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AMERICAN MORNING

Senate Approves Bailout Bill; What Life Could be Like Without a Bailout; Biden and Palin on Tough Topics; Preparing for the Vice Presidential Debate

Aired October 2, 2008 - 07:00   ET

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


JOHN ROBERTS, CNN ANCHOR: It's coming up on one minute to the top of the hour. And here are this morning's top stories. Authorities think that they have finally found the plane wreckage of millionaire adventurer Steve Fossett. Hikers also found I.D. cards with Fossett's name nearby. A ground team is traveling to that area of eastern California to investigate. It's been 13 months and one day since Fossett went missing. The areas near the Mammoth Mountain Ski Resort.
The engineer of the commuter train in last month's deadly accident near Los Angeles sent a text message from his cell phone just 22 seconds before his train collided head on with the freight train. The accident killed 25 people including the engineer. Investigators are still not sure if that's what caused the man to run the train through a red signal.

The toxic chemical Melamine was found in candy in four Connecticut stores this week according to a state official. Contaminated bags of White Rabbi creamy candy were also sold in California. Melamine is the same chemical behind a deadly tainted milk scandal in China.

CHETRY: There are two major political stories this morning. We're going to have a live report on tonight's vice presidential debate in just a moment. First, though, we have news breaking in Washington. The Senate approves the $700 billion bailout bill in a late night vote session, late night, 74 to 25. The measure now heads back to the House which voted against the bill Monday. Senate Majority Leader Harry Reid said he was very happy with last night's result.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D), MAJORITY LEADER: Inaction is not an option, which is why we worked expeditiously and in a bipartisan manner to stop a bad situation from getting even worse.

(END VIDEO CLIP)

CHETRY: John McCain, Barack Obama and Joe Biden all voted in favor of that bill.

JOHN ROBERTS, CNN ANCHOR: More on the bailout still ahead. Right now, we turn to arguably the most anticipated vice presidential debate ever. But what already has people talking before tonight's face-off, the glaring difference between the answers Joe Biden and Sarah Palin gave to a question about the Supreme Court. Last night, CBS' Katie Couric asked each candidate about a court decision they disagreed with. And Couric asked Palin for an example excluding Roe versus Wade.

(BEGIN VIDEO CLIP, CBS "EVENING NEWS")

KATIE COURIC, CBS ANCHOR: Are there Supreme Court decisions you disagree with?

SEN. JOE BIDEN (D), VICE PRESIDENTIAL CANDIDATE: You know, I'm the guy who wrote the Violence Against Women Act. And I said that every woman in America if they are beaten and abused by a man, should be able to take that person to court, meaning you should be able to go to federal court and sue in federal court the man who abused you, if you can prove that abuse. But they said no, that a woman, there is no federal jurisdiction.

And I held -- they acknowledge. I held about a thousand hours of hearings proving that, that there's an effect in interstate commerce. Women who are abused and beaten are women who are not able to be in the workforce. And the Supreme Court said, well, there is an impact on commerce, but this is federalizing a private crime and we're not going to allow that. I think the Supreme Court is wrong about that decision.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP, CBS "EVENING NEWS")

KATIE COURIC, CBS ANCHOR: What other Supreme Court decisions do you disagree with?

GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: Well, let's see. There's, of course, in the great history of America, there have been rulings that there's never going to be absolute consensus by every American. And there are those issues, again, like Roe v. Wade, where I believe are best held on a state level and addressed there. So, you know, going through the history of America, there would be others, but --

COURIC: Can you think of any?

PALIN: Well, I would think of any, again, that could best be dealt with on a more local level.

(END VIDEO CLIP)

ROBERTS: Each side is already playing down expectations as they always do going into these things.

Our Dana Bash is live for us this morning in St. Louis where the debate is going to be held. And there is so much anticipation across the country, Dana, for this. I can imagine what it's like there at Washington University.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: That's right. As you can see, the sun hasn't come up and already it's sort of crackling with anticipation here about what we're going to see later tonight.

But, you know, it's been interesting to see the way Sarah Palin has been preparing. We know she has been at John McCain's creek side cabin outside Sedona. That is a place where aides say she has been able to sort of get more comfortable. She's had her family around her.

But the other way she's been kind of warming up over the past couple of days, John, is by calling in to talk radio. And specifically, you know, you just played the interview from last night from Katie Couric. More and more conservatives, sort of intellectuals, columnists in Washington and New York have been writing, you know what, interviews like that show us she is not ready. She is not ready to be vice president, much less president.

Well, what aides are hoping is that by calling in to talk radio, she's able to really remind the Republican base who listens to conservative radio why they like her, why they really came alive when John McCain picked her. And she's using age-old, anti-media tactics. Listen to what she said yesterday.

(BEGIN VIDEO CLIP)

VOICE OF: GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: That's why I look forward to tomorrow night also. Getting to speak directly to Americans without that filter of mainstream media trying to I think maybe censor some of my comments as we lay out those contrasts between these two different tickets.

(END VIDEO CLIP)

BASH: Now, it is unclear when Governor Palin think she was actually censored by the media. I've not heard back from her aides about that. But one top aide did tell me last night, an aide who has been with her practicing, getting ready, is that what they're hoping inside the McCain campaign is that when people see her in totality, people see 90 minutes of Sarah Palin that that will help sort of bridge some of the problems that she's had in these interviews. That they're going to see her again for 90 minutes, maybe not 90 seconds in a sound bite which is the way they have been seeing her.

But you know, you mentioned at the beginning here, the expectation game. Obviously, that is always the game that is played before events like this. But even Republicans I've talked to who have been very, very worried about Governor Palin of late, they say that the expectations could not be any lower and that could only benefit her.

ROBERTS: Dana, those words "media filter" strike me as the fine hand of strategist Steve Schmidt. Remember back in the 2004 campaign, those were George Bush's favorite words as well. The "media filter" and we're going to talk straight to Americans. Sounds like an old tried and true tactic there.

Dana Bush for us this morning. Dana, thanks very much.

As we take a look at a live picture inside Washington University there in St. Louis, I want to remind you CNN is the only place where you can see the debate with the best political team on television. We've got it all for you tonight on CNN. It's your home for politics. Coverage all day leading up to the debate tonight at 9:00.

CHETRY: And returning now to our breaking news in Washington. Last night, the Senate approved the controversial $700 billion bailout bill. It now heads back to the House.

Our Kate Bolduan is live on Capitol Hill with the latest. We talked about the sweeteners added, designed to make it more attractive to some of those Congress people who voted against it the first time.

KATE BOLDUAN, CNN CORRESPONDENT: And that's the big question. Is it sweet enough to get the votes that they need and maintain the votes that they had the first time around? Kiran, good morning to you.

Well, the focus, as you said, is back on the House of Representatives this morning. Just days after the bailout bill failed, it now returns. Senators leaving their vote last night said that their 74-25 count sends a very strong bipartisan message and also gives the bill some strong momentum going into the House vote which is expected, we're told, probably Friday midday. And one of the principal negotiators on the House side, Democratic Congressman Barney Frank says much has changed since Monday's vote. Listen here.

(BEGIN VIDEO CLIP)

REP. BARNEY FRANK, CHMN., HOUSE FINANCIAL SERVICES CMTE: It's still uncertain. I think it is likelier to pass than before. But the major difference, frankly, Anderson, is not what the Senate did, to be honest. What I think has changed this is reality.

On Monday, there were a number of people who were still skeptical that there'd be some serious economic difficulty. It is also the case that we were hearing, as is often the case politically, only from those who were opposed, because the people who were for it assumed it would pass. Once it failed, a number of people began to hear about economic difficulty.

(END VIDEO CLIP)

BOLDUAN: Now, House Republican leaders, they were working the phones all day yesterday trying to drum up support among their colleagues. They know that about two-thirds of the House Republicans voted against the original bill and House Republican leaders know they need to come up with some votes if they're going to push this through this time around -- Kiran.

CHETRY: How much are they looking towards John McCain to help round those up?

BOLDUAN: I think at this point they are trying to take a lead from the entire Senate. Of course, getting -- to having John McCain vote for the package I think that will help part of the momentum as they're moving into the vote. But right now, it is very volatile and it was a risky -- a risky decision putting some of those provisions in the Senate bill. So right now, it's pretty volatile and very uncertain still in the House.

CHETRY: Yes. It's even more uncertain than it was Monday when people thought it was going to pass.

BOLDUAN: I know. So don't ask me if it's going to pass.

CHETRY: Yes. Things change by the second there that's why we have you with us.

Kate Bolduan, thanks.

ROBERTS: Normally, vice presidential debates don't attract as much attention as the presidential face-off. So they have provided some interesting moments. Remember 1988, Benson-Quayle?

But this year is different from all of that, though. The debate between vice presidential candidates Senator Joe Biden and Governor Sarah Palin tonight in St. Louis has been billed as Biden's experience against Palin's charisma.

Joining me now from New York is Republican strategist and CNN contributor Ed Rollins, and from Washington, Democratic strategist Kiki McLean. Good to see both of you.

ED ROLLINS, REPUBLICAN STRATEGIST: Good morning.

ROBERTS: Kiki, we understand that Joe Biden has been consulting with Hillary Clinton and Barbara Boxer about debating a woman. What would you advise him to do tonight if you were coaching him?

KIKI MCLEAN, OBAMA SUPPORTER: I would advise him to be himself. You know, Senator Biden has a great warm personality and great conviction and passion for what he believes in. I think this debate isn't so much about gender, and I think Joe Biden is a gentleman. I think he's a professional. I think he'll do well in that regard.

And frankly, I think Sarah Palin will do well tonight. You know, she is the governor of Alaska. That didn't just happen by accident. So I think the most important thing will be what kind of chance they have to either promote or defend the records and the proposals of their ticket and their partners. And in that instance, I do think Sarah Palin has the tougher road to hoe here. I think she's got to figure out a way in this economy to defend someone who is so closely tied to this administration...

ROBERTS: Right.

MCLEAN: ... somebody who has voted against, who's voted to privatize Social Security three times. That makes it a little more difficult. And the question is, will it be the barbs and the jabs? I don't think that's Joe Biden's style and I think Sarah Palin sort of overplayed that hand.

ROBERTS: Ed, sounds to me like Kiki both raised and lowered expectations for Governor Palin in the same sentence there.

ROLLINS: Because she said (INAUDIBLE)

(LAUGHTER)

ROBERTS: Ed, what would you counsel Governor Palin to do tonight?

ROLLINS: To be yourself. I mean, she's a big personality. Whenever that's out there on the stump, I mean, she draws tremendous crowds. She has a lot of humor.

I think the key thing today is not worry about all the facts and figures and just go out and basically talk to the American public. Answer the questions. Obviously, Biden has not been anywhere near as much a player in this race than she has. There's a great curiosity.

Historically, vice presidential debates don't do a whole lot moving numbers. Even presidential debates sometimes don't move numbers. I expect tomorrow we'll all be sitting here saying what was all the big deal about. It was an interesting debate, but not the greatest debate in the world.

ROBERTS: Yes, I mean, it's certainly going to be interesting theater.

Kiki, if she really wants to score a lot of points, she's been talking and she started down this road in an interview a couple of days ago with conservative talk show host Hugh Hewitt, where she's talked about being the candidate for Joe six-pack America.

MCLEAN: Or maybe Joanne six-pack, she might say. I think in this case, you're also talking about Joe Biden who's somebody who comes out of working class Irish roots, Scranton, Pennsylvania, still representing Delaware. The guy who never became part of Washington, taking that train home every night to his young children after a family tragedy, and then building his family back up and really being the kind of father and member of the community that I think a lot of us admire and respect and want for a next-door neighbor.

That's why I think if there's a moment in tonight's debate, it really won't be about personality.

ROBERTS: Yes.

MCLEAN: It will be about the substance. And I think that's why it becomes a little more difficult for Palin. But in terms of performance, she's going to do just fine.

(CROSSTALK)

ROBERTS: Kiki, let me just -- let me just jump in here because I want to ask Ed one question here with the time that we have left since it's very short.

Ed, this whole controversy about Gwen Ifill writing a book that's got Barack Obama on the cover of it. He's mentioned on the inside. Do you buy what conservative, conservative blogospheres is saying that she's showing bias. ROLLINS: No. She's a first-rate journalist. I've known Gwen a long, long time. She'll do a very effective job tonight, and we'll have a very fair hearing.

ROBERTS: Or if not biased, at least conflict of interest?

ROLLINS: No. I don't think there is. I think -- as I said, I think she's a first rate professional. She's done these debates before. She'll do a very good job.

ROBERTS: All right. Ed Rollins for us. Kiki McLean, good to see you. Folks, thanks for being with us.

ROLLINS: Thank you.

CHETRY: And here's what we're working on for you this morning. The worse case scenario for the economy. Without a bailout plan, what could happen and when?

You're watching the "Most News in the Morning."

(COMMERCIAL BREAK)

CHETRY: Welcome back to AMERICAN MORNING. Ali Velshi joins us now with a look at if this bailout bill indeed passes, what are the top three questions we need to ask ourselves starting with this credit problem.

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: And by the way, we are taking questions continually on CNN.com/am on the blog, but I'm getting a lot of the same sort of questions. I want to address some of this main one (ph).

She said, how long, if this passes the House tomorrow, how long before credit starts flowing again?

I've been describing this credit freeze that we are in, which is preventing individuals and major companies from getting credit.

Now, the minute this passes the House, there will be an instant reaction on credit markets. Instant. In fact, I'm probably going to go to the Chicago Board of Trade tomorrow which is where, where these things are traded, where credit instruments are traded, like treasury bonds and give you a sense of how fast it's going to come unfrozen.

CHETRY: Not just pork belly (ph).

VELSHI: It would be by the end of the day tomorrow if this thing -- if this thing loosens up. How long before you feel it? It still will be a matter of just days because banks will be able to get money very quickly assuming, assuming nothing else gums this up, and that would probably a bad assumption to make these days.

CHETRY: How do you measure if it's successful?

VELSHI: Well, that's a good question. I would advise people not to be looking at the stock market as a measure of success. I've been saying this for a while. The stock market is kind of moving independently. We will hear from people, companies that have been struggling to get money.

AT&T had trouble. Caterpillar had trouble. We'll start hearing from companies that deals are being done.

Commercial paper, as they call it, is being moved. And companies are getting money. That will move down to the banks. We'll start to hear anecdotally from small business and individuals that they're able to get their mortgages or if they're trying to sell a house that they will be able to sell it. You'll email us and tell us if those mortgages that are on hold are happening.

And finally, should you watch for market reaction on this, I really advise that you don't. We will watch it very closely, but this isn't about the stock market. This is something entirely different. Markets react when there are things we react to or not. Don't worry too much about the markets this week. Just put them aside.

CHETRY: All right. Good stuff. Thanks.

ROBERTS: In fact, futures are down almost 70 this morning.

VELSHI: That's right. And as I mentioned, they've been sort of up and down all morning.

ROBERTS: Just don't pay any attention to that.

CHETRY: He said don't look.

VELSHI: Don't look. Why are you looking?

ROBERTS: Just (INAUDIBLE) curious.

Sixteen minutes after the hour.

Doom and gloom.

(BEGIN VIDEO CLIP)

HENRY PAULSON, TREASURY SECRETARY: The taxpayer already is going to suffer the consequences.

(END VIDEO CLIP)

ROBERTS: Breaking down the credit crisis. Christine Romans on what life could be like without a bailout.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Individuals stop spending. Banks get weaker. Stock market goes down.

(END VIDEO CLIP)

ROBERTS: You're watching the "Most News in the Morning."

(COMMERCIAL BREAK)

ROBERTS: Welcome back to the "Most News in the Morning." The House will get another chance to pass the $700 economic bailout bill which, by the way, will be $850 billion by the time it gets to the House with those add-ons. But we keep hearing about how the sky will fall if nothing is done. Is that really true? Are all these gloomy predictions being just a little overblown?

Our Christine Romans is looking at the doomsday scenario for the economy. What does it look like?

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: And, John, we're wondering just what would the economy look like if we didn't get confidence back in the credit markets?

(BEGIN VIDEOTAPE)

ROMANS (voice-over): A crescendo of gloomy predictions.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We're in the midst of a serious financial crisis.

HENRY PAULSON, TREASURY SECRETARY: The taxpayer already is going to suffer the consequences if things don't work the way they should work.

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: This plan is an emergency plan to put out a fire, to resolve a serious crisis.

ROMANS: So just what is going to happen and when? No one believes America will wake up tomorrow to soup lines, shanty towns and depression era panic on Wall Street. What they do expect --

UNIDENTIFIED MALE: Banks get weaker. They can't finance home credit. They start foreclosing. Individuals stop spending. Banks get weaker. Still, the stock market goes down.

ROMANS: The U.S. Chamber of Commerce predicts a vicious cycle of frozen credit markets where banks don't lend money. Towns can't borrow for important projects. Companies miss payrolls and consumers stop spending.

The chamber says the cycle could begin in a week or two and once started would be hard to stop. Others predict it will be much further down the road.

Listen to the president's own prediction of life without a bailout bill.

(BEGIN VIDEO CLIP, PRESIDENTIAL RADIO ADDRESS)

BUSH: Further stress on our financial markets would cause massive job loss, devastate retirement accounts, further erode housing values and dry up new loans for homes, cars and college tuitions.

(END VIDEO CLIP)

ROMANS: Harvard economist, Ken Rogoff, says government action is better than the alternative.

KENNETH ROGOFF, HARVARD ECONOMIST: We're worried about something that wipes out a big chunk of our financial intermediation that gives us, you know, credit cards, mortgages, auto loans, you name it. It's something that hurts us for many years.

(END VIDEOTAPE)

ROMANS: Former vice chairman of the Fed, Alice Rivlin, says anticipating what the world will look like without a bailout is "like anticipating nuclear war. We don't know what the chances are, but we know we have to do everything we can to avoid it."

ROBERTS: Yes. Well, so far, they've been successful at that. Let's see if we can avoid this one as well.

ROMANS: Right.

ROBERTS: Christine, thanks so much for that.

A programming note now. We are going to ask Senator John McCain about his economic plan right here on AMERICAN MORNING. That's during our next hour.

CHETRY: Palin under pressure.

(BEGIN VIDEO CLIP)

HOWARD KURTZ, HOST, CNN'S "RELIABLE SOURCES": These are very basic questions.

(END VIDEO CLIP)

CHETRY: A preview of tonight's debate on the evening news. Jason Carroll with the interview everyone is talking about.

You're watching the "Most News in the Morning."

(COMMERCIAL BREAK)

ROBERTS: Live picture inside the Washington University in St. Louis there. A preview of tonight's debate. We've got a little problem here in our studio here that we hope that you'll just sit with us through. We've got a fire alarm that's gone off, so we got a lot of noise in the studio.

We were expecting to be talking with Pennsylvania Governor Ed Rendell about this time. But we certainly don't want to put the governor into a circumstance here where we may have to abandon him. Oop, and guess what, it's gone off. So we're just going to do a little bit more business here as we look at that live picture and then we'll get right back to everything.

CHETRY: All right. Well, welcome back to the "Most Politics in the Morning."

All eyes will be on tonight's one on one, one and only vice presidential debate. Senator Joe Biden and Governor Sarah Palin get their big chance to define themselves to the public -- sorry about that folks. You know, we're so worried about the sound, there could actually be a fire.

But let's quickly go instead to Jason Carroll. Quickly, because, Jason, you get us through this and we'll double check and see if there's a fire. But meantime, this is going to be the big one and only debate tonight with the vice presidential candidates. And Katie Couric was asking Senator Biden and Governor Palin some questions that we may hear more of tonight.

JASON CARROLL, CNN CORRESPONDENT: Absolutely. You know, some of Governor Palin's supporters say, in fact, she will do very well tonight despite some criticism that she's faced about some questions he answered earlier. For an early side-by-side look at both of the candidates, CBS' Katie Couric interviewed both Governor Palin and Senator Biden asking similar questions on tough topics.

(BEGIN VIDEOTAPE)

KATIE COURIC, CBS ANCHOR: Why, in your view, is Roe v. Wade a bad decision?

GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: I think it should be a state issue, not federal government mandating yes or no on such an important issue. In that sense a federalist where I believe that states should have more say in the laws of their lands in individual areas.

KATIE COURIC, CBS ANCHOR: Why do you think Roe v. Wade was a good decision?

SEN. JOE BIDEN (D), VICE PRESIDENTIAL CANDIDATE: Because I think it's as close to a consensus that can exist in a society as heterogeneous as ours.

CARROLL (voice-over): Katie Couric then asked Joe Biden to name a Supreme Court decision he disagreed with.

BIDEN: I said that every woman in America, if they are beaten and abused by a man should be able to take that person to court and the Supreme Court said well, there is an impact on commerce, but this is federalizing a private crime and we're not going to allow that. I think the Supreme Court is wrong.

COURIC: What other Supreme Court decisions do you disagree with?

PALIN: Well, let's see. There's, of course, in the great history of America, there have been rulings that there's never going to be absolute consensus by every American. And there are those issues, again, like Roe v. Wade, where I believe are best held on a state level and addressed there. So, you know, going through the history of America, there would be others, but -- COURIC: Can you think of any?

PALIN: Well, I would think of any, again, that could best be dealt with on a more local level. Maybe I would take issue with, but, you know, as a mayor and then as a governor and even as a vice president, if I'm so privileged to serve, would be in a position of changing those things, but in supporting the law of the land as it reads today.

HOWARD KURTZ, HOST, CNN'S "RELIABLE SOURCES": These are very basic questions that you would ask any vice presidential nominee to talk about Supreme Court decisions, for example. It only becomes newsworthy when Governor Palin fumbles or bumbles in response.

CARROLL: So is Governor Sarah Palin ready to debate tonight?

ROLLINS: Now when you're going up against the best anchors in the world, you know, they're going to ask tough questions, and you better be prepared to answer the tough questions.

CARROLL: Political analysts say interviews are a good way to sharpen debate skills. Biden has done some 90 interviews since becoming the vice presidential nominee. Palin far fewer. The governor supporters say that's partly because she's been a victim of what they call gotcha journalism, and they say working class voters are firmly behind her regardless.

BRAD TODD, REPUBLICAN STRATEGIST: The way she is handling the press, the way she's handling the media, the way she's handling the spotlight, frankly, I think a lot of people identify with her.

(END VIDEOTAPE)

CARROLL: And her supporters say, remember Palin went through a number of debates in Alaska for her campaign for governor and Obama's own campaign manager says he expects she'll give a great performance tonight.

CHETRY: All right. We'll all be watching for sure. 9:00 p.m. You can see it right here on CNN. Right now, we're going to find out a little bit more about this fire drill. Thank you.

CARROLL: We know where the exits are.

CHETRY: Yes. Exactly. They're lighted.

ROBERTS: The good news is that the actual alarm itself has gone off. The strobes have stopped flashing, so I believe that the situation may be taken care of.

We've got Governor Ed Rendell of Pennsylvania standing by to talk to us about tonight's debate. Let's leave you with a picture right now of what's going on inside the debate hall at Washington University in St. Louis, and we'll be back with the governor right after this. Stay with us.

(COMMERCIAL BREAK) KIRAN CHETRY, CNN, ANCHOR: Welcome back to the most politics in the morning. All eyes on tonight's one and only vice presidential debate. As Joe Biden and Governor Sarah Palin get their big chance to define themselves to the public. Now Palin is just coming off several media interviews where she faced some criticism for her performance. And Joe Biden is known for his frequent and infamous gaffs as well. so what will be tonight's debate strategy?

Joining me now is Pennsylvania Governor Ed Rendell in Pittsburgh. Great to see you this morning, Governor.

GOV. ED RENDELL (D), PENNSYLVANIA: Good to see you, Kiran.

CHETRY: There is a lot riding on this tonight. A lot of people are going to be watching and as we said for the reasons outlined. They maybe paying a little bit closer attention that usual. What do you think the strategy has to be first for Joe Biden, who as we understand has been doing some debate preps with Hillary Clinton as well as Senator Barbara Boxer.

RENDELL: I think Joe is incredibly knowledgeable. And I think what Joe has to do is answer the question, demonstrate his experience, his knowledge of the issues and the passion he has for helping ordinary Americans improve their quality of life. If he does that I think he's going to win this debate going away.

He doesn't have to attack Governor Palin. He doesn't even have to attack Senator McCain although he should point out the differences between the McCain economic policy for example and the Obama economic policy. So I think Joe should just answer the questions directly, use his good sense of humor. He has a good sense of humor. But not get into too much of an attack. But get into answering the question.

I had about 17 debates in my political career. And the one thing I've learned is people like you to answer the question. They don't want ducking and weaving, and they don't necessarily want negative going for the jugular.

CHETRY: Does he need to approach this differently Governor because he is going up against a woman?

RENDELL: I think because of all the controversy, I think a little bit. I think what Joe has got to avoid is in any way shape or form appearing to be condescending. I think Senator McCain lost a lot of support with the women voters in the last debate because he appeared to be condescending saying oh Senator Obama doesn't understand or Senator Obama is being naive. I think that condescension really turned people against Senator McCain. I think Joe has got to stay away from that. He's got to let the questions speak for themselves and Governor Palin's answers if they're not sufficient speak for themselves.

CHETRY: Let me ask you about that because she's gotten some skeptics among Republicans. Some have been questioning her grasp of the issues after some of the comments she made to Katie Couric in these interviews. If you were advising Sarah Palin, what would be your advice for her tonight?

RENDELL: Well, I would make sure that Sarah kept her answers fairly brief. I think she gets in trouble when she rambles a little bit. Answer the question directly. Support the basic thrust and themes of the McCain campaign. Attack when you think there's an opening to attack, drawing differences in policies. But keep your answers fairly short.

I think if you look at the Katie Couric interview, it's very interesting, often Governor Palin will do well in the first question. When she was asked the Roe v Wade question, I think she gave a basically sound answer. She's a states rights person and she thinks the courts shouldn't intervene and leave that up to the states. I don't necessarily agree with that but it's a plausible answer.

Where she got in trouble was when the second question was asked and she started to ramble a little bit. So I would, by the way, I'm a former big city mayor so that alarm doesn't bother me at all.

CHETRY: Oh I was hoping you couldn't hear it. It was my alarm clock. I forgot to shut it off.

RENDELL: No I heard it. It doesn't bother me at all. I'm used to it as a former big city mayor.

CHETRY: If the fire marshall comes and removes me just keep talking, Governor.

(LAUGHTER)

RENDELL: OK. So I think she's got to keep her answers fairly short, fairly direct and hang there and use her sense of humor. She has a good sense of humor. She should use her sense of humor as well. The problem is, for her, follow-up questions, but I think the McCain campaign has the structure of the rules of this debate so there are very few follow up questions to be asked, not like Katie Couric who asked one question and then followed it up. I think that's where Governor Palin got in trouble. So, it think this is a good format for her.

If you saw any of the Alaska gubernatorial debates, she did a good job on that. Again, using her sense of humor. So I think she's going to give a better performance that a lot of people are expecting. But you really have to worry about her selection when you have conservative commentators, the George Wells, the David Brooks saying that she's over her head and shouldn't be on the ticket.

I think that reflects upon Senator McCain's choice. Could Senator McCain have given us a potential president here who is clearly over her head, if even according to conservative commentators. This is not an attack from a liberal press, this are rock solid conservative commentators.

CHETRY: OK. We're going to him that. He's going to join us in about an hour, Senator John McCain. Meanwhile Governor Ed Rendell, thanks so much for joining us this morning. RENDELL: Thanks. It was interesting.

CHETRY: It sure was. Wasn't Governor?

JOHN ROBERTS, CNN, ANCHOR: You know as a former big city mayor he probably wouldn't know what to do if the fire alarm weren't going off. Our Ali Velshi is here, we got fire alarms on the economy and we've had that for a couple of weeks now. And a lot of people reacting to them, not so common cool as Ed Rendell.

ALI VELSHI, CNN, SENIOR BUSINESS CORRESPONDENT: No and our job here is we're trying to answer your questions that you sent in to cnn.com/am on my blog to try and give you some information on this. Nancy in Ann Arbor, Michigan says "what are the pros and cons of putting money in a bank savings account versus a money market account, assuming they both earn the same rate of interest?" Nothing. No difference. Money market mutual funds are another thing all together and while the Treasury has said that they will insure those, they are insuring the principle on those which means you may be promised some return on them that you might not get. So money market deposit accounts versus a regular deposit accounts in a bank are both insured up to $100,000, could be $250,000 if this bill passes.

Gail in New York says - "I've heard recommendations about investments if you're working or near retirement but I've heard nothing about if you're already retired. What do you recommend for retired people?" Excellent question, Gail. At some point retirement you start to need to take withdrawals from your IRA or 401(k). That's mandated by law. But if you're in your good health and you're in your 60s you could be using this money for 20 or 30 years. So you have not to think about it as stopping your investments. You actually have to grow that money because you got to start taking it out.

For many people it makes sense to be involved in stocks and mutual funds at that point. Now you might want to consult a fee-only financial advisor who like a lawyer for a set fee can give you some advice, look at what you've got and allocate your assets in a certain way. The other thing I recommend to people go to money.com and go money101 on there and it's got a lot of financial planning advice where at least you can learn what the options are for you. But just because you're in retirement or close to retirement does not mean it's right for you to exit the stock market.

And for those of you, please we're calling in, e-mailing me and telling me you're liquidating your 401(k), understand your 401(k) is just a shell in which your retirement savings exist. You can get out of your stocks. And I'm not recommending that. But you can do that without liquidating your 401(k). Don't take money out of your 401(k). You'll pay a penalty on that.

ROBERTS: You know what I think happened? I think people are just tired of all the doom and gloom this morning with the economy somebody has pulled the fire alarm. You used to do in high school.

VELSHI: That's right. John, I need to get out.

ROBERTS: Ali, thanks so much.

CHETRY: In case of emergency, break glass.

VELSHI: One other quick thing I want to tell you guys. I know that a lot of you have been sending in opinions about what you think about the bailout and we're really just trying to help people these questions. But I do have the radio show today at 11:00 Eastern and I'm going let you rant all you want. So save it all up. Call us at 877-266-4189 at 11:00 Eastern and I'm going to open up those lines. You say whatever you want.

ROBERTS: At least it's not about the gas.

VELSHI: It's not about the gas. It's about the economy.

ROBERTS: Right? Thanks.

39, 40 minutes after the hour.

(BEGIN VIDEOTAPE)

ROBERTS (voice-over): The debate. Debate.

UNIDENTIFIED MALE: Totally in the tank for Barack Obama.

ROBERTS: Questioning the questioners. Carol Costello on why some Republicans are crying foul over tonight's debate.

UNIDENTIFIED MALE: She has a financial stake in Obama winning the race.

ROBERTS: You're watching "the most news in the morning."

(END VIDEOTAPE)

(COMMERCIAL BREAK)

ROBERTS: Welcome back to AMERICAN MORNING. And time again to check in with our truth squad. Alina Cho is looking into environmental issues this morning. She's here. Good morning.

ALINA CHO, CNN, CORRESPONDENT: Good morning. I love the way you say truth squad. Such force.

(CROSSTALK)

ROBERTS: I say it with force. It's going to sound like -

CHO: Working hard.

ROBERTS: The fire department -

CHO: That's right. You know this one is a bit confusing. So you really have to listen. What happens when a candidate says something that does not support his own campaign's policy. Is it fair game? Well apparently so. Listen carefully again because this is a bit confusing. We're going to start with a radio ad being run by John McCain. It attacks Barack Obama and Joe Biden for being against clean coal technology. That's a new generation of energy processes that sharply reduces emissions from coal burning power plants. Now the McCain ad attacks by using Biden's own words against him. Take a listen.

(BEGIN VIDEO CLIP)

ANNOUNCER: Obama, Biden and their liberal allies oppose clean coal. Listen to Joe Biden.

VOICE OF SEN. JOE BIDEN (D), VICE PRESIDENTIAL CANDIDATE: No coal plants here in America.

We're not supporting clean coal.

(END VIDEO CLIP)

CHO: We're not supporting clean coal. Is that really what Biden said? Well we hunted down the source of the audio. We found a youtube clip posted about two weeks ago. It shows Biden being approached by a young woman at an event in Ohio. Take a listen to what's missing from the McCain ad, the beginning of their exchange.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: We need - here in Ohio -

BIDEN: I'm not supporting clean coal.

(END VIDEO CLIP)

CHO: Now Biden clearly says if you listen very carefully that we're not supporting clean coal. He finishes by saying this.

(BEGIN VIDEO CLIP)

BIDEN: China's going to burn 300 years of bad coal unless we figure out how to clean their coal up because it's going to ruin your lungs and there's nothing can we can do about it. No coal plants here in America. Build them if they're going to build them over there make them clean because it's killing -

(END VIDEO CLIP)

CHO: Now halfway through that you heard the other line. No coal plants here in America. So in a different order and a little bit out of context but those are definitely Biden's words in the McCain ad. But do they reflect Obama and Biden's policy? Surprisingly no. We checked Obama's website. His energy policy includes a push to "develop and deploy clean coal technology." How about that? Specifically it says and Obama Energy Department will "develop five first of a kind commercial scale coal fired plants with clean carbon capture and sequestration technology." A mouthful certainly but definitely a call for clean coal. And what's more, Biden's own Senate website calls for clean coal research. So Biden's words were real. They were accurate but is he clearly misstating the campaign's policy and the McCain camp took full advantage of that.

So the truth squad has no choice but to call this one misleading. The McCain ad does accurately quote Biden in saying he's against clean coal but the quote lacks some context and more importantly in speaking off the cuff, Biden inexplicably contradicts his own campaign's own stated policy. Of course, as always we're keeping both campaigns honest. In the next hour Barack Obama boasting he took on lobbyists in both Illinois and Washington. Is it true? We're going to take a close look at his record. And John, we're going to see if that backs up his statements.

ROBERTS: This is another reason why this debate tonight will be so interesting.

CHO: Oh, yes. It is a lot of gray area there. So you really have to look at it closely.

ROBERTS: All right. Alina Cho for us this morning. Alina, thanks.

CHO: You bet.

ROBERTS: Kiran.

CHETRY: Speaking of it. It's tonight the V.P. debate set for 9:00. Former presidential candidates Fred Thompson is with us live. We'll see what he predicts will happen up on that stage.

Also getting grandparents to the polls. What young Jewish voters are doing to motivate their older relatives to vote. Who's behind what they call the great schlep?

(COMMERCIAL BREAK)

CHETRY: Welcome back to the most news in the morning. Tonight's vice presidential debate was already getting a lot of attention but now there is a new controversy brewing. Moderator Gwenn Ifill's new book, not even out yet is causing some to claim that she favors Barack Obama. Our Carol Costello joins me now from Washington with more. Hey, Carol.

CAROL COSTELLO, CNN CORRESPONDENT: Hey, Kiran. Can you say drama? I mean it's drama with a capital "d." The only sure thing about this latest controversy is that it will generate even more interest in the vice presidential debate. Is Gwen Ifill really biased? Should she be the moderator? Decide for yourself.

(BEGIN VIDEOTAPE)

COSTELLO (voice-over): Just when you thought the V.P. debate couldn't get my more intriguing, enter moderator Gwen Ifill.

RUSH LIMBAUGH, "THE RUSH LIMBAUGH SHOW": Gwenn Ifill, formerly NBC now with PBS, totally in the tank for Barack Obama, no question about it.

COSTELLO: Ifill was moderator for PBS's Washington Week is taking it on the chin because of a coverless book that hasn't even been completed yet. It will eventually be called Break through. Politics and race in the age of Obama. Critics charge it set for release on inauguration day.

LIMBAUGH: This is a conflict of interest. She has a financial stake in Obama winning the race.

COSTELLO: And some conservatives charge it's possible she'll treat republican vice presidential Sarah Palin unfairly. Those who know Ifill say nonsense.

BRYAN MONROE, "EBONY AND JET MAGAZINE": That whole thing Tempest in a Teapot is just ridiculous. She has been working on this book for months and months, long before the debate even came around.

COSTELLO: Ifill has written about the book and articles in "Time" and "Essence" Magazine and was quoted in the "Washington Post" about it. She's also talked about it online, telling viewers the book focuses on four African-American politicians, Barack Obama among them.

GWENN IFFIL, 2008 VP DEBATE MODERATOR: This book is about a generation of people who took seriously the achievements that their parents fought for. They knew that Martin Luther King did what they did so that they could do what they are doing.

COSTELLO: That is little comfort though to some conservatives who cite her work in the 2004 vice presidential debate when Ifill refused to allow Dick Cheney to break debate protocol to answer a question about his old employer, Haliburton.

IFFIL: Mr. Vice President.

VICE PRESIDENT DICK CHENEY, UNITED STATES OF AMERICA: I can respond, Gwenn, but it's going to take more than 30 seconds.

IFFIL: Well, that's all you've got.

COSTELLO: The McCain campaign is not asking for Ifill's removal, but said -

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: You know, it's not helpful but I'm sure that Gwenn Ifill is professional journalist and that she will do an objective job of moderating.

COSTELLO: Friends say that Ifill is unfazed by the controversy. Ifill herself told the "Washington Post," there is no bias in favor of Obama. She said, "I'm still capable of looking at his pros and cons in a political sense."

(END VIDEOTAPE)

COSTELLO: Now sources I talked to say the book probably won't come out on inauguration day because Ifill has been busy preparing for the vice presidential debate. As per Ifill, she told the "Associated Press" she is not worried about the chatter. She says the critics can watch the debate and make their own decisions on whether she has done her job. When asked if there were racial motives at play here, she told the AP, "I don't know what it is. I find it curious." Kiran.

CHETRY: You're right. Adding to the drama tonight at 9:00 p.m. as we watch all of this unfold. Certainly no one is going to be changing channel tonight.

COSTELLO: No. And I think she's going to - what, about 50 million people watch the presidential debate? I think the numbers are going to be bigger for this one, don't you?

CHETRY: Oh, yes. I bet. I'm on your side there. Carol, thanks.

(BEGIN VIDEOTAPE)

CHETRY (voice-over): John McCain live on the new bailout plan, on prepping Sarah Palin and what he says about his status in the battleground states now.

And just when you think you've heard everything in the campaign, a new push to get young Jewish voters, to sway their own grandparents in Florida.

UNIDENTIFIED FEMALE: Get you fat Jewish (expletive) on a plane to Florida.

CHETRY: She says schlep out the vote. You're watching in the most news in the morning.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BILL CLINTON, FMR. U.S. PRESIDENT: Look at what they stand for. Look at the philosophy, look at the programs, look at the commitments. This is not close, folks. It is not a close question. This country is in deep trouble, but its potential is absolutely limitless. And I think you know who best represents that potential.

(END VIDEO CLIP)

ROBERTS: That's former President Bill Clinton stumping for Barack Obama and says there is only one choice in this election.

Economy, abortion, security all on the line for tonight's vice presidential showdown between Senator Joe Biden and Governor Sarah Palin. Joining us now, former Republican presidential candidate and former Tennessee Senator Fred Thompson. Senator, thanks very much for joining us.

SEN. FRED THOMPSON, FMR. REPUBLICAN PRESIDENTIAL CANDIDATE: Thank you.

ROBERTS: The last time we caught up with you was in St. Louis at the republican convention. You told me you had absolute faith in Governor Palin at that point. You called her at that point, "a remarkable success story in the history of American politics." But in the last few days, several conservatives among them George Will, Kathleen Parker of "National Review" and David Frum, former speech writer for President Bush have all said, wow, watching these interviews, she appears out of her league. What do you say about those opinions?

THOMPSON: Well, I respect all of them very much, but their beltway pundits themselves and they look at things in a very traditional way. Here is a woman who is a - has a very accomplished record, who has done great things in Alaska for her state, who has taken on the oil companies, who has taken on members of her own party, who defeated a one-time popular incumbent governor and defeated two Democrats in a general election and held about a dozen or two dozen debates, I guess, during that period of time and has an 80 percent approval rating in her home state.

And she's been thrown out into the mist of this pretty rapidly and she has to get introduced on the national level. It's understandable she's going to take some bumps. But you're implying - not you, but generally a double standard has been applied to her that do not apply to Joe Biden. He's been around for 35 years, makes a gaffe every day practically. And we kind of smile and go on. But she's been micromanaged - not micromanaged, but microscoped.

ROBERTS: Oh, wait a second. Was that a Freudian slip?

THOMPSON: Well, I don't know. I mean, I don't know.

ROBERTS: Has she been micromanaged here because there are some people who say there has been too tight a rein on her by the McCain campaign. They need to just you know free the bonds and let her go to be herself.

THOMPSON: Well, it's possible. It's possible. Because the person that we've seen in times past, the person who walked out there before that convention to be introduced to the world and give her first speech had her teleprompter go out on her. And she handled that, she has self-confidence when she's following her own instincts and that's why she's going to be fine tonight. I have no concerns about her. People ought to understand that the American people are not all into this gotcha machine that Democrats and Republicans in Washington, D.C. are all into and think are very determinative. Governors in times past who were up as vice presidential nominees didn't have to go through this and they shouldn't be judged solely on that today.

She's gone through the fires of introduction. They've slandered her and her family on ways on the internet and some of the left wing groups, unimaginable. They've accused her of being inexperienced. Look at what kind of experience we've got in Washington, D.C. today. Look when all our other experiences have wrought in Washington and on Wall Street. Well I think somebody who has the qualifications of courage, of moral courage and the willingness to take on those who need to be taken on and defeat them needs to be added to that mix. I think it would be good for our country at this particular time to have that kind of person -

ROBERTS: Senator, I just want to say to you, I thought that teleprompter story was a myth, we had checked with the R.N.C. and they said, no, there wasn't a problem with the teleprompter. But let me ask you this question, if you were coaching Joe -

THOMPSON: Yes, and nobody ever makes a mistake at the R.N.C.

ROBERTS: Yes. If you were coaching -

THOMPSON: Ask Rudy Giuliani about that teleprompter.

ROBERTS: All right. Let me ask you this question, though. If you were coaching Joe Biden tonight, if you were assigned to debate prep for him, what would you advise him to do this evening?

THOMPSON: Well I think just attend to his knitting, pretend that she's not there, talk about John McCain. Those are the traditional roles. And I think those suits Joe well. He's got a hard defensive job. He's got to defend Barack Obama. He's got to defend his own record. He has been one of Barack Obama's most severe critics, saying that he was showing his inexperience when he said he would sit down unconditionally with Iranian and other leaders, when he talked about going into Pakistan, when he voted against funding the troops, all those things. Biden was severely critical of Obama.

So, he's got some difficulties there to deal with himself before he was selected for the ticket. But his main job will be to go after John McCain.

JOHN ROBERTS, CNN ANCHOR: All right. Senator Fred Thompson, it's good to see you. Thanks for being with us this morning. Looking forward to tonight certainly.

THOMPSON: Thank you.

ROBERTS: All right.

THOMPSON: Appreciate it. Best of luck.

ROBERTS: Take care. We'll see you again.