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LOU DOBBS TONIGHT

Government Buying Bank Stocks; Where Do the Presidential Candidates Stand?; ACORN is Under Fire for Voter Fraud; Integrity of Election Threatened; Budget Bloat

Aired October 10, 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: Wolf, thank you. Tonight, the worst week ever for the stock market, Treasury Secretary Paulson has just announced a plan to buy shares in ailing financial institutions, recapitalizing those institutions. I'll be joined by three of the country's smartest economic thinkers here tonight.
And President Bush telling the American people again to be patient as the crisis worsens. We'll be reporting on that and the lack of leadership in Washington throughout this crisis.

Also tonight, the McCain campaign hammer Senator Obama for his links with a left wing activist organization called ACORN, accused of election fraud all across the country. We'll have the very latest.

And three top political analysts join us to discuss that and a great deal more, all the day's news and much more from an independent perspective tonight, straight ahead.

ANNOUNCER: This is LOU DOBBS TONIGHT: news, debate, and opinion for Friday, October 10th. Live from New York, Lou Dobbs.

DOBBS: Good evening, everybody. Over the past few minutes, Treasury Secretary Hank Paulson announced the United States government will buy shares in financial institutions, his announcement following the worst week ever for the Dow Jones industrials, a 1,000-point swing today in the Dow. It was below 8,000 in early trading after plummeting nearly 700 points, but the Dow then rebounded, reaching a high of more than 320 points to the good.

It ended the day 128 points lower. The Dow has now plunged more than 40 percent from its record close one year ago. The Dow has fallen 35 percent from its high set earlier this year on May 2nd and this week the Dow plummeted 18 percent, the Nasdaq dropped 15 percent, the S&P 500 lost 18 percent. Stocks this week have lost almost $2.5 trillion.

President Bush appealed this morning for patience, saying the so- called rescue plan is aggressive enough and big enough to work. This weekend, President Bush will be meeting with finance ministers from the Group of Seven, the world's largest, richest industrial nations. Tonight, Treasury Secretary Hank Paulson confirmed that the U.S. government will be purchasing mortgage assets and investing in banks, recapitalizing them, a plan that we first reported here as being under active consideration Monday.

(BEGIN VIDEO CLIP)

HENRY PAULSON, TREASURY SECRETARY: We are developing strategies to use the authority to purchase and insure mortgage assets and to purchase equity in financial institutions as deemed necessary to promote financial market stability.

(END VIDEO CLIP)

DOBBS: That, of course, Secretary of the Treasury Paulson, talking just moments ago. Earlier today, the president again, as I said, attempting to calm investors. That failed, however, to inspire at least any immediate confidence among investors.

The stock market fell sharply even as the president made his statements, reflecting continued fear and skepticism. Many investors and voters now believe there's a complete vacuum of political and economic leadership in this country. Lisa Sylvester has our report from Washington.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): President Bush tried to calm fears as he assured the public that the federal government is taking steps to stabilize the economy and unfreeze the credit system.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Here's what the American people need to know. That the United States government is acting. We will continue to act to resolve this crisis and restore stability to our markets.

SYLVESTER: But despite the message, confidence is lacking. The Dow Jones average lost 100 points during what was supposed to be a reassuring speech by President Bush.

DEAN BAKER, CTR. FOR ECON. AND POLICY RESEARCH: At this point, I don't think he has much stature to really reassure the country. I mean, compare him to Franklin Roosevelt figure, who could stand up in the middle of the great depression and say you know "we have nothing to fear but fear itself." You couldn't envision you know President Bush playing that role at this point.

SYLVESTER: So how to regain confidence? Economic analysts say in the short term, people are waiting to hear specifics of what Treasury Secretary Henry Paulson is going to do with the $700 billion approved by Congress. Long term, the U.S. business and Industry Council says the country's leaders need to shift focus away from what he calls reshuffled wealth to creating real wealth.

ALAN TONELSON, BUSINESS AND INDUSTRY COUNCIL: What our leadership has failed to do is send the message that they understand that the real problem we face today is not in the finance sector. That's only a symptom or in the housing sector. That's only a symptom. The real problem we face is in the real economy. It's in the wealth creating sector. SYLVESTER: Alan Tonelson says to jump-start the economy, the United States needs to go back to making things, production of goods and services.

(END VIDEOTAPE)

SYLVESTER: And we did get a few more details. Treasury Secretary Henry Paulson just moments ago announced that the administration will buy stock in financial institutions. That money will come from -- will be part of the $700 billion that was approved by Congress. And he also said that the program will be open to a number of different companies. Lou?

DOBBS: All right. Thank you very much, Lisa. Lisa Sylvester from Washington.

On the presidential campaign trail today, Senator McCain launched a new wave of attacks against Senator Obama, but some of McCain's supporters are demanding McCain take a much tougher line in this campaign. Dana Bash reports now from Lakeville, Minnesota, where Senator McCain has just finished up a campaign rally -- Dana.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, Lou, that sense that we're getting and we have been getting for this entire week from McCain supporters at these events are really a bit of a climax here in this town hall that just wrapped up. More than half of the questions he got weren't on the economy and weren't on health care...

(AUDIO GAP)

BASH: His supporters saying, please push you know yourself to hit Obama more and hit him harder. Also some questions regarding the thing that they have right up on the air right now, the whole idea that Barack Obama has a relationship with the radical from the 1960s, William Ayers. But the first question he got was from a veteran who again pushed him to be tough on Obama, particularly at next week's debate. But for the first time in a couple of weeks we heard Senator McCain try to tamp down on what we've seen and that is basically rage from some of his supporters.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: And we want to fight. And I will fight, but we will be respectful. I admire Senator Obama and his accomplishments. I will respect him. And I want...

(BOOING)

MCCAIN: No, no. I want everyone to be respectful. And let's make sure we are. Because that's the way politics should be conducted in America. So, let's make sure.

(APPLAUSE)

UNIDENTIFIED MALE: We're scared. We're scared of an Obama presidency. MCCAIN: I have to tell you, he is a decent person and a person that you do not have to be scared as president of the United States.

(BOOING)

MCCAIN: Now, I just -- and I just -- now, look, I -- if I didn't think I wouldn't be one heck of a lot better president, I wouldn't be running, OK and that's the point. That's the point.

(APPLAUSE)

UNIDENTIFIED FEMALE: I can't trust Obama. I have read about him and he's not -- he's not -- he's an Arab. He is not?

MCCAIN: No, ma'am.

UNIDENTIFIED FEMALE: No?

MCCAIN: No. No, ma'am. No ma'am. He's a decent family man, citizen that I just happen to have disagreements with on fundamental issues and that's what this campaign is all about. He's not. Thank you.

(APPLAUSE)

(END VIDEO CLIP)

BASH: Now, Lou, as you probably know, there has been some concern, particularly voiced by Democrats about this sentiment that we have heard. You heard just a snippet of it here tonight from McCain and also Sarah Palin has rallied throughout the week. As you say there, Senator McCain is trying to again tamp down on some of the rage he is hearing.

But at the same time, he is airing right now a brand new ad on television nationwide, which does point out from his perspective that there are some things that Barack Obama is not telling Americans about his relationship with William Ayers and you heard some of that come out here tonight. Lou?

DOBBS: When you talk about anger, I listened to really some ignorance from at least two people in that crowd and I thought, frankly, Dana, didn't you, that Senator McCain handled that with considerable grace and civility.

BASH: Well, he certainly tried. And it really is frankly different. The way he reacted today in here is different from what we have seen throughout the week, where people have maybe not expressed, using your word, ignorance, about Barack Obama the way they did here tonight. But certainly they had urged him to fight Barack Obama harder, because they felt...

DOBBS: No, no, no, I understand that, Dana...

(CROSSTALK) DOBBS: ... but what I'm asking you, the rage that we have seen reported by you, by Ed Henry yesterday, the anger has been directed at McCain for having no fire in his belly, if you will, and not carrying out an aggressive, energized campaign. That seems to be the anger.

BASH: That has been part of it. Another part of it has been some calls from the crowd when Sarah Palin or John McCain had been talking about Barack Obama, calling him a terrorist and things like that. It hasn't been direct because there hasn't been the kind of forum that we had here, a town hall like this, but it has been a rally and it has been noticed and it has been picked up in our reports and others. And it was very clear and talking to McCain and some of his aides right afterwards that that is something that he is trying to tamp down on.

DOBBS: OK. Thank you very much, Dana. Dana Bash reporting.

BASH: Thank you.

DOBBS: Well Senator Obama today lashed out at Senator McCain, accusing him of trying to divide the country. Obama said the American people won't be, as he put it, hoodwinked. Obama today also presenting new economic proposals designed to help small business. Candy Crowley has our report. Candy, Senator Obama suddenly announcing, along with Senator McCain, new economic proposals?

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: It's a pretty different mode at this point than most campaigns that I have seen. We are about three weeks away and generally this is when candidates are out trying to rally the faithful, trying to reach into those swing voters, going to independent areas and it's all about rally, rally, rally and usually, nothing new because when you put something new up there, somebody is going to take a shot at it, and particularly if you're the front-runner, as Barack Obama is at this point.

You really don't want to rock the boat with too much. You have a steady as you go campaign. But what this shows you, that both McCain and Obama made proposals today, dealing with certain groups being hurt by this economy with Obama, it was about small businesses, which he said needed to be given long-term, steady rate loans that are lower than normal, so that they can stay in business and keep the economy running and do it through the small business administration.

It's just a portion of what's going on in the economy. But it's very targeted and they are releasing it, because you just can't fight this economy as the headline. And I think it has really changed the dynamic of the campaign. We've never seen a campaign that has really been -- has undergone something like this, and that this atmosphere has, at least in any campaign I have ever seen, has not been present. So, they really can't afford to stay out of the conversation. And I think that's why you are seeing, from time to time, some new proposals from both these men.

DOBBS: I think it's important that we remember that they're all just that, whether from McCain or from Obama, conversation. Because neither has the capacity to advance these so-called proposals for -- I mean, that's what's unique about this.

The second part of it, we were talking the other day, you were pointing out that Obama is being very constrained by the, if you will, by the direction. Speaking before crowds today, was he still using a teleprompter or was he more -- well more looser?

CROWLEY: Yeah. No, very definitely this has been -- this is teleprompter time for Obama. It keeps down the possibility of a mistake. There are limited conversations with reporters. I think it's been two, two and a half weeks since there was a press conference. So really, this is the time that a campaign that's in the lead tries to kind of draw together and really control things so that they can stay in the lead.

DOBBS: Well it's pretty clear that the campaign that's behind is controlling things very well. Candy, thank you very much. Candy Crowley.

CROWLEY: Sure.

DOBBS: Well time now for the poll. Do you believe the stock market would have gone down a lot more without that federal bailout? Yes or no. We would love to hear from you. Cast your vote at loudobbs.com. We'll have the results later in the broadcast.

Still ahead, much more on the presidential campaign and the government's new plan to buy, to recapitalize banks. The McCain campaign going on the offensive, but so are some of his supporters.

We'll also be reporting to you on Senator Obama's links with a left-wing radical activist group accused of election fraud all across the country. And troubling new concerns about the integrity of our voting system. That story, a great deal more, straight ahead.

(COMMERCIAL BREAK)

DOBBS: The McCain campaign today released a new Web ad, targeting Senator Obama's ties to the left wing special interest group ACORN. As we reported here, the Obama campaign denied any significant relationship between Obama and ACORN. In reality, the Obama campaign paid an ACORN subsidiary more than $800,000 and ACORN endorsed Senator Obama for president.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE, CAMPAIGN COMMERCIAL: But Obama's ties to ACORN run long and deep. He taught classes for ACORN. They even endorsed him for president.

(END VIDEO CLIP)

DOBBS: ACORN claims to be a non-partisan community organization for social justice. In point of fact, the group is under investigation for voter registration fraud in states all across the country. Bill Tucker has our report.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): The Association of Community Organizations for Reform Now, ACORN, and its partner group, Project Vote say all attacks on its voter registration drives are purely partisan. ACORN officials say all they're trying to do is register voters and they insist that they've tried to get local officials involved in their drives to help detect fraudulent registration cards, to little or no avail.

BRIAN MELLOR, PROJECT VOTE: We encourage and have encouraged and tried to push election officials to take this seriously. And they never seem to do so until October.

TUCKER: That may be true, but in the past, individuals associated with ACORN have admitted to voter registration fraud. Because of that background, critics of the group now argue any campaign or political party should be wary of being associated with ACORN.

HANS VON SPAKOVSKY, HERITAGE FOUNDATION: I think the Obama campaign given it's $800,000 that it paid to an ACORN organization for voter registration ought to be extremely concerned over the voter registration fraud investigations that are going on across the country.

TUCKER: The concern of Heritage Foundation and other critics are calling for an investigation into ACORN. They see a fundamental problem with the Obama campaign paying Citizen's Services, Inc., CSI to conduct a voter registration drive because CSI is a partnership organization with ACORN and ACORN through its political action committee has endorsed Obama for president.

JAMES TERRY, CITIZENS RIGHTS LEAGUE: Obama hiring CSI and ACORN would be very much akin to the McCain campaign going out and hiring Freedoms Watch or in the past organizations like Swift Boat.

TUCKER: The Obama campaign says its payments to CSI were made to register voters during the primaries, in that it has had no association with the group during the general election campaign.

(END VIDEOTAPE)

TUCKER: Now currently the FBI and the Department of Justice say there are no open or pending investigations into the relationship between Obama and ACORN or any of its myriad of affiliates, Lou.

DOBBS: Well there are, Bill, thank you very much, a ton of investigations underway tonight all across the country into tens of thousands of cases of voter registration fraud. And there hasn't been a lot of public attention paid to these investigations and what is happening again nearly -- in nearly every state in the union.

ACORN employees have been indicted on fraud charges in two states. There are questions about ACORN's voter registrations in another 10 states. Well it's not just voter fraud that's threatening the integrity of the election. Many key battleground states are facing critical problems and voting procedures just days before the election. Problems range from faulty voting machines to inadequate staff at the polls. As Kitty Pilgrim now reports, all of this could mean chaos on election day.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Problems with electronic voting machines, spoofed in a popular animated series.

UNIDENTIFIED MALE, FROM YOUTUBE FOX: Ooh, one of those electronic voting dealies (ph).

UNIDENTIFIED MALE, FROM YOUTUBE FOX: One vote for McCain.

UNIDENTIFIED MALE, FROM YOUTUBE FOX: No, no, no.

UNIDENTIFIED MALE, FROM YOUTUBE FOX: Six votes for President McCain.

PILGRIM: Don't laugh. Voter activist groups say this year's high voter turnout, coupled with potential malfunctions of electronic machines could mean election day chaos.

SUSANNAH GOODMAN, COMMON CAUSE: There are 24 states, which have electronic voting machines and these machines can fail to start on election day, they can crash. They have to have emergency paper ballots. Nine states don't have a requirement to have them.

PILGRIM: The Voter Action Group Advancement Project's new report "End of the Line" predicts huge potential election troubles in many key states. In Virginia, many precincts will be overwhelmed because of insufficient number of machines and poll workers. Pennsylvania, polling place resources are insufficient. Ohio, the allocation of poll workers may be insufficient. Missouri, paper ballots may be inadequate.

JUDITH BROWNE-DIANIS, CO-DIR., ADVANCEMENT PROJECT: If the machines aren't available because the lines are too long, then election officials should turn to paper ballots and they should have enough paper ballots available for the people who are going to turn out.

PILGRIM: The report finds key battleground states of Ohio, Florida and Pennsylvania have an increase of two million voters since 2004. Even a five-percent increase in turnout is expected to overwhelm polls in a 13-hour voting day.

(END VIDEOTAPE)

PILGRIM: Now some states have encouraged early voting to try to avoid election day chaos. As many as one-third of the voters in the country will potentially cast their ballots before election day. Well that compares to 20 percent of voters who voted early in 2000 and that is not enough to quell fears that the polls may be overwhelmed by all kinds of malfunctions and problems on election day -- Lou.

DOBBS: You're not inspiring a lot of confidence tonight in our electoral system.

PILGRIM: You know when you read through some of these studies and these reports on just the number of voters that are going to be at the polls, if you have one electronic breakdown, you're not going to be able to process all these votes.

DOBBS: Well and the idea of a recount? Good luck. Talk about being on the honor system. This is -- this is -- and I don't for the life of me understand why we're not seeing more reporting on this issue, whether it be the e-voting machines, whether it be the lack of staffing at polling places and in the election offices all across the country, from state to local.

It's just mind numbing. I am pleased, by the way -- I want to compliment you. I've never seen you follow Homer Simpson with a report before...

(LAUGHTER)

PILGRIM: It was too tempting. I had to do it.

DOBBS: That's terrific. When did that run?

PILGRIM: I'm not actually sure when it ran, but it's a recent episode.

DOBBS: I'm not a Homer Simpson fan until now. Now I'm a homer Simpson fan. Thank you very much.

We've been reporting here for years on the unreliability of e- voting systems without a paper trail because of the issue of recount, obviously. And still voters in New Jersey, Maryland, Delaware, South Carolina, Georgia, parts of Florida and Pennsylvania -- well folks, you'll all be using machines without those paper backups in the upcoming election, so I sure hope you get it right the first time.

Up next, Secretary Paulson announcing just moments ago that the federal government will be recapitalizing some U.S. banks as part of the response to this credit crisis. Three of the brightest economic thinkers in the country join me for more on the response by the Treasury Department and the G7 nations and what's happening on Wall Street. They'll tell us precisely.

Who is next in line for a taxpayer funded bailout? Well Governor Schwarzenegger says it should be California. After years of out of control spending, irresponsible public policies in the state of California, why not? We'll be right back with that special report.

(COMMERCIAL BREAK)

DOBBS: Treasury Secretary Paulson tonight announced a new plan in concert with a group of seven nations to try to deal with the credit crisis that is global. But in this country, it is a plan to recapitalize the nation's banks that is central to what Paulson had to say. The Treasury secretary announcing that the United States will be investing in banks, recapitalizing them and, at the same time, purchasing some mortgage assets. The proportion was not discussed by the Treasury secretary.

The money for those investments, of course, come from the $700 billion bailout for Wall Street that Congress passed and the president signed a week ago. We'll be talking about that plan and more with three of the best economic analysts in the country.

California's budget crisis is now, we should tell you, at a critical level. The state needs $7 billion by next week to ensure its employees continue receiving paychecks. The problems in California, largely the result of a massive state spending spree and massive deficits over recent years. Casey Wian has our report.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): California's population grew three percent from 2003 through last year. But during that same time, the state's budget swelled by 47 percent. Education spending jumped $16 billion, health care rose 10 billion, transportation more than seven. Prison spending rose $4 million, a 74 percent increase. Two weeks ago, Republican Governor Arnold Schwarzenegger and the Democratic controlled state legislature ended a summer-long stalemate and agreed to a budget that cuts spending for the first time in seven years.

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: We can't continue on promising things that we can keep. At one point we have to just say to the people, look, right now, let's just dial back a little bit and let's you know not demand always more, more, more.

WIAN: But the new budget is already in the red and now the state is looking to Wall Street for a $7 billion loan to cover its bills. Last week Schwarzenegger sent Treasury Secretary Henry Paulson a letter, warning the state could need a federal bailout if the bond sale fails because of the credit crunch.

TOM MCCLINTOCK (R), CALIFORNIA SENATE: The national mess in Wall Street is the catalyst, but the underlying problem remains unaddressed and that is this state cannot manage its finances and Wall Street knows it.

WIAN: McClintock says powerful unions representing teachers and corrections officers are partly the blame for a bloated state bureaucracy. Schwarzenegger points to a revenue slump because of the slowing state economy. California's unemployment rate has spiked to 7.7 percent. Now the governor wants Californians to buy state bonds.

SCHWARZENEGGER: In a few days, the state will sell $4 billion of short-term notes.

WIAN: This radio ad is running in Los Angeles and San Francisco as part of an effort to raise money to pay for schools and health care.

(END VIDEOTAPE)

WIAN: Thursday, the governor sent Paulson another letter, saying the first part of California's borrowing effort is actually going well, adding that actions by the Fed and the FDIC, appear to be quote, "improving liquidity". Schwarzenegger also praised the federal bailout work of Paulson, the former CEO of Goldman Sachs. Goldman Sachs is co-managing California's debt offering, Lou.

DOBBS: Oh, my God. I mean does anybody -- does anybody -- is anybody ashamed of themselves in all of this? Schwarzenegger is timing his response to the bailout by saying he needs a bailout in California just as the Congress is taking a vote. That was supposed to be pure coincidence.

I mean, this is just beyond -- this is disgusting politics at its worst. Does Governor Schwarzenegger, bless his little heart, does he need the money or doesn't he? Has he figured that out?

(CROSSTALK)

DOBBS: Where is his buddy Warren Buffett, by the way? Warren Buffett was supposed to be advising him. How did you people in California get in this big mess with Warren Buffett?

WIAN: Well we're in quite a mess, Lou. The governor is now asking all Californians to buy bonds and help the state out. He says it's good for the state. At the same time, California's unemployment rate is about a point and half above the national average. The budget out here, as we reported, has gone totally from -- a total budget from about $100 billion to $150 billion in just four years. I mean, it's really a mess, Lou.

DOBBS: It is a mess. And you would think we would call up Warren Buffett who is, by the way, now the richest man in the world, just and say, you know, we need a $7 billion cover here, give him -- you know, give him warrants, maybe take a note at 10 percent interest, like he's doing on Wall Street, maybe he could sell California's government to Warren Buffett. What do you think?

WIAN: Sounds like you should broker that deal, Lou.

DOBBS: Well, I have to tell you, somebody needs to look out for the interest of California, because the folks who are there, the Democratic leadership and the state legislature and that Republican governor don't seem to have a clue.

Casey, thanks. Casey Wian.

California isn't alone, almost all the states in this country face some form of budget problem. Virginia's governor, Tim Kaine, yesterday, announced layoffs of almost 600 state workers, he's also cutting funding for higher education. New Jersey's governor, Jon Corzine will unveil a plan to jumpstart his state's economy. He'll address the state legislature next week, facing all sorts of financial issues. West Virginia's governor, Joe Manchin, is considering suing Wall Street firms to recover losses in state investments. Good luck.

Up next, after the worst week in history on the stock market, Treasury Secretary Paulson announces a new plan one week after the Wall Street bailout to recapitalize banks. Will it work? I'll be joined by three top economic thinkers. And, the presidential candidates, they're tying to convince voters they have plans to end this crisis. Are either one of them making any sense? What are they talking about. They won't even be in office, whichever one is elected, of course, until January 20 of next year. We have a few issues to take care of before then. I'll be talking about that and more with three of the best political analysts in the country, next. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Treasury secretary, Henry Paulson, just minutes ago, announced a new plan that will include recapitalizing ailing banks across the country and this new plan, a five-point plan, being delivered in coordination with the G7 nations. Secretary Paulson said the United States will be investing in those banks while purchasing also mortgage assets.

Joining me now to assess this latest development as well as the crisis before us, David Cay Johnston, Pulitzer prize winning journalist, best selling author of "Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense."

David, good to have you with us.

Pat Choate, director of the Manufacturing Policy Project, the author of "Dangerous Business: The Risk of Globalization for America."

Good to have you with us, Pat.

And David Smick, author of "The World is Curved: Hidden Dangers to the Global Economy." I'm starting to pick up a theme, here, amongst your books, gentlemen.

Let me turn first to this development. Pat Choate, let's start with you. The idea of recapitalizing these banks, that sounds a familiar ring to it. What do you think?

PAT CHOATE, AUTHOR, "DANGEROUS BUSINESS": Yes. Well, many of us have been urging that for about three weeks at this point. The problem with Secretary Paulson has is he's tardy, he's piecemeal, he should accompany that with an announcement that we are in a national fiscal crisis, financial crisis, which would free up the Federal Deposit Insurance Corporation to guarantee the creditors of all of the banks. This alone would break the freeze.

He should also go a step further and announce 120-day moratorium on foreclosures of homes that either are owner occupied or that have renters in them while they figure this out. We've taken care of Wall Street, now we're going to partially take care of the banks. We still haven't done anything for those homeowners, which we should be doing.

DOBBS: Well, before I turn to David Smick, let me say amen, brother. David Smick, your reaction? This coordination with G7, the specialized addition to the -- and the emphasis of the Treasury secretary to, of all things -- you know, as Pat Choate has been recommending precisely this -- Bill Isaac, the former chairman of the FDIC recommending precisely this. Now the Treasury secretary is putting emphasis on this aspect of the bailout. What's your reaction?

DAVID SMICK, AUTHOR, "THE WORLD IS CURVED": I guess, the original bailout got run over by a Mack Truck and I think by the markets. What I find interesting, I almost feel sorry for Secretary Paulson. It's like he's trying to defy the laws of gravity on this. And the laws of gravity are the global market is doing a reappraisal, a downward reappraisal of every asset in the world, including the U.S. banks. And the assets of the banks are now worth less. This is a deleverage system that we're going through, a deleveraging that we're going through and kind of -- he seems to be scrambling to try to deny the obvious.

DOBBS: And you know there's no mention here of a credit default swaps, which is that giant, dark, massive cloud that is looming over everything still. And when you talk about deleveraging, that is an issue that I suspect that there's some folks at Treasury and the Federal Reserve who are working furiously throughout every evening, throughout every day to try to both understand and contain. What do you think?

SMICK: Well, you know, it's funny. There's this motion there isn't any money. There's plenty of money in the world, it's just sitting on the sidelines, but looking at the financial architecture including the credit default swaps, it's looking at the asset-backed security market in general and it's saying, all right, if these are the things that got us into trouble, how are you going to reform those things and are we going to go back to that way of doing business? We have none of this is explained to the investment community, so no wonder they're sitting on the sideline.

DOBBS: David Cay Johnston, what is first your reaction to what the Treasury secretary said? Do you feel that they're being -- I don't know, I detect a certain comfort zone being asserted by the Treasury secretary, which was really a comfort zone that makes me uncomfortable. That is, he got to say, G7 a couple of times and he sounded like he wasn't exactly committed to greater transparency. What was your reaction?

DAVID CAY JOHNSTON, AUTHOR, "FREE LUNCH": Well, after three weeks of awful leadership and confusion and disarray and, therefore, destroying confidence, they've at least put forward a pretty clear statement of where they're going. I mean I wish that we knew a lot more about the details. But, it isn't we'll get around to doing something after the elections, but you have to give us the authority now. It might not be a bad idea, however, if the people in Washington would either write out a clear plan or shut up.

DOBBS: OK, on that note, we're going to be back with you gentlemen in just two seconds. We're going to take a quick break. New investigations of election fraud against the left wing activist group ACORN. Three of the nation's top political analysts will be here to discuss that, the Treasury secretary's latest announcements and, of course, what in the world is going on, on the presidential campaign trail? We'll be back with our panel in just on moment.

(COMMERCIAL BREAK)

DOBBS: We're back with David Cay Johnston, Pat Choate and David Smick, talking about the Treasury -- the Treasury secretary's just -- new announcement, with the adding with emphasis the recapitalization of ailing banks and government's plan to deal with this crisis.

David, one of the things that we've been talking about here is the lack of transparency. The Treasury Department is not telling everybody exactly what it's doing and there are going to be some beneficiaries. I've been saying all along, I'm concerned about Hank Paulson. The first people he's taking care of are his buddies on Wall Street. What's your reaction? What are your thoughts?

JOHNSTON: There's going to be profit earring in this, without a doubt, and one of the things that happened this week that should get our attention and has been missed by the news media except for a little publication I write for called "Tax Notes," is the Treasury has announced they are going to make it much easier for banks that acquire troubled bank assets to take the maximum possible tax write-off. Think of it as a stealth corporate tax cut. And they did this just as Wells Fargo was reaching in to take Wachovia away from CitiGroup. And of course, who controls Wells Fargo? Warren Buffett.

DOBBS: And that is such a complicated relationship because you've got Warren Buffett controlling Wells Fargo, getting the benefit of this initiative, we'll call it that, from Hank Paulson's Treasury Department right now. And of course CitiGroup is -- well, if not managed by, supremely influenced by its vice chairman, a guy by the name of Bob Rubin, also of Goldman Sachs. We need a program to keep track of these interrelationships, don't we?

JOHNSTON: All cash flows lead back to Goldman Sachs is the rule to follow here.

DOBBS: Well, oh my gosh. I mean, what is your reaction to that, David? What do you think?

JOHNSTON: Well, you know, this is an administration that has been really tough in cracking down on working class people, on their tax benefits, but has had not the same rigor for the business community and to put in a stealth tax cut and quietly do it so that it was completely missed by the journal news media is, you know, sort of indicative of why we should be skeptical and suspicious of their conduct.

DOBBS: David Smick, your reaction, also, to the interrelationships, if you will. And give me an assessment of your level of confidence of what the Treasury Department has now announced with its latest initiative on recapitalize of ailing banks?

SMICK: Well, you know, I was thinking today, what if there hadn't been a bailout, but there had been a 500 -- some kind of guarantee or an injection of capital into the FDIC and the Treasury had just issued paper, a guarantee to a bank that said, look, we'll take the toxic waste off your balance sheet for a certain price. That was proposed in Washington pretty aggressively and the Treasury wasn't interested in it because it's a lot better to have this slush fund going. But unfortunately, it opens up enormous conflicts of interest. There could be conflicts that the Treasury secretary doesn't even know about.

But you're talking about a hornet's nest of political intrigue. And this thing is going to be a reporter's delight because the -- to get into all this. On the overall plan, again, it seems to be -- you know, Hank Paulson is looking for the magic pill, the panacea, that's going to have shock and awe for the markets and I don't think -- I think they'll buy some -- they'll inject some cash, but basically this is a -- this is the tide is dropping and it's hard to defy that with all these little maneuvers by the Treasury.

DOBBS: And, Pat Choate, you get the last word tonight.

CHOATE: Well, Paulson is heading in the right direction, too slowly, not imaginatively enough. He needs to step up to the line and guarantee the creditors of the bank so that banks will not be afraid to loan to each other. That's essential to breaking this log jam. It will stay frozen until he takes that step, let's hope it's not three weeks from now.

DOBBS: Thank you very much. Pat Choate, thank you very much. David Smick and David Cay Johnston, thank you, gentlemen.

A reminder now to vote in our poll. Do you think the stock market would have gone down a lot more without that very important Wall Street bailout? Yes or no? Cast your vote at loudobbs.com. We'll have the results upcoming.

And up at the top of the hour, the ELECTION CENTER with Campbell Brown.

Campbell, what are you working on?

CAMPBELL BROWN, ELECTION CENTER: Well Lou, we're still talking about the worst week ever. I'll say it again. Worst decline ever on Wall Street. As you've been talking about, of course, the Dow dropping below 8,000 before bouncing back, it still closed down. Now the government is announcing another fix for the money meltdown. We're going to have all the details.

Also, the presidential candidates were at it again. More bitter character attacks and counterattacks. We're going to use what's going on in the campaign now as a jumping off point to talk about a special that we're going to do most of this show and again this weekend on "Race in the Race: The Great Unknown." You've seen an overreaction, I think, by extreme partisans on both sides of the issue. We're going to try to cut through the bull and get to some real answers on all this. All that at the top of the hour -- Lou.

DOBBS: Thank you very much, Campbell.

Senator McCain on the offensive over Senator Obama's ties to the left wing activist group, ACORN, a group accused of widespread election fraud. Does anybody care? And how will Treasury Secretary Paulson's plan now to recapitalize banks effect the campaign, if at all? Three top political analysts join me here next. We'll be right back. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Joining me now, three of the best political analysts in the country, all CNN contributors. Republican strategist, Ed Rollins, and the White House politiwical director under President Reagan, and chairman of the Mike Huckabee campaign. Errol Louis, columnist, "New York Daily News." Democratic strategist, Robert Zimmerman, Democratic national committeeman and, well, you've a lot of things to talk about, you and Errol both, but I'm going to short-change you tonight.

Errol, let me turn to you real quickly. We had an amazing occurrence today on the campaign trail. Senator McCain was basically told by his supporters at a rally, liven yourself up, get engaged, we want to see fire in the belly, get out there and go after Senator Obama. And he effectively said, you know, I think we just got to all respect each other and ignore them and by my estimation, at least. What's your reaction to what's going on with this campaign?

ERROL LOUIS, NEW YORK DAILY NEWS: I think it was an admirable display of political discipline. He knows that rallying the base is not his primary task right now, and you know, the reason -- when you see the candidates, where they're spending their time is the best indication of their remaining strategy is, no whaert what they say to the contrary.

If you see them this Pennsylvania he's trying to get swing voters. If you see him in Ohio, he's trying to get swing voters. He's trying to get people who haven't made up their minds yet. He's throwing red meat to the people who think the Democrats are a socialist party and some kind of conspiracy...

ROBERT ZIMMERMAN, DEMOCRATIC STRATEGIST: This is not an honorable -- this was a dishonorable -- a totally dishonorable political display of political...

DOBBS: You're not (INAUDIBLE) Errol Louis?

ZIMMERMAN: ...of political showmanship. Absolutely. For three days now...

DOBBS: Political showmanship? What are you saying?

ZIMMERMAN: For three day now, Errol, we've seen John McCain and Sarah Palin stir up the crowds to the point where they yell ugly, vile things about John McCain -- about Barack Obama. McCain and Palin have never once held them accountable. Now after several days of media coverage exposing what they've done they're sort of changing their tune. It doesn't change the ugliness of the message. DOBBS: Those cameras just arrived huh?

ZIMMERMAN: Yeah, absolutely. Thank you.

LOUIS: They're doing the right thing. They're doing the right thing. They're pulling back. I think they realize they've stirred up some really ugly stuff.

ED ROLLINS, REPUBLICAN STRATEGIST: Well, the bottom line is if he doesn't get talking about the economy instead of talking about the Ayres and all these things would have been relevant things two months ago. Right today, as I made a statement earlier, I said, this is like a 60 foot wave going over your sailboat, one of your people saying," what's for lunch?"

(LAUGHTER)

You know, I mean, nobody cares. What they care about is the economy and whoever basically can project some meaningful program here, both whether you're going to cut taxes or raise taxes or whatever it is that you need to be doing or none of the above which is what you probably should be doing, I think the country will basically look to and give another chance. The race is getting away from McCain and the reality is that Obama, I think, has frozen -- I mean, he's just moving forward. There's 11-point gap now in the Gallup poll new "Newsweek" poll.

DOBBS: Oh no, that was reduced. It fell to a 10.

ROLLINS: Fell to a 10, well "Newsweek" has one tonight, in all the major state that is he has to win he's trailing now with the exception of Indiana. So...

DOBBS: Is it over? I mean, let's be honest here? This looks like...

ROLLINS: I personally think it's over and I think the question for McCain is how do you want to go out? How do you want to be remembered? Do you want to be talking about issues that matter or help your party, which is the more significant thing, where you now have 10 or 12 senators...

DOBBS: How can you help this party? How can you help this party?

ROLLINS: You can talk about something that's relative to the public, which is the economy, as opposed to sidebar issues that can't help anybody else.

DOBBS: Is it not entirely possible, Errol, that we're talking about not helping the party at all? Because the party is going to have such inconsequential influence, if any at all, in the new Congress that it doesn't really matter at this point what the Republicans think? They could very easily swamp the reelection -- the election for Senate, for the House and for president. LOUIS: Well, that's right. But, if look, if you're a Republican Party man, if you're looking maybe at the long-term and the long-term could be as short a frame as four years from now, you've got to try and hang on. You've got to try and rescue as many seats as possible. You've got to try to live to fight another day. And the reality is, everybody is representing districts that are actually being heard. I mean, there's real work that has to get done here. I if you're a Republican or a Democrat, you want to stay in the game and try to help your district.

ZIMMERMAN: The only way, I'm going to go back to Ed's point, which I think this is right on target, the only way the Republican Party can live to fight another day so stand for and speak out to the issues confronting the American people. And they have run a campaign, very frankly that has especially in the past several weeks with these personal attacks, really ignored them. And I think it's important to see the country is hungry for solutions. I think Secretary Paulson's statement today is an important first step. And I give you a lot of credit for being one of the first people to call upon the secretary to do this and predicted what happened. And I think it's an important first step to putting us back on track.

DOBBS: But we still have an issue in which both of these presidential candidates have demonstrated a complete lack of understanding of what to do, which means that their advisers have little understanding of what to do. And, that creates, I think, a great concern for us going forward.

ROLLINS: Well, it should. I mean, I think you're exactly right. And these major issues, both by Barack and by McCain, have been thrown out the mortgage adjustment thing that McCain throughout on the debate and what he threw out today, some of the things Barack has thrown out, they're not thought through. And if I was running McCain campaign...

DOBBS: They're devices.

ROLLINS: They're devices and it's not part of an economic plan. This debate on Wednesday is the last time the public is going to look at either one of these guys and I think that both sides need to argue a point of view and it's very important that they be differential.

DOBBS: All right, we're going to be right back with our panel, we'll much more with them.

Coming up next, and stay with us. I'm going to find out if this means that Robert Zimmerman agrees wholeheartedly with Rush Limbaugh. We'll be right back.

(COMMERCIAL BREAK)

DOBBS: We're back with Ed Rollins, Errol Louis and Robert Zimmerman. So, I mean, basically, Rush Limbaugh, his position was early on that John McCain is inept and unattached to the Republican base. Would you agree with that?

ZIMMERMAN: I think the Republican base is inept and unattached to the mainstream of the American people, so have no concern. I don't agree with Rush Limbaugh and if I did I would change my position immediately.

DOBBS: Errol, what do you think?

LOUIS: Well, I think you're right. I mean, look, that reflects some of this anger that you've been seeing on the campaign trail where -- and this is the base, they're coming out there. This is somebody who probably a lot of them didn't really want -- you know, you'd never know the guy won a string of primaries, but you know, the base is saying, who are you? Why aren't you saying what we want you to say? When are you going to get into it? You know? And people like Rush Limbaugh have stirred up the base and so, you know, it's a mismatch, one more problem he has to surmount and with 23, 24 days left he's got very, very little time to turn it around.

ROLLINS: Well, we could spend the show discussing what the liberal Democrat base wants to do.

(CROSSTALK)

Fortunately for Obama, they have been very quiet, but they're looking forward to the old Robin Hood policy and taking the money from the rich and giving it to the poor and there may not be any money left because the federal government is taking it all. We're creating a nationalized government, now.

DOBBS: Well, this is one of those cases whehere it's going to be very, very important that whoever that president may be, selects a team that is capable of dealing with this.

Listening to Bob Rubin today, it's clear -- Bob Rubin is one of Obama's top advisers on the economy. I don't believe that he is also one of the guys who's helped drive CitiGroup into the mess that it's in. I think it's time -- I hope that these -- whichever one of these men are to be elected, they'll find fresh and bright new leadership instead of attachments to the old, which has gotten us into this mess it's time for genuinely new thinking.

Let's turn to the politics that the nation faces now and that is, this tremendous credit crisis, a failure of government. We are looking at a calamitous but, possibilities, here. I personally, and I've said this on this show and I've invited everybody to join me in economic policy -- there will be no depression. But we've got to begin, it seems, to think real terms about the future of this country. It's not happening. This presidential campaign should have been about bringing together a national consensus. They have not engaged. They've not engaged on a host of critically important issues. We're going to come out of November 4, whoever is elected president, without any -- without a mandate on a host of issues.

ZIMMERMAN: But you know, the words you just said before, "there will be no depression," and you're one of the very few people I've heard on the national stage say that. Those words speak to hope and speak to confidence and we're not hearing that. And that's how recovery begins, when our national leaders do speak with hope and confidence and we certainly didn't get it today from the White House when Bush...

DOBBS: Wait, don't talk about that.

ZIMMERMAN: OK, I won't bring up the White House, but the point is though, our national news on every level, we're not getting that sense of hope and confidence and that's what begins the recovery. Although, I think the treasury made important first steps, a long way to go.

LOUIS: You know, this is what you get, Lou, when you have two campaigns that refuse to deal with the press. They have very carefully staged and managed every appearance, bypassed any kind of real conversation.

DOBBS: I would add to that, that's what happens when the press goes into the tank for one candidate and neither -- neither the national or the local media has the strength of character to demand a response from candidate.

ROLLINS: The thing that frightens me and I think frightens a lot of other Americans who don't know a lot about the economy, I don't think anybody in the government understands the economy. I think it's a game-play. It's like the McCain campaign, everyday they wake up and something's not working, so they try something different and that's very frightening to us.

DOBBS: And one of those things that hasn't been working, if I may say, in conclusion is, is free trade policies. Thanks very much, Ed. Thank you, Errol. Thank you very much, Robert, appreciate it.

Tonight's poll results: 83 percent of you don't believe the market would have gone down a lot more with that $700 billion bailout and 150 billion in pork. And I believe you're right. Thanks for being with us tonight. The ELECTION CENTER with Campbell Brown begins right now -- Campbell.

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