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LOU DOBBS TONIGHT

Showdown in St. Louis; Fight over Wall Street Bailout; Bill Packed Full of Pork; Taking Care of Business; No Help for Credit Card Holders

Aired October 2, 2008 - 19:00   ET

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


LOU DOBBS, CNN ANCHOR: Wolf, thank you very much. Tonight Governor Palin, Senator Biden facing off in St. Louis in their only debate of this presidential campaign. Will Governor Palin defy her critics and the liberal national media? We'll find out.
And tonight frenzied lobbying on Capitol Hill one day before the House of Representatives votes again on whether to bail out Wall Street. Top Democratic Congressman Brad Sherman (ph) among our guests tonight. He'll tell us whether he believes the House will betray the American people and support this bailout.

And tonight -- our political elite selling out our middle class helped by lobbyists, special interests and corporate America. Tonight we report on the aggressive tactics of the largest business lobby group, the U.S. Chamber of Commerce. All of that, all the day's news and a lot more from an independent perspective straight ahead here tonight.

ANNOUNCER: This is LOU DOBBS TONIGHT: news, debate, and opinion for Thursday, October 2nd. Live from New York, Lou Dobbs.

DOBBS: Good evening, everybody. A high-stakes showdown in St. Louis tonight between Governor Palin and Senator Biden. They will begin their vice presidential debate in just under two hours. Governor Palin will try to prove she has the experience and knowledge to be vice president. Senator Biden will try to demonstrate his reputation for gaffes and verbosity is unwarranted and irrelevant.

Polls say voters are evenly divided on which of these candidates they believe will win. We have extensive coverage tonight from our correspondents in St. Louis Dana Bash and Bill Schneider and Candy Crowley. We begin with Dana Bash who is following the Palin campaign. Dana, just how will the governor try to demonstrate that critics and the national liberal media are just simply wrong?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well first of all, it's by presenting herself as somebody who we have not really seen over the past couple of weeks in some of the interviews she's been doing, Lou. I just spoke to a couple of her advisors who have seen her really in the last hour or so, one of whom has known her for a very long time.

And this person said that she thinks that the Sarah Palin that she sees tonight getting ready is the Sarah Palin that America saw five weeks ago at the Republican National Convention. She has been spending -- she had been at John McCain's Creekside (ph) ranch or cabin in -- near Sedona, Arizona, for three days. People are saying who are with her or were with her and are with her now is that they think that that helped.

Because the goal for them tonight is to get her to basically to relax and to be the Sarah Palin that people, a lot of people, fell in love with because they hadn't seen her before five weeks ago. Specifically what they want her to do is to connect with people like she did at the beginning, talk about the fact that she understands what people are going through because, just like many people out there, she knows what it's like to go without health care.

She -- her husband is watching his 401 (k) go down just like everybody else. And so it's that kind of connection that she's going for. But I got to tell you that there's been a lot of talk about the fact that this is absolutely different than any vice presidential debate we've ever seen in terms of the electricity, in terms of the expectations.

That is true, being here I can tell that is true. However, one of the other goals of the McCain campaign tonight is for her to be a traditional vice presidential candidate. That means be an attack dog. Go after not necessarily Joe Biden but go after Barack Obama and his policies. And that is what they have been going over with her as they prepare her for tonight.

DOBBS: All right. Dana, thank you very much. Dana Bash from St. Louis. Let's turn now to our senior political correspondent Candy Crowley also in St. Louis. She's covered a few presidential and vice presidential debates. Candy, what do you believe Senator Biden's strategy will be tonight?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: First, do no harm night for Joe Biden. People are not questioning whether he is capable of being president. He's been in Washington more than 30 years. He has a lengthy resume. He's run for president before. He's been in debates all through the primary season.

What he needs to do really is sell the top of his ticket. I think what's interesting about vice presidential debates is it's really not about them. What they need to do is get out there and sell the top of the ticket. And that's what Joe Biden will be doing. And if there's an overarching theme that they want him to hit, it is Sarah Palin and John McCain are not about change, but we are.

One of the things that's also interesting, Lou, about these vice presidential debates is you are not just responsible for your record, but you are responsible for the top of the ticket record. And sometimes that's tricky in the case of Biden. There have been some major things that he has criticized about Barack Obama's policy, the war in Iraq, how to deal with hostile nations and whether to sit down and talk to them, that kind of thing.

So that may be something that comes out. And what he has to do, these were things, of course, that he talked about prior to being selected as vice president. But those are the sorts of questions that come up in these forums for VPs and that is square what you said before with what you are now supporting, which is the top of your ticket.

So he is out there pushing Barack Obama, trying to frame the McCain/Palin ticket as the same old thing, just a Bush third term, and to sell himself and not do any harm at this point. The Barack Obama ticket, the Obama/Biden ticket doing very well as far as they're concerned. They don't want to rock this boat, Lou.

DOBBS: All right, Candy, thank you very much. We look forward to your reports throughout the evening. Let's bring in our senior political analyst Bill Schneider. Bill, in your judgment, what should we all be expecting tonight in this debate?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well that's all we asked voters around the country. What do you -- who do you expect to win this debate? And the result was kind of a surprise, about equal numbers said that they expect Biden to win and they expect Palin to win. You know, expectations always play some role in this, so each side is trying to drive those expectations and say, oh, she's a terrific debater.

She has a lot of experience and she talks about her -- the Republicans talk about how much experience Joe Biden has. But look at this, the voters say they're about equal in the expectations because they don't know that much about either one of them, even though Joe Biden has been around a long time. He's run for president twice. He's not that familiar a figure to many Americans.

So voters will be watching this with a pretty open mind. One other question we asked that was a bit surprising, this was a question actually asked by "The Washington Post"/ABC News poll, which of the two candidates do -- does each of the candidates understand the problems of people like yourself? And there, too the voters didn't see a great deal of difference between Sarah Palin and Joe Biden.

DOBBS: That is remarkable. It's remarkable in large measure because no matter how popular a governor Sarah Palin is in Alaska, she has been literally pummeled in the national news media ever since the Republican National Convention. I mean, for these two to be this even, what does that suggest to you as the savvy political analyst you are?

SCHNEIDER: That a lot of people don't pay a lot of attention to those criticisms. When Sarah Palin was named to the ticket, a lot of people thought it was very refreshing because she is clearly a Washington outsider, which is what a lot of voters are looking for. She's about as outside Washington as you can get.

So what we're going to see is two contenders tonight, one the ultimate Washington insider, the other the outsider. One claims superior experience, the other claims she's fresh, she's new. And the voters are looking at this really on an even keel. They're saying you know both of them are about equal as far as the voters are concerned. Let's see who does the better job. DOBBS: All right and we are obviously counting down to the beginning of that. Bill Schneider will be with our correspondents there at Washington University for that debate. As I say, coming up in just a little over an hour and 15 minutes now.

Time for our poll tonight. We thought we would ask, are you at least a little annoyed by the liberal national media's blatant bias against Governor Palin? We'd like to hear from you on this. Yes or no. Cast your vote at loudobbs.com. We'll have the results upcoming in the broadcast.

Much more on the vice presidential debate later here in the broadcast. One of the issues in that debate will be the massive bailout for Wall Street. The House of Representatives is scheduled to vote on the latest and much expanded and far costlier version of the legislation tomorrow. Party leaders tonight desperately trying to convince lawmakers to support that bill. Jessica Yellin has our report from Capitol Hill.

(BEGIN VIDEOTAPE)

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT (voice-over): The man who's counting Republican votes is choosing his words carefully.

REP. STEVEN LATOURETTE (R), OHIO: We'll say I'm optimistic.

YELLIN: He's still working the phones trying to win over frustrated Republicans who are still not ready to vote for the bailout bill.

UNIDENTIFIED MALE: The number $700 billion continues to be difficult for us.

YELLIN: Many are furious the Senate added new provisions and they're demanding changes.

UNIDENTIFIED MALE: It's a ludicrous suggestion to say that whatever comes over from the Senate the House has to adopt.

UNIDENTIFIED MALE: I hope other people who voted yes may be reconsidering where they are when they get the outrage of the pork barrel projects.

YELLIN: The proposed changes are unlikely to be accepted, but their demand is a sign Republicans are not coming on board easily. House leaders are sounding cautious notes.

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: We're not going to take a bill to the floor that doesn't have the votes. I'm optimistic that we'll take the bill to the floor.

UNIDENTIFIED MALE: We are optimistic, very cautiously so.

UNIDENTIFIED MALE: I think there's a decent shot that this can get through the House, pick up some votes possibly on both sides of the aisle.

(END VIDEOTAPE)

YELLIN: Now, Lou, CNN has confirmed that at least seven members who voted no on Monday plan to vote yes when the bill comes to the House of Representatives again, but leaders have told us they will not hold that vote tomorrow unless they are certain the bill will pass. Now, also making news today, Lou, Senate Majority Leader Harry Reid, a Democrat, his office is trying to clarify some comments the senator made last night before the bailout vote when he suggested that a major insurance company is on the verge of bankruptcy. Let's listen.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), SENATE MAJORITY LEADER: We don't have a lot of leeway and time. One of the individuals in the caucus today talked about a major insurance company, a major insurance company, one with a name that everyone knows that's on the verge of going bankrupt. That's what this is all about.

(END VIDEO CLIP)

YELLIN: Now, he was making those comments as he was urging people to vote for this bill. His communications director today is walking that back. He issued a statement saying that Senator Reid is not personal really aware of any particular company being on the verge of bankruptcy. He has no special knowledge about nor has he talked to any insurance company officials. Rather, his comments were meant to refer to the conditions in the financial sector generally and he regrets any confusion his comments may have caused -- Lou?

DOBBS: When you say walking it back, he's -- what does that mean? Is he denying he said it? Because he said it. Is he denying that that is the situation? Because today the market sold off insurance companies as if they were hot potatoes. I mean, what is he really saying here?

YELLIN: He's saying that the senator was not -- did not know of a specific company that was filing for bankruptcy or on the verge and didn't mean to suggest he knows of one.

DOBBS: Interestingly, any discussion there on Capitol Hill about the fact that they passed this $150 billion of pork attached to 700 billion in three days it grew to $850 billion? Any reaction to the fact that the markets simply sold off today 350 points on the Dow, almost 100 points on the Nasdaq?

YELLIN: Well, folks here are worried about the market, but they're not sure what to do. They're not sure that a vote yes will fix things. Some people think a vote no is the better answer for the markets in the long term. It really depends on who you talk to, Lou. Nobody seems to have the answer up here.

DOBBS: All right. Thank you very much. One last question, the level of confidence now with the Democratic leadership in the House.

YELLIN: The level confidence in them?

DOBBS: Yes.

YELLIN: Is that what you're asking? There's a high level of confidence that they will be able to bring this to a vote tomorrow and that it will pass, but they're not certain. Is there confidence in their leadership? They are still secure it's the Republican leaders who are being questioned by their members now. Their standing is very much in question.

DOBBS: All right. Jessica, thank you very much. Jessica Yellin from Capitol Hill.

Well, as I said, the stock market today selling off, and it fell sharply on concerns first of all with what is happening in Washington and secondly, with a weakening economy. The Dow Jones industrials fell nearly 350 points, losing about three percent. The dollar, however, climbed against the euro again and against the pound sterling. This amid growing uncertainty about the European economy as their financial crisis is now becoming far more apparent.

The U.S. Senate has voted in favor of a nuclear deal with India. That vote coming ahead of the Wall Street bailout vote. It will give India nuclear technology and give the United States Indian mangoes. The Senate voted 86-13 to approve the agreement. During a visit to India in March of 2006, President Bush said and I quote -- "the United States is looking forward to eating Indian mangoes." And Secretary of State Condoleezza Rice will visit India this weekend to celebrate the agreement which she lauded today.

Up next -- pork, lobbying, fear mongering on Capitol Hill and for that matter at 1600 Pennsylvania. What in the world has become of our political system and our so-called political leaders? We'll have the very latest for you on the battle over this massive Wall Street bailout. We'll be right back.

(COMMERCIAL BREAK)

DOBBS: The Senate passed that Wall Street bailout, $850 billion bailout last night. But the bill is so loaded with pork, $150 billion worth, pork barrel spending projects that simply have nothing at all to do with our financial crisis. Louise Schiavone now reports on what your hard-earned tax dollars will be paying for if this bill becomes law.

(BEGIN VIDEOTAPE)

LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): Congressional deal makers reasoned there are some things money can't buy. For everything else, there's the American taxpayer. And so it was that an unpaid-for $150 billion package of tax sweeteners became part of an almost trillion-dollar bailout.

DIANA FURCHTGOTT-ROTH, ECONOMIST, HUDSON INSTITUTE: If I were a small business and that was how I run my business, I would soon be out of business. SCHIAVONE: Considered at first politically improbable...

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: It's unacceptable for any kind of earmarks to be included in this bill. It would be outrageous for legislators and lobbyists...

SCHIAVONE: Today the McCain campaign called the inclusion of earmarks regrettable, but said this was a national emergency to protect Americans from losing their homes and savings. Senator Obama was also among 74 senators supporting the bill to the outrage of conservative critics.

MICHAEL FRANC, HERITAGE FOUNDATION: You've got members of Congress dancing with the lobbyists and frankly at the end of a Congressional session, which is where we are now, the level of fear on the part of these lobbyists is at its greatest because they're afraid they're not going to get their little special interest items through to passage.

SCHIAVONE: The Senate embraced tax considerations for Hollywood, rum importers, motor sports tracks, the woolen industry, plug-in hybrid vehicles, parties affected by the 1989 Exxon Valdez oil spill, clean coal construction, research and development for high tech and pharmaceuticals, business development for American Samoa, makers of wooden practice arrows used by children and much more.

ROBERT BIXBY, CONCORD COALITION: You have to start wondering at this point who's going to bail out Washington and if that needs to happen, there are only three choices -- the American taxpayers, foreign lenders and the government printing press.

(END VIDEOTAPE)

SCHIAVONE: Well sources say it probably won't win many, if any votes among the red ink watching blue dog Democrats in the House, but make no mistake, this package of sweeteners is going to help get a massive financial sector bailout through Congress -- Lou?

DOBBS: Well I guess I am mistaken. I thought I heard both Senator Obama and Senator McCain in their debate forswear exactly what they voted for last night.

SCHIAVONE: This is going to be -- this is why they didn't want to do this financial sector bailout to begin with, because this is going to be tough to explain to the American voters, people that they have to face in a little more than a month. And they have to swallow this down with this preposterous $150 billion package of tax extenders, which really trivializes the severity of the financial situation.

DOBBS: American people really have only one hope, and that now is to make your voices heard. Let people know what you're thinking, contacting your Congressmen to offer your view on this bailout. Go to loudobbs.com. We have a way to click through to your relevant representative and Congressman or woman to make your view heard. Louise Schiavone, thank you very much, a very discouraging story. The Chamber of Commerce and an army of lobbyists representing the business interests have been working around the clock this week on Capitol Hill. Their singular focus -- to further frighten Congress into passing what will be a trillion-dollar bailout for Wall Street. But as Lisa Sylvester now reports, the voters may actually have the final say.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): The Business Roundtable and the U.S. Chamber of Commerce both took out full-page ads in national newspapers urging Americans to lobby their lawmakers to vote for the $700 billion bailout. Capitol Hill has been crowded with business lobbyists and according to Representative Pete DeFazio, they are not being very subtle.

REP. PETER DEFAZIO (D), OREGON: Chamber of Commerce, U.S. Chamber of Commerce, not our little folks at home, is threatening Republicans. They will withdraw support and they'll get them if they don't vote for this package.

SYLVESTER: The Chamber of Commerce acknowledged as much. Chief lobbyist Bruce Josten (ph) saying quote, "I have no intention of losing again. We're pushing and pressing and we're playing hard"

The Bush administration and the business community suggests that unless Congress acts we'll see a financial Armageddon. John Castellani with the Business Roundtable says this is their number one issue.

JOHN CASTELLANI, THE BUSINESS ROUNDTABLE: This is something that cuts across all of America. The freeze-up in the credit market is hurting small businesses, their ability to make payroll, their ability to buy products and services to keep their businesses going.

SYLVESTER: The Business Roundtable has spent an average of $11 million a year on lobbying during the last decade while the U.S. Chamber of Commerce spent an average of nearly $40 million. But there is one other group that carries even more clout with Washington politicians than big business -- voters.

STEVE ELLIS, TAXPAYERS FOR COMMON SENSE: Biggest counter to the lobbyist or to the donor call has been the constituents. And you know, at the end of the day, you're not going to get those lobbyists or those donor calls if you're not still in Congress.

(END VIDEOTAPE)

SYLVESTER: Representative DeFazio says the pressure to act now, no questions asked, is a lot like the lead-up to the Iraq war when members of Congress were told there were weapons of mass destruction. Now DeFazio says they're being pressured to vote on a 450-page bill that they just got today with no amendments or changes and for some without even having read it, so definitely the politics of fear at work here, Lou. DOBBS: The politics of fear, precisely what many Democrats have said they resented about the White House and the war on Iraq. They are now -- the Democratic leadership full on accomplices in the politics of fear. And by the way, as we watched what happened on Wall Street today, it is clear that Wall Street was unimpressed with anything that Congress did last night.

And it remains an open question as to whether or not this Wall Street bailout will have any impact at all because as economist after economist and former government official after government official has pointed out, this is not the correct way to deal with either -- with either the credit crisis or the housing crisis. In fact, the housing crisis is ignored altogether in this legislation.

We should point out, too, that, as you mentioned, Congressman DeFazio, he was here. He is an alternative, which will not cost the taxpayers much money at all in comparison. He and Congresswoman Marcie Kaptur (ph) suggesting that everyone watching this broadcast call into the Washington -- to the Capitol Hill switchboard. That number, we'll put this up if it's not up there right now.

It's on our Web site at loudobbs.com -- 20 -- go to Congress -- 201 -- it says 212 there but that's wrong. It's 202-224-3121. Again, 202-224-3121. He says Congress wants to hear from you on this. Let them hear from you.

Up next -- Congress working to bailout Wall Street ignoring the credit card crisis, ignoring our middle class.

And ahead -- a leading opponent of the Wall Street bailout. I'll be joined by Congressman Brad Sherman (ph).

And just about 90 minutes to go until the vice presidential debate in St. Louis. For all of that and a lot more, stay with us. We'll be right back.

(COMMERCIAL BREAK)

DOBBS: Welcome back. While Congress is acting to bail out Wall Street, very little is being done, of course, to help working men and women and their families. In fact, American families right now are struggling with massive, massive amounts of credit card debt, household debt. But a bill to protect consumers from predatory lending practices has not been passed by the Senate. As Kitty Pilgrim reports, the banks, well they are getting all of the Senate's attention while the credit cardholder has virtually no protection from predatory practices.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Massive relief for banks. But for Americans burdened with credit card debt, nothing. The so-called credit cardholder's bill of rights was written to protect consumers from arbitrary and sudden interest rate hikes on credit cards, excessive fees and gimmicks that trigger penalties. That bill passed in the House with overwhelming support. But in the rush to get the Wall Street bailout done, the Senate never took up its version of the legislation to curb credit card abuses. The Bush administration, in an official statement, actually tried to shoot down the bill, saying it would constrain financial institutions. Consumer groups say the Wall Street bailout bill is expected to allow the government to buy securitized bad debt, including credit card debt.

TRAVIS PLUNKETT, CONSUMER FEDERATION OF AMERICA: The bailout bill is going to help many of the same firms who are responsible for these abusive tactics, and under the bill, the government will be able to buy not just bad mortgage debt but bad credit card debt as well.

PILGRIM: Robert Manning has testified before Congress on the credit card industry and says banks pressured Congress.

ROBERT MANNING, ROCHESTER INSTITUTE OF TECHNOLOGY: They're going back to Congress and saying, hey, now is not the time to impose regulations. We need the money. Cash flow coming from the credit card portfolios is going to be crucial to maintaining financial stability in other divisions that are losing money.

PILGRIM: Manning estimates credit card operations have been a cash cow for years. Last year earning $117 billion in revenue and $12 billion in late fees and over-limit fees.

(END VIDEOTAPE)

PILGRIM: Now the Bush administration promises that new Federal Reserve regulations will help credit cardholders in December. But there is a doubt that those regulations will protect the consumer against the abusive practices the same way that the legislation would have, Lou.

DOBBS: So they're bailing out -- trying to bail out Wall Street but not the people who hold a mortgage. So they're trying to bail out Wall Street, investment banks and, of course, Paulson's old firm Goldman Sachs standing to do better than anyone in all of this, but not helping out credit cardholders.

PILGRIM: It's an absolute outrage. And credit card debt is at historic levels. Families are struggling. And these predatory practices have made it more difficult for everyone to pay these balances off.

DOBBS: Kitty, thank you very much. Kitty Pilgrim. A lot of names we could use there, but we won't.

The economic conditions for working men and women in this country are deteriorating. A new report out today, in fact, if you have any question about the impact of our trade deficit, that new report finding that the trade deficit costs Americans more than 5.5 million jobs.

The Economic Policy Institute report find in California losing the most jobs, 700,000, Michigan losing a huge percentage of jobs, 7.5 percent of the state's jobs, in fact, disappearing over the last year.

All 50 states losing jobs because of the trade deficit, and, of course, that is a drag as well on overall on economic growth. And most of those job losses in manufacturing.

Turning now to at least some positive news. And this time about a much loved World War II aircraft carrier. After a two-year restoration project, the USS Intrepid is back at its home berth in New York City.

A team of tugboats moving the 900-foot aircraft carrier across the harbor in New York. It cost $115 million to renovate the Intrepid museum. The USS Intrepid was commissioned in 1943, served in World War II. The Intrepid also served during the Korean and Vietnam Wars. The museum will reopen to the public in November.

Welcome home, Intrepid.

Up next, a leading congressional opponent of this massive Wall Street bailout joins me, Congressman Brad Sherman, Democrat of California. Is there any chance he will support this new bailout?

Stay with us. We'll be right back.

(COMMERCIAL BREAK)

ANNOUNCER: This is LOU DOBBS TONIGHT. News, debate and opinion.

Here again, Mr. Independent, Lou Dobbs.

DOBBS: Welcome back. Joining me now one of the House's most outspoken opponents of this Wall Street bailout, Congressman Brad Sherman, who's a Democrat of California, sits on the Financial Services Committee amongst other committees.

Congressman, good to have you back with us.

REP. BRAD SHERMAN (D), CALIFORNIA: Good to be with you, Lou.

DOBBS: $150 billion in some of the most outrageous pork imaginable, and you just saw Senator Obama and Senator McCain signed off on this like it was just as pristine and pure as the driven snow.

What does Congressman Sherman say about this new attempt to get the bailout through?

SHERMAN: Wall Street really wants that $700 billion, and they've put some -- they put some sweeteners on this. They put some pork. There is some good tax provisions they put on it that they should have just passed independently and there's some bad tax provisions on it as well.

They've increased the cost of a $700 billion program to about $800 billion, and it's, if anything, a worse bill.

DOBBS: All right. So you can't support it? SHERMAN: Hell no.

DOBBS: Well, hallelujah.

Congressman Sherman, let me just say, many of our viewers may not the be aware that they added 100 -- over 110 provisions, in addition to making the -- as you well know with your accounting background, they even pulled back the alternative minimum tax and rather than pay as you go, which had been the original plan, now it's just part of deficit spending.

They threw it into this legislation. This is an insult to the intelligence of every American, and the two men who would be president of the United States signed up for this. I mean it is enough to make you vomit.

SHERMAN: Well, the Wall Street panic machine has been operating over time. They've convinced so many people that if you don't back this bill you're an irresponsible populist that any real patriot would put country first and vote for the bill.

The people saying that are trying to make sure that no one looks and reads the key provisions of the bill.

DOBBS: Right.

SHERMAN: If you get enough panic, nobody has time to read.

DOBBS: I know that you've got great respect for Bill Isaac. We talked with him here last night. He's laid out a plan. Marcy Kaptur, Peter DeFazio, two highly respected congressmen -- one from Ohio, the other from Oregon -- with their legislation as an alternative.

You -- do you believe there's any hope for sense to prevail in the House of Representatives and for us to stop what is with -- by the estimation of every expert I respect is an absolute disaster for this country?

SHERMAN: Well, people are going to have to call their members of Congress. Keep in mind, the Wall Street firms now have their employees sitting there with lists and they're not just calling their members of Congress. They're all calling 435 of us in the hope that whoever answers the phone won't bother to ask what part of the district are you from.

So we're up against people who are being paid to make the phone calls during their office time. People have got to call in and say, you can't vote for a bill where Bill Isaac says that half the money is going to foreign investors through the China two-step.

Half the money is not even bailing out Americans who made bad investments but rather foreigners who did instead.

DOBBS: Congressman Brad Sherman, thank you very much.

SHERMAN: Thank you. DOBBS: We'll be -- we'll be, obviously, watching tomorrow and hoping for the best for the American people.

And as an independent populist, I can say that I can make it very clear, people are my -- the American people are my first concern. We appreciate it, and I know they are yours as well.

Thank you very much, Congressman.

Up next, the vice presidential debate is now just a little less than an hour and a half away. The nation's chance to hear Governor Sarah Palin without, well, some of the little tweaks and twists of the liberal main stream media.

And will the House of Representatives have the guts to turn back that Wall Street bailout? Or will they sell out the American people?

I'll be joined by three of the nation's leading economic thinkers and our panel of political analysts as well, next. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Joining us now three of the country's top economic thinkers. I'm joined now by David Smick, he's author of "The World is Curved: Hidden Dangers to the Global Economy," Peter Morici, professor of the Robert A. Smith School of Business at the University of Maryland, and David Beim, he's professor of finance and economics division of the Columbia Business of School.

Good to have you all here.

Professor Beim, let me start with you. Your reaction to this bailout provision that suddenly grown to $850 billions over a three- day period.

PROF. DAVID BEIM, COLUMBIA BUSINESS SCHOOL: Well, I'm sorry to see it grow with all of this pork. I agree with you about that. But I do think that we're going to have to do something and do it quite promptly.

The banking system is jammed.

DOBBS: Right.

BEIM: The banks are not making loans. Good businesses can't get loans. Good people can't get loans. And that's the oxygen of business. We -- the oxygen's been turned off.

DOBBS: The oxygen's been turned off, yet anecdotally, we know people are getting loans in small business across the country. We know, again, that there are obstacles to credit, but there are always in the contraction -- we're, obviously, in an economic contraction.

What is unclear is what, if anything, this $850 billions buys that will free up that credit crisis, that will change institutions that are now insolvent to solvent. It's obviously very clearly favorable to Goldman Sachs, Treasury Secretary Hank Paulson's old firm.

But beyond that, it isn't so clear.

BEIM: Well, the fact is, the reason the banks aren't lending is because they're jammed up with bad assets. It's an appropriate solution to that to take the bad assets off their books and exchange it for cash if you do it at a low price.

Now I think everything turns on price.

DOBBS: Right.

BEIM: If you overpay for the assets, then you're giving them a gift. And I agree with you that we don't want to be giving gifts to the people who brought us this problem. We don't want to do that.

But if we buy at a low price, approximating fair market value, then we're just exchanging one asset for another and we don't lose.

DOBBS: But that's a difficult thing, is it not, Professor Morici, because, as Professor Beim just pointed out -- I mean that -- it sort of you turn that value in price rather deathly, but the fact is, without one we don't know the other, do we?

PROF. PETER MORICI, UNIVERSITY OF MARYLAND: Well, we don't. But I have to say I just don't agree with my colleague as learned as he may be.

So far we've advanced the banks over $400 billion through the Federal Reserve discount window and they've done very little to free up lending. We've taken this paper off their books for a bit of time and they've done nothing with it.

The fact is, nothing in this bill provides or requires the banks to begin lending again and to reenter to securitization process that would provide the funds for regional banks to make mortgages.

I maintain you give them the $700 billion, there'll still be a shortage of mortgages tomorrow, because it doesn't fix the compensation plans. You simply can't pay 35-year-old MBAs $10 million and $20 million a year, which this bill permits, and borrow 5 and lend it 7.

The only way you can do that is with complicated derivatives, subprime mortgages and shenanigans. And that's exactly what we're going to get except they'll move in to another financial market to do it.

Finally, the bill doesn't provide for equity participation so the losses are going to be too large. We know we're going to lose money on some banks that fail and we won't be able to make it back on the banks that do well.

What we saw today was Wall Street marching up Mount Olympus where -- using their well-oiled lobbying machine, counting on those people whom they've enriched with enormous campaign contributions to put pressure on the House of Representatives.

Hopefully, the people's House will recognize this bill is unchanged and simply vote it down. We do need a solution. This simply isn't it. It's a massive waste of money.

DOBBS: David Smick, your thoughts?

DAVID SMICK, AUTHOR, "THE WORLD IS CURVED": I think the soft underbelly of this plan is the price. If you listen carefully to the treasury secretary, what he says is, we're going to have an auction, but it's going to be a private auction.

And when you say, how will you select the prices, very vague about it or deliberately vague, for this reason. If the price is too low, then you got -- you end up with a Lehman Brothers situation. These companies collapse.

He's going to have to set that price very, very high. Here's the problem -- the U.S. economy is weakening. Bank stocks are going to weaken with the slowdown in the economy. So he's going to have to continue to raise that price. It may have to be close to book value.

What does that mean? That means he's going to go through that $700 billion very fast. He's going to be back to Congress.

DOBBS: Right. I think most people, David, acknowledge that this was -- the treasury secretary himself -- his office acknowledging -- this was just a number, the numbers expected to be well north, as you well know, of a trillion dollars.

We're already pushing a trillion and a half dollars anyway, all in.

Let me ask you. Can I just add one other thing about...

DOBBS: Sure.

SMICK: ...about the pork.

DOBBS: Sure.

SMICK: You know, that $150 billion is probably going to be really needed in about two months when Congress goes home and they find out people are hurting. They're going to want to have a fiscal stimulus package, another package. The Fed is going to have to cut interest rates, but they've frittered away $150 billion that they could have used as the foundation for a package to help the average person.

It's really quite astounding.

DOBBS: Yes, that $700 billion, by the way, trying a novel period of trickle up rather than trickle down for a change will also be a great help to working men and women in this country.

I can't believe the Democratic leadership of this Congress is so ignorant as to put -- to go along with this madness.

You get the last word, Professor.

BEIM: OK. I think the banks have two needs. One is some of them are insolvent. And the other is many of them are illiquid. Those are two different problems. Banks that are insolvent whose liabilities are greater than their asset should be closed.

We can do that. Insolvent banks should be closed. We closed thousands of them in the past, literally thousands.

DOBBS: Including investment banks?

BEIM: Yes, if they're insolvent, close them down. OK? But if they're illiquid, buy their assets at a fair price. Warren Buffett said the same thing today.

DOBBS: Yes, but that...

BEIM: He says he'd like to have one percent of his program himself.

MORICI: The problem is...

DOBBS: Professor, what did you say about Warren Buffet? With all respect, with great fondness for the man, he is buying a preferred position in Goldman Sachs. He is buying a preferred position in GE with an advantage over the investor to whom there is an offering.

BEIM: That is true.

DOBBS: You put the government and the taxpayer and the other investors in the same position as Warren Buffett, then I say you've got a level playing field, and I'm prepared to play.

But let's not (INAUDIBLE) Warren Buffet for taking a preferred and advantageous position.

Would you agree?

BEIM: He said he'd like 1 percent of this asset purchase program if it was done at low prices, and I agree with him. I'd like to have a piece of it, too.

DOBBS: Well, with that condition, so would the American people. These are not the people who find out the price or discern the value.

Thank you very much, Professor.

BEIM: You're very welcome.

DOBBS: Thank you, Professor Morici. Thank you, David Smick.

Great expectations for tonight's vice presidential debate. Next, I'll be talking with three of the best political observers and analysts in this country about the debate and who they think will win. It's just over an hour away now. Can you feel the suspense, the excitement building?

We'll be right back.

(COMMERCIAL BREAK)

DOBBS: A little over an hour the vice presidential debate from St. Louis.

Now to give us their assessment of what's happening and what we might expect, three of the best political analyst, all CNN contributors, Republican strategist Ed Rollins, White House political director under President Reagan, and also chairing Mike Huckabee's president campaign, Pulitzer Prize winning columnist, "New York Daily News," Michael Goodwin, Democratic strategist, Democratic national committeeman, Robert Zimmerman.

Welcome back, Robert. Let me start with you. You've got to be excited about tonight. You think Joe Biden can hold up against the pressure from Governor Palin?

I've been reading in all the northeastern papers, say the "New York Times," how tough it will be for him.

ROBERT ZIMMERMAN, CNN CONTRIBUTOR: Well, first step is to ignore all the talking points on both sides. And I think, ultimately, if Joe Biden keeps his focus in John McCain, he'll be just fine in this debate.

DOBBS: All right, let me ask you this, too, if I may, Michael Goodwin, is there any sense of what we should expect from it or is this just going to be a free-for-all without any sort of inkling as to what the strategy is from either of these candidates?

MICHAEL GOODWIN, NEW YORK DAILY NEWS: Well, look, I think the rules will determine a lot of it, and apparently, the rules for this one are much more restrictive than they were for the presidential debate. So the time is more limited for each response.

So the idea that they'll go back and forth with each other is probably less likely. And that didn't happen very much in the presidential debate either. So it's very hard to see how either one of them will score points. It's really about who makes the gaffe.

I mean that's what we're all watching for, isn't it, who makes the gaffe here?

DOBBS: The gaffe. The gaffe. I love it. Is that what you're waiting for here?

ED ROLLINS, CNN CONTRIBUTOR: Well, I'm -- you know I mean it's like this week where Senator Biden thought he was shot down over Iraq and was really chased down (INAUDIBLE) they got landed by weather. There's always a little one or two here that are little overstatement.

And I expect in a 90-minute debate he'll have -- he'll have several of those... ZIMMERMAN: But you know...

ROLLINS: And I think she'll outperform any expectations.

ZIMMERMAN: Well, that's not too difficult. If she doesn't fall off the podium, she outperforms expectations. The point here, though, is it's not about the gaffe.

DOBBS: That wasn't very (INAUDIBLE).

ZIMMERMAN: Well, I do what I can, but it's not -- it's not about the gaffe and the game of got-you. It's about Sarah Palin finally being exposed as another politician, and I know...

DOBBS: Wait a minute. Wait a minute. Wait a minute. Joe Biden has been -- I mean certified twice as a plagiarist. He has made all sort of distortions and I don't understand this discussion about being vice presidential material.

I mean this is not a joke. The national liberal media gives him a pass. I'm not going to give him a pass against that kind of dialogue.

ZIMMERMAN: You know, I've always been suspicious of David Brook and -- also people like George Will and Kathleen Parker, those right wing conservative...

DOBBS: They haven't committed plagiarism, have they?

ZIMMERMAN: No, but they...

DOBBS: They haven't committed plagiarism. He's done it twice.

ZIMMERMAN: And he acknowledged it. And very, frankly...

DOBBS: Well, you know, if that's an issue then...

ZIMMERMAN: No, that's...

DOBBS: ... then I guess that we're done.

ZIMMERMAN: The issue is he acknowledge a mistake and that doesn't define his career in the Senate.

DOBBS: What -- what has Sarah Palin done that rises to that level of a character flaw? Help me out.

ZIMMERMAN: She said -- I'll help you out. She said she was against the bridge to nowhere and then, of course, lied and said she was opposed to it.

DOBBS: And that's -- and you see that as a moral equivalent.

All right. OK.

ZIMMERMAN: I -- by the way... DOBBS: We're going to be right back with Robert Zimmerman and moral equivalency and further discussion in just one moment.

Michael Goodwin is going to be heard from, even Ed Rollins. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Well, we're back with our panel, Ed Rollins, Michael Goodwin, Robert Zimmerman.

And let me turn to you, this taking place, this debate tonight in the context of a very important vote tomorrow whether (INAUDIBLE) the House has the courage to roll back a Wall Street bailout filled with pork and other madness.

Your thoughts?

ROLLINS: My thought is they will. I think there's tremendous pressure and they'll basically -- since they've already started hanging ornaments on the Christmas tree, I think they'll make some deal with some House members who want something special if they don't get the other 10 or 12 votes.

DOBBS: Have they impact -- John McCain and Barack Obama both saying in the debate, the presidential debate, that this is exactly the kind of thing they wouldn't permit under their presidency.

ROLLINS: Neither of them stood up and argued against it last night. We should argue to strip down versions -- they believe in the bill, and neither of them did that.

DOBBS: They could have scored real points by doing so.

GOODWIN: Well, one of them could have at least owned the issue. I mean I think this is going to determine the sort of fate of the next president's policies but so not to take a position...

DOBBS: What about the fate of the nation?

GOODWIN: Well, that, too, but for the men who want to be president not to lead on this issue -- and look, I mean, it's not equal here. Don't forget the economy is really hurting John McCain and Sarah Palin much more.

So tonight I would look for Palin to try to score a couple of points on the economic issue. It's not her strong suit but I don't think they don't have much choice now.

DOBBS: Robert?

ZIMMERMAN: Sarah Palin clearly has to try to score some points in this debate. And I'm predicting she's going to try take on Joe Biden and try to draw him into that. But it's not going to work, because at the end of the day she's part of an economic agenda that has failed this country. DOBBS: Well, she's a recent adjunct to it at least.

ZIMMERMAN: Well, we do know...

DOBBS: Let me ask you this, what about this issue that neither Obama nor McCain had the courage to stand up against the very things they said that they would resist as president, and that is all of the pork in this ridiculous Wall Street bailout?

ZIMMERMAN: Look, nobody, nobody -- nobody wants to support this bailout bill. It's a matter of making the best choice in a very difficult situation. John McCain has defined his candidacy by opposing earmarks. Here, he was, in fact, standing up for the bill and supporting it.

But the reality is, as tough as this bill is, the much greater concern is that auto sales are down by 27 percent in September.

DOBBS: Who wins tonight?

ZIMMERMAN: There's no question, Joe Biden wins.

DOBBS: Who wins?

GOODWIN: I'm predicting Sarah Palin.

ROLLINS: I predict Sarah Palin. I think she's going to shock everybody.

DOBBS: All right. Well, with that, we have even more reason to watch now.

Thank you very much, Robert Zimmerman. Michael Goodwin, thank you very much, Ed Rollins.

And our poll results tonight, 51 percent of you are at least a little annoyed by the liberal national media's blatant bias against Governor Palin.

Thanks for responding to our poll and thanks for being with us tonight. CNN's special coverage of the vice presidential debate in St. Louis continues right now with Wolf Blitzer and Campbell Brown.

Wolf, Campbell?

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