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Economic Crisis Goes Global; GM and Chrysler to Merge?; Abuse of Power?

Aired October 11, 2008 - 11:00   ET

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

BETTY NGUYEN, CNN, ANCHOR: You are on the CNN NEWSROOM where the news is unfolding live on this Saturday, the 11th of October. Hello, everybody. I'm Betty Nguyen.
T.J. HOLMES, CNN, ANCHOR: And hello to you all, I'm T.J. Holmes.

Global response to the financial crisis. The president having coffee this morning with some of his top U.S. allies, talking about strategy and solving what's now a global crisis.

NGUYEN: Also, it is a move that could redraw the Detroit skyline and reshape the automobile industry. GM and Chrysler maybe thinking merger.

HOLMES: Also Republican running mate Sarah Palin denies that she abused her power as governor of Alaska.

Well, an investigation says she did abuse that power. We'll get into that this morning. Right here, on the NEWSROOM.

NGUYEN: But first though, we do have some breaking news. The Bush administration is set to announce major news any minute now dealing with North Korea. So, let's get you now to CNN's State Department correspondent Zain Verjee who joins us live. Now this has to do with North Korea and the terrorism list. What do you know?

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Well this is essentially a dramatic save by the Bush administration. The U.S. has essentially prevented a significant nuclear deal with North Korea from just falling apart. Senior state Department officials have told us essentially that the U.S. is expected to remove North Korea from its terrorism black list and in return North Korea agrees to a verification plan and allows inspectors to come in and determine what's been going on at its main nuclear facility in Yongbyon. Let's listen now to what's being said at the state department.

(BEGIN VIDEO CLIP)

SEAN MCCORMACK, STATE DEPT. SPOKESMAN: Q and A session and talk about this morning's events. The participants in the six party talks have for some time been discussing the importance of verification measures that will allow the parties to reliably verify North Korea's denuclearization as the process moves forward. The six party heads of delegated met in July to discuss verification measures and draft papers were exchanged among the parties. On July 12th, China, the chair of the six-party talks released a press communicate stating that verification measures would include visits to facilities, review of documents and interviews with technical personnel as well as other measures unanimously agreed upon by the six parties. On the invitation of the North Korean government, a U.S. negotiating team on behalf of the six parties visit Pyongyang from October 1st to the 3rd for intensive talks on verification measures. (inaudible) valuation. He can talk in depth from first-hand accounts about those negotiations.

Based on those discussions, the United States and North Korea negotiators agreed and I have to emphasize this is an agreement on a number of important verification measures, including agreement that experts from all six parties may participate in verification activities, including experts from nonnuclear states. Agreement that the IAEA will have an important consultative and support roll and verification. Agreement that experts will have access to all declared facilities and based on mutual consent to undeclared sites. Agreement on the use of scientific procedures including sampling and forensic activities and agreement that all measures contain in the verification protocol will apply to the plutonium-based program and any uranium- enrichment and proliferation activities.

In addition, the monitoring mechanism already agreed by the six parties to monitor compliance with the six-party documents applies to proliferation and uranium enrichment activities. The U.S.-North Korea agreement on these verification measures has been quantified and a joint document between the United States and North Korea and creating other understandings and has been reaffirmed through intensive consultations. The agreement and associated understandings have been conveyed to the other parties. These measures will serve as a baseline for verification protocol to be finalized and adopted by the six parties in the near future.

Let me just add a couple addenda to this. And our experts can speak to this in a bit more depth. Every element of verification that we sought is included in this package. It's an important point. Every single thing that we sought going in is part of this package.

And on the point about the intensive consultations, I think Ambassador Kim can speak to that a bit more. But we also had intensive consultations with our Japanese colleagues and in the course of those consultations, Japan made it clear that the agreement should be formalized including in writing at the level of the six parties. We agree with that. I have to emphasize here that this is already in agreement. So what you are in essence doing is - the next step is living up to a key tenet of the six-party talks. And that is that an agreement between any two parties will ultimately be guaranteed and formalized by all the six parties. Again, Ambassador Kim can speak a little bit more to that. That's an important point.

And you already have the fact sheet on the existing measures. And then this is a statement from me. And we will put this out in paper form afterwards. The Democratic Peoples' Republic of North Korea agree to a series of verification measures that represent significant cooperation concerning the verification of North Korea's - VERJEE: This is really a significant moment in what the Bush administration and the administration point man for these nuclear negotiations with North Korea, Christopher Hill, has been trying to do, hammer out a verification agreement with North Korea that basically means that there is a mechanism created to see whether North Korea is, in fact, telling the truth about it's nuclear secrets. This is where, Betty, the rubber meets the road. Essentially, what this means and Sean McCormick there is saying that the administration really got every single thing it wanted in this verification deal with North Korea. They had been kicking up a major fuss saying, it's too tough. It's too intrusive.

This is what the deal has all been about. What's going to happen now is that you are going to see inspection, sampling of things like the air and the soil in the nuclear facilities. McCormick was talking about access to documentation and interviews with people on the ground. They are basically saying that all this is needed to create a picture of what the history of North Korea's nuclear program has been like. Think of it kind of like going through someone's garbage, Betty.

When you can do that, and you have access you can kind of put a picture of what this person is like, what they have been doing, what they want to do is take samples from the nuclear facility. This one, the main one in Yongbyon, that produced a nuclear device and produced the plutonium needed for that. They want to know how long it has been in the world and get a consistent picture to make sure that the North Koreans aren't pulling the wool over our eyes.

So this is a significant moment. The State Department is making it clear that the U.S. got what it wanted. So essentially saying we didn't cave in with the North Koreans. That this is a negotiation. And verification is a key stage of this process. It's going to be critical to see what happens next. We understand, from a senior state Department official, that the verification, will begin immediately and also that the steps that North Korea has done, like restarting it's nuclear bomb facility, kicking out inspectors, moving around missiles. You know they are going to reverse all that aggressive behavior. They are going to reverse the process and get back on track.

A significant movement, a significant feather in the cap of Christopher Hill here and the Bush administration who really wants to claim North Korea as a big success as it tries to push North Korea toward denuclearization and just coming clean on its nuclear program. But it's going to be tough and you know the stairs are just getting steeper.

NGUYEN: Yes, Zain, you call it a feather in the cap and a deal saver. But at the same time, it is a little controversial in the sense that there is some fierce opposition by even some of the presidents, republican, fellow republican John McCain in fact put out a statement on Friday, saying that he was against this. What was the president up against in making this decision? Because as we talked earlier, this was an executive decision. VERJEE: This has been a major battle within the administration, between the hard-liners, people like the former U.S. ambassador to the United Nations, John Bolton, and other Republicans in the administration that say there is no way we can do this. Why should we trust North Korea? We are caving in to North Korea? They have lied before, and they are going to lie again. And then, you have other factions within the administration that say, look, you need to shut down this reactor. The North Koreans, we have a process. It's an international process. They're complying and this is the most significant thing we can do. And it is working, as you can see, North Korea just some months ago blew up dramatically this cooling tower. So the battle has been there within the administration.

It seems as though the pragmatists have won out by making this declaration and determining that there is going to be a verification process. And that they also say that North Korea, if they don't live up to their promises, they can be put back on the terrorism list. So that's key to understanding why we are seeing the back and forth, as the battle within the administration.

One last point, Betty, whatever Christopher Hill has done now to negotiate this agreement, the question is, will it be sufficient enough? Will it be flexible enough and acceptable enough for the next administration to use as a framework for their future negotiations with North Korea. Because you sure don't want to be going back and renegotiating all of this all over again.

NGUYEN: All right. Zain Verjee joining us live this morning. Thank you so much for that, Zain. We do appreciate it.

VERJEE: Thank you.

NGUYEN: Well, there is some good news dealing with the stock markets. Well, kind of, sort of. You are not losing your money this Saturday. How about that? Because they are closed. But the Dow is coming off its worst week in history. The downturn blamed in part on frozen credit markets. Today, the President and world money leaders tried to thaw credit and stop the global meltdown, they have been working hard on this Saturday, working over the weekend to make it happen.

White House correspondent Elaine Quijano joins us to explain. So, Elaine, we heard from the President a little bit earlier today. Break it down for the viewers who may be waking up and trying to figure out if anything concrete has come out of these meetings?

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: You know, we didn't hear anything really specific, I have to tell you, Betty, after the president met with the G-7 finance ministers this morning. And for the White House, this really was about presenting a united front, trying to project the image that the international community stands united in trying to tackle the financial challenges ahead. The President having a rare Saturday morning meeting here at the White House with top members of his administration, top officials in his administration, as well as those finance ministers from the group of seven industrialized nations who were here in Washington, anyway, for the weekend. But again, no specifics unveiled. The meeting, itself, lasting about 30 or 40 minutes or so. And afterwards, President Bush in his remarks from the Rose Garden basically reiterated what we heard from him yesterday outlining the steps that the U.S. government is taking in order to try to shore up the U.S. economy. But also, with those finance ministers standing behind him. The president trying to send the message that there is global cooperation and coordination on this issue.

(BEGIN VIDEO CLIP)

PRES. GEORGE W. BUSH, UNITED STATES OF AMERICA: We all agree that the actions we take should protect our taxpayers. And we agree that we ought to work with other nations, such as those that will be represented this afternoon in the G-20 forum. As our nation carries out this plan, we must ensure the actions of one country do not contradict or undermine the actions of another. In an interconnected world, no nation will gain by driving down the fortunes of another. We are in this together. We will come through it together.

(END VIDEO CLIP)

NGUYEN: Now officials hear say they are still in the very early stages of reviewing ideas that have come to them. So that might help explain why we haven't seen any kind of international strategy or the specifics of one unveiled. Rather, what we heard, Betty, were their guiding principles as they are looking at this situation moving forward. But again, President Bush trying to underscore the idea that the United States is not acting alone in trying to tackle some of these financial problems that really there is cooperation. There is coordination. That's the message. And those are the images with the pictures that we saw there a moment ago that the president and the White House are trying to send today. Betty.

NGUYEN: All right. CNN's Elaine Quijano joining us live. Thank you, Elaine.

HOLMES: We will return back to that breaking story we brought you just a moment ago about the U.S. and North Korea. The story this morning, North Korea now officially being removed from the list of state sponsors of terrorism. And, in exchange, the U.S. and other members of the six-party talks there have gotten a deal with North Korea that, in fact, the U.S. got everything they wanted. And that North Korea has agreed to pretty much open up everything to inspections of all of its nuclear facilities.

We want to turn to our Sohn Jie-Ae who is in Seoul, South Korea for us. South Korea, of course, a member of those six-party talks. Sohn Jie-Ae joining us now. And tell us, is this new deal and all these announcements we are seeing here in the U.S. being met with optimism or skepticism there?

VOICE OF SOHN JIE-AE, CNN CORRESPONDENT: Well it's a little early in the morning to really tell for sure. It is probably the case that South Koreans and the South Korean government are going to breath a huge sigh of relief. The South Koreans have been anxiously waiting to see whether the nuclear deal will be resolved. South Korea really wants the nuclear deal to be resolved so that it can really build relations with North Korea again.

And now it is South Korea who has really - has been very anxious in recent months because North Korea was rebuilding its nuclear reactor. The nuclear issue was going to be top of all dealings with South Korea. And South Korea does not want tensions building again on the Korean Peninsula. So when the South Koreans get up in the morning, it is expected the South Koreans will look at this with a huge sigh of relief and will be looking, anxiously looking to see if the nuclear deal will actually become something that will be put behind them.

And they know it's going to take a long time. You know, a lot of these North Korean deals, if you move an inch forward, there is always a possibility you are going to move a step back. But any inch moved forward at this point is a good sign.

HOLMES: Well, this is a good sign. Certainly one that is welcomed right now certainly by the Bush administration, which has been after this for quite some time. Sohn Jie-Ae for us there with a little idea of how it's going to be taken there in South Korea. Again, as you said, many there in South Korea have been looking forward to this deal being put in place, anxious to get this deal put in place so they can normalize their relations with North Korea. So our Sohn-Jie-Ae, we thank you so much.

NGUYEN: All right. We are going to continue with this story, because it is a important one. We want to go to CNN's Christiane Amanpour who joins us live today. Christiane, you have been to North Korea. You know this story firsthand. Let me ask you this, some are calling it a deal-saver. Others say that perhaps it's caving into to North Korea. How do you see it working out?

VOICE OF CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: Well, obviously, the way it has happened doesn't look fantastic in that the North Koreans went into their very tough negotiating mode. And now, you see a deal being hammered out. But the truth of the matter is, that this is a deal that is being worked out by Ambassador Chris Hill and his associates of the State Department for many, many months now and has come because the North Koreans, as you know, shut down Yongbyon and started to disable it more than a year ago, fourteen months ago. And the negotiations were proceeding in a successful manner with various stumbling blocks along the way until this summer when President Bush took them off the terrorism list and they had first given their verification, their nuclear declaration.

And then, as you heard, there seemed to be a struggle within the U.S. administration between those who were moving forward on a pragmatic way and others, some of the more hard-line members of the U.S. administration, according to officials, who briefed me saying they wanted any where any time inspection in order to verify the deal. Now, this was apparently a deal breaker. Because then the North Koreans said, no. They vault as the notion of Iraq style inspection.

Many many officials both inside the U.S. administration and the IAEA said the only way you can really verify knew nuclear disarmament is by mutual consent or by consent of the host government. And now, you can see that according to the State Department which read out the agreement, that the experts will have access to all sites, he said, with mutual consent the verification will carry on. So it looks like they were able to get over and get past what was causing a major stumbling block in the negotiations and move on.

So, you see, they are going to be able to verify North Korea's plutonium stock piles. And it also it says here it's uranium enrichment activities. That is also a step forward. Because there was a lot of questions about uranium enrichment, North Korea saying it didn't have any. It wasn't doing any. It didn't want that to be a part of the original deal. So this looks like to be a step forward as well.

Ant the IAEA will have a continued role. And U.S. technical experts are also there at Yongbyon and they presumably will have a continued role in the verification. But the real big story is that North Korea's enablement of - with the United States and other members of the six-party talks. Betty.

NGUYEN: All right. Christiane joining us by phone, a little bit of breakup there in the audio lines but we do appreciate that insight. And so again, there has been a deal to take North Korea off the terrorism list. But it's the deal is that if North Korea doesn't live up to its end of the bargain, it could be put on that list once again.

In other news today, abuse of power. Mixed results in Alaska on the so-called troopergate controversy. Governor Sarah Palin responding this morning.

(COMMERCIAL BREAK)

HOLMES: Well, to the campaign trail now and a whirlwind tour for Barack Obama today even though it's confined to the city limits of Philadelphia. He has already made two stops around town this morning for what they call little mini rallies. Obama is making a total of four stops in that city today.

John McCain meanwhile has a couple of events in Davenport, Iowa on this schedule today. He was in Wisconsin yesterday. I am just listening to the music. The McCain campaign is trailing in both of those states.

NGUYEN: Look at that maverick.

HOLMES: Ahhh.

NGUYEN: "Top Gun."

HOLMES: Thank you for making the connection. I was struggling with it. Well, McCain was in the midwest though. Sarah Palin was also in Pennsylvania. OK. She doesn't get her own music. I thought we have something for her as well. She was in Johnstown for a rally last hour. You saw some of that last hour in CNN. She will head on to Philadelphia where she will take in a hockey game, not just as any spectator. She is dropping the puck for the Philadelphia Flyers home opener.

NGUYEN: Well the McCain-Palin campaign does have one big distraction this weekend. A bi-partisan Alaska investigation found Governor Palin abused her power and violated state ethics law trying to get her former brother in law fired from state police. But the report found that she broke no laws when she fired his boss, the public safety commissioner. Now while boarding a bus for her first event this morning, Palin responded to questions saying she did not abuse her power and did nothing unethical or unlawful. CNN's Randi Kaye has more on the case.

(BEGIN VIDEOTAPE)

RANDI KAYE, CNN CORRESPONDENT (voice-over): This all began three years ago with an ugly divorce between Alaska state trooper Mike Wooten, and Sarah Palin's sister. The governor says Wooten threatened her family. He even suggested he would kill her father.

MIKE WOOTEN, ALASKA STATE TROOPER: I didn't threaten him and I've never threatened anyone, for that matter.

KAYE: The Governor says public safety commissioner, Walt Monegan was fired because of budgetary reasons. That and more was repeated in documents released late Thursday. The McCain campaign's attempt to head off the legislative council's findings. It insists, "Monegan's dismissal was a result of his insubordination and budgetary clashes."

WALT MONEGAN: I believe I was fired because I did not fire Mike Wooten. Monegan told CNN he was never directly told to fire trooper Wooten. Palin had conceded her staff expressed concern about Wooten to Monegan but she insists as governor, she did not pressure anyone to fire Wooten. Palin recently told ABC that her husband, Todd Palin, had met Monegan but did not pressure him to fire Wooten.

GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: He did, very appropriately, though, bring up those concerns about a trooper who was making threats against the first family.

KAYE: The McCain campaign said that "Sarah Palin did not learn of these contacts by Todd Palin until August of this year, even though Todd Palin met Monegan in her office soon after she became governor.

(END VIDEOTAPE)

KAYE: Is this a political circus or a partisan payback as some republican lawmakers claimed. Whether it is or isn't, it surely is an embarrassing distraction, one the McCain campaign trailing in the polls doesn't need this close to election day. Randi Kaye, CNN, New York.

NGUYEN: And you can hear more from the candidates this weekend on CNN's "Ballot Bowl." Extended excerpts from the campaign trail, the candidates unfiltered in their own words. It is "Ballot Bowl" starting at 2:00 p.m. Eastern Saturday only on CNN.

HOLMES: Well this financial crisis may drive GM and Chrysler into each other's arms. A corporate marriage to combine two iconic brands drastically alter Detroit. GM stock has tumbled to near dollars a share. It's credit rating cut to junk and its cash quickly running out. Reports by the "New York Times" and "Wall Street Journal" say all talks between GM and Chrysler are preliminary. A GM-Chrysler combination would control a third of the U.S. market.

NGUYEN: So what about Ford. Well a report in today's "Wall Street Journal" says it may sell some or all of its stake in Mazda. Ford owns about one-third of the Japanese automaker and selling Mazda would give Ford something that's hard to come by these days. That being cash.

HOLMES: Yes.

NGUYEN: I could use a little of that.

HOLMES: It is hard to find cash these days, isn't.

Back to the campaign trail. Senator Barack Obama is taking aim at McCain's answer to the whole mortgage crisis.

So, truth or pot shot, find out from our truth squad.

(COMMERCIAL BREAK)

NGUYEN: In politics now, Barack Obama is going after John McCain's plan for the mortgage crisis saying it adds to the burden on taxpayers. The question is, is this true? Well Josh Levs from the CNN truth squad is here to sort it all out for us.

All right, fact or fiction?

JOSH LEVS, CNN CORRESPONDENT: Fact or fiction. That's what we're digging in right now. Actually CNN kind of plays a roll in this one. You are going to see in this clip of an ad from Barack Obama right now one of our articles. Let's take a look.

(BEGIN VIDEO CLIP)

ANNOUNCER: On Tuesday, an announcement.

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: I would order the Secretary of the Treasury to immediately buy up the bad home loan mortgages in America.

ANNOUNCER: On Wednesday, the details. McCain would shift the burden from lenders to taxpayers guaranteeing a loss of taxpayer money. Who wins? The same lenders that caused the crisis in the first place.

(END VIDEO CLIP)

LEVS: So is that accurate? Is that an accurate portrayal? With things said. We are looking at this question, would McCain's plan shift the burden from lender to taxpayer. You saw in that ad the Obama campaign is showing this article right here from cnnmoney.com. Let me explain what it's all about. We have a graphic here to break it down to pretty simple terms.

Under McCain's plan, the government would buy up some troubled mortgages at their full value. And that means that lenders would not take a loss. The government would then renegotiate those mortgages so eligible homeowners would pay rates based on their homes current reduced value. McCain previously supported a plan under which the government would renegotiate with lenders. And that meant that lenders would have to take a loss. His economic adviser says that McCain now believes that would take too long and that in order to move quickly, the government should pay the entire value of the loans and get that process going right away.

And the McCain campaign acknowledges that that does mean that taxpayers are paying more. So our verdict is right here for you on this one, true. The plan would shift the burden to taxpayers instead of lenders. So Betty, that's what it boils down to. Of course we've got even more details about this on CNN.com. Just click the fact check button at the top and you can read all about it.

NGUYEN: So what the candidates say are true?

LEVS: Once in a while, that actually happens. It does happen.

NGUYEN: I'm not saying that I am shocked but I am glad to hear it. Thank you, Josh.

HOLMES: Well, do Americans still have confidence in their country? Tonight, CNN contributor Bill Bennett goes beyond the politics. You can see him tonight on CNN at 6:00 Eastern.

NGUYEN: Real people talk about their mortgage troubles at the dinner table.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: They did not tell us. They did not make it clear it would start adjusting after two years. I would have stopped it at that point and say, hold up, we need to do something else.

(END VIDEO CLIP)

NGUYEN: A conversation with the Johnson family, struggling like so many others right now. We're going to talk to our Tony Harris next.

(COMMERCIAL BREAK)

HOLMES: It's 11:35 here on this Saturday morning. First, evangelist, Reverend Billy Graham, has been hospitalized. A hospital spokesperson says Graham tripped and fell over his dog actually at his North Carolina home. The 89-year-old suffered bruises, no broken bones, though. He is expected to be released later today.

And new this morning, the U.S. State Department says it plans to drop North Korea from a terrorism black list as a return for North Korea agreeing to a plan to inspect its nuclear facilities. This decision is drawing criticism from some conservatives who think the U.S. is rewarding North Korea for bad behavior.

Also, finance officials from the world's largest economic powers met at the White House this morning. Afterwards, President Bush said the group of seven countries are doing all they can to rein in the financial crisis.

NGUYEN: Let's talk about the economy because the Johnsons of Douglasville, Georgia, they were a middle class family until the financial crisis hit. CNN's Tony Harris met up with them over dinner this weekend and talked about the struggles.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: We have got a feast today.

TONY HARRIS, CNN CORRESPONDENT: Knock, knock, knock, Johnson family. Hey, hey, hey.

WAYNE JOHNSON, STRUGGLING WITH BILLS: How are you doing?

HARRIS: Wayne.

W. JOHNSON: Tony.

HARRIS: Wayne.

W. JOHNSON: Tony. I'm Wayne.

HARRIS: How are you, man?

W. JOHNSON: All right.

HARRIS: All right. Beautiful. Beautiful. We're going to do a feast.

(CROSSTALK)

Sarah (ph), can I take the salad in? The salad is all good?

UNIDENTIFIED FEMALE: The salad is ready.

UNIDENTIFIED MALE: Amen. Father we thank you for allowing us to come together to share this blessing.

HARRIS: All right, look, I want to get down to some brass tacks here. And you're a family right now going through some things. Is that correct?

SANDY JOHNSON, STRUGGLING WITH BILLS: Yes.

HARRIS: Can we say that?

S. JOHNSON: Yes, yes.

HARRIS: So what's happening with your business right now, Sandy?

S. JOHNSON: It slowed up. It has slowed up tremendously, especially with the gas prices.

HARRIS: You have a cleaning business.

S. JOHNSON: I have a cleaning service. And we do cleaning -- we clean houses.

HARRIS: So have you actually lost clients?

S. JOHNSON: Yes. They're not letting me go because I'm not doing a good job, but it's because of the economy.

HARRIS: You had to let go some of your people?

S. JOHNSON: Yes. That's one of the reasons why Sandrika (ph), once since she graduates -- she was supposed to start school, but she's going to hopefully start in the fall because I had to cut back on people so that she could help me. And I kind of -- give her a little lower pay.

HARRIS: Well, Sandrika, that's not what you had planned for your life.

UNIDENTIFIED FEMALE: Oh, no. But I don't mind. That's my mom.

HARRIS: Well, and Wayne, how long have you been driving trucks?

W. JOHNSON: Since 2000.

HARRIS: 2000. So what's the last -- say -- year been like for you?

W. JOHNSON: We're on call six days a week, but with the economy like it is, we're only working like four days a week.

HARRIS: We're talking about at least a good year, 18 months, where the economy really has been sliding.

W. JOHNSON: Well, with the prices of fuel going up and trickle that down. When fuel goes up, food prices go up. And -- you know -- medical bills and all the other added-on expenses, it's just made it really hard.

HARRIS: Are you behind in your bills right now?

S. JOHNSON: Yes.

W. JOHNSON: Yes.

HARRIS: Talking about behind in the mortgage? Or are we talking about behind in the car payments?

S. JOHNSON: The car payments. And because our -- we decided that the house was more important because we needed to have somewhere to stay, can't stay in the car. So I told my husband, I will be willing to let my truck go back because we've got to continue to pay the mortgage to make sure it's paid on time.

We actually got caught up in the adjustable rate issue. HARRIS: No. You had one of those ARMs? That inflated --

S. JOHNSON: Yes.

HARRIS: Reset to a higher rate?

S. JOHNSON: Yes, and it actually --

HARRIS: What did it reset from? And how much of an increase in the reset?

S. JOHNSON: Well when we first got our house in 2005, it was -- the percentage was 7.5. Now the -- because we have an 80/20 -- we have two mortgages. The 80 now is -- it went up to 11.5.

HARRIS: 11.5. Excuse me -- geez, 11.5? Which is a difference of how much a month?

S. JOHNSON: We were paying at first like 700 something. So now it's like up to -- the first mortgage, was the 80, is at --

W. JOHNSON: 982.

HARRIS: To what extent do you fault yourself for not ultimately making the right call on that?

W. JOHNSON: Well, like I say, I was --

HARRIS: Did you put any money down?

S. JOHNSON: No.

W. JOHNSON: No.

(CROSSTALK)

S. JOHNSON: Can I answer, honey?

I think because we were excited, and it was our first home. We had just got married, so we were excited. We were excited.

W. JOHNSON: But even with being excited, I'm not going to enter into a loan that I can't pay for. We're talking about something you're going to be paying on the next 30 years of your life.

HARRIS: So.

W. JOHNSON: So you want to make sure that that is right. OK -- what they told us -- that we were in a fixed rate. But they did not tell us and they did not make it clear that it would start adjusting after two years. Because I would have stopped it at that point and said hold up, we need to do something else.

HARRIS: So what are you going to do about the truck? Are you going to let it go?

How far behind are you?

S. JOHNSON: Four months.

HARRIS: Four months. Are they calling you?

S. JOHNSON: They're calling, and I think somebody showed up today.

HARRIS: Don't you need your truck for your business?

S. JOHNSON: Yes, for my business I do.

HARRIS: So what kind of debt are you looking at now?

W. JOHNSON: I would say $50,000.

S. JOHNSON: I'd say a little more.

W. JOHNSON: A little more?

S. JOHNSON: Yes.

W. JOHNSON: A little more than $50,000 in debt.

HARRIS: And that's excluding the house right now.

W. JOHNSON: That's excluding the house.

S. JOHNSON: That's excluding the house.

HARRIS: That's a big, big number for this family right now.

S. JOHNSON: It is, it is.

(END VIDEOTAPE)

NGUYEN: And get this. Things have actually gotten tougher for Sandy since Tony shot that piece. The repo man took her truck away on Thursday. She had to borrow $600 from her brother-in-law just to buy a used van and keep her cleaning business going.

HOLMES: A lot of stories, unfortunately, out there for a lot of families. That is just one of them. Tony Harris, thank you for that.

And back to the campaign trail, John McCain lashing out at Obama's health care plan. He says it is bad for small businesses.

NGUYEN: But is it true? Well our truth squad is on it, once again sorting out fact from fiction.

(COMMERCIAL BREAK)

HOLMES: The economic crunch putting a whole lot of new pressure on small businesses. And now John McCain says Barack Obama wants to add even more. Is that true, Josh Levs, of our truth squad, our facts squad, our kind of sort of the truth? Tell us please. LEVS: It's the truth squad, not the truthiness squad. Oh man, so you know a few minutes we were looking at an attack on the other side. Now, it is time for John McCain's turn. What he's doing is he's zeroing in on Barack Obama's health plan. And here is what he said.

(BEGIN VIDEO CLIP)

MCCAIN: Under his plan, he will find employers who don't offer health insurance to put their employees in government health care. He will fine them. Do you know what that does? That costs jobs. That costs jobs for small business people in America.

(END VIDEO CLIP)

LEVS: Is that true? Is that the case? We have a graphic for you here. Obama's health plan requires employers to offer what he calls meaningful coverage or contribute to a national fund to help people who can't afford health care pay for it. That contribution would come from payroll tax. So it's really more of like a tax than it is a fine.

In fact, John McCain's own Web site refers to what Obama's plan is in that case as a tax, not a fine. And Obama says small businesses are actually exempt. So the CNN truth squad verdict on this one is that this one is false. And again, you can get more details on CNN.com.

Let's zoom in quickly on the board behind me. We have an explanation here. Everything having to do with the plan and our verdict. And if you want to read anymore about our other fact checks, just go to the CNN political ticker and you will be able to see those all day long. We keep them coming at you throughout the rest of the campaign so you can sort fact from fiction at any time. T.J.?

HOLMES: All right, we appreciate it. That was a true one this morning, we were happy to get that as well. All right Josh, thanks so much.

NGUYEN: All right, let's turn to the weather right now because something is brewing by the name of Norbert. Reynolds Wolf is watching it. Hey there, Reynolds.

(WEATHER REPORT)

HOLMES: All right Reynolds, we do appreciate you. Stay here with us. We are almost out of here. We have a few minutes left. We are going to take a quick break here. We're going to talk about the recruiting impact on the economy right now. The tough times actually can be a good thing, as sad as it is to kind of say that for the military. We will talk about that. Stay with us.

(COMMERCIAL BREAK)

NGUYEN: Well, the lure of a steady paycheck. An important recruiting tool for the military in these tough times possible bringing an end to other enlistment incentives. The story now from senior Pentagon correspondent Jamie McIntyre. (BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Raise your right hands and repeat after me.

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT (voice-over): At the Baltimore processing station, a new crop of recruits takes the oath before shipping off to boot camp. Most made their decision to sign up well before the current financial meltdown. But the bad times were a factor for David Whall, a former truck driver who's small business went under when the economy tanked.

DAVID WHALL, U.S. ARMY: I couldn't get any offers. And job experience in what I want to do and it's a stable income. Here I am.

MCINTYRE: Whall is 48. He can still join up because to help meet its goal the Army recently raised the maximum enlistment age to 42. And he gets credit for prior service in the Navy.

But to attract many of the 300,000 fresh recruits signed up this year, the Pentagon paid out hard cash. More than $750 million in bonuses. However, if two trends continue, violence drops in Iraq and the economy slides into depression, the military may not need as many incentives next year.

DAVID CHU, UNDERSECRETARY OF DEFENSE: What more difficult economic times give us is an opening to make our case to people who might not otherwise have. And to make our case fairly -

MCINTYRE: The Pentagon says some trends that affect the quality of recruits like high school graduation rates and teen drug use are not directly linked by the economy. But if more young people consider listing, then the U.S. military can be more picky. Jamie McIntyre, CNN, the Pentagon.

(END VIDEOTAPE)

NGUYEN: Well, the NEWSROOM continues at the top of the hour with Naamua Delaney.

HOLMES: Naamua, welcome, hello.

NAAMUA DELANEY, CNN CORRESPONDENT: Thank you very much, it's good to be here.

HOLMES: Glad you came up from downstairs at CNN.com.

DELANEY: Busy Saturday.

HOLMES: Always busy.

NGUYEN: So what's on tap?

DELANEY: We've got this massive voter registration drive that's turned up hundred of fake names, addresses and disconnected phones. Our legal guys talk about voter fraud plus the candidates are on the trail. The best political team on television brings it to you live. HOLMES: The best political stuff -- we have to say that a lot here.

DELANEY: You do. I've got the lingo down.

HOLMES: Naamua Delaney, good to see you with us.

DELANEY: Good to be here, thanks very much.

NGUYEN: Comedy and the campaign trail, "Saturday Night Live" finding the humor in all of the political wrangling. It's allowing you to laugh along during these serious times.

(COMMERCIAL BREAK)

NGUYEN: Just about everyone knows Tina Fey is dead-on as Sarah Palin and that's been comic gold for "Saturday Night Live."

HOLMES: With so much to make fun of, the show has been thriving in this highly charged presidential campaign. Here now is CNN's Alina Cho.

(BEGIN VIDEOTAPE)

CHRIS PARNELL, ACTOR: Good evening and welcome.

ALINA CHO, CNN CORRESPONDENT (voice-over): With Chris Parnell returning as moderator Tom Brokaw, Fred Armisen as Barack Obama and Darrell Hammond as John McCain, the stage is set.

TOM BROKAW, NBC NEWS CORRESPONDENT: They are a signal --

CHO: Remember those pesky time limits during the real presidential debate? Here's SNL's take.

FRED ARMISEN, ACTOR: One thing I absolutely promise --

PARNELL: Time's up!

DARRELL HAMMOND, ACTOR: My friends...

PARNELL: Senator McCain, your time is up.

CHO: How about this moment from the real debate?

MCCAIN: You know who voted for it? Might never know. That one.

CHO: Hammond's John McCain, well, he sees it this way.

HAMMOND: I would continue what I've done for 25 years which is to reach across party lines, something that pee pants over here would never even consider.

CHO: In its 34th season "Saturday Night Live" is hotter than ever. Ratings are up 50 percent this season. The show's premiere, its highest rated since 2001.

TINA FEY, ACTOR: Hillary Clinton who came so close to the White House and me, Sarah Palin, who is even closer.

CHO: And in the age of YouTube, this fake Sarah Palin/Katie Couric interview got more views than the real thing, more than 10 million to date. This election is very, very good for "Saturday Night Live." Just ask Seth Meyers, "Weekend Update" anchor and SNL's head writer.

SETH MEYERS, ACTOR: When you do something about politics it helps that everyone's paying attention and this is a very special election.

CHO: Not unlike 2000. The historic presidential recount was rich with material and this election --

Was that like a gift from the humor gods to have Sarah Palin?

MEYERS: It took an hour to realize and sort of find out who she and was what not. Obviously we had the gift of casting with Tina.

CHO: Tina is Tina Fey, of course.

FEY: Can I call you Joe?

CHO: And her already iconic portrayal of Palin.

FEY: Are we not doing the talent portion?

CHO: Has as one writer put it, all but defined the candidate. Executive producer Lorne Michaels says he's proud to be part of the process and maintains the show is not partisan.

LORNE MICHAELS, EXECUTIVE PRODUCER, SNL: You're not putting on anything because you have a serious point to make. You might have a serious point to make, but first and foremost it has to be funny.

(END VIDEOTAPE)

NGUYEN: I never get tired of seeing that.

HOLMES: They are doing well right about now. It's must-see TV every Saturday night.

NGUYEN: CNN NEWSROOM, must-see television as well continues now with Naamua Delaney. Hello, Naamua.

DELANEY: Hello there, thank you T.J. and Betty.