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LOU DOBBS TONIGHT

McCain Ridicules Obama's Economic Policies; ACORN Tries to Register Mickey Mouse; Cover-Up by Top Democrats?

Aired October 14, 2008 - 19:00   ET

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


LOU DOBBS, HOST: Thanks, Wolf.
Tonight, Senator McCain ridiculing Senator Obama's economic policies one day before they meet in a potentially game-changing presidential debate.

And tonight ACORN, the left wing radical group with ties to Senator Obama sparing no effort to sign up new voters, even trying to register Mickey Mouse. We'll have the report.

And also tonight a Democratic congressman who said he was putting ethics at the center of his campaign is now involved in a sex scandal. Was there a cover-up by top Democrats in Washington? We'll have the report. All of that, all the day's news and a lot more from an independent perspective, straight ahead here tonight.

ANNOUNCER: This is LOU DOBBS TONIGHT; news, debate and opinion for Tuesday, October 14th. Live from New York, Lou Dobbs.

DOBBS: Good evening, everybody. Three weeks before election day, Senator McCain launching an all-out assault on Senator Obama's economic policies. McCain declaring Obama's proposals return a recession into a depression. McCain presented a new economic plan of his own, one that includes a series of new tax cuts.

The Obama campaign immediately responding calling McCain's policies bad and his campaign erratic. We have extensive coverage tonight. We begin with Dana Bash reporting on the McCain campaign from Blue Bell, Pennsylvania.

(BEGIN VIDEOTAPE)

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Introduce her to Washington, D.C.

(APPLAUSE)

MCCAIN: We're going (INAUDIBLE) clean it up. We'll clean up that mess. We'll clean it up. It's -- the old boy quickly and decisively.

DANA BASH, CNN CORRESPONDENT (voice-over): He offered a new $52.5 billion plan targeting jobless voters by eliminating taxes on unemployment benefits which Barack Obama proposed a day earlier.

MCCAIN: It's unclear to me why the government taxes money it just sent you.

(APPLAUSE)

BASH: McCain is also going after those at or near retirement calling for taxes on up to $50,000 in withdrawals from IRAs and 401 (k)'s to be lowered to 10 percent and for investors who have lost money in the markets he would increase the deduction allowed from $3,000 to 15,000. For those who have made money, McCain would cut the capital gains tax in half.

MCCAIN: The hard-earned savings Americans should not be penalized by the erratic behavior of politicians.

(APPLAUSE)

BASH: McCain wasn't even done speaking when camp Obama slammed him saying "trickle down ideological recipes won't strengthen our economy and grow our middle class." Convincing voters to trust him on the economy is incredibly tough now for McCain. Here in Pennsylvania, Obama has nearly a 20-point advantage on the issue. It's why McCain's attacks on Obama may be less personal. But they are just as pointed.

MCCAIN: Even he can't turn a record of supporting higher taxes into a credible promise to cut taxes. Perhaps never in history have the American people been asked to risk so much based on so little.

(APPLAUSE)

BASH (on camera): Voters in this area fiscally conservative suburban Philadelphia, should be a prime target for McCain's new call to lower taxes. But locals say McCain has the same problem here he does across the country. That voters are so sick of President Bush, Obama may be a so-called risk they're willing to take.

Dana Bash, CNN, Blue Bell, Pennsylvania.

(END VIDEOTAPE)

DOBBS: Senator Obama stepping up his offensive. Senator Obama calling McCain's economic proposals very bad. Some of the harshest criticism so far of McCain. Jessica Yellin has our report.

(BEGIN VIDEOTAPE)

(CROSSTALK)

JESSICA YELLIN, CNN CORRESPONDENT (voice-over): Today, Senator Obama was getting out the early vote in the battleground state of Ohio.

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: Now remember, Ohioans, you can vote now, don't wait.

YELLIN: He got a welcome greeting by workers at this auto parts plant near Toledo.

(CROSSTALK)

YELLIN: Speaking to reporters, the senator had some harsh words for McCain's new economic plan.

OBAMA: There are some ideas that Senator McCain has put forward in the last couple of weeks that are very bad ideas. The idea, for example, of purchasing homes at full price from banks so that banks have no losses and taxpayers automatically have losses. That's a bad idea.

YELLIN: He also criticized senator McCain's proposal to slash capital gains taxes.

OBAMA: I don't know anybody, even the smartest investors who right now are going to be experiencing a lot of capital gains. That probably is not going to be particularly useful in solving the financial crisis.

YELLIN: On the stump, Obama's running mate offered even more biting criticism of McCain, accusing him of being erratic.

SEN. JOE BIDEN (D), VICE PRESIDENTIAL CANDIDATE: John has nothing new to offer. That's why I think you're seeing John McCain's campaign becoming so erratic, relying on stunts and negative ads instead of offering real solutions.

YELLIN: And painting McCain as an angry warrior.

BIDEN: The distinction could not be clearer. One guy's fighting for you and the other guy is fighting mad and attacking.

YELLIN: Both candidates lavished praise on the state of Ohio saying a win there could seal victory.

(END VIDEOTAPE)

YELLIN: And Lou, Barack Obama also renewed his call for what he's calling a rescue plan for the middle class. He says if Congress doesn't get one done in the next few months, he would make that his top priority if he were to become president -- Lou.

DOBBS: I notice the Obama campaign is using this word erratic a lot in reference to McCain. What is that a code word for? It's become a mantra with them, hasn't it? Erratic, erratic, erratic...

YELLIN: Yeah, it's a real buzz word. It is a buzz word with them. It's a way of questioning McCain's ability to be a leader, his judgment. They say that he is quick to anger and unpredictable. And they're using the word because pundits are also using it to describe his campaign these days. They think they're having some success selling that message.

DOBBS: Do you suppose that's just -- well, just a coincidental alliance, the campaign and the pundits?

YELLIN: That's for you to decide, Lou. DOBBS: Thanks a lot, Jessica. Jessica Yellin.

Senator Obama tonight is facing strong criticism for saying he wants to spread the wealth around. Obama told a plumber in Toledo, Ohio, who's concerned Obama would raise his taxes that, quote, "spreading wealth around would be good for everyone", using the tax system is what he was referring to. Obama's statement follows comments by his running mate, Senator Biden who said it would be patriotic for wealthier Americans to pay higher taxes. McCain supporters say it's a clear indication that Obama and Biden are pursing what they call a socialist agenda.

Well our poll question tonight is, do you believe that Senator Barack Obama told that plumber at a rally that the income tax system should be used to, quote, "spread the wealth"? Yes or no. Cast your vote at loudobbs.com. We'll have the results upcoming.

Both presidential candidates tonight preparing for the third and final presidential debate. And as we just reported, it takes place tomorrow at Hofstra University in Hampstead, New York. And joining me now to tell us what we can expect, our senior political correspondent Candy Crowley, our very own Ed Henry, on loan from the White House right now, covering there.

Good to have you both here. Candy, what's your take? What are we going to -- are we going to see the quote -- I love this expression -- "the game-changer".

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: I now hate that expression. I just think that what we have -- if we have learned anything from these debate, it is that everybody stays in their lane. Nobody is taking a risk. The rules of the debates are so strict that you can't get any you know sort of cross talk.

They are safe places. They are, as far as I'm concerned, they are ads. They are stump speeches for an hour and a half.

ED HENRY, CNN CORRESPONDENT: They used to be a little unpredictable. But they were frankly quite boring, the first two. They were sort of both shadowboxes...

DOBBS: Sort of boring?

HENRY: Sort of boring -- I have not had -- Lou, OK, boring.

(CROSSTALK)

DOBBS: Unbelievable.

HENRY: In the third one there's really no incentive for Barack Obama to do anything radical. He needs to just sort of stay the course and he is likely to stay the front-runner, so John McCain needs to mix things up. Today he told a St. Louis radio station that he will bring up William Ayers, the controversy about the 1960s radical. But you wonder if it's too little, too late. DOBBS: Well I suppose in part that depends on what he says about it. But if he does this sort of you know sorry to be intruding on your space kind of thing and want to have this discussion as a way to confront Obama, that's not going to play. You said he stayed in his lane. I thought the vehicle was parked for most of the debate last time.

CROWLEY: Well and the thing is that they kind of, at this point, they know where each other is coming from. I mean they get it. And this race was framed a long time ago. For Barack Obama, it's John McCain is George Bush.

DOBBS: Right.

CROWLEY: And for John McCain, it has mostly been, you don't know a thing about this guy. He's too risky to put in the White House. Everything has fit under that umbrella. And it's why you don't get -- I mean it's why it's so hard to make major changes to drive the poll numbers on the basis of a debate. It's not that it can't happen. But boy the odds are pretty thin.

DOBBS: You've got one candidate here, Ed, who said he's all about change, change you can believe in. The other is all about reform. I personally don't believe either one of them because they both are about as status quo as you can get. We haven't heard -- to me, I have this idealistic view that a presidential campaign should be in our political process, if nothing else is, one process towards which we reach a national consensus on important issues.

The important issues, border security, port security, free trade, outsourcing, off shoring production, the very security of our market system. None of this has been discussed. Public education, infrastructure spending, the impact of -- well I mean it just goes on and on. A host of critically important issues that have been pushed to the side for a process that everyone said was just too long through the primaries and has gotten even longer and worse, it seems to me, in the general.

HENRY: Well it's mostly boiled down to one issue, and that's the economy. And so a lot of the other issues you mentioned have been crowded out. And on the economy, you haven't really necessarily heard big ideas. You've heard a lot of nibbling around the edges.

And with John McCain, he struggled with the message on the economy. Over the weekend, you know we heard, he'd probably be rolling out some new stuff on Monday. Then it didn't happen on Monday. Well it happened on Tuesday. But it's been fits and starts. He hasn't really been able to quite figure out the calibration on what he's going to say or, frankly, the substance of it. He's finally now come up with some 401(k) changes to appeal to senior citizens, but again late in the game.

DOBBS: And one of the difficulties compounding McCain's position, which has been in my opinion an often hapless campaign, is now he's got a media that's just been for his -- that has been in the tank for his opponent throughout the past year. Right now it's very difficult to break through the noise and find any comfort, if you will, from any quarter of the national media no matter what. So I mean I don't know what we're going to see tomorrow, but if it's more of the same, somebody's going to be pulling their hair out, I would think.

CROWLEY: My guess is the day after, we will be where we were. I don't know. Look, something big could happen. We know that.

DOBBS: Ed, quickly...

(CROSSTALK)

DOBBS: Something big will happen.

HENRY: Well, Lou, something big may happen...

DOBBS: All right, we're going to take that. Thank you both for your honesty, which will -- which I don't think you know one could argue with even a centimeter, so thank you both. Appreciate it. Candy Crowley, Ed Henry.

Well up next, new details of a sex scandal involving a Democratic congressman in Florida. He replaced a Republican congressman who was in a sex scandal. What is it about West Palm Beach? We'll have that special report. We'll tell you what's happening with the Democratic leadership. A cover-up, perhaps?

And new charges, shocking charges in the controversy over phony voters and phony registration and the left wing activist group, ACORN, oh yes, and a presidential candidate. The very latest is next. Stay with us.

(COMMERCIAL BREAK)

DOBBS: We've been reporting here regularly on the fraudulent voter registration efforts that are under investigation, those efforts led by ACORN, the radical left wing activist group with ties to Senator Obama is being investigated in states all across the country. ACORN describes itself as an advocate of low and moderate income people.

The group has 400,000 members in 40 states. They claim they're nonpartisan. The 2008 budget for ACORN, by the way, and its subsidiaries is estimated to reach $110 million. That estimate by ACORN's founder, former chief organizer, Wade Rathke. ACORN isn't required, by the way, to disclose its contributors, but taxpayer dollars make up a significant share of its funding.

ACORN's tax exempt housing group is required to release its financial information, according to a study by the non partisan Consumer Rights League. The ACORN Housing Corporation received more than 40 percent of its funding from your tax dollars. The study alleges that ACORN failed to maintain a proper distinction between funding for its housing work and its aggressive political activities, which could constitute an illegal use of taxpayer money and an unlikely investigation.

Well ACORN's tactics continue to test the voter registration system and among the names on a recent ACORN voter registration form in Florida, well none other of course than Mickey Mouse. But election officials noticed the form and they tossed it out. It's just the latest incident pointing to a critical problem with voter registration drives being conducted by ACORN. Thousands of fraudulent voter registration forms that threatened the very integrity of this election. Bill Tucker has our report.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): Officials from ACORN defend their voter registration drives despite the thousands of fraudulent registration forms submitted. They point out, they've registered some 1.3 million legitimate voters. ACORN officials say most of the fraudulent registration forms that have been found were flagged by ACORN workers who identified the Boards of Elections where the problems existed. The officials also say there's a very big difference between voter registration fraud and voter fraud.

SCOTT LEVENSON, ACORN: Not only has there never been a conviction of voter fraud relating to these cases, there hasn't been an indictment of voter fraud connected with these cases.

TUCKER: However, the Board of Election in Cuyahoga County, Ohio, has referred one case of possible attempted voter fraud to the local prosecutor for investigation. The man registered multiple times at different addresses through ACORN. ACORN calls the attacks on its voter registration drives politically motivated. Conservative critics say no, the problem is fraudulent registrations keep occurring.

RICK BERMAN, EMPLOYMENT POLICIES INST.: This is not a one-time deal. This happens year after year after year. These are people who work for ACORN. If a company was accused of doing this kind of thing and their employees were continually violating the law year in and year out, there would be hell to pay.

TUCKER: One group which describes itself as liberal and made up of current and former ACORN organizers says it's time for change.

GREG HALL, TRUTH2POWER: Beyond that ACORN will not address anything, take responsibility for anything. We're hoping they're going to look another way and maybe say OK, yeah, we should change the way we operate. But I don't see it happening.

TUCKER: ACORN's troubles have apparently led Obama to clarify his relationship with the group.

(END VIDEOTAPE)

TUCKER: On the campaign Web site run by Obama, fightthesmears.com, he has changed the declaration from one that he never was an ACORN trainer or worked with them in any capacity to say that he was never hired to work as a trainer or organizer. The campaign now admits Obama did work on two occasions as a volunteer trainer in the late 1990s. And Lou, we talked to the campaign late today and they said change was made to be more precise, in their words.

DOBBS: Accurate, I think is the other word...

(CROSSTALK)

TUCKER: That would be another way to do that, yes.

DOBBS: And they spent -- we've got the final numbers -- over $800,000 in the primary.

TUCKER: 832,000, right.

DOBBS: And Andre Griffin (ph) reporting that in one meeting, he was at this nonpartisan group, more than half of the folks or half -- at least half the folks had on Obama buttons. This nonpartisan claim is sort of amusing, it's sort of amusing, isn't it?

TUCKER: The critics would say, we challenge you to find a Republican that this group has ever supported for election anywhere and you won't find them.

DOBBS: And I wonder do the Republicans have a group like this? I mean they've got 400,000 what they call families...

TUCKER: Right.

DOBBS: ... in, what, 100 cities and 40 states across the country. I'd say the Republicans have got a little issue here with ACORN, a little problem.

TUCKER: Well a lot of people call ACORN unique, saying there really isn't another organization like this, structured like this anywhere else.

DOBBS: Well it's going to make -- it's going to add to the interesting aspects of this election for the Republican National Committee. All right. Thank you very much. Appreciate it.

Up next, Democrats or Republicans? Who's likely to control the Senate and the House after this election? We'll see which party is now favored in a special report.

And a second political sex scandal from a single Florida congressional district. We'll have that story from Florida. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Well another violation of public trust in Florida's 16th congressional district. They should be getting used to it there. The current congressman in that district, Democrat Tim Mahoney, faces allegations of an extramarital affair, the payment of more than $100,000 in hush money and they're charges the House Democratic leadership or at least part of it was aware of the scandal. Mahoney succeeding Congressman Mark Foley, the Republican who resigned in a scandal involving text messages and congressional pages. All of this just three weeks before the election. Kitty Pilgrim has our report.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Florida Democrat Tim Mahoney campaigned as a champion of ethics in 2006.

UNIDENTIFIED MALE: Every generation has a responsibility to turning over to the next generation America that's more moral.

PILGRIM: With that campaign Mahoney won the congressional seat formerly held by Republican Mark Foley. Foley had to resign after his scandal in 2006. ABC News charges Tim Mahoney paid his former staffer and mistress $121,000 to avoid a sexual harassment lawsuit. Other papers have picked up the ABC report. ABC News says this audiotape is of Mahoney firing her from his staff.

UNIDENTIFIED MALE: You're fired. Do you hear me? Don't tell me whether it's correct or not.

UNIDENTIFIED FEMALE: Tell me why else I'm fired.

UNIDENTIFIED MALE: You know why else. I don't give (EXPLETIVE DELETED), OK, but if you say anything you wont get your last paycheck.

UNIDENTIFIED FEMALE: You're firing me for other reasons, but you are not man enough to say it.

PILGRIM: Republicans today were outraged.

REP. TOM COLE, CHMN. NAT'L. REPUB. CONG. CMTE.: We do -- are concerned about the Democratic leadership's involvement. They clearly knew something was wrong. We don't know what they knew when they did -- knew it and what they did about it.

PILGRIM: Congressman Rahm Emanuel, who was then chairman of the Democratic Congressional Campaign Committee, says he confronted Mahoney about the affair in 2007 not knowing the woman was a staffer. Emanuel says he told Mahoney to act appropriately because he was in public life. Emanuel says he had no further conversations on the topic.

House Speaker Nancy Pelosi called for an immediate investigation by the House Ethics Committee saying she just learned of the charges. The Democratic Congressional Campaign Committee says its current chairman, Chris Van Hollen, warned Congressman Mahoney to respond to allegations when he learned of them two months ago. The scandal comes one week before early voting begins in Florida.

DAVID WASSERMAN, COOK POLITICAL REPORT: Voters will not take kindly to the gross hypocrisy that they perceive in Tim Mahoney's appeals in 2006. The fact that he was a candidate of family values in his race against Mark Foley.

PILGRIM: Mahoney defended himself today, but did not take questions. REP. TIM MAHONEY (D), FLORIDA: I have not violated my oath of office, nor have I broken any laws, and I consider this to be a private matter.

(END VIDEOTAPE)

PILGRIM: Now the Mark Foley scandal of 2006 came just before the election. That cost the Republicans control of the House. Now this scandal comes even later in the campaign season and few are willing to predict that the Democrats will be able to hold their seat in November, Lou.

DOBBS: As we've become accustomed, the congressman showing up with his wife. I mean...

PILGRIM: Yeah. It wasn't even a real press conference. It was a statement with no questions. He was...

DOBBS: A statement with no questions. And well, that poor district, sixteenth district in Florida. I mean they could write a book. Well somebody will be writing a book. Thanks very much, Kitty Pilgrim.

Disturbing new statistics about police officers in Atlanta, Georgia in new officers. One in three of their new recruits has a criminal record, one in three. An investigation by the "Atlanta Journal Constitution" finding that arrests ranging from minor offenses such as shoplifting, if you consider that minor, to violent charges including assault.

Atlanta police officials say the need for more police officers has forced them to lower their standards in hiring new recruits. The "Atlanta Journal Constitution" also found 12 out of 33 officers, 36 percent admitted to being rejected by other law enforcement agencies. That third is a statistic that's holding up pretty well down in Atlanta.

Up next, the government's huge bailout of banks of financial institutions expanding. You won't believe how much it's going to cost you and me and our fellow taxpayers.

And will Democrats make sweeping gains in the congressional elections next month? We'll have that report. And working men and women who have lost their jobs, they could face a devastating new setback. That story and a great deal more straight ahead. We'll be right back.

(COMMERCIAL BREAK)

ANNOUNCER: This is LOU DOBBS TONIGHT; news, debate and opinion. Here again, Mr. Independent, Lou Dobbs.

DOBBS: Firefighters in California tonight are struggling to bring massive wildfires there under control. The wind swept blazes killing two people in Los Angeles in Ventura counties. Those fires have burned more than 25,000 acres. Thousands of people have been evacuated. Sixty-four structures destroyed. Firefighters are concerned those winds could push the fires toward more populated areas. Governor Arnold Schwarzenegger has declared a state of emergency in Los Angeles and Ventura Counties now.

On Wall Street today, stocks closed lower after yesterday's nearly 1,000-point rally on the Dow. The Dow today fell 76 points. Stocks had rallied earlier today after the government announced that $250 billion recapitalization of financial institutions.

The Bush administration says it will buy stakes in some of the nation's banks trying to stabilize the economy and market. The federal government is spending far more than $850 billion cost of that Wall Street bailout package. 850 includes of course the $150 billion in court.

Here's what the federal government is committed to so far: $200 billion to take over Freddie Mac and Fannie Mae, a $29 billion loan to support the Bear Stearns buyout, a $123 billion loan to AIG, $25 billion in loans to the auto industry, up to $300 billion in federal housing administration loans to refinance failing mortgages, $50 billion to ensure money market funds and the FDIC may need a $150 billion bailout as more banks fail.

15 banks have failed so far this year, 117 are now at risk. If you're counting, that's $1.75 trillion and that's certainly not all. The number will certainly go much higher.

And the federal reserve yesterday for its part said it would offer an unlimited amount of dollars at a fixed interest rate to the central banks of England, Switzerland, the European Union, they'll all use that money to provide short term loans to financial institutions trying to free up the credit markets, that doesn't include about a $900 billion that they're injecting into the banking system. So the numbers are beginning to add up to quite a consequential number.

Our unemployment rate stands at 6.1 percent. As the unemployment rate rises, more laid-off workers returning to their states on employment benefit programs for help. But as Lisa Sylvester now reports, states including the battleground states of Missouri and Ohio are on the verge of running out of money for those programs.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT: Out of work and out of luck, workers have been crushed by job layoffs. In Ohio, the unemployment rate is 7.4 percent. In the last year, the number of people seeking unemployment checks from the state has surged 63 percent. Helen Jones-Kelley, director of the state's Job and Family Services, says the state is paying out $34 million a week for unemployment benefits.

HELEN JONES-KELLEY, OH DEPT. OF JOB AND FAMILY SVCS.: This is really critical for people who are transitioning from jobs, who are finding themselves through no fault of their own, downsized or outsized and needing to call upon the government to assist them.

SYLVESTER: Ohio's unemployment picture is key. It is a battleground state in the presidential election. Struggling to keep up with massive layoffs, Ohio, Missouri, Michigan and New York could see their benefit funds tapped out by the end of this year. Six other states have less than six months' reserve, according to analysis by the national employment law project. The impacted states fall across the political spectrum. Those that lean republican and democratic. States that run out of money will likely have to turn to the federal government.

ANDREW STETTNER, NATL. EMPLOYMENT LAW PROJECT: It means they're going to have to borrow from the federal government. They'll have to repay that debt and pay interest, or the employers in their state may face federal tax penalties.

SYLVESTER: One option that is not on the table, cutting off benefits to workers. The states will continue to make sure workers receive their unemployment compensation.

(END VIDEOTAPE)

SYLVESTER: Ohio is one of those states that will likely have to borrow from the federal government. State officials anticipate the interest alone could be $300 million. State officials would prefer congress would provide an infusion of money as an alternative to a loan. Lou?

DOBBS: Certainly the precedent has been set in a number of areas. No one should be surprised that the federal government doesn't do exactly that. Thank you so much, Lisa Sylvester.

This year's election isn't just about winning the white house. It's also about who wins the house and the senate. Bill Schneider joins me now for more on the congressional and the senate races to watch in key battleground states.

Bill, good to see you. This is quite a race. How is it shaping up though in terms of the house, which every state is obviously up for election, a third of the seats in the senate? How is it looking for the democrats?

BILL SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Democrats are getting very ambitious.

Let's start with the senate. The democrats' ambition in the senate is to gain nine seats. They dare to think they could gain as many as nine seats, which would give them 60. That would mean that that would have a filibuster-proof situation. Right now they have 49 democrats and two independents who caucus with the democrats. But 35 senate seats are up. 12 of them now held by democrats, only one of those seats is in trouble, Mary Landrieu in Louisiana because it's estimated that 100,000 of her base constituents in New Orleans have left after hurricane Katrina. 23 republican senate seats are up. And as many as ten of those republican seats may be in danger of flipping to the democrats. The one most likely, Virginia, two former governors are running where the democrat Mark Warner is way ahead. Elizabeth Dole in North Carolina is in trouble because she's accused of losing touch with her constituents. The most interesting race probably is Ted Stevens in Alaska, that race will be decided not so much by the voters of Alaska as by 12 citizens of the District of Columbia sitting on a jury who are going to decide whether he's guilty or innocent of trying to conceal $250,000 in gifts. So at last citizens of the District of Columbia may be able to elect a senator.

DOBBS: Well I'm not sure that Ted Stevens would appreciate the humor but it looks like if Mary Landrieu was to lose in Louisiana, you're looking at a switch of about nine seats?

SCHNEIDER: That would give the democrats 60 seats, 58 seats, although two independents. And an interesting question, what does Joe Lieberman do?

DOBBS: Well, it's always interesting.

Let's turn to the house now. How does the house look?

SCHNEIDER: All 435 seats are up. Right now the democrats have 236. The democrats have an ambitious goal in the house as well. They would like to gain 20 more seats. That doesn't sound ambitious. But they gained 30 seats in 2006. To get 20 more seats on top of that would be a very big accomplishment indeed. I've checked what the experts are saying and they estimate -- this is Charlie Cook and Stu Rothenberg, that there are 17 or 18 democratic seats that could be taken by republicans, including Tim Mahoney's seat in Florida that we just heard a report.

DOBBS: He just moved into the problematic column.

SCHNEIDER: But the republican seats in trouble number between 37 and 48 which is a lot more than the democratic seats. One of those that's in trouble is Vito Fossella here on Staten Island. He's not running for re-election but he got in trouble when he was arrested for drunk driving back in May. He was bailed out by his mistress with whom he acknowledged he had a child out of wedlock some three years ago. It's a problem. And he's not running for re-election but that seat is almost certain to go democrat. We can conclude that hanky- panky is bipartisan. Not independents, they don't do that.

DOBBS: No way in the world. A pick-up of between 20 and 30 seats for the democrats in the house?

SCHNEIDER: Which would be quite an achievement mainly because they already gained 20 in the last election.

DOBBS: And I should say, if nothing else changes here. And if it were, all the experts would be proved correct.

SCHNEIDER: But the democrats are getting very ambitious.

DOBBS: And not without considerable support from the republicans, it appears.

SCHNEIDER: Yes.

DOBBS: Thanks very much, Bill Schneider. Coming up next, the candidates gearing up for the last presidential debate. Will this debate turn the campaign around for John McCain? I'll be talking with three of my favorite radio talk show hosts about that.

And what's happening to the government's Wall Street bailout? Is it starting to make sense? We'll find out next.

(COMMERCIAL BREAK)

DOBBS: Joining me now to assess what the government is doing to try to improve the state of our markets and this economy, William Isaac. He's the chairman of the Secura Group and former chairman of the Federal Deposit Insurance Corporation. Great to have you with us. David Smick, author of the "World is Curved, Hidden Dangers to the Global Economy." Good to have you with us.

Let's turn -- Bill, you've got to feel in some ways gratified that Henry Paulson is changing direction here. How do you feel about the recapitalization plan taking, apparently, pre-eminent emphasis in this bailout effort?

WILLIAM ISAAC, CHAIRMAN, SECURA GROUP: Well, I'm very gratified about that. I think it's really good for the country that they're shifting from buying bad loans to putting capital in, mainly because they get 10 to 1 leverage. For every dollar of capital they put in, they get $10 of lending capacity because banks lend 10 to 1 on their capital. If all they had done was buy loans, you just have 1 for 1 leverage. There's no leverage. It's really much better. I hope they abandon the loan purchase program altogether.

DOBBS: It sounds like --

ISAAC: It's not going to work.

DOBBS: David, it sounds like there's sufficient ego in this bailout team at treasury, I think we have seven teams working on this. There's sufficient ego in the treasury leadership team that they're going to stick with buying some of those quote, unquote, toxic assets, bad loans. Do you agree with Bill that they should just abandon that idea, get over their bad ego selves?

DAVID SMICK, AUTHOR, "THE WORLD IS CURVED": I think they seem to be playing it by ear. I think people would be stunned to know what happened this past weekend.

DOBBS: Tell everybody, it's a very important development and sets the stage for what ultimately unfolded here.

SMICK: People assume that there was this big coordinated move by the G-7. The Europeans came into town into Washington, D.C. for the G-7 meeting and they had -- they were suddenly shocked, freaked out because the British has guaranteed their system and provided this plan to inject enormous amounts of capital in there. And the Europeans suddenly saw capital drain out of Germany, France into London. So they immediately ran back to Frankfurt and Paris and elsewhere and said to their governments, we need to match that.

DOBBS: Because the UK took leadership.

SMICK: And now the treasury is in a similar situation. We have now a global competition for guaranteed capital. What's interesting about this situation now, Washington's become America's new financial center. Things are going to be run out of Washington. It's interesting.

DOBBS: It's interesting. It's also deeply, profoundly concerning as the united states is effectively guaranteeing the funding for central banks in Europe, as well as becoming a direct lender, Bill Isaac, to corporations, financial institutions that just weeks ago were outside the purview and the jurisdiction of the treasury department.

ISAAC: I'm deeply concerned to the extent that the government has gotten into the business of taking over the private sector lending needs. And that's a very bad direction we're headed in. I am very happy, though, with the plan that the treasury announced this morning, in broad strokes, at least. I think they need to recapitalize the banking system and need to have the FDIC step up and declare an emergency and protect the creditors of banks. What we didn't get today the FCC there to get rid of these accounting rules that have been destroying our system. I don't understand why they weren't there today.

SMICK: What I would say is, we saw a nearly 1,000-point jump two days ago. And I think that was -- that move was the market saying, okay, maybe depression is off the table and that's a good thing. But I think the move today, the market is now -- disappointing showing for a lot of people, I think the market is saying, how sure are we that this huge program is going to cause the banks to lend, a. And, b, $4 trillion in new debt that's being piled onto the industrialized world. What are the unintended consequences? As people look into this, they really begin to think, maybe this is a Japan scenario of the early '90s. There's a lot of curiosity about the details of this.

DOBBS: Bill, does this work -- do we need, setting aside the FCC question, setting aside the accounting rules on market to market, is there anything else required or do you believe the stage is set for recovery in the credit markets?

ISAAC: I think we've solved the problems we need to solve in our banking system, except for the market to market accounting. We really must do that. The FCC destroys capital faster than we can create it. The other thing I hope the treasury will do is abandon the rest of their loan purchase program because I think we need that money for fiscal stimulus for the economy. And also to give some homeowners some help that are going to lose their homes. Apart from that, I think we've solved the banking problem with these moves.

DOBBS: David?

SMICK: I guess keep your eye on the long-term bond markets because long-term bonds are -- their yields are staying up there. I predict they're up there because the market's not sure who's going to pay for all this debt and what the long-term implications are, this massive mountain of debt throughout the industrialized world.

DOBBS: I can give you a hint about who will be paying for it. Thank you very much, David and Bill.

Up next, new questions about Senator Obama's relationship with a left wing group accused of registration fraud. And the Obama campaign accusing McCain and the Republican Party of intimidating voters. Three of my favorite radio talk show hosts join me here next. We'll be right back.

(COMMERCIAL BREAK)

DOBBS: Joining me now, three of the best radio talk show hosts in the country. Here in New York, John Gambling, WOR; John, great to have you here. In Washington, D.C., Chris Plante, WMAL; Chris thank you for being with us, and Tom Marr of WCBM, thank you for being with us.

TOM MARR, WCBM IN BALTIMORE: Good to be here again.

DOBBS: Let's start with this race. John, is this race over for McCain?

JOHN GAMBLING, WOR IN NEW YORK: I don't think it's over, but tomorrow night he has to do something I've been calling for him to do for three months and that's put his handlers in a closet, lock the door, and walk out and be John McCain and stop worrying about walking through the Obama minefield, and talk to the American people one on one and say, hey, here's why I should be president and here's where we've got to go in this horrible situation we have surrounding us and forget about tiptoeing. It's time to get serious.

DOBBS: You think he's been tiptoeing?

GAMBLING: I think he's been tiptoeing. I think he's been afraid of his shadow.

DOBBS: Do you agree, Tom?

MARR: First of all, I think the debate format has been absolutely terrible. Last week -- or week before last, it was the Tom Brokaw Show, and I think he's got to go right for the juggler, instead of telling people why he should be president, that's natural, the national security, he ought to be telling them why Barack Obama should not be president, and he should be speaking to specific states, it's about the state of Ohio, it's about the state of Florida, and he's not that far behind, but a national poll means nothing. It's the polls that count in various states. I think he can still pull it out, but he's got to get tough, take the gloves off. We're in a street fight here. The democrats show up with their brick bats, their brass knuckles, and the republicans show up with their boxing gloves on and the Queensbury rules. That's got to go out the window.

DOBBS: Chris, Tom's view is a little bit the opposite of what Congressman John Lewis was saying about the rules for John McCain. I mean, this is -- this has been a peculiar campaign, but this debate tomorrow, Chris, do you believe that John McCain can get sufficiently fired up? Is there enough fire in his belly to go after McCain and make a real impression on the voters?

CHRIS PLANTE, WMAL IN WASHINGTON: He hasn't demonstrated that recently. I hate to agree with your guests, but they're both right. It's time they stopped walking on egg shells.

DOBBS: They're good guys, that's okay.

PLANTE: Every time McCain starts to talk, every time Sarah Palin starts to talk, they're vilified, demonized, called racists, they have to sort of punch their way through that, and they have to come out. If they're going to pull this out, and at this point I think we're talking about pulling it out, they have to really go to town.

Both of your other guests are absolutely correct. It's time to stop playing around and being polite. It's time to go after Barack Obama where he's vulnerable, and he's vulnerable in an awful lot of areas. He's got to ignore the "New York Times" and ABC News. He has to start playing tough. You know, this is big-league ball, and we have to stop playing by it's not just marques of Queensbury, it's the rules of political correctness and if the republicans and McCain stays inside of the lines on the rules of political correctness, they're going to lose on November 4th.

DOBBS: We'll be back with our panel of terrific radio talk show hosts here in just a moment.

But first, coming up at the top of the hour, Campbell Brown, no bias, no bull, what are you working on tonight?

CAMPBELL BROWN, CNN ANCHOR: Lou, I think you're here. Am I here or here?

DOBBS: You're right here.

All righty.

BROWN: Lou, are you there?

DOBBS: I'm here, are you there? Well, they're not there. Apparently they're not quite ready, but they will be. They'll be coming up at the top of the hour. Campbell Brown, with no bias, no bull, no sound, either.

Join me, a reminder please, on the radio Monday through Friday for the Lou Dobbs show. Tomorrow my guests will include Congressman Tom Penny of Florida, who wants General Mukasey to investigate A.C.O.R.N., and please go to loudobbsradio.com to get your local listings for the Lou Dobbs Show on the radio.

By the way, that no bias no bull show coming up at the top of the hour will have sound, I guarantee it, along with Campbell Brown. We'll be back with our panel in just a moment. Stay with us. (COMMERCIAL BREAK)

DOBBS: All right. A.C.O.R.N., the left-wing activist group, about 400,000 families and members across the country, the county board of elections calling for an investigation of them there in Cleveland. What's your reaction?

GAMBLING: I think this thing is just the beginning of a setup for a legal contest, no matter what happens in this election. I think this is just -- somebody's just laying the groundwork to just to bog this whole thing down. If it's anywhere near close, this will be the go-to state and the go-to problem.

DOBBS: What do you think, Tom?

MARR: I think that A.C.O.R.N. is to fair elections what the late Frank Purdue was to chickens - deadly but I think the more important issue right now is what Jessie I have a scheme Jackson had to say overseas and here it is right here for people to see, when he said the first thing that will be done in a Barack Obama foreign policy is not to put Israel first, which every administration in recent time has done, and for good reason, Jessie, and then he said -- Jessie Jackson did, and he knows a little more about foreign policy and Barack than he does about surgery, and then he said -- Jackson said designists have been running American foreign policy, along with the tape of the head of the tan clan Lou Farrakhan says Barack Obama was the messiah, and now we know although it's not getting a great deal of press in the national media, that Barack's Muslim outreach director, the new one just had a quasi-secret meeting with some pretty unsavory Muslim characters who will not condemn Hezbollah and Hamas in Springfield. What about that, Barack? Why don't you ask of John McCain to answer those questions?

DOBBS: You're making a pretty good assumption here, Tom, that Jessie Jackson knows what -- you know, this is a man that's going to lift part of his manhood from him --

MARR: Yes, but he --

DOBBS: I'm not sure how close they were.

MARR: He does talk about him. He is, by the way, lives in the neighborhood along there with Farrakhan and does say he's a member of the family. The son is actively involved in the campaign. It's a very serious issue.

PLANTE: McCain has that go after the relationship with William Ayers and Bernadine Dohrn, has to go after all these notorious relationships. The mainstream news media for the most part is sweeping it under the rug. The relationship with Ayers is much more significant that the "New York Times" would have you know. Bernadine Dohrn worked with Michelle, you've got the Tony Rezko sitting in prison scenario. You've got all of these shady characters.

DOBBS: Why in the world of this campaign with McCain, is he so sanctimonious that he doesn't want to -- GAMBLING: He scared to death.

PLANTE: They're walking on egg shells, why are they not going after A.C.O.R.N.? I love the Frank Purdue comparison, but this has to be brought home to the people. This is a terrible tragedy in the making, and Barack Obama needs to be laid out there as he is, not as the press would like him to be.

MARR: And Chris, he has also got to go after the national media. They're so far into the tank for him, it's unbelievable. And it continues unabated at all major networks, all of them, and I'll say it again, including this one -- I didn't say it's major -- and it's even worse in some of the big city newspapers. And he's got to go right after them, too, and say it, and give them hell. The American people appreciate that.

PLANTE: It is. I see four years of scandals unfolding before our very eyes, no matter what happens here.

DOBBS: Well, speaking of scandals, Congressman Mahoney doing the 16th District, congressional district in Florida proud. I mean, the folks in Palm Beach County have got to get sick of this.

GAMBLING: They never disappoint. They never disappoint. We hear about this on a regular basis. How -- what's in the water in Washington?

MARR: No, no, he's referring all questions to Bill Clinton.

DOBBS: All right. Gentlemen, I think that's a good place to leave it. We appreciate it, and as always, good to have you with us. Chris, thank you. Chris Plante, we thank you. Tom Marr, thank you very much. John Gambling, thank you.

GAMBLING: Pleasure. Thanks, Lou.

DOBBS: Good to see you.

And tonight's poll results. Now, this is a squeaker -- 52 percent of you do not believe, as Senator Barack Obama told a plumber at a rally, that the income tax system should be used to spread the wealth. Now, that's interesting. That is still a victory for the income tax system, as it is now placed. You know, that wealth redistribution thing gets a little touchy for folks.

Time now for some of your thoughts. Rick in California said, "Lou, I'm a resident of California and an investor. I'll buy Governor Schwarzenegger's municipal bonds when he starts taking action against the illegal aliens who are financially running this state into bankruptcy."

We'll leave it with that thought. We thank you for being with us tonight. Please join us here tomorrow. For all of us, we thank you for watching. Good night from New York. Campbell Brown, no bias, no bull, starts right now -- Campbell.

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