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Lou Dobbs Tonight
Wall Street Bailout Plan Becomes Law; War on the Middle Class; McCain Trust Fund Proposal; Financial Crisis; AZ Immigration Law Upheld
Aired October 03, 2008 - 19:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LOU DOBBS, HOST: Thanks, Wolf. Tonight, Congress and the president ramming the Wall Street bailout down the throats of the American people and rushing out of Washington, D.C. as quickly as they could, leaving you with a bill of nearly $1 trillion. We'll have complete coverage tonight.
And California and other states now saying they're running out of money as well. They need a federal bailout. Stand in line. Here we go. We'll have that report.
And tonight, Governor Palin defying her critics, going on the offensive in one of the most watched debates in television history. Will Governor Palin's performance boost the ticket? We'll find out.
Three of the country's top political analysts join me to discuss that and a great deal more. All of that, all the day's news from an independent perspective right here, straight ahead tonight.
ANNOUNCER: This is LOU DOBBS TONIGHT: news, debate, and opinion for Friday, October 3rd. Live from New York, Lou Dobbs.
DOBBS: Good evening, everybody. Tonight, disappointment and fury around the country after the House of Representatives today gave Wall Street its massive bailout. The House reversed course and voted to support that bailout. The vote 263-171.
The Wall Street bailout will cost taxpayers nearly $1 trillion, and it gives the Treasury secretary unprecedented powers. It is a stunning setback for voters who believed the House would stand up for the American people and refuse to be bought out by the Bush administration, political elites and Wall Street. We have complete coverage tonight, and we begin with Jessica Yellin on Capitol Hill.
(BEGIN VIDEOTAPE)
JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT (voice-over): For Democratic leaders, an agonizing week ended with a laugh.
UNIDENTIFIED FEMALE: (INAUDIBLE)
UNIDENTIFIED GROUP: (INAUDIBLE)
YELLIN: The first bill fell 12 votes short and sent the stock market tumbling. Today an updated version passed easily with 33 new Democrats and 26 Republicans voting yes. Some say that vote puts their political future in jeopardy.
REP. HOWARD COBLE (R), NORTH CAROLINA: I'm voting aye today, and it may be politically damaging, and the sky may fall tomorrow, but it will fall upon my head. It won't fall on any other else.
YELLIN: All were under pressure from constituents...
UNIDENTIFIED FEMALE: I talked to workers who are worried about losing their jobs.
REP. ELIJAH CUMMINGS (D), MARYLAND: What they're saying to me is, Congressman, every day when I go to my portfolio, I'm seeing that, you know, for my pension or whatever, I'm seeing that my money is leaving.
YELLIN: From business leaders.
REP. JOE KNOLLENBERG (R), MICHIGAN: That was coming from CEOs, it was coming from bank presidents. I think I've talked to more bank presidents in 10 days than I've talked to in 16 years.
YELLIN: And from intense lobbying by President Bush and Senator McCain targeting Republicans. And Senator Obama who was dialing Democrats all week.
SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: There were a number of members of Congress who had voted no that I talked to.
UNIDENTIFIED MALE: He called me at my home on Tuesday night.
YELLIN: They insisted the bill is not a Wall Street bailout but a Main Street rescue. Still many were unconvinced and accused both Democratic and Republican leaders of fear mongering.
REP. BRAD SHERMAN (D), CALIFORNIA: Wall Street wants $700 billion so bad they can taste it. To get it they need two things. First, you create panic. Then you block alternatives, and then you herd the stampeding cattle toward passing a bad bill.
REP. PETER DEFAZIO (D), OREGON: Henry Paulson set this up I mean, really. I mean coming over on a Thursday night and saying the world is going to collapse and then going out to the public and say if Congress doesn't pass this in three days, you know the world economy crashes. Congress is really easy to stampede when they're up for election.
(END VIDEOTAPE)
YELLIN: Now lou, Minority Leader John Boehner said on the floor that the U.S. is going to need God's help to get through this financial crisis. He made it clear he thinks this bill is distasteful, even those who supported it don't like it. Lou?
DOBBS: They don't like it. They rationalized it, the excuses that we've heard are remarkable. But at the same time, there's absolutely no discussion of the fact that there is not a single person saying what the result of spending this $1 trillion will be.
YELLIN: They're afraid of what happens if they don't act. They don't know what this will do. They're afraid that it will be worse if they don't do it.
DOBBS: Well, we should point out what did happen after they passed this legislation today. As you were watching very carefully those folks who are on Capitol Hill, Jessica. On Wall Street, the market was up 150 points on the Dow Jones industrials. As soon as they passed the legislation, the Dow Jones industrials turned course and gave up 400 point from that point to close down 150. That's just -- it's just remarkable. Thank you very much. Jessica Yellin, a great job reporting this story.
It's a lousy story to have to report, but there it is. Lawmakers who supported this Wall Street bailout are facing charges they were manipulated by Wall Street lobbyists and special interest groups. Congressmen who today voted for the Wall Street bailout have received 40 percent more money from the financial sectors than Congressmen who opposed it. That's according to data from the Center for Responsive Politics.
Senators who voted for the bailout on average received 140 percent more money from the financial industry than senators who voted against it. Imagine that. Well, President Bush wasted no time signing the Wall Street bailout legislation. The president signing the bill into law 48 minutes after the speaker signed on Capitol Hill.
It was one of the quickest bill signings by a president in recent memory. The president then rushed out of Washington for the weekend. Elaine Quijano has our report from the White House.
(BEGIN VIDEOTAPE)
ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT (voice-over): A relieved President Bush saying to his point man on the financial crisis, Treasury Secretary Henry Paulson minutes before signing the bill.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Mr. Secretary, you and your team have worked incredibly hard.
QUIJANO: Putting pen to paper in the Oval Office, the president made the financial bailout law two weeks after his administration first unveiled its $700 billion financial rescue plan to Congress. And a remarkable turnaround from Monday's stunning House defeat. Lawmakers passed a modified version of the original rescue plan.
UNIDENTIFIED FEMALE: The motion is adopted.
REP. ROY BLUNT (R), MINORITY WHIP: So I know we're all relieved to be beyond where we were yesterday.
REP. NANCY PELOSI (D-CA), HOUSE SPEAKER: We were dealt a bad hand. We made the most of it. I think the American people will benefit from it. QUIJANO: Afterwards, a grateful President Bush thanked Congress, but also cautioned the bill's effects would not be immediate.
BUSH: Americans should also expect that it will take some time for this legislation to have its full impact on our economy.
QUIJANO: And against the backdrop of more bad economic news that America lost jobs again in September, the president did not offer a rosy economic outlook.
BUSH: Take more time and determined effort to get through this difficult period. But with confidence and leadership and bipartisan cooperation, we'll overcome the challenges we face.
(END VIDEOTAPE)
QUIJANO: Yet with less than four months left in his term, President Bush will likely not see the economy turn around during the remainder of his term. Last month, the United States lost 159,000 jobs. Some analysts are predicting the economy will not start picking up until well into next year. Lou?
DOBBS: Elaine, thank you. Elaine Quijano from the White House.
Members of Congress also in a rush to get out of Washington, D.C. so fast in point of fact that they left much of the people's business unfinished after passing the Wall Street bailout. Lisa Sylvester has our report.
(BEGIN VIDEOTAPE)
UNIDENTIFIED FEMALE: (INAUDIBLE)
LISA SYLVESTER, CNN CORRESPONDENT (voice-over): In the final days of the legislative session, the phones were ringing off the hook. Many constituents were calling to complain about the bailout but couldn't get through to their lawmakers. Representative Marcy Kaptur says Congress in the end passed a rescue for Wall Street without rescuing middle class families.
REP. MARCY KAPTUR (D), OHIO: I'm getting tired of the Democratic picking up their wreckage across America. When is my party really going to stand up to Wall Street and the outsourcing of jobs? This isn't good enough. This isn't good enough for the people who have sent us here.
SYLVESTER: With the financial crisis, many things on Congress' to-do list just never got done.
THEA LEE, AFL-CIO: Congress left without an economic stimulus bill that would have included an extension on unemployment insurance, aid to state and local governments and also some infrastructure spending and that was really, really an important piece of what we need to do to get our economy going again to get the real economy going again. SYLVESTER: There's more. The credit card holder's Bill of Rights to protect consumers from interest rate spikes only made it through the House. Instead of voting on more than a dozen appropriations bills, Congress just passed what's called a continuing resolution to keep the government running and the program known as E- Verify that allows employers to check the immigration status of workers was up for renewal. Legislators did a temporary fix passing only a six-month extension.
REP. BRIAN BILBRAY (R), CALIFORNIA: I have to say that the leadership that's handled the House and the Senate, and though they may be friends of mine, they've absolutely dropped the ball.
SYLVESTER: This was going to not be a do-nothing Congress and they did do something. They passed a $700 billion bailout for Wall Street and $150 billion worth of sweeteners that were tacked on to it.
(END VIDEOTAPE)
SYLVESTER: The House and Senate Democratic leadership offices both say they tried hard to pass the economic stimulus package and to extend unemployment benefits, but they say Senate Republicans stood in the way, so a lot of blame, a lot of pointing fingers now -- Lou.
DOBBS: Well I notice it didn't require any forethought of any kind on the part of both Senator Obama and Senator McCain to sign a piece of legislation bailing out Wall Street that contained $150 billion worth of pork. You know, precisely what they had said in their debate neither one of them would permit as president of the United States. It's starting to look like politics as usual, isn't it?
SYLVESTER: Yeah, indeed and you know despite all of the rhetoric and such, you know Congress left including Obama and McCain. They left without giving these breaks, the extending unemployment insurance, the economic stimulus plan. They left Washington without acting on any of those pieces of legislation.
DOBBS: Well they'll be back soon, right?
SYLVESTER: Oh they'll be back. They're actually scheduled to come back to the Senate for a couple of days in November, but we're talking lame duck Congress here.
DOBBS: Absolutely. Well, that's an appropriate title. Lame duck president, lame duck Congress, people's business unfinished, but by golly they took care of Wall Street (INAUDIBLE) feel good. Lisa, thank you much. Lisa Sylvester.
Up next troubling new evidence of the devastating impact of the weakening economy on working men and women and their families. We'll have that report.
And new details of the massive amounts of pork. There were simple bribes attached to the Wall Street bailout. What in the world are Congressional members and senators thinking about? What are they doing? Three of the best economic thinkers in the country join me. We'll be right back.
(COMMERCIAL BREAK)
DOBBS: The massive Wall Street bailout provides hundreds of billions of dollars for Wall Street and it provides billions in congressional pork. About $150 billion of pork in the form of tax breaks for industries and key congressional districts. All of this pushed through despite overwhelming opposition from the American people. This Congress told the American people to go to hell. Louise Schiavone has our report.
(BEGIN VIDEOTAPE)
LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): Seven hundred billion dollars for a bailout?
UNIDENTIFIED MALE: There is some junk in this bill. There's no two ways about it.
SCHIAVONE: What if taxpayers threw in $150 billion in tax breaks for Hollywood, car race track owners, wool producers and more?
REP. BILL PASCRELL (D), NEW JERSEY: To help the American people, I am now supporting today's financial package.
SCHIAVONE: New Jersey's Bill Pascrell was one of 32 Democrats switching to the yes column, 25 Republicans switched, all clearing the way for this session's final swallow of what lots of people are calling pork.
REP. STEVEN LATOURETTE (R), OHIO: Hundred and ninety-two million dollars for rum? I guess we got the pirate vote in November; $100 million for NASCAR; $181 million for Hollywood. And my favorite, $2 million for wooden arrows for children.
SCHIAVONE: There was barely a congressman who didn't regret his or her impending aye vote.
REP. RON KIND (D), WISCONSIN: Time is of the essence and we must move this rescue plan forward to avert a much wider disaster tomorrow.
REP. DAVID DREIER (R), CALIFORNIA: I ultimately concluded that this bill is a necessary evil.
REP. JOHN BOEHNER (R-OH), MINORITY LEADER: When this bill passes today, remember those words, in God we trust, because we're going to need his help.
SCHIAVONE: And there will be plenty of voters who won't soon forget the final tally.
DALE CAUGHEY, TAXPAYER: There's a lot of pork put in it by our beloved congressman. And some of them ought to retire.
KEIKO KIMBALL, TAXPAYER: I don't think that us as taxpayers should be the ones that have to bail out these companies, especially with things like a toy company or for a racetrack company.
SCHIAVONE: House of Representatives hustled the bailout bill to the president who quickly signed it with the American taxpayer standing by to pay the price.
(END VIDEOTAPE)
SCHIAVONE: So Lou, House leaders closed down the 110th Congress with a flourish, pledging hearings of all kinds and tough reforms on financial institutions. But worried budget watchers now wonder when Congress is going to do something about its own spending habits. Lou?
DOBBS: Well, let's hope that Congress does no more for a while. Apparently they won't because there's too much real work to be done. It's remarkable to see taking hard earned tax dollars from working men and women, our middle class, moving that money to corporate America, to Wall Street, the very same people who claim that the free markets that have devastated working people in this country and our middle class over the last decade, those people are no longer talking about their free markets.
They're delighted to have intervention. There's no discussion of the fact by this Congress, this president or either political party or either presidential candidate about the impact of off shoring and outsourcing of jobs and putting our working class -- our working middle class into direct competition with the cheapest foreign labor in the world.
This is outrageous on every level from any perspective you look at this. And to see Hank Paulson, the Treasury secretary basically taking control of $1 trillion for the benefit of his friends on Wall Street. It is nauseating. It is disgusting what has happened here.
It will be interesting to see if there's any impact at the polls for these Congress people and senators come November 4th. Thank you very much. Appreciate it, Louise Schiavone.
That brings us to the subject of our poll. Do you think Congress should be added to the list of American institutions in need reform after the passage of the Wall Street bailout bill? Yes or no. Cast your vote at loudobbs.com. We'll have the results upcoming.
More evidence tonight of the staggering impact of this financial crisis and the failed economic policies of both political parties. Employers cutting 159,000 jobs last month. That's the biggest decline in five years. And manufacturing had the largest number of job cuts.
Many manufacturing job losses are the result of our massive trade deficit. A key measure shows manufacturing, in fact, is now at an almost seven-year low. And the crisis is being altogether ignored by, of course, Congress and this president. Bill Tucker has our report.
(BEGIN VIDEOTAPE)
BILL TUCKER, CNN CORRESPONDENT (voice-over): America's trade deficit makes Washington's one time $850 billion bailout package look tame in comparison.
BOB BAUGH, AFL-CIO INDUSTRIAL UNION COUN.: We actually do this every year where we send $800 billion overseas in trade deficits. And the captains of Wall Street are the captains of the Titanic these days. And these are the same guys who gave us advice on our trade policy.
TUCKER: That advice argues the coalition to fix America's economy, an ad hoc (ph) alliance of manufacturers, unions, farmers and trade associations. The group says that while Washington panics over Wall Street's fears, nobody is paying attention to our industrial policy or our trade policy and it's killing our economy.
PATRICK MULLOY, AMER. MFG. TRADE ACTION COALITION: Both parties should be talking about these matters because year after year America is on a position where we're eroding our manufacturing base. We're outsourcing our jobs and we're becoming a bigger and bigger debtor nation depending upon foreign capital.
TUCKER: Since 1996 through July of this year, we have wracked up a trade deficit of $4.5 trillion in just manufacturing alone. According to a just-released study by the Economic Policy Institute, we lost or displaced 5.5 million jobs last year, solely because of our trade deficit. But unlike the financial community...
CHARLES BLUM, COALITION FOR PROSPEROUS AMERICA: We're not looking for a bailout. What we're looking for is a competitive national strategy. Every country in the world has got an idea of how it can succeed in the global economy. We don't.
TUCKER: And if we don't decide that strategy, the coalition argues our economy will never regain its vitality.
(END VIDEOTAPE)
TUCKER: The coalition to fix America's economy wants Americans to simply start demanding that politicians and the presidential candidates answer the question what will they do to make domestic manufacturers healthy again? Lou, they're not looking for hundreds of billions of dollars in bailouts.
DOBBS: Well they're missing a bet because everybody else is lining up. Governor Schwarzenegger, who's been running a bankrupt state for some time, he and the Democratic leadership of the state legislature basically lying to the citizens of the great state of California year after year. Apparently a reckoning is at hand. When we -- when we talk about what has happened to working men and women in this country...
TUCKER: Right.
DOBBS: I think -- I would hope that people would understand, as they go to the polling booths on November 4th, that when they vote for either one of these two men, no matter Obama or McCain, they're voting for a person and a party who has basically worked overtime to devastate working people in this country. Hollowing out this economy, destroying manufacturing and doing so with snarky (ph) little ideas like free trade and looking down their noses and saying oh, no, this is all about free markets and free trade and calling that a policy. It's a joke. It's a rationalization and the joke has been on the American people. There will be no laughter from here on. Bill Tucker, thank you very much.
Well coming up next, Biden versus Palin. It may have been the most watched debate in history. Did it boost the McCain ticket? What did it do to the Obama ticket? Our distinguished panel of political analysts join me.
And now the Wall Street bailout is law. Now our states have their hands up, begging Washington, D.C. for much of the same. We'll have that report. Three top economic thinkers join me to tell us what they think of this bailout and what they think of this economy and what you and I can expect. We'll be right back.
(COMMERCIAL BREAK)
DOBBS: Well the fear of a credit crisis is having an impact on a number of states all across the country. Now those state governments are looking to the federal government for guess what? A bailout. California is now asking for a federal bailout and Governor Arnold Schwarzenegger saying his state will run out of money for key programs, as he put it, within a matter of weeks. Phillippa Holland (ph) has our report.
(BEGIN VIDEOTAPE)
UNIDENTIFIED REPORTER (voice-over): California Governor Arnold Schwarzenegger is sounding a $7 billion alarm, saying he needs a federal bailout for his state. In a letter to Treasury Secretary Henry Paulson, the governor pleaded for help. Schwarzenegger today said even with the massive Wall Street bailout deal, the state's $7 billion short fall hasn't changed.
GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: There's nothing new with the amount. It's just that we need the money and cash is running out by the end of the month of October. So this is why it's important that we get going right now and that we solve those problems.
UNIDENTIFIED REPORTER: California borrows billions of dollars every year to fund its budget. The state pays the money back with holiday sales and income taxes. But this year state officials say the economic crisis made it impossible to borrow money. That puts state jobs and programs at risk, including funding for public schools.
The state has a $2.3 billion school spending bill due at the end of the month. But critics say this didn't have to happen. The state has a long history of mismanaging its finances.
FRED SILVA, CALIFORNIA FORWARD: The state had a late budget, could not get general agreement on an expenditure plan. It then got its agreement three months late and at that point the credit markets were more difficult to access. UNIDENTIFIED REPORTER: California is not alone.
NICHOLAS JOHNSON, CTR. ON BUDGET & POLICY PRIORITIES: We're going to see other states coming forward with projections of budget short falls as the economy continues to show signs of weakness. And states are going to have to cut spending.
UNIDENTIFIED REPORTER: New Mexico recently made a $500 million bond sale. Massachusetts is postponing a $750 million bond offering and Maine is holding off on a $50 million bond sale. They all blame the conditions on Wall Street.
Phillippa Holland (ph),CNN, New York.
(END VIDEOTAPE)
DOBBS: And of course the one option available to all of these state governments, which is to cut back spending is the one option that they're not discussing at this point, which is the problem with bailouts. (INAUDIBLE) prudence and responsible spending seem to be pushed back once they are given handouts by the federal government.
The center on budget and policy priority says that at least 15 more states and Washington, D.C. also face significant budget deficits. Those deficits could total more than $6 billion. Those states will likely be forced to cut services or to raise taxes in order to cover those deficits. Imagine that.
Well, time now for some of your thoughts. Frank in North Carolina wrote in about the bailout. "Lou, no hearings, no expert testimony, no accountability, no oversight, no faith in our elected officials."
Valerie in Georgia, "I can't believe Congress has the gall to fill this bill with pork when taxpayers are footing the bill. Shame on all who drafted and voted for this bailout."
Sue in Virginia, "We've just witnessed a financial coup d'etat, orchestrated by Paulson and Bush. Whatever small sliver of government by the people, for the people that we had left is now gone." Not quite, but we better hang on. We'll have more of your thoughts here later in the broadcast.
Up next, does the Wall Street bailout help Barack Obama or John McCain? Does it help you? Three of the best political analysts join us to talk about that.
And two of the staunchest opponents of this bailout, Congressman Brad Sherman, Congresswoman Marilyn Musgrove (ph) join me next. 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. President Bush quickly signed into law that massive Wall Street bailout after the House reversed itself and approved the legislation. The final vote, 263-171, 58 congressmen switched their vote to support the bailout. Joining me now, two members of Congress who stood their ground and voted against the bill. We're joined now by Congresswoman Marilyn Musgrave, Republican from Colorado.
Great to have you with us, Congresswoman.
REP MARILYN MUSGRAVE (R), COLORADO: Thank you.
DOBBS: Congressman Brian Sherman, Democrat of California.
Congressman, good to have you with us.
REP BRIAN SHERMAN (D), CALIFORNIA: Good to be with you, Lou.
LOU: Let's just start -- first of all, and I want to go on record as saying this, you guys demonstrated absolute courage to stand up against what was a tidal wave of lobbying, pressure brought to bear by the Chamber of Commerce, the securities industry, the financial industry. How did you withstand it? Let me -- Congresswoman, let me start with you.
MUSGRAVE: Oh, I just got out there with a no before anybody really hit the Hill, actually before any phone calls came into my office, because I could see immediately that the Paulson plan was fatally flawed. And to think he would come to the Hill, you know just in a panic, you got to do something, you got to do it right now to me was absolutely ridiculous. So I got out there with a no and, really...
DOBBS: And stood your ground.
MUSGRAVE: Absolutely.
DOBBS: Well, Congressman Sherman, I know you stood your ground. You were circulating information about this legislation with your colleagues, I know. What -- you know, does anybody in that town who signed on to this understand how unseeingly that -- transparently so they have conducted themselves? And I'm being as kind as I can be. Is there a sense -- is there any sort of self-loathing on the part of these people who know that they took an oath to go after the interests of this country rather than surrender to special interests?
SHERMAN: Lou, you've got to understand the Wall Street panic machine, the administration's panic machine, the ability of the administration to exaggerate and create panic and frankly, the role that was played by cable television, certainly not this show, in feeding into this panic frenzy. It reached the point where some of my colleagues think that it was their patriotic duty to make sure to vote for the bill without reading it.
MUSGRAVE: And it's amazing to me that it was just an educated guess. You know, we don't know if this $700 billion bailout is going to work. You know, clear back in 2005, I was saying we need to limit the size of portfolios of Fannie and Freddie. And in 2007, you know, get Fannie and Freddie back to their original mission, restrict them to that. We saw this coming and then all of a sudden, Secretary Paulson comes to the Hill in a panic when so much of our market depends on confidence. So, it was ridiculous.
DOBBS: Congresswoman -- Congressman Sherman, I mean, was this in your judgment, because was it absolutely contrived? Was this utter manipulation? And let's start with first the call by Schwarzenegger today, on the day of the vote to point out he needs a $7 billion handout for his state alone in a matter of weeks. Is this -- give us your reaction.
SHERMAN: Well, Governor Schwarzenegger seems to have bet my state on the success of this bill. And frankly, California is credit worthy and I think that as long as the administration isn't trying to manufacture a crisis, California will get funded, but having come with that statement and basically said I want you all to vote for the bill, if this bill doesn't work for California, how's he going to say, well, you've blown your $700 billion, now find seven or 10 or $15 billion for California. We've shot our wad and we shot it the way he wanted us to.
DOBBS: Well, I think he -- where's his good buddy, Warren Buffett, who was his financial adviser, it's been an absolute disaster in that state and with a democratically elected legislature, he deserves, I think, considerable criticism.
Congresswoman, let me ask you this, you know, each of you are up for election as are all of your colleagues. The Chamber of Commerce has said they're going after every Republican who voted against this legislation. They're going to be feeding 527s, corporate Wall Street is going to be donating money very quietly. They're going to come after you with everything they've got. Do your constituents understand what is happening in your district?
MUSGRAVE: Well, I don't think that my constituents all realize that 527s whack the daylights out of me, they don't even have to reveal their donors. People don't realize how they can go after you in that way. But I'll tell you one thing I did. I kept my re-elect totally out of my mind when I took this stand on this bill. I was out there with a no before I got lobbied by anybody, any calls coming into my office because the plan was fatally flawed. And again today, we don't know that this is going to work. The thing passed, but...
DOBBS: We know one thing, Congresswoman and Congressman Sherman, within seconds what had been a 250-point gain turned into a 150-point loss at the end of the day. So far so good Treasury Secretary Paulson, President Bush, Nancy Pelosi and Harry Reid. Oh, and I think we should give a shoutout as well to Barack Obama and John McCain. Thank you both very much, Congressman Sherman, Congresswoman Musgrave.
SHERMAN: Good to be with you.
DOBBS: Thank you very much. Up next, both presidential candidates betrayed this country's working men and women and their families as they lobbied for this massive Wall Street bailout. Was the American taxpayer robbed at pinpoint? We'll be talking about that with three top economic thinkers and a panel of distinguished political analysts, as well. We'll be right back with that and more.
(COMMERCIAL BREAK)
DOBBS: Joining me now, three very smart economic thinkers, Pulitzer Prize winning journalist, David Cay Johnston, author of "Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense." I don't know if that was directly tied to the bailout. Of course it wasn't, but it's certainly timely.
David, great to have you here.
Peter Morici, professor at the Robert H. Smith School of Business at the University of Maryland.
Good to have you with us, Professor.
Jeffrey Miron, professor of economics at Harvard University. Good to have you with us.
Let me -- I -- person after person in the United States Congress stood up and said, you know, this smells to high heaven, it is -- it's a lousy bill, we don't know if it will work, but we've got to do it for the national good. I have never heard such tripe even from the United States Congress. Professor, what should these congressmen and the rest of us expect as a result of this trillion sellout of the American people?
Was that to me?
DOBBS: Absolutely.
PROF JEFFREY MIRON, HARVARD UNIVERSITY: I think that what we can expect is a lot more turmoil and a lot more uncertainty in the asset markets and a lot more hesitation in liquidity because this bill is so complicated, it's going to take a long time to enact. It's not going to do what it was supposed to do, which is to calm everybody don and give them assurances and make all the uncertainty go away, it just generates more of that. And so, I think we're going to be in for a pretty bumpy ride.
DOBBS: Was it just an accident that the Dow Jones Industrials, which have been up 250 points at the time it was passed, suddenly the Dow reversed itself and ended with a loss of 158 points after the bill was passed?
MIRON: I don't -- it's obviously a little early to judge, but it doesn't seem like such a coincidence to me. I think that when people realize all the power that's vested in the federal government in this bill, all the ability to regulate Wall Street, all the crony capitalism that can take place now, strategically selling off these assets versus others, I think the sober reality is going to soak in and people aren't going to be happy with it.
DOBBS: Professor Morici, what do you expect the impact to be? As Professor Miron says, it's a little early to tell what the impact will be of a passage, but the idea that this Congress would rush to this kind of judgment without a public hearing, without talking with the relevant experts, without public hearings. I mean, I can't even imagine spending a trillion dollars, even these people, this Congress, both parties this Democratic leadership, this president. This is -- it's simply incredible.
PROF PETER MORICI, UNIVERSITY OF MARYLAND: Well, a trillion dollars is a lot of money, even for the United States of America and this Congress. The auction process, that is the process of buying the bonds through some kind of reverse auction with the banks, is going to be enormously complicated. It's going to have a lot of pitfalls, for example, only assets of like quality can be auctioned at the same time. But the bond rating agencies are having trouble assessing quality.
But beyond that, my concern about turmoil (ph) goes to the real economy. Retail sales are down, we had another terrible employment report today, the worst yet, lost more than 700,000 jobs in eighth months. Retail sales are taking, automobile sales are terrible, not even Toyota can sell cars. So, the real side of the economy requires a lot of attention, they just spent a trillion dollars bailing out five percent of the economy. They're spending almost 10 percent, eight or nine percent of the GDP to bail out Wall Street, but what about the rest of America, they're going to have to start printing money on Mars to get enough cash to do that.
DOBBS: I want to point out one thing before we turn to David Cay Johnston. Last year, 2007, the five largest investment banks on Wall Street, brokerages, they paid themselves $39 billion in bonuses, five firms. They lost their shareholders $75 billion, last year. I mean, that's what we're dealing with. That's what this Congress, this Senate, this president just did is bailout people who would express such greed and excess. It's unconscionable.
David, let me turn to you. I am just furious and as I listen to Governor Schwarzenegger say his state needs $7 billion because they're running a little short. That is the most mismanaged state, arguably, in the union, has been for years. It is criminally incompetent and absolutely irresponsible. And yet, Warren Buffett, who's supposed to be saving Goldman Sachs and GE has been advising Arnold Schwarzenegger.
Is it about time to get real about who Warren Buffett is and what he's doing here and what people like Governor Schwarzenegger and his the democratically-led state legislature are doing?
DAVID CAY JOHNSTON, PULITZER PRIZE WINNER: Well, Warren Buffett didn't make all that money by being a nice guy and he's taken a couple of actions that carry some clear implication of what's happening here. He advanced billions of dollars to Goldman Sachs and to GE. Now, GE is the only company, Lou, that was on the original Dow Jones list that's still on it. It's supposed to be the gold plated American enterprise. They're paying 10 percent interest on a dividend, that's the equivalent of a 15 percent bond. They were selling bonds for low single -- mid single digits very recently, so the implication here is that perhaps there's a big problem with GE, but that we've got inflation coming and that we're going to find that inflation will be a key element of what the government does here going forward.
DOBBS: Is it also a prospect that putting the Warren Buffett brand on it will bring in the dumb money to support whatever else GE wants to offer the public now that he's got his guaranteed far preferred, far more advantageous position in GE?
JOHNSTON: Well, and, in fact, they are bringing in common shareholders that...
DOBBS: Oh, I didn't know. I'm shocked. I'm surprised.
(LAUGHTER)
JOHNSTON: Oh, yes. And by the way, at the same time, Mr. Buffett's Wells Fargo bank is issuing new stock that will bring to him, I think it's $20 billion. But, Mr. Buffett's going to do very, very well off of this because he has cash and the ability to raise cash. And that's at the core of the liquidity problem, of course, is cash.
DOBBS: I get it. I get it. Warren Buffett is in this for Warren Buffett. I'll be dog gone.
JOHNSTON: Of course.
DOBBS: You know, it's just shocking to me, David. And the idea that this country's national media lionizes Warren Buffett and ignores the position he's taking in these companies, what it means to GE, the fact that the public investor will be disadvantaged as to Warren Buffett, and could actually be punished as a result of the construction here. Why doesn't that occur to anyone in the national media? Or in Congress or in the Senate?
JOHNSTON: Well, there's a few people that it's occurred to and there's a little bit here and there, but it's not on the front burner. And hopefully one of the things that will happen out of this is that we will get tougher reporting, I don't expect we will, but hopefully we will, asking fundamental questions about how this is being managed. And the professor from Harvard is quite right. They're going to be back soon, they're going to have to have more legislation. This cannot, by its nature, solve the problem. The hope is it won't make it worse.
DOBBS: Professor Miron, let me ask this as we wrap up here, and then I want to turn to you Professor Morici. What do you expect to be the next phase in this -- what a number of congressmen and senators are saying is a contrived and manipulated crisis on the part of this administration and the Democratic leadership in Congress?
MIRON: I think the main thing is, unless things improve dramatically in some fairly unlikely very quickly, there's going to be a huge drumbeat for a fiscal stimulus. Of course, a fiscal stimulus is going to have a lot of the same issues and questions that the bailout package has. It's not going to be timely, it's not going to work the way it's planned and so that's going to be just more costs that may not fix the problem, either.
DOBBS: Professor Morici, you've got the last word.
MORICI: Well, yeah, it's going to take at least five or six weeks to get the Congress back. Try to get a stimulus package now, you're not going to see cash in people's hands in January or February. The fact of the matter is that they've blown their chance to pull the economy out. We're now headed far recession. It's going to be a long one, it's not necessarily going to be terribly deep, but it is going to be very painful because American workers went in.
By the way, one last point, from 2000 to 2007, corporate profits grew dramatically. Did you notice the stock market before all this kadoffle (ph) went -- the S&P went from 1,500 to 1,200. The individual shareholder didn't get any of the money. It was Warren Buffetts, the hedge funds, the executives that you describe. Americans can no longer invest in corporate America because of the kinds of deals that Warren Buffett just pulled off with GE.
DOBBS: Right. Professor Morici, thank you very much. Professor Miron, David Cay Johnston, thank you gentlemen, appreciate it.
Up at the top of the hour, the ELECTION CENTER with Campbell Brown.
Campbell, what are you working on?
CAMPBELL BROWN, ELECTION CENTER: Well, thanks, Lou. At the top of the hour, we're going to have a close look at all the goodies and the tax breaks that Congress has added to the big bailout. We're talking about rum, racetracks, wool? We'll explain when we come back.
Also, we're trying to cut through some of the bull on what the presidential candidates are not telling us about how this will affect their campaign promises. Plus, we'll put the claims from the vice presidential debate to our "No Bias, No Bull" test. We'll also talk through the states where you're going to be seeing a lot of McCain and Palin in the 32 days until Election Day -- Lou.
DOBBS: Thank you, Campbell.
Just ahead, here, the liberal national media said she couldn't do it, but a majority of voters say Governor Palin did do it in the vice presidential debate. We'll be right back, stay with us.
(COMMERCIAL BREAK)
DOBBS: Joining me now, all CNN contributors, Republican strategist and White House political director under President Reagan, chairman of the Mike Huckabee presidential campaign, Ed Rollins.
Good to have you here, Ed. ED ROLLINS, REPUBLICAN STRATEGIST: Thank you.
DOBBS: And Michael Goodwin, Pulitzer Prize winning columnist, "New York Daily News" -- Michael.
And Democratic strategist, Robert Zimmerman, also a Democratic antirational committeeman, and absolute expert on vice presidential debates, which is the reason I turn first to you.
How did Governor Palin do?
ROBERT ZIMMERMAN, DEMOCRATIC STRATEGIST: She got her cliff notes in order.
(LAUGHTER)
DOBBS: You've been working on that all day.
ZIMMERMAN: I thought about that on the way over, today.
DOBBS: I played right into your hands.
ZIMMERMAN: But, the point is, clearly, for the Right Wing of the base of her party, she did well.
DOBBS: How did Joe Biden do?
ZIMMERMAN: Joe Biden, without -- every poll, every survey shows...
DOBBS: I think he's searching for superlatives.
ZIMMERMAN: No, no, it's hard to because he really was at the best form I've ever seen him. I think the response he got showed this is a man who could be president. She couldn't make the case.
ROLLINS: That's what Dave Gergen said last night. Are you copying Dave Gergen's...
ZIMMERMAN: He's copying my thoughts.
ROLLINS: That's what he said. Greatest debate he ever saw.
DOBBS: Really?
ROLLINS: That's what he said.
ZIMMERMAN: Great minds, what can I say?
DOBBS: What are you alleging, here?
ROLLINS: Maybe...
DOBBS: You better get a rebuttal in here right now. You guys are getting off to...
ROLLINS: David is writing his lines, there...
DOBBS: Let me ask you, since you've come into this thing swinging.
ROLLINS: I did.
DOBBS: How did you think Joe Biden and Governor Palin did?
ROLLINS: I thought it was fabulous to hear the 30-plus-year career of Joe Biden and it was me, me, me, we, we, we, me, me, me. And then there wasn't anybody else, I guess, in the Senate for the last 30 years. I would have liked to have had John McCain debating Joe Biden on the past and that's clearly what it is, the past.
DOBBS: Well, I think, about John McCain debating, I think of his debate with Barack Obama and frankly, are you sure you want McCain in a debate, again? I mean, he was -- I thought that the two of them were absolutely horrible.
ROLLINS: I agree he was horrible, but he certainly is in a better position to defend his record since that's what it was all about. It was about the past, about the two Senate records.
DOBBS: Well there -- as we evaluate performance, here, Michael, I thought it was interesting, we've seen lots of people put up gaffe meters and gaffe-o-ramas and gaffe charts. Why didn't they put up something called "lies?" Those two candidates were lying through their -- excuse me, I can't use the word "lie" that wouldn't be polite. They distorted, they misstated, they misspoke -- do you want me to go through the line? They were lying through their teeth a number of times. What in the heck was going on?
MICHAEL GOODWIN, NEW YORK DAILY NEWS: It was a debate as usual with one exception, which is, of course, Sarah Palin who I believe did win the debate, because she spoke directly to people whereas Biden, just -- more than a camera trick, he spoke to the moderator, as he was a teacher to the student. I think people relate to Palin. I think Palin helped herself, help McCain. The question is, in the economy, it's a tough sled, but I think she did very well.
ZIMMERMAN: But that's not the sled, that's the ride. And the challenge for Sarah Palin was to change the momentum and give McCain a boost. Clearly she didn't stop the momentum that's moving towards Barack Obama. Joe Biden's mission was a different one, it was to really reinforce the message of change and really keep the momentum going for Obama; he accomplished that.
ROLLINS: When you talk about their 36-year career in the Senate, that's the movement of change? That's what he talked about. He talked about...
ZIMMERMAN: Well, you see the polls. You study the polls more than anyone else, Ed...
ROLLINS: But, what the polls, which are very important, I mean, we get all caught up in the instant polls. What the polls reflect are people's sentiment towards the top of the ticket. So, when 51 percent say I think Joe Biden, they're basically ready to vote for Joe Biden and Barack Obama. And the 36 percent to 39 percent are pretty much the Republican base or what have you, and that's what it reflects. The end of the day, she performed under the most difficult scrutiny anybody's had in the five weeks she's been there, and I think she connected with voters. John McCain's got to make the sale, and he so far he hasn't.
DOBBS: We're going to be back with our panel and what we're going to do when we come back is we're going to get an answer to my question -- what's going on with these lying son of a guns, both of them, Governor Palin and Joe Biden. We're going to add up a few of the lies, misstatements, well, they mispostured, mis-whatever you want to call it. I call them lies, because they're so remarkably divergent from fact. But, that's just me. Stay with us, we'll be right back with that. We'll see if these guys really want to answer that.
(COMMERCIAL BREAK)
DOBBS: We're back with our panel -- Ed Rollins, Michael Goodwin, Robert Zimmerman. Let me just turn to just a few of the little lies. Biden twice claimed that McCain voted, voted, with Barack Obama, whether the issue was the budget bill or whether it was the troop funding. It was just absolutely...
GOODWIN: Let me take that one if I could, on Iraq, because I thought that was outrageous what Biden said. He clearly distorted -- Hillary Clinton and Barack Obama were one of 14 senators in May of '07 who voted to defund both wars because -- they wouldn't agree to it, because Bush wouldn't agree to a timetable. Only 14 senators voted for that bill. The two trying to court the liberal wind of the Democratic Party. John McCain never voted to defund the Army.
ZIMMERMAN: There was much more to it, Michael, than that, it was about holding the administration accountable for performance and also holding the Iraqis government accountable.
DOBBS: The point is, he lied. There was no attempt at interpreting that statement. He basically, fundamentally, straightforwardly lied. But, he was in good company because Governor Palin was doing the same thing. She said that Obama voted in favor of higher taxes on families making as little as 42,000 a year. In point of fact, it was on singles making that amount, it would have been 90,000 the other way. Palin said millions of small businesses will see tax increases under Obama's tax proposal. At most, as factcheck.org says, it would only have been several hundred thousand. But, why aren't we seeing the national media hold these candidates, whether it's Obama and McCain or Palin and Biden -- you know, we talk about how cute they were, how well they did this, how -- you know, it's all nonsense if they're lying. And we're getting it from all four candidates.
ZIMMERMAN: Look, the reality is...
DOBBS: I'm looking.
ZIMMERMAN: OK, in this debate...
DOBBS: That was a very Obama-like thing you just did -- "look."
ZIMMERMAN: There were -- I would not call them lies. I think they were misstatements of the record.
DOBBS: OK, fair enough. I surrender "lie."
ZIMMERMAN: When Sarah Palin said she opposed the "Bridge to Nowhere" and then kept the funds for it after it wasn't build, that does matter, because that's the definition of her candidacy -- taking on the lobbyist, taking on the special interests.
DOBBS: She didn't say she was adverse to the money...
ZIMMERMAN: Sure, she didn't want the bridge, she just wanted the money, though, and that's our tax dollars.
ROLLINS: You tell me one Democrat and one Republican governor who ever gives back transportation money.
ZIMMERMAN: She ran against the money, that's the point.
DOBBS: Wait a minute. We've got a campaign to deal with, too. If you can't resolve this thing for us...
ROLLINS: The most dangerous line last night was, "I love my friend John McCain," and the moment that word came out of his mouth, a fist went right to John McCain's teeth.
(LAUGHTER)
ZIMMERMAN: That was the most artfully done statement, God love him.
"God love my good friend John McCain, but" -- and the bottom line is, my good friend Joe Biden basically made it all about him, last night.
DOBBS: Well, let me ask you this. Obama, right now in the tracking poll seven percent lead in both Rasmussen and Gallup showing some significant strength in the battleground states. Is this race over?
GOODWIN: Look, it's all about the economy and unless McCain can find an answer, one he hasn't found so far, it is over.
ZIMMERMAN: The economy is driving these polls, and that's what's impacting the outcome.
ROLLINS: John McCain has to change the game. The only way he can change the game is say I'm going to run for one term and here's my Treasury secretary, Steve Forbes or something like that.
DOBBS: Thank you very much, Ed. Michael, thank you. Robert, thank you. And our poll results, 98 percent of you say Congress should be added to the list of American institutions in need of reform after the passage of the Wall Street bailout.
Thanks for being with us, tonight. Join us tomorrow. For all of us here, we thank you for watching. Goodnight from New York. The ELECTION CENTER with Campbell Brown starts, right now -- Campbell.
