on a bailout plan. That's plan B. Our Kate Bolduan joins us live from Capitol Hill this morning.
Kate, you probably heard Congresswoman Blackburn there a second ago saying she believes that something will get done by the end of this week. Is that a sentiment that's widely shared there on Capitol Hill?
KATE BOLDUAN, CNN CORRESPONDENT: I can tell you, they sure hope they can. Many did not expect it to turn out this way or be in the position that everyone seems to be right now, which is scratching their heads. I mean, some really thought this was a done deal but it turned out to be anything but that, John, and what turned out to be one of the most dramatic votes in recent years.
(BEGIN VIDEOTAPE)
BOLDUAN (voice-over): Lawmakers knew it would be a tough vote and House Republican leaders were begging for support until the last minute.
REP. JOHN BOEHNER (R), MINORITY LEADER: What's in the best interest of our country? Not what's in the best interest of our party. Not what's in the best interest of our own reelection. What's in the best interest of our country? Vote yes.
BOLDUAN: Then came the stunning count. When the official clock expired, support wasn't there. Leaders held the vote open for more than 20 minutes twisting arms. In all, 95 Democrats and 133 Republicans voted no.
UNIDENTIFIED FEMALE: The motion is not adopted.
BOLDUAN: The stock market then plunged more than 700 points and the finger pointing began. House Republicans claiming Speaker Nancy Pelosi's blast against free market advocates poisoned key Republican support.
REP. NANCY PELOSI (D), HOUSE SPEAKER: But in this case, in its unbridled form, as encourage supported by the Republicans, some in the Republican Party not all, it has created not just -- not jobs, not capital, it has created chaos.
REP. ERIC CANTOR (R), VIRGINIA: Right here is the reason I believe why this vote failed. And this is Speaker Pelosi's speech that frankly struck the tone of partisanship that frankly was inappropriate in this discussion.
BOLDUAN: Democrats call that absurd.
REP. BARNEY FRANK (D), FINANCIAL SERVICES CHAIR: Here's the story. There's a terrible crisis affecting the American economy. We have come together on a bill to alleviate the crisis and because somebody hurt their feelings they decide to punish the country.
BOLDUAN: And Speaker Pelosi insists this crisis requires a bipartisan solution.
PELOSI: What happened today cannot stand. We must move forward and I hope that the markets will take that message.
(END VIDEOTAPE)
BOLDUAN: Now, where everyone goes from here is definitely still unclear. One top House Republican, Roy Blunt, tells CNN that the bill could first go to the Senate, pass with some tweaks and then head back to the House hopefully gaining support along the way. But one top Senate aide says that seems very unlikely right now -- John.
ROBERTS: Kate Bolduan for us this morning on Capitol Hill watching this very closely. Kate, thanks. We'll talk to you a little bit later.
BOLDUAN: OK.
CHETRY: So the way this could all trickle down to you and hit you the hardest is through the credit market. Senior business correspondent Ali Velshi joins us now.
You know, we all like to look at the Dow.
ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Right.
CHETRY: We like to look at Wall Street because you can actually see things dropping...
VELSHI: Yes.
CHETRY: ... and coming up. But really this credit situation --
VELSHI: You've got that little box that we could have in the corner. We've got the big screen with the Dow. But if you actually to put the Dow or U.S. stock markets in perspective in terms of all the money that flows around the world, it would be like looking at a map of America and having the Dow look like Long Island.
The fact is the credit markets are much bigger. There is much more money that flows outside of stock markets than not. And that is the money that banks exchange with each other and then flow down -- that money flows down to you in different ways.
One of the ways it flows down to you is in terms of you getting loans, mortgages and auto loans and student loans and other kinds of loans. But another way it flows down to you is if you're trying to sell a house. You're in trouble, you're trying to get out from under your payments. You're worried about foreclosure. You're trying to sell that house but somebody else can't buy it because they can't get the financing that is necessary.
Another way it affects you is that companies and maybe your employer, maybe even small businesses need to borrow money. It's very common for them to borrow money for day-to-day operations which include payroll, and if they can't make those payments or if they can't pay a supplier, that affects that supplier which may be a small business. So the issue here is that as these credit markets are frozen up, people can't get loans.
Now the big deal here is that the credit markets were frozen up already. But the anticipation of a deal really shut them down because now nobody is going to loan money on the expectation that they don't know whether the rules are going to change in a couple of days. So that's a really big deal and we are not hearing about all of it. We're hearing anecdotally from certain companies. But we know that some franchisees, for instance, who depended on the franchiser to get financing to buy machinery or things like that can't do that.
You say, why do people care? Because people work at these places and those are jobs that are being lost. That's why we are worried about this. Again, I just make that point to underscore how this is related to Main Street because it's become a Wall Street bailout in the minds of so many Americans.
CHETRY: That's right. And that's what -- and they're still saying calling it that.
VELSHI: That's right.
CHETRY: And that also is a psychological trigger as well. All right, Ali. We're going to talk about this throughout the morning. Thanks.
VELSHI: And we're taking questions so go CNN.com/am.
CHETRY: Slash am. Thanks.
ROBERTS: A lot of people want information this morning.
A deal rejected, a market collapsing, and all Republicans and Democrats could do was point fingers at each other. Each side accusing the other of playing politics with both the bailout and your money.
(BEGIN VIDEO CLIP)
REP. JOHN CULBERSON (R), TEXAS: The Democrats because they had the majority they could have passed the bill today on their own.
REP. NANCY PELOSI (D), HOUSE SPEAKER: The Democratic side more than lived up to its side of the bargain.
REP. JOHN BOEHNER (R), HOUSE MINORITY LEADER: I do believe that we could have gotten there today had it not been for this partisan speech that the speaker gave on the floor of the House.
REP. MICHELE BACHMANN (R), MINNESOTA: We are not babies who suck our thumbs. We have very principled reasons for voting no.
(END VIDEO CLIP)
ROBERTS: Well, ultimately, the bickering costs us more than $3 billion a minute but it may have cost John McCain something even more valuable right now. Political capital. Our Ed Henry joins us live from Washington this morning.
Ed, Senator McCain put a lot on the line here, suspended his campaign, rushed back to Washington. The deal fell apart. Now he's back there on the campaign trail. What kind of shape is he in with this whole thing?
ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Well, John, you're absolutely right. John McCain put the financial crisis front and center last week, so the bailout's fall is a really dangerous development for him.
(BEGIN VIDEOTAPE)
HENRY (voice-over): The market appears to be melting down, threatening to bring John McCain's campaign with it.
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: I was hopeful that the improved rescue plan would have had the votes needed to pass.
HENRY: The bailout's failure on the House floor is a stinging defeat for McCain who dramatically raised the stakes himself last week declaring he'd suspend his campaign to get a deal. As the Dow plunged 778 points, McCain was on the defensive. So he tried to pin the defeat on Barack Obama, even as McCain insisted he did not want to play the blame game.
MCCAIN: Senator Obama and his allies in Congress infused unnecessary partisanship into the process. Now is not the time to fix the blame. It's time to fix the problem.
HENRY: But the real problem for McCain is that despite his best lobbying efforts, 133 fellow Republicans voted no. And some conservatives are charging McCain lost sight of his party's free market roots.
TERRY JEFFRIES, CNN CONTRIBUTOR: I think that John McCain failed fully. He should be right there pushing the principles that the conservatives in the House are doing right now.
HENRY: The bailout is one of the few major issues where Obama is pretty much in line with McCain. Both men have suggested they would vote for the rescue plan. But the tension within the Republican Party, many House conservatives rejecting both the president and their presidential nominee, has given Obama an opportunity to tie McCain to an unpopular White House.
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: This crisis is a direct result of a philosophy that the people who've been running Washington for the last eight years have been following.
HENRY: McCain allies continue to insist he made the right move by inserting himself into the talks and note 95 Democrats voted against the bill too.
RON BONJEAN, REPUBLICAN STRATEGIST: He wanted to come back to Washington to help with the crisis. In fact that it didn't work out, it's not in his shoulders. Frankly, it's on the Democrats shoulders. They're the one who run -- they're the ones who run Congress.
HENRY: But the challenge is particularly stark for McCain, according to the latest CNN/Opinion Research poll. When asked who was more responsible for the financial crisis, 47 percent said Republicans. Twenty-four percent said Democrats.
(END VIDEOTAPE)
HENRY: Now, both candidates will be talking about the economy again today. Senator Obama in Nevada, Senator McCain will be in Iowa.
And new this morning, Senator McCain was supposed to be coming back to D.C. tonight into tomorrow for a possible Senate vote. With all that influx, he's now going to Missouri instead. Besides the fact that the Senate vote is up in the air, it doesn't seem to be a lot of political benefit for John McCain coming back here to Washington right now, John.
ROBERTS: All right. Ed Henry for us in Washington this morning. Ed, thanks so much for that.
And a reminder that Senator John McCain is going to join us coming up live at our next hour here on the "Most News in the Morning." What are his plans for the campaign now that Congress is looking for a plan B on that bailout?
CHETRY: And in the wake of the bailout bill defeat, Republicans in the House are getting a lot of blame. But 95 Democrats also voted against the bill, too, and we're going to talk to one of them live to find out more about why.
Also, the VP's plan of attack. Sarah Palin and Joe Biden getting ready to face off in front of the nation. Will Governor Palin be prepared? Can Senator Biden be too tough? Jason Carroll gives us the tale of the tape on the "Most Politics in the Morning."
(COMMERCIAL BREAK)
CHETRY: Well, after the House rejected the $700 billion bailout yesterday, the finger pointing started and it was fast and furious. And while many Democrats say they're happy to give most of the blame to conservative Republicans, there were 95 Democratic House -- House Democrats who also voted no.
Congresswoman Sheila Jackson Lee was one of them and she joins us now from Houston this morning.
Congresswoman Lee, thanks for being with us.
REP. SHEILA JACKSON LEE (D), TEXAS: Thank you, Kiran. It's a pleasure to be with you.
CHETRY: Now you said -- you said there could have been a better bill. What do you think needed to be added to the point where you couldn't support yesterday's measure?
JACKSON LEE: Well, good morning. And I really do think there could have been a better deal. But you know, Kiran, there are many, many variable that played into the decision that members made. And I think the most important point is and one of the myths that I want to deflect is that we are working as we speak. We were out because of the Rosh Hashanah holiday, but we are working. We're meeting, we're submitting proposals.
The idea was, of course, a lot of political intervention. McCain's coming in and talking about he had the votes and only delivered 65 Republicans compared to Senator Obama's steady hand and actually 140 Democrats voted. But those of us voted for the bill.
CHETRY: Wait. Let me ask (ph) something there. What do you mean Barack Obama's steady hand? He didn't come back to Washington to gather votes or to try to get Democrats to support it?
JACKSON LEE: Well, Senator Obama set down a number of principles that were conveyed to the Democratic caucus. He was engaged in conversations that was made very clear to us. So we sort of understood the framework. And out of that, 140 Democrats did vote for the bill. But those of us who did not felt that there were better ways to approach this.
For example, there was no mark in the bill for specifically helping Americans, Mr. And Mrs. Main Street get out of their mortgage foreclosure crisis. $700 billion and not one single dime set aside specifically for that. That can be an improvement. Of course, the bankruptcy provisions were not in, due to the opposition of our good friends on the other side of the aisle. That allows individual homeowners to excess restructuring their loan.
CHETRY: Let me just ask you one quick question. Is there any chance that some of that can be addressed? We're starting to see the scope of this problem, especially as you're talking about foreclosures. Is there any way that could be -- that could be addressed in something separate?
Henry Paulson, the Treasury secretary, at the time said this has to be quick and clean in order for it to work. There were a lot of safeguards put into place to make sure there were some oversight, but still 777-point drop yesterday. Isn't the time now to do something?
JACKSON LEE: Well, what I do want to say is that the market certainly should recognize that they have the full faith and credit of the United States behind them. There should be less panic and more calm. We saw the market fall after 9/11. We saw the debacle of the savings and loan. We restored ourselves after that.
The debacle of the oil and the collapse. I come from Houston. We're suffering from Hurricane Ike. We can get this done. We can get this done by putting some of these elements in.
This bill first came to us from the White House with unbridled power by Secretary Paulson...
CHETRY: Right.
JACKSON LEE: ... something that was questionable under the Constitution. Members want to see a balance between this unfettered power given to the secretary and also a balance --
CHETRY: There were two oversight boards. There were two oversight boards in the legislation you guys turned down yesterday.
JACKSON LEE: Yes. But -- right. But, Kiran, they didn't have enforcement powers. And one of the issues coming from the Judiciary Committee that I was concerned about is that there were limitations on judicial review. Some of the issues that Secretary Paulson would be dealing with would be prohibited from the court's review. That's an unlikely set of circumstances. But the issue of Wall Street is one of concern to all of us.
We understand credit is a concern. I believe that we can add this particular mark that sets aside dollars for those on Main Street. I believe that we can put in more enforcement. We can look at the issues of the FDIC and the mark to market suspension.
We can handle this. We will be back in Washington, the Senate on Wednesday. We will be back on Wednesday and Thursday. We are meeting, and I frankly believe we can solve this. But the people who voted should also be given the credit of looking at this issue to make sure that the American consumer was being protected, even to the extent of protecting going forward their 401(k) and their pensions.
We understand the crisis that is in place, but we also want you to know that this crisis was brewing for one year.
CHETRY: Right.
JACKSON LEE: And this administration did not tell the Congress that we were facing this kind of collapse. And so, there has to be, in essence, balancing of the responsibility of where we are today.
Congress will accept its constitutional responsibilities. The market can calm down on the basis of the strength of this government. This government is not going anywhere. We are going to protect the American people and certainly we're going to protect and help to build back Wall Street.
CHETRY: All right. A lot of differences of opinion, though, when we heard from your GOP counterpart, Marsha Blackburn. A lot of differences in why it didn't get passed. The bottom line is it didn't get passed. You guys still have a way to go obviously to work out something everyone can agree with.
Sheila Jackson Lee, thanks.
JACKSON LEE: I think we'll come together, Kiran.
CHETRY: All right. Congresswoman, thanks for joining us this morning.
JACKSON LEE: Thank you for having me.
(BEGIN VIDEO CLIP)
OBAMA: We will invest.
MCCAIN: We will invest.
(END VIDEO CLIP)
ROBERTS: A look at how a potential bailout could kill the campaign promises before the next president even takes office. (BEGIN VIDEO CLIP)
LAKSHMAN ACHUTHAN, ECONOMIC CYCLE RESEARCH INSTITUTE: What's going on now is going to define the economic policies for the next president.
(END VIDEO CLIP)
ROBERTS: You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
ROBERTS: Welcome back to the "Most News in the Morning." A lot of uncertainty for the man in the Oval Office after yesterday's bailout rejection. But one thing that is certain, the next person in line will inherit an economic mess of gargantuan proportions.
Christine Romans joins us now. It's going to bad.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: It is. And these candidates have spent months on the campaign trail trying to set themselves apart from each other and trying to set themselves apart from George Bush. The fact is, no matter who is president, this crisis will define the beginning of that presidency.
(BEGIN VIDEOTAPE)
MCCAIN: Change is coming to a neighborhood near you.
OBAMA: It is time for change in America.
ROMANS (voice-over): Both candidates are distancing themselves from the last eight years, but this economy will not suddenly change in 2009.
LAKSHMAN ACHUTHAN, ECONOMIC CYCLE RESEARCH INSTITUTE: What's going on now is going to define the economic policies for the first term of the next president.
ROMANS: The collapse of Bear Stearns, the government takeover of Fannie Mae and Freddie Mac and AIG, bank failures and a potential $700 billion bailout package.
ACHUTHAN: Either way, all of the government support given to the markets, given to the economy this year and in the coming months, is blowing a hole in the budget.
ROMANS: And that equally handcuffs Obama and McCain.
OBAMA: We are going to invest $150 billion.
MCCAIN: We will invest as much as $2 billion a year.
OBAMA: I will cut taxes.
MCCAIN: Tax cuts for America's hard-working families. ROMANS: But can any of it really happen? The budget deficit is forecast to hit $482 billion next year. The national debt is approaching 10 trillion, and that's before the current banking system crisis. And it's still unfolding. Medicare and Social Security are on the verge of running dry. And the wars in Iraq and Afghanistan are incredibly expensive.
MARK HALPERIN, POLITICAL ANALYST: They can both go out on the campaign trail and talk about change all they want. When they get sworn in, whichever one wins, it's going to be not a new agenda but the old problem, the huge financial problem that George Bush is handing off to them.
ROMANS: The Obama camp says a vote for McCain is a vote for a third Bush term. The fact is either man will have to spend their first term trying to fix the same problem plaguing George Bush's last term.
(END VIDEOTAPE)
ROMANS: The bottom line, either candidate starts 2009 playing defense. The crisis still unfolding and there's really no playbook for it. It's not about putting their own mark on a new administration of change. It's about dealing with what we're dealing with right now.
ROBERTS: A way to start a presidency.
ROMANS: That's right.
ROBERTS: Christine, thanks so much.
Twenty-four minutes now after the hour.
CHETRY: Setting up the showdown.
(BEGIN VIDEO CLIP)
SEN. JOE BIDEN (D), VICE PRESIDENTIAL CANDIDATE: I have great respect for the debating skills of Governor Palin.
(END VIDEO CLIP)
CHETRY: The attack dog versus the pit bull.
(BEGIN VIDEO CLIP)
GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: You know, they say the difference between a hockey mom and a pit bull? Lipstick.
(END VIDEO CLIP)
CHETRY: Jason Carroll with a preview of the debate everyone is waiting for.
You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
REP. BARNEY FRANK (D), CHAIRMAN, FINANCIAL SERVICES COMMITTEE: There's a terrible crisis affecting the American economy. We have come together on a bill to alleviate the crisis and because somebody hurt their feelings they decide to punish the country.
(END VIDEO CLIP)
ROBERTS: Time now for the "Most Politics in the Morning." As shocking as it may seem, the presidential candidates have turned the economic crisis into a political issue. Sarcasm aside, Americans are already feeling the effects. So is this going to work to either candidates' advantage?
Joining me for that and more, Democratic strategist Lisa Caputo and Republican strategist and CNN contributor Ed Rollins back with us again this morning.
Before we head up to the presidential campaign, let's talk about what's going on Capitol Hill. Is there any question as to why congressional ratings are 10 percent? They can't find any way to address this in a prudent and urgent fashion, yet credit markets are drying up. $1.2 trillion in worth was lost yesterday.
LISA CAPUTO, DEMOCRATIC STRATEGIST: Yes. You know, it is amazing. I think that Congress has done a very poor job in packaging this to the American people. People don't understand what's at play here and what's at risk to their own personal pocketbooks. And that's why you saw members cave, particularly Republicans, because constituents were phoning into congressional offices three to one against this. And so, they caved.
Politics entered into the equation. And frankly, you know, having worked on Capitol Hill, I'm surprised these folks didn't stay in to work through the holidays to get this package up and done.
ROBERTS: Ed, is there a fundamental misunderstanding of what's going on by the people who are trying to solve this crisis?
ED ROLLINS, REPUBLICAN STRATEGIST: I think to a certain extent. There's probably 30 competitive races this year and most of those are open races. Of the 205 members who voted for the bill yesterday, only two of them are really in tough contests. This became -- everybody who thought they had a tough race which is anybody really has a serious opponent, and I think to a certain extent the Republicans are listening to the phone calls that are coming to their office overwhelming as opposed to the marketplace.
ROBERTS: So a tough race there and the presidential campaign as well. Should John McCain suspend the campaign for a second time and come back and work on this until it's done?
ROLLINS: I don't think he should try that. I think he should just go out and find -- hope that Congress gets this thing done. Go out and try to encourage to get it done and go out and campaign on other issues.
ROBERTS: What about Senator Obama? I mean, he pretty much sat on the sidelines through this whole thing and his campaign is trying to give him credit for bringing two-thirds of the Democratic caucus on board. But, you know, if he could have brought 12 more Democrats on board, this thing would have got passed.
CAPUTO: Well, I think Senator Obama is playing this just right because let's not forget, John McCain wrapped himself in this. He wrapped himself to be part of the solution. He couldn't even deliver his own party nor could the president for that matter on this vote.
Let's also remember that 47 percent of Americans identify Republicans with this financial crisis. So that plays to Barack Obama's favor. He just needs to stay the course.
ROBERTS: Do you buy that, Ed, because it was Democrats who were in charge of writing this bill?
ROLLINS: Well --
ROBERTS: And they couldn't bring -- they couldn't bring the majority. Well, they brought the majority of their caucus but they couldn't bring more members to the table.
ROLLINS: I think they'll have to bring more members to the table. I don't think the Republicans are going to make the deal. And I think they're going to have -- the Democrats are going to have to give something up to get another 10 or 12 votes here. And I think you end up with a worse bill not a better one.
ROBERTS: And quickly, if you had to be a betting person, would you bet they get something done this week?
CAPUTO: I bet they get something done this week. They have to. The country needs it to be done.
ROBERTS: All right. Lisa Caputo, Ed Rollins, good to see you as always. Thanks so much.
CAPUTO: Nice to see you.
ROLLINS: Thank you.
ROBERTS: And it is 7:30 here in New York. Some of the top stories this morning.
The battle for Ohio begins today. Absentee voting in the crucial swing state will start in just 30 minutes. Election officials there are expecting a record number of early ballots, as many as 12,000 before November 4th. And more than 52 million people watched the first presidential debate between Senators John McCain and Barack Obama, way below expectations though. Nielsen says that the audience was 10 million fewer than the first debate back in 2004. That was held on a Thursday which is the most watched night on television, not on a Friday when a lot of people go out. Janet Jackson in a hospital this morning. A statement from her publicist says the 42-year-old singer suddenly became ill before a concert in Montreal last night. There's no word on her condition. The statement only says that she's being monitored and hopes to reschedule the show. Janet Jackson is currently on a tour of North America.
And Governor Sarah Palin sat down for a follow up interview with Katie Couric. This time John McCain was there as well. McCain had his running mate's back when Couric asked about Palin's response to a voter's question over the weekend. Take a look.
(BEGIN VIDEO CLIP)
KATIE COURIC, CBS HOST: Over the weekend, Governor Palin you said the U.S. should absolutely launch cross border attacks from Afghanistan into Pakistan to "stop the terrorists from coming any further." Now that's almost the exact position Barack Obama has taken and that you, Senator McCain have criticized as something that you do not say out loud. So, Governor Palin, are you two on the same page.
GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: We had a great discussion with President Zardari as we talked about what it is that America can and should be doing together to make sure that the terrorists do not cross borders and do not ultimately put themselves in a position of attacking America again or her allies. And we will do what we have to do to secure the United States of America and her allies.
COURIC: Is that something you shouldn't say out loud, Senator McCain?
MCCAIN: Of course not. I understand this day and age of gotcha journalism. Is that a pizza place? In a conversation with someone who didn't hear the question very well. You don't know the context of the conversation, grab a phrase -- Governor Palin and I agree that you don't announce that you're going to attack another country.
COURIC: Are you sorry you said it, Governor?
MCCAIN: Wait a minute, before you say is she sorry she said it? This was a gotcha sound bite that what =-
COURIC: It wasn't a gotcha, she was talking to a voter.
MCCAIN: It was a conversation with a group of people and talking back and forth and I'll let Governor Palin speak for herself.
PALIN: In fact, you're absolutely right on. In the context this was a voter, a constituent hollering out a question from across an area, asking what are you going to do about Pakistan? You better have an answer about Pakistan? I said we're going to do what we have to do to protect the United States of America.
COURIC: What did you learn from that experience?
PALIN: That this is all about gotcha journalism. A lot of it is. But that's OK too.
(END VIDEO CLIP)
CHETRY: McCain criticized Barack Obama during the first presidential debate for saying publicly that he would launch attacks on Al Qaeda targets inside Pakistan. McCain called Obama naive on foreign policy telling him "you don't say that out loud."
Now John McCain won't be there when Governor Palin goes head-to- head with Senator Joe Biden Thursday. Each candidate is already trying to frame the big debate to his or her own advantage. And Jason Carroll joins us now with a look at what each one needs to do, I guess.
CARROLL: A lot of people are going to be watching. Both Senator Joe Biden and Sarah Palin have a mission going into this debate which is attack the man running for president. Both Palin and Biden have another mission going into this debate as well, and in order to meet their goals it's going to be tough.
(BEGIN VIDEOTAPE)
CARROLL (voice-over): Each side has been praised for their skill.
SEN. JOE BIDEN (D), VICE PRESIDENTIAL CANDIDATE: I have great respect for the, what I hear and watch some of the debating skills of Governor Palin.
UNIDENTIFIED MALE: Joe Biden is a very good debater. He's got a quick tongue.
CARROLL: Both Governor Sarah Palin -
PALIN: It's no secret that I'm pro life. And I don't hide that nor am I ashamed of that.
CARROLL: And Senator Joe Biden have debating experience.
UNIDENTIFIED MALE: Can you reassure voters in this country that you would have the discipline you would need on the world stage, Senator?
BIDEN: Yes.
CARROLL: Biden's use of self deprecating humor has helped him diffuse criticism that he can't stay on message. Too wordy. Biden does come to the stage with foreign policy experience and a reputation for attack dog instinct, appropriately his opponent is a self- described pitt bull.
PALIN: You know they say the difference between a hockey mom and a pitt bull? Lipstick.
SUSAN MOLINARI, FORMER CONGRESSWOMAN: This is the time for America to see Governor Palin like we saw her at the convention. CARROLL: Susan Molinari is a former Republican congresswoman who says Biden has to use caution in his exchanges with Palin. I can tell you from experience, it's very difficult to sometimes run against a debate against a female candidate.
In 1984, then Vice President George H.W. Bush learned that during the VP debate against Congresswoman Geraldine Ferraro.
GEORGE H.W. BUSH, FORMER PRESIDENT OF THE UNITED STATES: Let me help you with the difference Miss Ferraro between Iran and the embassy in Lebanon.
CARROLL: Critics called Bush condescending. Biden's camp say his tone will be civil.
DAVID AXELROD, OBAMA CAMPAIGN STRATEGIST: I don't think he's going there to go after Governor Palin. He is going there to make the case for Senator Obama.
CARROLL: In these last days, Palin is preparing for her own set of challenges.
RUTH MANDEL, EAGLESTON INSTITUTE OF POLITICS: What does she know about the issues, is she qualified substantively to hold that position and to be a heart beat away from the presidency.
CARROLL: Questions raised by some conservatives following her rocky interview with CBS's Katie Couric reestablishing Palin's credibility is not all she has to accomplish.
PAUL BEGALA, CNN POLITICAL CONTRIBUTOR: At the same time she's got to attack Barack Obama and try to put Joe Biden on defense. It will be hard to balance those two missions.
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CARROLL: And in order to prepare for debates candidates often hold mock debates to get some of their homework in there. Palin is doing her homework in Arizona with the McCain team while Biden is preparing in Wilmington, Delaware.
CHETRY: All right. And everyone can watch it. Jason Carroll, thanks so much. By the way, at 9:00 p.m. this Thursday, the most anticipated V.P. debate ever, Biden versus Palin. The best political team live, Thursday night, right here on CNN.
ROBERTS: And of course, the economy, issue #1. It will be the debate here all morning on the "Most News in the Morning." 36 minutes after the hour. Ali Velshi working the blog today.
What are you hearing, Ali?
ALI VELSHI, CNN, SENIOR BUSINESS CORRESPONDENT: Go to CNN.com/am. There's some really great questions on there. New questions about this bailout package. What happens if it doesn't get passed and what it needs to have in it in order to work for Americans? I'm going to answer some of those questions when we come back right after this break.
Stay with AMERICAN MORNING.
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ROBERTS: 21 minutes now to the top of the hour. Ali Velshi is working the blog this morning, answering your questions about the implosion on Wall Street yesterday. I'm sure a lot of people have a lot of concerns out there -- Ali.
VELSHI: They do. And some of them have interesting comments. One of them says Ali needs to stop acting like someone peed in his oatmeal. I'm not going to answer that question.
Rennon in Florida says "My family has been waiting for a final mortgage approval from a lender. We were told it was stuck until Congress made a decision, how will the failure of the bailout plan affect us? Has our family of seven lost a chance at the home we've been trying to buy for months?"
This is exactly one of the outcomes of this credit freeze which has been enhanced by the fact that this bailout plan has not passed. Before there was a bailout plan there was actually still a credit freeze and now there's no money flowing around because everyone waiting to see what the rules of this thing are. So once there's some sort of plan that should free up the money for your mortgage assuming you got good credit and it's already been largely approved.
Drew in Albany says "I'm a 30-year-old professional with no stake in the market. I'm looking to start my first 401(k) and IRA. I've heard this is a terrible time to be in the market but a great time to get in. What do you think? If so, what should I buy?"
You're 30 years old. You got a lot of time in the market. The value of compounding your money is the biggest deal in you being able to retire well. So I would start your 401(k) immediately and make disciplined contributions to that, irrespective of where the market is.
And, Izzy in Florida says, "Should we be keeping some money stashed at home for emergencies just in case there's an issue about getting money out of ATMs from or checking or savings account until our government "for the people" gets their act together?"
Generally speaking you shouldn't expect any problem. Your money is insured by the FDIC and that is backed by federal government. There is no instance if you don't have more money than those insured limits that would cause you not to have your money. It's always safe to have some money. I wouldn't recommend stashing any significant amount of money in your house. That leaves to all sorts of problems. You can lose it if something happens to your house. Somebody might rob you. Banks are still pretty safe. Keep the money you need for the weekend. And I wouldn't worry about it beyond that -- John.
ROBERTS: And Ali, I can attest to the fact that I have never ever seen you eat oatmeal. VELSHI: Right.
ROBERTS: So I don't know -
VELSHI: I don't generally eat breakfast but no danger of that. Thanks for the consideration.
ROBERTS: Ali, thank so much for that.
CHETRY: Death of the American dream.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Oh, daddy it's going to be just perfect.
(END VIDEO CLIP)
CHETRY: Forget the picket fence. Carol Costello looks at how changing times are changing the dream.
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UNIDENTIFIED MALE: It's getting worse and worse.
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CHETRY: You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
CHETRY: Welcome back to the "Most News in the Morning."
In the middle of all of this economic uncertainty it's easy to get lost in the numbers. We have a $700 billion bailout bill that failed. We have $1.2 trillion lost on Wall Street yesterday alone. But what's really at stake here is the American dream itself. Carol Costello has that for us this morning live from Washington.
Hi, Carol.
CAROL COSTELLO, CNN CORRESPONDENT: Hi, Kiran.
You know, part of the reason that bailout plan failed in the House is because a lot of voters are angry and politicians realize that. Voters are also anxious because for the first time in 50 years they believe their children will be unable to realize the American dream.
(BEGIN VIDEOTAPE)
COSTELLO (voice-over): The American dream, 1950 style.
UNIDENTIFIED FEMALE: Oh, Dan, it's going to be just perfect.
COSTELLO: The dream was simple back then. A nice home with a white picket fence. A life better than what your parents had. It seemed so attainable back then. Today not so much.
JOHN MORTON, PEW CHARITABLE TRUSTS: The perception is clearly negative. Americans are clearly very anxious about their economic prospects and the prospects for their children. At levels that we haven't seen in 50 years.
COSTELLO: Why? Since 1999 median family income has decline slightly even though we're working longer hours to keep up. More startling, between 1974 and 2004 the median income for a guy in his 30s fell by 12 percent. Still, Americans continue to believe in the dream. Many bought homes they couldn't afford. Some sold to them by unscrupulous lenders. Many believed until the housing boom went bust. And the country woke up to a dream that seems to be dying.
UNIDENTIFIED MALE: It's getting worse and worse.
UNIDENTIFIED FEMALE: Housing was better then than now.
UNIDENTIFIED MALE: A lot of the American dream is gone.
COSTELLO: Americans are also angry at Wall Street, the wage gap between rich and poor is bigger than ever. And many in the middle class no longer feel that if you work hard enough you can have it all.
UNIDENTIFIED MALE: The perception begins to be quite negative. And if the reality begins to turn in that direction we enter a new form of people trying to figure out how they fit into that American dream.
COSTELLO: And if part of the country can no longer figure out how they fit into that dream, America will lose the one belief that unites us.
UNIDENTIFIED FEMALE: And we'll have the living room right in here.
COSTELLO: A dream that anything is possible, even if it means that we now own a small piece of that house with the white picket fence.
(END VIDEOTAPE)
COSTELLO: Now it is important to keep in mind how resilient Americans are. We made it through the Great Depression, the '87 stock market crash and we made it through 9/11. If history is any indication, Kiran, we will make it through this too. But it will take strong leadership, something many Americans are looking for and simply not finding.
CHETRY: And it's also amazing, all of this is happening in the middle of an election year and an election cycle. And so that makes every move that much more amplified.
COSTELLO: It does. It's really become Main Street versus Wall Street and right now Main Street is calling Wall Street's bluff. So I guess Main Street, some of Main Street, anyway, believes it's winning, but things well, we know all know how things are going on the Hill.
CHETRY: Yes. Main Street is also calling their Congress people saying don't vote for this bill. That's what a lot that has happened yesterday.
Good piece. Carol Costello, thanks.
ROBERTS: Mr. Independent.
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LOU DOBBS, CNN HOST: They are lying cheat and thieves.
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ROBERTS: Lou Dobbs pulling no punches, why he says it's a good thing that the bailout failed.
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DOBBS: I'll guarantee you, the Democrats won't be passing any such legislation.
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ROBERTS: You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
ROBERTS: 49 minutes after the hour. A new food label law goes into effect today. It's kind of like a passport for meat and produce, requiring companies to label food by country of origin. The rules have been in the works for years. Comes right in the middle of China's milk scandal. But there are still a lot of loopholes. We're "Paging Dr. Gupta" this morning. He's in Atlanta for us.
What foods are required to be labeled under this new, I guess, the COL label?
DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Hey, good morning, John.
Yes, it's called the COL label which stands for country of origin labels and as you said it has been sort of a long time coming, been conceived some years ago. There are certain food groups that are absolutely going to fall under the guidelines here. For example, you take a look at meats, especially whole cuts, fish and shellfish have already been labeled in a lot of parts already, fruits and vegetables, nuts and ginseng.
But one of the things that I -- and I think you're alluding to this as well, John, is not everything is labeled and even small changes related to foods can make a difference. Let me give you a couple of examples. We went to the grocery store to tell what you we're talking about here. For example, if you buy regular raw chicken here, it's going to have to be labeled. This one in fact already has a label. But if it is cooked in any way, as this chicken is, it does not require a label. So Uncooked versus cooked.
Even something as simple as peanuts, for example. Raw peanuts, these would require a label. You roast them, they would not. An example, even more telling considering some of the food scares, fruits and vegetables. This cantaloupe would require a label but if you cut it up, you put it into a fruit salad like over here, it no longer does. So there's going to be some problems here as you might imagine. You know you may be able to figure out if your lamb is coming from New Zealand or if you particularly like Chilean grapes you can find that but there are going to be some problems though, John.
ROBERTS: I mean, it is great to have country of origin when it comes to these fresh fruits and these fresh vegetables but a lot of the biggest problems have been with processed foods, even some foods that have been canned. So does it leave a big hole in the food safety net?
GUPTA: Yes, I think it does John. I think you're exactly right. It is something that we thought about as well. And to take that a step further, you know when you talk about some of these food scares, we have focused on for example the tomatoes and jalapenos from Mexico or the milk from China as you mentioned. But remember that E. coli scare was in spinach and that was right here in California, in the United States. So you would not be able to distinguish state-to- state, you'd just be able to distinguish country-to-country.
So, you know, this is something that's been thought of since 2002 predating some of these recent food scares. But as I think you mentioned, it doesn't quite go far enough to get people the comfort to avoid them completely.
ROBERTS: All right. Sanjay, thanks very much for that. Appreciate it.
52 minutes after the hour now.
CHETRY: Bailout fallout. John McCain live next hour. How would he handle the financial crisis if president?
And cross examination.
(BEGIN VIDEO CLIP)
BILL MAHER, TV SHOW HOST: It's the whole idea of people who think magically, and in terms of stuff that's just not rational.
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CHETRY: Bill Maher takes on God and religion's place in politics.
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MAHER: We've had eight years of a faith-based presidency and you saw how well that turned out.
(END VIDEO CLIP)
CHETRY: You're watching the "Most News in the Morning."
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CHETRY: The fallout this morning after the House rejected a $700 billion financial bailout bill. The White House and congressional leaders are looking to regroup and try to salvage the legislation. And Treasury Secretary Henry Paulson says that the financial rescue effort is too important to fail.
CHETRY: CNN's Lou Dobbs joins us this morning from Sussex, New Jersey. You expressed delight I guess you could say, at the fact that it did go down yesterday, in defeat. We saw the largest point-drop on Wall Street ever.
What happens now?
DOBBS: Well, what happens now is that it sounds like the same fools who brought you this effort are going to try again.
Henry Paulson saying he's going to come right back, suggests he's not learning. And he's not paying attention to the Congress. These Congress people are all at home in their home districts, nearly every one of them and they're hearing an earful. The American people don't want to hear this nonsense about $700 billion to bail out financial institutions. Frankly, Kiran, that don't need it.
Economist after economist, with whom I've spoken, CEOs, they acknowledge that there are far better ways to deal with the issues confronting our financial system than this bailout. And it's absolutely obscenely irresponsible of House Speaker Pelosi, Treasury Secretary Paulson, President Bush, Senator Harry Reid, the leader of the Senate; for these people to be clucking about like hysterical -- so hysterically. It really must stop. And to hear there -- go ahead.
CHETRY: I was just going to ask you --
DOBBS: Go ahead.
CHETRY: You say that there's other ways around this. One of the things that everyone keeps talking about is the fact that credit markets are frozen and there has to be some way to free that up so that every day business from Wall Street to Main Street can continue.
Do you buy that?
DOBBS: No, not at all. And neither do most of the CEOs and economists with whom I'm speaking certainly. The real issue, they say, is liquidity. The Fed has injected more than half a billion dollars in liquidity into this banking system.
What we are watching are business -- quote, unquote -- leaders who won't surface and put their faces before the American public who are hysterical. Absolutely hysterical. These are not leaders of moment. They are not leaders of great character or vision. Only Warren Buffett has had the courage to step forward. And that's after he puts $5 billion into Goldman Sachs.
To watch our political leaders, they have no idea in the world, Kiran, what they're doing. Literally. And the arrogance with which this administration asks for, not only money, almost $1 trillion, and surely more in the months ahead. But the absolute power for Treasury Secretary Paulson. Give me a break. The American people want to stop those congressmen and women at home right now in their districts are getting an earful because this is an absurdity and it has to end.
CHETRY: So in one way, you're knocking Congress. But on the other way you're saying that, I guess system works in that the brakes were pulled. Whether or not you agree with the reasons why it didn't go through. So, weren't they doing their job and showing leaderhip?
(CROSSTALK)
DOBBS: Let me be clear, Kiran. I'm saying leadership -- I'm saying the Democratic leadership of this Congress was absolutely in the same situation as this president.
They don't know what they're talking about. They're trying to ram this thing down the people's throats and Congress. And those House Republicans and House Democrats who voted against this bailout deserve a great, great expression of thanks from the American people. Absolutely.
CHETRY: What do you think if you were up there making decisions? What do you think we need to do?
DOBBS: Well, the first thing we need to do is return to a traditional role of regulation. We are looking -- the problem here is not simply the housing market. We're talking -- but $700 billion and nothing in that bill deals with the foreclosure crisis, if you can imagine that. That's arrogance. That's stupidity. That is your leadership in Washington, D.C. Democratic leadership in Congress and Republican leadership in the White House. So that's an absurdity. The first thing that has to be dealt with is mitigating the foreclosure crisis, period.
Secondly, in terms of instilling confidence in the banking system and in our credit markets, the first thing to do is to deal with those institutions that are wildly out of balance, whose balance sheets, frankly, are a joke. And the regulators who should have been tending to them over the years are also a joke.
It's time to end the joke. That means aggressive regulation. It means aggressive intervention on an institution-by-institution basis.
CHETRY: All right. Well, they're going to take this up again today, or throughout the week as they try to figure out what the best course of action is. Maybe they should listen to you a little bit more.
DOBBS: They'll be back Thursday --
CHETRY: Right. DOBBS: They'll be back Thursday to try this nonsense all over again, Kiran.
CHETRY: I'm sure those frantic phone calls are going to continue through, throughout the holidays.
Lou Dobbs, thanks for being with us this morning.
DOBBS: Thank you. Good to be with you.
