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Vice Presidential Hopefuls Prep for Debate; Will House Pass Push Sweetened Bailout Bill?; Obama Gaining Ground in Swing State Support
Aired October 02, 2008 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, CNN ANCHOR: $100 billion here, more add-on there. Could the Senate sweeteners sour House members on the bailout? A potential pickle on Capitol Hill.
Just hours to go before they meet, the vice presidential hopefuls cramming for this evening's debate. Joe Biden versus Sarah Palin. Will there be drama? Will you watch?
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: There was a head on crash into the side of the mountain and a rock and the plane moved in and upward direction for 100 feet or so, and disintegrated.
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PHILLIPS: More than a year after the plane disappeared, have the Sierra Nevada finally given up Steve Fossett's resting place? The latest on the search.
Hi, everyone. I'm Kyra Phillips live in the CNN World Headquarters in Atlanta. You are in the CNN NEWSROOM.
Well, it tanked on Monday and will it fly on Friday? A few things have changed since the House voted down a $700-billion banking system bailout three days ago. For one thing, it is now an $810-billion bailout when you count all the tax breaks thrown in by senators, who passed that package easily last night.
Now, one thing that hasn't changed is the hard sell from the White House. Take a listen.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: This issue is way beyond New York and Wall Street. This is an issue that is affecting hard-working people. They are worried about their savings; they are worried about their jobs, and they are worried about their houses, they are worried about their small businesses, and the House of Representatives must listen to these voices. Get this bill passed so we can get about the business of restoring confidence.
(END VIDEO CLIP)
PHILLIPS: CNN's Brianna Keilar is on the Hill, where you can hear the arms being twisted.
Hey, Brianna.
BRIANNA KEILAR, CNN CORRESPONDENT: Hi there, Kyra.
Yes, House Republican leaders they have been on the phone twisting arms trying to win over some their rank-and-file members who were not on board Monday. We are starting to get a clearer picture as to whether they are able to get some of those rank-and-file members or not they are getting the rank and file members to move. It appears they are getting some to move I want to tell you, first off, though, the plan is still at this point for this vote to happen mid-day tomorrow. That is the tentative plan.
One of the concerns is that if you can get House Republicans on board, you end up losing some House Democrats. Well, we heard from a Democratic leader in the House, Steny Hoyer, he said, that it appears they are really not losing any of the fiscally conservative Democrats they were concerned about losing. So he really minimized the numbers of loss there. But one of the reasons that would have been a concern, I should add, is because of the tax cuts that have been added on to this plan that the Senate passed. Some concerns from those fiscally conservative Democrats that that would not be offset and they are not OK with that.
Well, those sweeteners along with some of that arm twisting, that does appear to be moving some of the House Republicans. We have been hearing from several of them actually that they are open to voting yes. Some of these members who voted no on Monday, so we are seeing some progress there.
Democratic aides saying, at this point, they don't really want to slow down any of the process here. They want to get this to the president's desk as quickly as possible so they are not expecting to change any of the language from the Senate bill. Of course, that is tentative, but the bottom line is the final math, and the bottom line, Kyra, is that we don't exactly know what the final math is, and neither do House Republican or Democratic leaders.
But one person who is going out on a bit of a limb is Charlie Rangel, a Democrat from New York, He actually said, when asked, how confident is he that this will got through. He said, "Very confident, because there is a change in the attitude of people back home. I am sure that would have been reflected, but adding the extenders and the energy package and the mental health and the AMT kind of guarantees it's going to go through."
He is talking about the add ons there that are expected to be popular to win over some of the people who voted no. I have to tell you how much do we put in what Charlie Rangel is saying? A little bit, he is the chairman of the House Ways & Means Committee. He has been in on some of these negotiations so you definitely have to listen to what he says, Kyra.
PHILLIPS: Brianna Keilar, we'll be listening, that's for sure. Thanks so much.
Here is where the financial crunch hits home: 497,000 new claims for unemployment benefits last week, the most in seven years. The Labor Department estimates that some of those, 45,000 or so, resulted from Hurricanes Gustav and Ike.
Those numbers are weighing on Wall Street. The Dow went down at the opening bell and hasn't looked back. Dow industrials down 269 points, right now. We are going to run with the numbers and Susan Lisovicz in just a few minutes. We are going to find out whether or not all of this might affect interest rates.
Well, the countdown is on to what is sure to be one of the most watched political events this season. Joe Biden and Sarah Palin going face-to-face in the first and only vice presidential debate. And it is just hours away. CNN Senior Political Correspondent Candy Crowley is joining us now from the debate site, at Washington University in St. Louis.
Oh, Candy, this is going to be interesting, no doubt.
CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Absolutely, absolutely.
You know, what is really interesting to me is that this sort of pits the woman from Wasilla, Alaska, and the man from Scranton, Pennsylvania. This is going to be the fight for the working-class roots. Both of them sort of trying to reach out and say, look, I am ability you and I get you.
It seems to me that the vice presidential debates are so much more difficult than the presidential ones, because you have to be responsible for your own record, and the top of the ticket record. And for both of these candidates, it is going to be really interesting, because they need to push the top guy on the ticket. They need to say, here is what he is about, and here is what we are about. For Sarah Palin, the problem, of course, has been that she did not always seem totally sure of some of John McCain's positions.
For Joe Biden, the problem is that he has openly disagreed with some of Barack Obama's positions; less so since he became number two on the ticket. So it is going to be really interesting to watch the two of them kind of try to kind of mesh their records with that of the top of the ticket which is really what this is all about, Kyra.
PHILLIPS: And I have also really wanted to know your take on this whole issue of Joe Biden and this talk about he needs to be a gentleman; he needs to treat her like a lady. He needs to watch his manners and what he says. I am just curious to know what you think about this? This got me riled up this morning. It got us talking in our morning meeting. Should that even be brought up? I mean, this never came up when Hillary Clinton was debating, you know, four or five men.
CROWLEY: Well, actually it did. I want to take you back. And I think that we were in -- I am going to say Pennsylvania, but maybe I am wrong -- no, it was Drexler University. It was after that debate there was a very famous cartoon that they put on the Internet, the Clinton campaign, called "Piling On" and Hillary Clinton went up and talked to her alma mater and said - you know, her all-female alma mater, said what I learned here prepared me for trying to get into the all-boy's club. So there always was some sort of feel in there for how do you walk around? How do you deal with a female opponent?
Now, look, it usually comes down to a gesture. It came with Barack Obama, it came down to that remark he made in the New Hampshire debate when he said, well, you are likable enough, Hillary. And everybody thought it was condescending and he would not have done that to a man, that kind of thing. So there are these sort of short, five- second moments that sometimes can explode on you. So I do think there is a potential. But, look, he has been so schooled in this, and I would be really amazed if he fell into that trap. Because, obviously, in the ideal world what we would really like is to have the two of them to treat each other like candidates.
PHILLIPS: There you go, bottom line. That is what we need to stay focused on. Here you are in 2008, we all love, as women, to be treated like a lady, of course, in every respect, but when it comes down to something like this, you don't want to feel any less than a man, so when the issue even comes up, you just wonder if we should be talking about it, or not?
CROWLEY: Well, absolutely. But as long as it is a factor, and you and I both know it is still a factor in all walks of life, and if it is going to be a factor in this debate, we will know at the end of the debate. It certainly is going in. Listen, they didn't bring Jennifer Granholm down from Michigan to be with Joe Biden simply because she was the best debater they could find. She's female. They wanted, you know, have the two of them sort of knock it back and forth.
We know that Joe Biden has talked to some other female lawmakers about, you know, is there anything I should watch out for? Just getting their take on how to go forward in this debate. So obviously, when it is an issue, you have to deal with it. Do we wish that we didn't have to deal with the issue? Sure, I'm with you.
PHILLIPS: Amen. I can't wait to talk to you about this tomorrow, Candy.
CROWLEY: OK.
PHILLIPS: Thanks.
So what will you be paying attention to when you watch the debate tonight? Issues, confidence, manners? That leads me to know Joe Biden and it got us talking in our morning meeting. Biden is known for not putting on the kid gloves and so does that matter as he gets ready to debate a woman? Should he act like a gentleman? Should he pay attention to chivalry?
Well, as a strong woman, does it insult you that we even brought this up? Here is some of the discussion from our editorial meeting this morning.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: This is not about a woman, you know, debating, but it is about two vice presidential candidates talking about the issues so I really want to steer away from the whole gender issue, because I think it is demoralizing.
MICHELLE, PRODUCER: Biden's addressed this already. I don't know whether I saw it on our air or somewhere else, but somebody posed the question to him, he is not going to temper himself or make himself any different tonight than he would be any other time, because he has already debated the woman.
UNIDENTIFIED FEMALE: I would even have no problem saying, this bothered me and should this even be an issue?
(END VIDEO CLIP)
PHILLIPS: So what do you think? Should this even be an issue? Nobody said that Biden had to watch his manners with Hillary Clinton, specifically, so what is up with this? Whether Biden is debating a man or woman, shouldn't he and Palin just be as tough as they can no matter the gender?
Tell us what you think. E-mail us at cnnnewsroom@cnn.com.
Tonight is debate night in America. Be sure to stay with CNN the best political team on television. For complete coverage of the one- and-only vice presidential debate. The debate kicks off at 9:00 p.m. Eastern right here on CNN.
Let's go ahead and listen to Nancy Pelosi speaking on Cap Hill. Let's find out if any progress was made with that bailout plan.
(JOINED IN PROGRESS)
NANCY PELOSI (D), HOUSE SPEAKER: ... To stabilize our economy, protect taxpayers, create jobs, and cut taxes for American families. The core of the plan is identical to the original bill that we had negotiated last weekend, House and Senate, Democrats and Republicans, and the White House.
It has one addition that we all agreed to which is lifting the FDIC limit in the legislation from $100,000 to $250,000. So we welcome that change. And that was what was not in the original bill -- the original bill was unacceptable, that the White House sent over, but much-improved bill that included protections for the taxpayers with oversight, and also with a share in the profits, reforming CEO pay and compensation, and the compensation and the golden parachute and helping Americans avoid foreclosure, and also ensuring that Wall Street not Main Street was going to pay for this. Again, it includes that FDIC piece. So all of the original bill, as amended, in a bipartisan way and now with the FDIC piece.
One piece we were fighting --an addition that is in the bill -- contained in the package is something that meant a great deal to some of the members on the House side, and that is the that we were advocating for the extension of the $1,000 family tax deduction for property tax, for non-itemizers. And that was a very important issue for some of us, to have something to take home for homeowners. This will help families, and working families in minority communities hit hardest by skyrocketing property taxes.
I am pleased that this bill, you know, as you know, my flagship issue has been energy security and reversing global warming. And I am very pleased that in this bill we have the extenders for the investments in clean renewable energy research and development. In this bill, it is paid for. So I am very -- that is one piece of the energy bill that we couldn't pass last year that is now has been passed by the Senate. And we will take it up. We have fought hard to include the critical tax provisions, again, in that energy bill last year.
While we are on the focus has been in the news on the Dow Jones on Wall Street, our focus has been on Mr. & Mrs. Jones on Main Street and how this legislation would affect them.
Seniors and those nearing retirement are worried about the pensions and that their savings may evaporate, and entrepreneurs seeking loans for new business, or franchise may be turned away. And that is happening and that undermines job creation. Students and families are concerned about the education and their college savings.
If we don't have -- it affects everything. If you want to buy a car, you cannot get a loan. If you sell cars, you can not get a loan to buy the cars, to sell the cars to people who cannot get a loan to buy them. So it has an impact that is very pervasive throughout our economy and our society. In fact, if we do not act, hard-working Americans and millions of people will see the American dream evaporate. So that is why it is very important to pass this legislation and we are working hard to do so.
But, this week is only the beginning. Two weeks ago, as many of you know, the administration came to see us, and they lifted a rock and under that rock we saw lots of vermin. We have started to address it in this legislation. Again, we did not - we found the initial legislation brought forth by the administration to be unacceptable, and in a bipartisan way we amended it, it was further amended in the Senate last night.
This is only the beginning. Next week Chairman Waxman will be having hearings on beginning -- what went wrong? What regulatory reform we need, and how we can avoid this in the future. Chairman Frank, the chairman of the Financial Services Committee, will be having hearings, too, as to how we go forward in a positive way.
In addition to that, Chairman Collin Peterson of the Agricultural Committee will be having hearings, too. That will be related to credit default swaps (ph) and what impact that has on the marketplace. Some very specific issues, some very broad issues, and all of them to protect the taxpayer and to prevent our economy from being in such jeopardy again.
We must have these new safeguards in the loss of the recklessness of some of the operators on Wall Street can never again imperil the savings of the American people, and imperil the economy at the same time.
With that, I'd be pleased to take any questions that you may have.
QUESTION: (OFF-MIC) ... Would you be open to amendments to this package?
PELOSI: Well, it is not a question if I'm open to an amendment, because there are many Democrats who would like to amend this package as well. It is a question of what the White House will sign. We have tried very hard to get some other modifications in the bill unsuccessfully, because they said that would lose votes for them.
So what the Senate has --, what I said to Harry Reid yesterday, if you pass this bill, and we change it, how long will it be before you can take up a House version? It would be a long time. So I think that, as I said from the start, time is of the essence. If we had more time, I think that we could have written a better bill, and certainly one that has some more of a foundation into the economy, and not just one person's idea of how we should go forward. I think that we were successful in amending it to make it a better bill. I don't think that any changes here will do what we need to do, which is to right now send a message of competence to the markets that Congress will act.
This is not our last act. We have plenty of time to do more. That is what I tell the Democrats, that is what I tell the Republicans. Again, I call their attention to the pace of activities in the United States Senate.
QUESTION: (OFF-MIC)
PELOSI: Well, right now, we are working very hard to see that. We want to see if we still have the 141 votes we had before. And that seems to be coming in pretty well, but we haven't -- you know, what you have to remember is that members like to see the bill before they give you an answer. And they saw what happened in the Senate last night, but now they are getting a closer look, and as they review it, then we can go forward to see what the vote will be. We are not going the take a bill to the floor that doesn't have the votes. I am optimistic that we will take a bill to the floor.
Yes, sir?
QUESTION: Madam Speaker, you talk about how this huge amount of money, $700 billion, potentially, plus another $100 million or so for the tax extenders and in the new year, how is that going to inhibit the Democrats' ability to spend money on domestic needs they think are way overdue?
PELOSI: Well, one of our first question, when they informed us of the price tag, which wasn't the first night, it was a couple of days later, after we had made our commitments to doing a rescue package, is what is the impact on the budget? And what we have said in this legislation is that we want the American people to be made whole.
This is a large amount of money. It is invested -- it being put out there to buy the illiquid paper, of commercial and real estate paper, but that is why, in a bipartisan way, we were insisting that the American people would be able to participate in the profits. And so at the end of say a few years we make a measure of what the downside is. Is there a shortfall? If there is, then the financial services industry and those affected by this would have to make up that shortfall.
So we see this as something that will be -- that taxpayers will not have to pay for. Every time you have some money outlaid, of course, there is competition for the dollar and we have said all along when we go forward we do not want to increase the deficit. We start with waste, fraud and abuse, with our hearings to, when we have full control of -- when I say full control, when we had more control of the budget, and we look at realigning priorities, and the biggest, the biggest contribution to the deficit has been the tax cuts on the wealthiest people in America. I think we have to revisit that.
PHILLIPS: Nancy Pelosi saying she is feeling pretty good about Friday's vote. So, how will the various lawmakers vote? We will talk to two later in the hour. If you want to continue watching this live news conference you can go straight to CNN.com. We will be back in just a second.
(COMMERCIAL BREAK)
PHILLIPS: Presidential race is expected to be decided in the big battleground states that we keep hearing about, and now we have new poll numbers from those states to tell you about. CNN Deputy Political Director Paul Steinhauser joins us from St. Louis.
What have you got for us, Paul?
PAUL STEINHAUSER, CNN DEPUTY POLITICAL DIRECTOR: Well, you got it, Kyra, five states, five states that could decide this election. We have brand new numbers from the CNN/"TIME" magazine and the Opinion Research Corporation. So, let's take a look at them right away.
Let's start with Florida, the state that decided it all in 2000, 27 electoral votes at stake. Our new numbers suggest Obama has a 4- point lead, 51 to 47.
Minnesota, a state that has gone for the Democrats the last couple cycles, the Republicans just had their convention there, and it got a little close. Now our numbers suggest Obama is up by 11 points, 54-43.
Missouri, state that for the last couple of weeks have been leaning toward McCain. Bush won it last time around. Our numbers suggest it is basically a dead heat, 49-48.
Nevada, a Western state the Democrats would love to turn from to blue, our numbers suggest Obama has a 4-point lead, 51-47. And check out Virginia, this state hasn't voted for a Democrat, Kyra, since 1964, in a presidential election. Our new numbers suggest Obama has a 9-point lead. Other polls say it is much closer. Maybe McCain had another red state, Obama would love to turn it blue, Kyra.
PHILLIPS: All right, electoral map? Shifts in Obama's favor?
STEINHAUSER: Yes, take a look at our new map. We updated it yesterday, after these polls came out. And the CNN electoral map takes a look at polls, voting trends, where the candidates are campaigning and spending money.
And, right now, if the election were held today, CNN estimates that Barack Obama would win states with 250 electoral votes. John McCain states with 189, with 99 electoral votes still in those toss up states. Remember, you need 270 to win it all, to win the win the White House, Kyra.
PHILLIPS: All right, Paul Steinhauser, good to see you.
In New York, Mayor Michael Bloomberg has announced he will seek a third term, but he'll have to get the law changed to do that. The current law limits the office to two four-year terms. New York City Council would have to approve the change. Bloomberg says he want to run again so he can deal with the unprecedented challenges brought on by the financial crises.
Be sure to check out our political ticker for all the latest campaign news, just log on to CNNPolitics.com, your source for all things political.
Let's take a look now at the Big Board. Dow industrials down 290 points. Susan Lisovicz is tracking the stocks. We will take you live to Wall Street in just a moment.
(COMMERCIAL BREAK)
PHILLIPS: Right now 2:28 Eastern Time and here are some of the stories we are working on in the CNN NEWSROOM.
After booming through the Senate late last night, could the bailout go bust in the House? Congressional leaders say they are cautiously optimistic that they can get the revised plan through tomorrow.
The Senate added more than $100 billion worth of sweeteners, which may entice reluctant House members.
A friendly meeting in St. Louis, Joe Biden and Sarah Palin both in their final preparations for tonight's vice presidential debate. It is the only time the two face-off before the election.
And researchers confirm wreckage found on a California mountainside is Steve Fossett's plane. The millionaire adventurer disappeared in September 2007.
Financial crisis is sparking debate at high levels around the world. Today, the former chairman of the Federal Reserve even weighs in. Susan Lisovicz at the New York Stock Exchange with the details on what Alan Greenspan had to say.
Hey, Susan.
SUSAN LISOVICZ, CNN FINANCIAL CORRESPONDENT: Well, Kyra, Alan Greenspan used a phrase today that he coined more than a decade ago. When Greenspan first used the expression "irrational exuberance" in 1996, he was referring to the market conditions of the time, warning that stock prices were inflated and a bubble was forming. He was right. The Internet bubble popped four years later. When interest rates came down to historically low levels to juice the economy, because of the resulting recession, a new bubble formed. Consumers bought a lot of homes and a lot of stuff to put in them. Now, we have a financial crises.
(BEGIN VIDEO CLIP)
ALAN GREENSPAN, FMR. CHAIRMAN, FEDERAL RESERVE: We are living through the type of wrenching financial crisis that comes along only once in a century. Financial markets freeze up as an excess of fear displaces a protracted period of what some might call "irrational exuberance".
(END VIDEO CLIP)
LISOVICZ: Another big name speaking out today -- Warren Buffett says failure to pass the bailout would result in what he called a disaster. He calls it right now an economic Pearl Harbor. And of course, Buffett, yesterday, investing -- says he'll invest as much as $6 billion into General Electric share of stock he bought for a very good price -- Kyra.
PHILLIPS: Well does Greenspan see any signs of hope for the financial crisis?
LISOVICZ: Well he says eventually the credit freeze will thaw, that trust will be re-establish, the confidence will come back and the economy will recover. But he sees it in baby steps. Greenspan says he sees this happening sooner rather than later.
But what investors are worried about is something that's coming up really soon and that is tomorrow's vote. They are also worried about recession. We have more economic bad news. We also have a $4 drop in oil prices.
The Dow right now lower by 314 points. The Nasdaq, meanwhile, is down about 80 points. You're looking at 3 percent decline, so another sharp decline in what has been a volatile week here -- Kyra.
PHILLIPS: Volatile to say the least.
Thanks, Susan. More than $100 billion the sweeten the deal. Is it too much, not enough -- to entice lawmakers to pass the bailout bill? We're going to take a look at all the extras and talk to two Congressmen to see how they plan to vote.
(COMMERCIAL BREAK)
PHILLIPS: Back now to the bailout and those so-called sweeteners. They are tax breaks mostly designed to make the crux of the bill easier for lawmakers to swallow. Add them up, and they add more than $100 billion to a package that some thought was way too expensive to begin with. CNN's Josh Levs joins me now to break down the add ons.
Hey, Josh.
JOSH LEVS, CNN CORRESPONDENT: $100 billion, do you think that's expensive, Kyra? Come on, it's just $100 billion.
PHILLIPS: Hey, we could pay off a lot of debt with that money.
LEVS: Tell me about it.
Speaking of debt, you know what? I'm going to tell you about the sweeteners, but let's zoom in on the board for a second. I was just pulling this up from the Treasury. This is the current debt, officially $10 trillion down here where my finger is. Scroll down a little bit. $10 trillion and that is just official as of now. You factor in all of the entitlements we already know we're going to have to pay out -- Social Security, Medicare, Medicaid, 53 trillion in today's dollars.
Let's take a look now at -- within this bill, she's right -- these sweeteners are really important to get it passed. Let's got to this first graphic. This is one from the FDIC. Now this one was important because what they're doing is they're raising, temporarily, the FDIC insurance cap to $250,000 from $100,000. The FDIC is not allowed to charge member banks in order to cover that increase in coverage, but the bill says the FDIC may borrow money from the Treasury to cover any losses as a result of that higher insurance limit.
Here's something else they're doing. They're extending these key tax breaks that were important to some lawmakers. First example, on renewable energy, and they are including a deduction there for the purchase of solar panels. Also they are extending a research and development credit for businesses, just a couple of examples of what is getting extended.
Finally I want to point out this. We hear a lot about the AMT, this is the alternative minimum tax. You may have heard of it referred to as an income tax for the wealthy. Well our story at CNNMoney.com about this -- points out that there is bipartisan support for that relief, but there are disagreements over whether it should be paid for through part of that plan. In fact, let me show you this here. If you want to get some more details just go to CNNMoney.com right now. And Kyra, they break it down really well, trace you through what you were talking about, that $100 billion there, what these sweeteners are, and how it helped convinced some lawmakers, and some constituents out there, to call their lawmakers and say, you know what? This is enough for me, now you can support it.
PHILLIPS: All right. Josh, thanks so much.
LEVS: Thanks a lot.
PHILLIPS: We're going to stay on this and talk about -- not many House members would have to change their 'No' votes for the bailout to pass tomorrow if the 'Yes' votes aren't scared off by the bigger price tag. But then there is the group that includes Brad Sherman, Democrat of California. He voted against bailout No.1 and he doesn't like bailout No.2 either.
He joins me now live from Capitol Hill.
So, what's it going to take to convince you otherwise? Or, are you just saying forget about it, I'm not going for it?
REP. BRAD SHERMAN (D), CALIFORNIA: Well, they didn't do anything to fix the basic bill. It still allows million dollar a month salaries to be paid to Wall Street executives whose companies have been driven into the ground to the point where they need a bailout. And in fact it allows those million dollar a month salaries to go the $1.5 million, $2 million, unlimited.
In addition, the bailout is not just for U.S. investors who made mistakes, or even for the U.S. entities that happened to be owned by foreign investors, there are toxic assets in the vaults in Beijing, in Shanghai and London that are going to be bailed out by our tax dollars. It's bad enough to bail out Wall Street, we're bailing out London and Beijing as well.
PHILLIPS: All right. So you have mentioned tens of billions of dollars will go to foreign investors. You don't like that. You also mentioned that the payout will still be huge to -- or the million dollar salaries will still continue. You also say taxpayers are highly unlikely to recoup any of the costs under revenue provision added last Sunday.
Explain that to me.
SHERMAN: Well, in an effort to get some votes last Sunday, they put in a provision which was wildly exaggerated in its effect. All the provision said was, sometime in 2013, the president should send us a proposal to tax the financial services industry to recoup the hundreds of billions of dollars we lose on this program. The thing is, telling a president in 2013 to send us a proposal is pretty meaningless.
If a president has a good idea in 2013, he will send it to us. If he sends us a proposal that he thinks is a bad idea, what do you think we're going to do with it?
PHILLIPS: You also mention that it says in the new language that an oversight board is talked about, but it can only critique not halt any action.
Is that true?
SHERMAN: That's true. There will be a board. It will be dominated by the party in power in Congress, so it will be a Democratic board. And it can issue press releases condemning whatever the Treasury secretary does. Those will be interesting. They will help your ratings. But that board cannot halt, delay, reverse or alter anything that Paulson does.
PHILLIPS: So what about all the corruption that is being investigated into right now on Wall Street. I mean, that -- bottom line there was not enough oversight.
So where in these provisions, or is there anything within all of these provisions, does it say, OK, that will be -- there will be -- the SEC will take on a totally different role, there will be oversight so you won't end up -- we all won't end up being where we are right now?
SHERMAN: Well, we hope that the existing law enforcement agencies investigate fraud, but the vast bulk of this is just investors, both on Wall Street, in Beijing and London, made really bad business decisions and now they'd like to be bailed out.
As for future regulatory changes, they'll get bogged down in the Senate. Even if we pass a good, tough bill that Wall Street hates, it will go to the Senate. 41 senators can stop it. There is no provision in here that says that a bill will get an up or down vote in the Senate if it is a tough regulatory bill. So they only need 41 senators to stop it. And of course we're giving them enough money to buy 4,100 lobbyists.
PHILLIPS: Congressman Brad Sherman, appreciate you here joining us.
SHERMAN: Thank you.
PHILLIPS: Well we'll be back in just a second. I'm going to talk to Arizona Republican John Shadegg who voted 'No' Monday, but he says he may vote 'Yes' tomorrow. We'll talk to him in just a sec.
(COMMERCIAL BREAK)
PHILLIPS: All right. Live pictures from St. Louis, Missouri. This is the woman that everybody is going to be watching this evening up against Joe Biden.
Rick Sanchez is sitting next to me laughing. I want to know why you are laughing. But let me point out --
RICK SANCHEZ, CNN ANCHOR: The superstar. PHILLIPS: She -- all eyes on this debate I've got to tell you. Side by side with her husband, Todd, there, here baby, Trig, that she just handed off to the youngest. But her kids all surrounding her as she gets ready probably, Rick, for the most talked about debate this presidential election.
SANCHEZ: She has captivated the attention of the American people, for some in a very positive way, and for others in a very negative way.
PHILLIPS: We're going to talk about that more in just a second.
Meanwhile, the clock ticking down not only toward the debate tonight, but also a bailout do-over vote in the House of Representatives. One fact is clear, though, for the outcome to be any different tomorrow, some members will have to change their minds. And that brings me to Arizona Republican, John Shadegg, who voted 'No' Monday, but says, I might vote 'Yes' tomorrow.
What has changed your mind, sir?
REP. JOHN SHADEGG (R), ARIZONA: Well probably three different factors. Number one, they have made two changes that I asked for in the bill from to get-go. One is a change in this mark-to-market accounting rule. Every expert that I have talked to has said that the mark-to-market accounting rule is a huge part of this problem. It is making these bank assets look like they are valueless when they clearly have some value. It is a complex rule and difficult to change, but prior to the vote on Monday, they were saying they would never consider any change to it, and yet the very next day, on Tuesday, the SEC began issuing guidance to change the rule. And I think that will help the problem a great deal.
Second, everyone I talked to says a large part of this problem is confidence in the market. And as you know, they have increased the amount of the FDIC insurance to $250,000, giving many investors and small business people who have to put money in accounts to make payroll, the confidence that that money will be there, even if that particular bank fails.
Those are the two reforms that I wanted and they made both of them. I had asked for them in a "USA Today" op-ed.
In addition to that, all along Secretary Paulson having -- I think -- thrown gasoline on this fire by lobbying the bill with fear, has created a climate in America, and quite frankly a climate around the world, where it is vitally important that we do something. I don't like the structure of the bill, I would write it very differently. But I think for the sake of the overall economy and so that Americans don't lose their jobs, it is important that we act and I think this package is the best we're going to get.
PHILLIPS: Well -- something else that needs to be done, and that is oversight. Bottom line, we are where we are because of greed. And there was not enough oversight, the SEC didn't do its job.
And so you actually sat down with the chairman, Chris Cox, is that right?
SHADEGG: I did. I talked to him for about an hour and 10 minutes yesterday. It was over the phone, but yes.
PHILLIPS: Well, did you ask him about this? Did you say to him, where were you? Where have you been? Why are we in this position? Why didn't you do a better job at your job?
SHADEGG: Well, I think those are fair questions but I think it is more important to understand that it this is a lot bigger than that. In part, there was a failure of oversight by the Congress over Fannie Mae and Freddie Mac, not quite frankly Chris Cox's responsibility. But it mystifies me that all of the media is telling the American people to blame Wall Street and greed at Wall Street. I think it's greed inside the United States Congress that created this problem.
It is the Congress that, in 1979, passed the Community Reinvestment Act, instructing banks to loan money to people who couldn't qualify. It is the Congress who let President Clinton expand that program dramatically to where banks were threatened if they didn't make subprime loans, if they didn't loan to people that were right at the margin, if they didn't begin this process of liar loans and paperless loans where you did haven't to confirm your income, that those banks would be punished. It was the Federal Reserve --
PHILLIPS: Well it sounds like we need to hold Congress accountable as well. We need to have some --
SHADEGG: Absolutely. That's my point.
PHILLIPS: -- some sort of oversight on Congress. And here it is members of Congress voting on this bailout plan to bail themselves out.
SHADEGG: I issued a press release 10 days ago that said asking Congress to fix this problem is a lot like asking an arsonist to put out the fire he or she started. I am telling you this Congress has been irresponsible.
Look back at Fannie Mae and Freddie Mac, Richard Baker and, for that matter, John McCain, were out there saying, look, we need to fix Fannie Mae and Freddie Mac. Our friend Barney Frank was saying, oh no, there's no problem whatsoever. Chris Dodd saying, no problem whatsoever, all the time he's taking campaign contributions.
There is a ton of blame that should be laid at the feet of this Congress. And for them to just push it all off on Wall Street, I think is just dead wrong.
PHILLIPS: Well, the U.S. representative John Shadegg, you better get in there and shake things up. We're eager to see what happens tomorrow.
SHADEGG: We'll try to do it.
PHILLIPS: Thanks for your time.
SHADEGG: You got it.
PHILLIPS: Taking another look at our e-mail question, whether Joe Biden is debating a man or woman, shouldn't he and Sarah Palin just be as tough as they can be no matter what the gender?
Of course you agree with me, right, Rick? We're going to have some of your responses coming up.
(COMMERCIAL BREAK)
PHILLIPS: Earlier we asked you to weigh in on whether gender should even be an issue in tonight's debate between Joe Biden and Sarah Palin.
SL Buggs writes: "I don't think it shouldn't be any different than any other time. If you debate the issue and do not personally attack a candidate, then it should be a mute point."
This is comes from Paul: "The only reason gender is an issue is because Governor Palin is out of her league. If it were Hillary Clinton no one would be talking about gender, because Hillary Clinton can hold her own in any situation."
And this from Michael: "Senator Biden should treat her as he would any other politician. Given the level of feminism in this country, I feel that if a woman wants to venture into the political arena, then she should be treated the same way that a man would be treated."
So what do first-time voters think of Sarah Palin? Rick Sanchez has been listening to what some of them are saying. He joins me now.
I would love to know what they think about the whole debate tonight.
SANCHEZ: Like you, people are captivated by Sarah Palin. So what we did was we found a group of women who are strong and independent and really have something to say about this. Look, here is the bottom line, people are talking about this in their homes, in their workplaces, on "The View" and on just about every other place where people gossip. So we brought together four strong women who are going to talk about everything, including John McCain and Barack Obama.
Suddenly, right after the first question, the conversation switched to Sarah Palin. Here is what happened. Take a look at it.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: It makes me angry because I think either, one, he put her there to take advantage of the ignorance that some women have because they will vote for her simply because she is a woman. Which is scary. REBECCA BURNOS, UNDECIDED VOTER: I think there are a lot of women that will choose to vote for him because of her, because maybe they were undecided and then they saw a woman.
ELIZABETH SCOTT, UNDECIDED VOTER: They are kind of sending her out there and they're saying, this is your woman, this is who you should vote for because you are a woman, too. And she can't put a sentence together.
SANCHEZ: Did you see anything, Sharlene, in her that you're saying, boy, this is a strong, confident, smart woman?
SHARLENE BOWEN, UNDECIDED VOTER: Honestly, she was refreshing to me. I really liked her. And I like somebody who is going to stand for what they believe in. They're going to stand behind what they believe in. They're not going to let people sway them.
(BEGIN VIDEO CLIP)
SANCHEZ: It is an interesting conversation. Some women feel like if she's going to be there, good. But do us right, represent us well. And they're disappointed in what they saw in the Katie Couric interviews. They're waiting to see if something will be different tonight in that debate. And that's why so many women are intrigued by this.
PHILLIPS: Yes. Well, not just women. But, I'll tell you what. Everyone around the country, around the world.
All right. We'll see you in less than 10 minutes.
SANCHEZ: Look forward to it.
PHILLIPS: All right. Thanks, Rick.
Another reminder. Tonight is debate night in America, so be sure to stay with CNN for the complete coverage for the one and only vice presidential debate. It kicks off at 9:00 p.m. Eastern. In case we haven't talked about enough.
So, should the bailout be even bigger? We're going to hear from ace investor Warren Buffett, who thinks $700 billion may not be enough.
(COMMERCIAL BREAK)
PHILLIPS: Warren Buffett says, he woke up this morning with some new ideas for fixing the economy. And he shared them with CNNMoney.com's Poppy Harlow, who joins us now from fortune's most popular women's summit in California.
Well, Poppy, maybe he's got an idea for the bailout plan.
POPPY HARLOW, CNNMONEY.COM: You know, he's a smart man, a pretty wealthy guy and he certainly has an idea. He says, listen, there is a serious problem on Wall Street. We need to fix it to help Main Street. That's a the key, here. He said, this is not just to bail out fat cats on Wall Street. America needs this. We need to open up credit lines to help mom and pop businesses across the country.
Take a look at what he said.
(BEGIN VIDEO CLIP)
WARREN BUFFETT, CHAIRMAN, BERKSHIRE HATHAWAY: The bill that's before Congress is not a panacea, it's necessary to prevent something way worse than will otherwise happen. But, it doesn't cure everything in a month. It doesn't cure everything in six months.
We have had an economy that's like a great, great athlete. But it's had a massive cardiac arrest. And the big thing to do, you know, is to apply resuscitation, get the athlete back on his feet. But, he's not going to leave the hospital tomorrow. I mean, it's just that -- I wish I could say that that would happen. It's going to take a while. But I will tell you that it will be far, far, far worse if we don't get right on it.
(END VIDEO CLIP)
HARLOW: That is exactly his point. He wants to see this bill passed. A lot are saying, could be tomorrow by the House. He does have his own plan which he thought of this morning. It is very interesting.
It combines an investment by the Treasury of about 80 percent. About 20 percent coming from independent private sector institutions. You can get that, Buffett's plan, only on CNNmoney.com. Check it out when you can.
Kyra, I have to say, it was a pleasure to talk to him. He's got a pretty good plan.
PHILLIPS: Poppy Harlow, appreciate it.
And you can hear more from Warren Buffett on our Web site. Just log on to CNNmoney.com. We'll be back in just a moment.
(COMMERCIAL BREAK)
PHILLIPS: And just moments ago, Sarah Palin arriving in St. Louis, Missouri, there. Her baby Trig in her arms, her daughters and also her husband, Todd. Getting ready for probably the most watched debate of this political season.
Joe Biden, Sarah Palin; 9:00 tonight. You won't want to miss it, because the debate is going to be right here on CNN. We'll have complete coverage of that vice presidential debate afterwards, as well. Once again, it's kicking off at 9:00 p.m. Prior to that of course, we'll be talking about the debate and then also debrief right after.
Rick Sanchez takes it from here.
