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AMERICAN MORNING

Countdown to Final Presidential Debate: Strategy for the Candidates; McCain Calls Obama a Liar; Candidates Square off With New Economic Plans

Aired October 15, 2008 - 07:00   ET

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


JOHN ROBERTS, CNN ANCHOR: We are just crossing the top of the hour. And breaking news right now. A report that passengers stopped a possible acts of terror in the sky. It happened on a Turkish airlines jet on the way to Russia. Local media says passengers overpowered a would-be hijacker who tried to take control of the aircraft over Belarus. It was flying from Antalya, Turkey, on the southern Coast of Turkey to St. Petersburg.
A Turkish Airlines spokesperson told CNN that the aircraft is experiencing an "urgent situation." So far, no word if anyone was hurt on board or what the immediate status of that flight is.

Stocks around the world mostly lower this morning. In Hong Kong, stocks fell five percent. In London, the FTSE down more than three percent so far. That comes after a roller coaster session on Wall Street saw stocks end with a small loss. And right now, Dow futures are pointing to a lower open today.

Hurricane Omar is heading for Puerto Rico. Omar strengthened into a Category 1 storm, is expected to get even stronger. Omar already slammed into Aruba. It's expected to hit the U.S. Virgin Islands before heading toward Puerto Rico tonight.

A new effort to fight voter registration fraud in a key swing state of Ohio. The federal court said the state's top election official has set up a system to check the eligibility of thousands of new voters. Republicans brought the lawsuit on fears of fake or duplicate voter registration.

While the latest on the CNN electoral map shows Barack Obama with 264 electoral votes from states either safe or leaning toward him, that's just six shy of the total needed for election; 270 is the finish line. John McCain has 174 electoral votes.

Our Candy Crowley is looking at what both candidates need to do in tonight's final debate to win those critical states still up for grabs and she joins us now -- Candy.

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Kiran and John, something unexpected can always happen in these debates, but this year there has been more certainty. And one of the biggest certainties is that both these candidates are likely to talk most about the economy.

(BEGIN VIDEOTAPE) CROWLEY (voice-over): Trying to get on top of an issue that has crushed his campaign, John McCain rolled out a $52.5 billion economic plan.

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: If I'm elected president, I will help to create jobs for Americans in the most effective way a president can do this, with tax cuts that are directed specifically -- to create jobs. Create jobs and to protect your life savings.

CROWLEY: McCain's new initiatives would eliminate taxes for workers drawing unemployment, allow individual investors to write off up to $15,000 in stock losses and cut the capital gains tax on stock profits. There was as well casually for one of McCain's most loyal voting blocs, the over-60 crowd.

MCCAIN: Under the emergency measure I propose, we will also cut the tax rate for withdrawals from tax-preferred requirement accounts to 10 percent. Retirees have suffered enough and need relief. And the surest relief is to let them keep more of their own savings.

CROWLEY: The Democratic ticket spent the day double-teaming Ohio and McCain. Obama camped out in that critical state for debate prep said he doesn't know much about McCain's latest proposals but hasn't liked what he's seen so far.

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: There are some ideas that Senator McCain has put forward in the last couple of weeks that are very bad ideas.

CROWLEY: It is the kind of coolly, critical analysis Obama has made into an art form in presidential debates. His main goals Wednesday night remain, look presidential. Don't rock the boat. Joe Biden does the rocking.

SEN. JOE BIDEN (D), VICE PRESIDENTIAL CANDIDATE: The distinction could not be clearer. One guy's fighting for you, and the other guy's fighting mad! And attacking.

CROWLEY: For John McCain, the third and final debate is his last best shot at a huge audience of voters, many of whom have not been impressed with McCain raising the issue of Obama's relationship with '60s radical William Ayers who founded a group linked to several bombings in the Vietnam era.

McCain did not mention Ayers in his last debate. Some conservatives are urging him to bring it to Obama this time.

It's risky. It might hearten those who think McCain hasn't gone hard enough. It may likely turn off independents, who increasingly seem to be turning to Obama.

(END VIDEOTAPE)

CROWLEY: In an interview with KMOX Radio in St. Louis, John McCain seemed to suggest that he thought the subject of Ayers would come up tonight, but he believes it would come in question form from the moderator -- Kiran and John.

ROBERTS: Candy Crowley this morning. Candy, thanks so much.

Besides the economy, Barack Obama's relationship with Bill Ayers is also likely to come up in tonight's debate as she just mentioned. After Barack Obama hinted that John McCain did not have the guts to mention Ayers to his face, McCain said in that radio interview that it probably would come up tonight. Here's how he put it.

(BEGIN VIDEO CLIP)

VOICE OF SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Oh, yes, you know, I was astonished to hear him say that he was surprised for me to have the guts to do that, because the fact is that the question didn't come up in that fashion. So, you know, and I think he's probably ensured that it will come up this time.

(END VIDEO CLIP)

ROBERTS: Joining me now to talk more about this is Suzanne Malveaux. You know, McCain in the past couple of weeks really ramped up the criticism of Barack Obama, but in the last 48 hours kind of dialed it back just a little bit when it's seen that it wasn't polling very well.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: I'm sure.

ROBERTS: Does he really have to appear post-partisan tonight at the debate? Or, as some conservatives are saying, as Candy Crowley reported, he really has to take it to him?

MALVEAUX: Well, John, I talked to a lot of advisers and they essentially are saying that what McCain needs to do is simply be himself. That he needs to not to appear as the kind of angry man that some of the Democrats have characterized him and really appear to be kind of a happy warrior guy that we saw at the Republican Convention and the person who says that rallying cry, "fight for me, fight with me," you know, that we're actually going to change things.

What people say is that he needs to inspire folks tonight. That he needs to have some sort of vision, an economic vision. That he needs to talk about his faith in the country. That he needs to talk about bringing about the change that he has promised and that he really needs to go beyond what we've seen in the last couple of weeks.

ROBERTS: What about this idea if William Ayers, former member of the Weather Underground terrorist group in the 1960s, does come out? Patricia Murphy was telling us in the last hour that if it does come up, McCain should not bite on it. What are you hearing?

MALVEAUX: Oh, you know, I mean, he's going to bring it. If it does come up, he's obviously going to talk about it. It's something that they want to address. They believe that it's a character issue.

At least John McCain is talking about it that way. That he says this is a washed-up, old terrorist, it doesn't really matter. That this is an issue of honesty here. But a lot of people think that this has not worked for him over the last week or so.

The polls are showing that a lot of people have been turned off by this, that they want to hear more about what is he going to do as president and less about these associations, these attacks. It has not worked for him the last couple of weeks. A lot of people believe he should just move on.

ROBERTS: And according to some organizations and analysts, he's had a pretty good 36 hours focusing on this economic plan. So --

MALVEAUX: And there's a lot of anxiety around the economy. People are really paying close attention to what the candidates are saying about their plan.

ROBERTS: There's the understatement. Suzanne, thanks so much for that.

MALVEAUX: Thanks, John.

Don't forget to join the best political team on television for your front-row seats at tonight's final presidential debate live from Hofstra University on Long Island, New York, at 9:00 p.m. Eastern, right here on CNN.

KIRAN CHETRY, CNN ANCHOR: Well, we're "Minding Your Business" right now. It's time to fast forward to see what stories will be making news later today.

Federal Reserve Chairman Ben Bernanke speaking here in New York this afternoon. Bernanke has so far stayed away from recession talk. But the president of San Francisco's Federal Reserve Bank says the U.S. appears to be in a recession.

And how much will Americans cut back on their spending this holiday season? Commerce Department will release its November/December sales prediction in about an hour. Forecasts for slow sales have some stores already offering up their holiday discounts.

Also a couple of big banks will give Wall Street a status report this morning. JPMorgan Chase and Wells Fargo will release their earnings. Also this afternoon, we'll get results from eBay and that's what we're following this morning.

Still ahead, your job security and the balance on your 401(k). The experts who helped the candidates with their new economic plans are here to show us how the plans could directly affect you.

Last chance, McCain and Obama face off in their final debate tonight. Our panel of experts on what McCain needs to do to reverse his slide in the polls before time runs out.

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

(COMMERCIAL BREAK)

CHETRY: Welcome back to the "Most News in the Morning." The final debate between John McCain and Barack Obama takes place tonight at Hofstra University in Long Island, New York. And joining me now, Republican strategist and CNN contributor Ed Rollins as well as Democratic strategist Lisa Caputo. Good morning.

LISA CAPUTO, DEMOCRATIC STRATEGIST: Good morning.

CHETRY: Thanks to both of you. I'm sure you're eagerly awaiting this. This is the last time we're going to hear from the candidates as they're able to sort of talk about their economic plans and what they're going to do for the country, to millions of people and a lot riding on it.

We have John McCain down eight points in the latest CNN poll of polls. You've said that in the past that you believe he's been running a divided campaign. What does he need to get a clear message out there?

ED ROLLINS, REPUBLICAN STRATEGIST: Well, talking about the economy and talk about what he's being talking about the last several days will help him immeasurably. This is really the last shot that he's going to have. If he doesn't win this thing, he can't just tie this thing and lay out a plan which forces people to take a second look. It's going to be awful hard. He's being badly outspent in the closing weeks of the campaign. Sometimes people get frozen where they are.

CHETRY: I want to ask you about this, Lisa, because if you were advising John McCain, what advice would you offer him?

CAPUTO: Well, I'd tell him to start talking about what his plan is for the economy and that's where Barack Obama is actually beating him because he's laid out the specifics and McCain and his negatives have backfired certainly in the polls, because you see Obama starting to make inroads with independents and with men, which is -- is a big deal for him. So, I would tell John McCain to lay out his plan specifically for the economy. I'd offer --

CHETRY: He did yesterday.

CAPUTO: Yes, but he didn't -- he didn't address the number one issue facing middle-class Americans which is jobs. And he's got to get specific on that. He also needs to get, I think, a little more warmth into his -- into his touch. He's not connecting with voters at all on a personal level, and he needs to get away from the angry attacks. He's coming across as an angry, old man.

CHETRY: I want to ask you about this, Ed, because he did tell a Missouri radio station yesterday that he would bring up Obama's connection to 1960s radical Williams Ayers. Let's listen.

(BEGIN VIDEO CLIP)

VOICE OF SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Oh, yes, you know, I was astonished to hear him say that he was surprised for me to have the guts to do that, because the fact is that the question didn't come up in that fashion. So, you know, and I think he's probably ensured that it will come up this time.

(END VIDEO CLIP)

CHETRY: Should he do this? I mean, should he bring this up when some of the polling has shown that people are turned off by the negativity?

ROLLINS: Ayers is a very legitimate issue six, eight weeks ago. No one cares about it today, unfortunately. And, I think, for John, he needs to talk about the economy. He needs to appear like he's in charge. Basically talking about an association of a guy who was a terrorist 40 years ago and should be in jail is not very pretty relevant to most Americans.

CHETRY: I want to ask you about whether or not it's fair game and successful, Lisa, to attack judgment and character. In fact, John Kerry on the "Rachel Maddow Show" yesterday talked about how the negative attacks impacted his 2004 campaign. Let's hear what John Kerry said.

(BEGIN VIDEO CLIP)

SEN. JOHN KERRY (D), MASSACHUSETTS: We saw in '04 that attacks on your person, no matter how valid, the mainstream media deems them, if they're reaching people who have not made up their mind and that's all they hear, that has an impact.

(END VIDEO CLIP)

CHETRY: Could this hurt Obama with undecided voters if some of the talk about William Ayers and links to radicals and links to Reverend Wright hurt him?

CAPUTO: Well, I agree with Ed. I don't think it's an issue today, three weeks out. I will say this.

This is where the importance of a war room or the counterpunch that was revolutionized in 1992s presidential campaign is so key. And I think you can bet if McCain tries to go down this path, it will, a, backfire with voters and, b, you can sure bet the McCain campaign will counterpunch and counterpunch hard, and not let any unsubstantiated --

CHETRY: The Obama camp.

CAPUTO: Yes. And not let any unsubstantiated fact sit out there without a counterpunch.

CHETRY: All right. Well, we'll be watching tonight and then we'll get you guys' take tomorrow. It was good to see you this morning.

Lisa Caputo, Ed Rollins, thanks.

CAPUTO: Nice to see you.

ROLLINS: Have a good day. Take care.

CHETRY: Seized by the bank and sold to the lowest bidder.

(BEGIN VIDEO CLIP) UNIDENTIFIED FEMALE: It was listed for $109,900. Now it's listed for $45,000. It's the same house. It is a tremendous loss to the bank.

(END VIDEO CLIP)

CHETRY: Foreclosed homes going at bargain prices. But why are the banks failing to help struggling homeowners?

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

(COMMERCIAL BREAK)

ROBERTS: Seventeen and a half minutes after the hour. Welcome back to the "Most News in the Morning."

We are tracking extreme weather for you this morning as Hurricane Omar heads for Puerto Rico. The storm strengthened into a Category 1 hurricane and could get even stronger before it gets to Puerto Rico later on tonight.

Our Rob Marciano is monitoring the storm. He's in hurricane headquarters in Atlanta. And how bad is this going to be for folks there on the island?

ROB MARCIANO, AMS METEOROLOGIST: Well, if it takes the forecast track, John, it shouldn't be horrible, because it will be on the clean side of the storm. Here's the center of it. It's about almost a little less than 300 miles from Puerto Rico, and you kind of see the clouds going from southwest to northeast. That's where the upper- level winds are. That's where this thing wants to go.

So it's already starting to do that, northeasterly movement at seven. And the forecast track will take it just to the east of Puerto Rico but will slam some of the other Leeward Islands as it makes its way into the open Atlantic. But before it does that, it should gain strength to not only a Category 1 but a Category 2 storm. So, this is definitely one that's beginning to crank up.

We've got one overall, so we're watching that. It's cranking up just a little bit. It's tropical depression number 16. This could be our "P" storm letter.

As we go on through the rest of today, it's hugging the Honduras coastline. This thing should go west. So we got two storms out there and both of them should miss the U.S. and that's the good news there.

Meanwhile, temperatures are quite warm across the east. 86 in Nashville. Meanwhile, 56 degrees in Kansas City. Cool across the west, but still warm temperatures and low humidities out in the southwest, including southern California.

Critical fire danger again today. Not so much because of heavy winds but just because of the heat and the dry air. The low levels of humidity there. So, firefighters beginning to have a bit of an issue.

Winds will be a little bit lighter today, John, but tomorrow looks to be improving, so hopefully they'll get a hand on those fires. Back up to you.

ROBERTS: Any help they can get would be welcome. Thanks, Rob, so much for that. Appreciate it.

Nineteen minutes after the hour, John McCain says that Barack Obama did not tell the truth on campaign financing. So, is John McCain telling the truth? CNN's "Truth Squad" is on the case.

(COMMERCIAL BREAK)

CHETRY: Welcome back to AMERICAN MORNING. Some tough talk from John McCain on Barack Obama's fund-raising. Alina Cho heading up the "Truth Squad" is here to check it out for us.

Hey, Alina.

ALINA CHO, CNN CORRESPONDENT: Hey there, Kiran. Good morning.

You know, as we inch closer and closer to the election, the candidates are heating up the rhetoric. No surprise there. And something that keeps popping up on the campaign trail, John McCain essentially calling Barack Obama a liar. Take a listen.

(BEGIN VIDEOTAPE)

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Senator Obama didn't tell the truth to the American people when he signed a piece of paper back when he was a dark horse, that said he would take public financing if I did. That's his signature on a piece of paper. He wasn't telling the American people the truth when he told them that he would "sit down with John McCain."

CHO (voice-over): But is he right? Did Obama say he would accept public financing if McCain did? Well, public financing comes from that little box on your tax returns. If you check it, your three bucks help fund all this, roughly $85 million in public money that candidates are eligible to receive if they choose to accept it.

In return, the candidate is not allowed to raise or accept additional money for the general election. Election reform advocates say it levels the playing field and cuts down on the influence of campaign donors.

Last year, Obama agreed. A political reform advocacy group asked the presidential candidates whether they would forego private funding if their opponents agreed.

In an e-mail response, Obama said, "Yes. I have been a long-time advocate for public financing of campaigns." And in a February debate, still in the primaries, Obama said he would "sit down with John McCain to talk about it."

But Obama's campaign shattered fund-raising records. And in June, he said he would not take public financing, allowing him to raise unlimited funds. So, is McCain right?

MCCAIN: Senator Obama didn't tell the truth. He signed a piece of paper, sit down with John McCain.

(END VIDEOTAPE)

CHO: So, what's the verdict on this one? Well, the "Truth Squad" says this one is mostly true. Obama did not sign anything, but he did indicate that he would accept public financing if his opponent did the same. That was until he changed his mind after a flood of private donations.

And on the second point, while Obama did not meet with McCain directly to talk about the issue, members of the campaigns did meet. But, Kiran, they failed to reach an agreement.

Again, as I've been saying starting yesterday, we should direct our viewers to go to CNN.com/am. All of the "Truth Squads" are there, at least the most recent ones from this week. You can do a personal tally, find out how many trues, how many falses there are.

As we inch closer to the election, a lot of people are curious about this. Go to the Web site, CNN.com/am. We're back in the 8:00 hour with another "Truth Squad."

CHETRY: We look forward to it. Thanks, Alina.

CHO: You bet.

ROBERTS: Twenty-four minutes after the hour. Their plans, your money. From your 401(k) to keeping your jobs, two people who helped the candidates craft their brand new economic goals are here to explain how they could help you.

CHETRY: Fake forms --

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: You could see some where they used a phone book, including the apostrophe. You know, some --

DREW GRIFFIN, CNN SPECIAL INVESTIGATIVE UNIT CORRESPONDENT: Went down in the phone book and just copied it verbatim.

(END VIDEO CLIP)

CHETRY: Drew Griffin confronts the group accused of filing thousands of bogus voter registration applications.

(BEGIN VIDEO CLIP)

GRIFFIN: Wouldn't ACORN like to run a nice, clean, smooth voter registration drive?

(END VIDEO CLIP)

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

(COMMERCIAL BREAK) ROBERTS: Welcome back to the "Most Politics in the Morning." We are counting down to the final debate night in America. John McCain and Barack Obama will face off tonight for the last time before Election Day at Hofstra University on Long Island, New York.

Both candidates have new economic plans on the table. They will affect anyone with a 401(k) retirement account which covers just about all of us, at least those of us who are working.

Joining me now from Chicago is Austan Goolsbee. He's Senator Obama's chief economic adviser. And from Arlington, Virginia, Douglas Holtz- Eakin, senior economic adviser to the McCain campaign.

Gentlemen, good to have you both on. Austan, let's start with you. Part of Senator Obama's plan would eliminate the penalty on withdrawals of up to 15 percent of a person's 401(k) up to a maximum of $10,000. The McCain campaign says that that would see a flight of capital from the market potentially. What do you say?

AUSTAN GOOLSBEE, OBAMA ECONOMIC ADVISER: Well, it was unbelievable that the McCain people said that and then three sentences later proposed something that would lead to a vastly larger flight of capital from the market.

Senator Obama recognized that we are in a hardship situation and just as the law now allows very specific hardship exemptions for withdrawing without a penalty, it's clear that this is a much broader problem and so we ought to have a temporary solution of that point.

ROBERTS: Doug, what about what Austan just said? He's talking about having the capital gains tax and investments that people have held from more than a year over the next two years. Some analysts say that could lead to a flight of capital for the market.

DOUGLAS HOLTZ-EAKIN, MCCAIN ECONOMIC ADVISER: Well, the provision is for next year 2009 and the year after. So it's an incentive for investors to hold. There's a requirement that you have a holding period of at least one year to get this reduced rate. This is an attempt to build some confidence in markets, get investors in and restore the value of assets that are held by pension funds all across America in addition to the IRAs and 401(k)s.

ROBERTS: But would that -- would that just be a temporary fix, though, because people wanted to take advantage of that reduction in capital gains, you would think logically they would want to cash in some of those investments?

HOLTZ-EAKIN: Well, I think the point in which it becomes a pressure to cash in becomes toward the end of 2010, where we're facing a large tax increase. And so, there'll be pressure on the Democrats in Congress to not have that tax increase and keep it in the market.

ROBERTS: Austan, let's talk of another big problem that people face and that's holding on to their homes. Senator Obama has proposed that 90-day moratorium on foreclosures. But critics complain that without additional measures to help people refinance their mortgages, then what you're really doing is you're just kicking the can down the road. You're just prolonging the problem.

GOOLSBEE: Well, no, I don't agree. It wasn't a blanket 90-day freeze on foreclosures. This is as a reciprocity condition for lenders that receive billions of dollars of hand-out from the government as part of the rescue. They would agree that for people living in their homes, so no speculators, and for people making good-faith attempt to make the payments on their mortgages, these are people that are likely going to qualify for a restructuring program through the government. And so, it doesn't make any sense for the lenders to be able to go down and throw them out of their homes quickly before the people would qualify for restructuring.

ROBERTS: And, Doug, what about Senator McCain's plan to help people stay in their homes through mortgage purchases? People say that part of the problem with it is, is that you would spend some of that $300 billion or a large part of it buying up mortgages at face value that weren't worth as much as you were paying. What sense does that make?

HOLTZ-EAKIN: Well, I mean, the only way to have a lender not get face value is to have people default. And we have 10 million mortgages under water, one of six mortgages in America. We have another three million or so who are distressed, delinquent. And this is a big problem and it is simply do the kinds of things that Senator Obama has suggested is too little, too late, quite frankly.

All the estimates are you'll get 400,000, 500,000 people from those measures. These are the fundamental problem facing U.S. economy methods. We need dramatic action to shore up housing values for every American home owner and this is an approach that can do it and do it quickly. And so Senator McCain thinks we ought to solve the big problems and it will stabilize the banking system at the same time.

ROBERTS: Obviously, there are going to be a lot of talk about this tonight at the debate at Hofstra. Doug, I know that you're going up. Austin, you'll be holding down the fort there in Chicago. So, maybe we'll get back with you tomorrow morning. We'll find out how it all went.

Douglas Holtz-Eakin and Austan Goolsbee, always good to talk to you. Thanks so much.

GOOLSBEE: Great to see you.

ROBERTS: Bye-bye.

If you've got any questions by the way for the campaigns about the economy or any other issue, send them to us at am@cnn.com and we will pass them along to our guests and our panel members as well.

CHETRY: Well, it is 7:30 here in New York and we had some breaking news this morning that we're finding out new details about. This was an attempted hijacking apparently. And reports are that passengers stopped a drunk, would-be hijacker from taking over a Turkish Airlines' jet. It happened on the way to Russia. An airline spokesperson says the passenger was so drunk that he gave a note to a flight attendant claiming to have a bomb. No explosives were found and the plane is now scheduled to land on time.

Well, stocks around the world, mostly lower this morning. Right now Dow futures are pointing down. That comes offer another roller- coaster session on Wall Street. The Dow erasing a portion of the record gain on Monday.

A group that claims it signed up more than a million new voters is now facing allegations that many forms may be fake. Drew Griffin from "The Special Investigations Unit" is in Philadelphia. He's looking at the facts for us this morning.

Hi, Drew.

DREW GRIFFIN, CNN SPECIAL INVESTIGATIONS UNIT: Good morning, Kiran. You know, ever since the voter registration deadline ended for this November 4th election, I feel like I've been on a national tour looking at voter registration fraud across the country. In Philly, it's no different. And here in Philadelphia, they say it's the same group as everywhere else.

(BEGIN VIDEOTAPE)

GRIFFIN; The good news, there have been hundreds of thousands of new voter registrations processed in Philadelphia, including a vast majority of good, clean registrations from ACORN. The bad news, Philadelphia has already sent 1,500 obvious fraudulent registrations to the U.S. attorney to be investigated. Every one of them from the same group. ACORN

Is ACORN, a group that has been problematic in its organizing of these voter registration? Have you tried to work with them to explain to them?

FRED VOIGT, PHILADELPHIA DEPUTY CITY COMMISSIONER: Absolutely.

GRIFFIN: Why is -

VOIGT: I don't have an answers for you, OK?

GRIFFIN: All right.

VOIGT: We originally - this has been going on for a number of years. We have met with them. We have talked to them.

GRIFFIN: According to city officials, close to 8,000 applications turned in by ACORN are problematic, including the 1,500 already sent to the U.S. attorney. And officials expect the number to climb. Fred Voigt said so far his office is catching them, making sure no bad registrations lead to bad votes. But admits he has limited staff.

VOIGT: Are there going to be bad votes? Sure there are going to be bad votes. There are always bad votes. Or am I concerned this is a close election? Of course, I'm concerned it's a close election. But you have to weigh everything in terms of your capacity to find things out. GRIFFIN: Voigt says the problem is ACORN hires people desperate for money. Including drug addicts, homeless, recovering alcoholics, even recent parolees who only get paid if they get signatures.

VOIGT: You just look at them and it was all in the same hand. You know, if you see some where they used a phone book, including the apostrophe. You know, some of the -

GRIFFIN: Went down in the phone book and just copied it verbatim right now.

VOIGT: Kitchen petition.

GRIFFIN: Kitchen? Sitting around the kitchen, fill out the petition.

VOIGT: Fill out the petition. That happens.

GRIFFIN: We went to ACORN's Philadelphia headquarters where a rally was taking place, telling volunteers the recent news about voter fraud was just another attack by the right wing and the media on the poor.

UNIDENTIFIED MALE: That is fraud! That is voter suppression. That is not news.

GRIFFIN: Jeanette Marcano (ph) is the local ACORN chairperson who acknowledges ACORN hires the less fortunate, but says there is nothing wrong with that. Why is the deputy city commissioner of Philadelphia telling me that ACORN is hiring recovering alcoholics, drug addicts, homeless people, who are so desperate to get money that they know that they don't make their quota, they just fill in any old name, that's what he's telling me?

JEANNETTE MARCANO, LOCAL ACORN CHAIRPERSON: That's not the point.

GRIFFIN: That's not the point?

MARCANO: No, that is not the point.

GRIFFIN: What is the point?

MARCANO: They do not deliberately go out there and see you're homeless, you are a recovering alcoholic. You are -

GRIFFIN: But has it presented itself as a problem to ACORN? Wouldn't ACORN like to run a nice, clean, smooth voter registration drive?

MARCANO: We have done that. Because if we had been able to register 85,000, above 85,000, good registrants compared to 5,000 suspect cards, we have done a good job.

(END VIDEOTAPE)

GRIFFIN: Kiran, last week I was in Indianapolis. Or actually, Gary, Indiana, where they had dead people being registered to vote. ACORN insists it trains its workers and doesn't have a big problem, but city officials here in Philadelphia beg to differ with that. Kiran.

CHETRY: Yes, and in its defense, ACORN has said it is actually identifying these problematic registrations in advance and trying to notify authorities. In Philadelphia ACORN said it flagged, I guess, 5,000 applications before the officials found them. Is that true?

GRIFFIN: Not according to city officials, it's not true. But they say that ACORN came in with a bundle of 1,100 that they thought were suspect. Actually, it turned out a couple of hundred of them were actually good voter registration cards that they processed and sent voter cards out to. So, there's a lot of disparities between the number that ACORN is getting and what city officials checking the actual records are getting. And that number, Kiran, is only going to grow as they continue to process more of these for this election.

CHETRY: All right, good reporting there, Drew. Also if you have concerns about possible voting irregularities in your state, call us. You can go to 877-GOCNN-08.

ROBERTS: 37 minutes after the hour. The economy "issue #1" this election season will be a big topic for tonight's debate at Hofstra University. Our Gerri Willis is logged on, plugged in and taking your questions about your money right now. What are you hearing, Gerri?

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Hey, John. One of our viewers want to know is now the right time to buy a car? You can still get your e-mail in CNN.com/am. Answers after the break.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JAY LENO, HOST "THE TONIGHT SHOW WITH JAY LENO": Actually, the financial news is starting to look pretty good this week. Yesterday the market was up almost 1,000 points. That was pretty good. Yes. That is the highest gain in the history of the stock exchange. In fact, the financial news looking so good, bankers are starting to be rude to customers again. So things are getting back to normal. It's a good sign. A good sign.

(END VIDEO CLIP)

ROBERTS: Ah, Jay Leno having some fun with the tough economic climate, as many Americans are not having so much fun or wondering what to do. Sometimes you just got to laugh, right? But here to help you out is our CNN personal finance editor, Gerri Willis. She's getting lots of questions on the blog and she's here to answer some of them. What are you hearing this morning, Gerri?

WILLIS: Hey there, John. Let's get down to it. Thomas in Colorado writes, "I just became eligible to enroll in my company's 401(k), should I contribute? How much and how conservative? If we're at the bottom, would a moderate or aggressive approach be better, or is very conservative the best option?

All right. OK. Thomas, it's not about what the stock market is doing. It's about how old you are. That's how you decide how much money you're going to put in, how aggressive you're going to be. And you sound like a newbie to the market and it's time for you to get serious about investing. You can set aside $15,500 each and every year into your 401(k). Do it and get that free money from your employer.

ROBERTS: Thomas didn't say how old he is?

WILLIS: No he didn't but he sounds young from the way he's describing how he's just become eligible to enroll.

ROBERTS: So the rule of thumb is if you are just starting out, in your 20s you can get fairly aggressive right and get more conservative as you get older.

WILLIS: Absolutely. Absolutely. And people need to stop hearing all the noise in the market and get serious about investing.

Steven in Texas writes "I'm interested in buying a new vehicle, a car, everything that's going on, should I hold off? Hey, Steven, you know, now is a great time if you have the cash to do it. Here's why - there are lots of benefits out there for folks, you know, all kinds of deals, offers, zero percent financing from Toyota, GM, you name it. If you have the money, it's time to do it. It could be hard to get a loan, but now is a good time to do it.

And finally Denise in New Hampshire writes "we are both invested in employer 401(k) plan. We're considering taking out 15,000 to pay off a credit card debt that is at 0 percent. Is it wise to take a loan out on your 401(k) plan? Not my favorite thing, I have to tell you. You're going to have to pay that money back. What's more, you'll pay it back with money that's already been taxed. So, you get taxed twice for the privilege. I'd say, no, don't borrow the money. Just pay it down out of income.

And finally, John, we got a quick e-mail from Sandra in Coral Springs, Florida, she wants to know the web site to go to if she's in trouble with her mortgage. Hud.gov.

ROBERTS: Back on the 401(k) thing though, that's one of the ideas that Barack Obama was floating. A penalty-free withdrawals from their 401(k). Some people might take advantage of that, depending on the outcome of the election.

WILLIS: Yes. Not my favorite thing.

ROBERTS: Not mine either.

WILLIS: But if you're in real trouble -

ROBERTS: It takes too long to make it back up.

WILLIS: If you're in real trouble, you might do it.

ROBERTS: Thanks, Gerri. Don't forget, keep your questions coming in, logon to CNN.com/am. Gerri will be back in just a little while to answer some more of those. Coming up now, 43 minutes after the hour.

(BEGIN VIDEOTAPE)

CHETRY: Seize by the bank. And sold to the lowest bidder.

UNIDENTIFIED FEMALE: It was listed for $109,900. Now it's listed for 45,000. it's the same house. It's a tremendous loss to the bank.

CHETRY: Foreclosed homes going at bargain prices. But why are the banks failing to help struggling home owners. You're watching the most news in the morning.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

ROBERTS: Well, you might have seen your neighbors go through it. Maybe it's already happened to you. Across the country there are families who are getting kicked to the curb. Their homes going foreclosed to nothing after they cleared all of their stuff out and many are tired of hearing that it's just business. AMERICAN MORNING's Carol Costello joins us live from Washington with one family's tragic story. Good morning, Carol.

CAROL COSTELLO, CNN CORRESPONDENT: Good morning, John. You know, so many families have lost their homes because of these toxic mortgages. And who was the government bailing out? The banks! For those who lost everything, that really stings. Especially since the banks largely refuse to help homeowners on the brink of foreclosure.

(BEGIN VIDEOTAPE)

COSTELLO (voice-over): In Lacombe County, Michigan -

UNIDENTIFIED FEMALE: $159,049.

COSTELLO: -- there's a fire sale going on.

UNIDENTIFIED FEMALE: $75,600.

COSTELLO: Hundreds of homes seized by banks are being auctioned off -

UNIDENTIFIED FEMALE: $49,000

COSTELLO: -- at bargain basement prices.

JENNIFER WARD, BANK FORECLOSED ON HOME: That just breaks - breaks my heart, you know, seeing it like it is.

COSTELLO: The Wards lost their home to foreclosure in 2007 after refinancing. They said they thought the interest rate was fixed. It was not. Today their lost family home sits empty. Bought at auction by a bank for $20,000. It's not only devastating for the Wards, but to their former neighbors who are seeing the value of their own homes plummet. It irks real estate agent Donna Caumartin. DONNA CAUMARTIN, SCHULTES REAL ESTATE: This home went up on the market and it was listed for $109,900. Now it's listed for $45,000. It's the same house. It is a tremendous loss to the bank. Why wouldn't they try to do a loan modification? Or something or refinance it at different terms?

COSTELLO: Why do you think the banks won't negotiate with people?

CAUMARTIN: I don't know. I really don't know.

COSTELLO: Groups that help troubled homeowners say it's because many banks don't own the mortgages. They simply handle the paperwork for investors.

BRUCE MARKS, NEIGHBORHOOD CORP. OF AMERICA: The servicers who the homeowners make their mortgage payments to, they're overwhelmed. They are not willing to staff up. And frankly they have no skin in the game. So, if someone goes to a foreclosure, they don't lose anything.

COSTELLO: The Wards did try to renegotiate with their lender, Washington Mutual, a bank seized by the federal government last month because it handed out so many bad loans.

KEITH WARD, BANK FORECLOSED ON HOME: I spent hours, days -

JENNIFER WARD: -- days.

KEITH WARD: -- on the phone with our finance company, our bank. Asking them, what I can do. And the only thing they told me was they needed, if I remember correctly, an amount close to $20,000 -

JENNIFER WARD: -- down.

KEITH WARD: - up front. And then they wanted to double our house payment also, on New Year's Eve.

JENNIFER WARD: 4:00.

KEITH WARD: At 4:00 in the afternoon, a gentleman came and put a notice on my door that there would be a sheriff's sale on my home.

COSTELLO: Both presidential candidates want to help people like the Wards. John McCain wants to use taxpayer money to buy and refinance troubled mortgages. Barack Obama wants a 90-day payment break for struggling homeowners. But it's too late for the Wards. Their house has already been auctioned off. They rent now. Nine blocks from their old home. And, yes, they found a way to cope.

KEITH WARD: A lot of patience, and a lot of love. It's the only way we can do it.

(END VIDEOTAPE)

COSTELLO: Now, the Wards and many others in economic straits will be listening to tonight's debate, wondering how this bailout plan will help them right now. I'm going to Michigan tonight to watch the debate, with the Wards to see if either candidate has answers for them.

ROBERTS: Yes, there are all kinds of plans out there and John McCain wants to spend $300 billion to buy up some of these mortgages. They would be bought some of them at face value but then renegotiated down so that people like the Wards might be able to afford them. Barack Obama wants a 90-day moratorium on foreclosure. But this housing bill, the FHA bill that passed during the summer, the Frank-Dodd bill was supposed to have a provision that kicked in the beginning of October to help out folks like this. So, I mean -

COSTELLO: You know what the big problem is - is nobody really knows who owns many of these mortgages. So, when real estate agents or agencies try to help these people renegotiate, they don't know who to talk to, and that's been a really big problem, too, John.

ROBERTS: Well maybe something will happen that will help to streamline the process for poor people like the Wards. Looking forward to what they had to say, we'll see that tomorrow morning. Carol Costello, thanks so much.

It's 50 minutes after the hour.

(BEGIN VIDEOTAPE)

ROBERTS (voice-over): It feels like the first time.

UNIDENTIFIED MALE: I'm asking you to get into doing it this election season.

ROBERTS: The kid who created the virgin voter movement joins the best political team.

Plus, Oliver Stone on making "W."

UNIDENTIFIED MALE: Fool me once, shame on you. Fool me twice, it's - you can't get fooled again.

ROBERTS: The people who turned him down because he was too easy on the president? The director joins us live, on the most news in the morning.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

CHETRY: Well, tonight is the final presidential debate of the 2008 campaign season. It seems to have gone by so fast, hasn't it? Well, it could actually be the last chance for candidates to make a strong impression with those undecided voters out there. John McCain is behind in the polls, but the race is far from over. So, what does he need to say tonight?

Well, joining me now is CNN contributor and host of the nationally syndicated radio show, one of our favorite guests, Bill Bennett, of "Morning in America." Good morning, Bill.

BILL BENNETT, RADIO SHOW HOST "MORNING IN AMERICA": Hi, Kiran. How are you?

CHETRY: Well, I'm doing OK. If you were John McCain's adviser today, put that hat on, for you with 20 days left in the campaign, what does he need to do tonight?

BENNETT: I'm full of advice. I don't know if he's listening. But I'm full of advice. Look, this is the Navy fighter pilot's big mission here. This is the third of three. He needs to tell the truth. A read the "New York Times" this morning saying the negative stuff doesn't work. That suggests to me it probably does work. And by negative, I don't mean the personal stuff. John McCain I think is very noble about that. Turning back audiences when they tried to get personal about Obama, saying things that aren't true about him. But I mean telling the truth. I think he should talk about two things - the alliances that he has had in the past, and this is everything from Reverend Wright to Bill Ayers to Jesse Jackson, the endorsement of Lewis Farrakhan and to the alliances in the future, Nancy Pelosi, Harry Reid. This is going to be all liberal government, no brakes, all accelerator. Americans, stop and pause. Are you sure you want this?

CHETRY: So, you think he should do that above, bring up his economic plan and solutions for the future?

BENNETT: Yes, sure. He has to do that. There will be plenty of time to talk about that. But I think one thing he can say about the economic plan is to say to Barack Obama, I understand you're telling people, 95 percent will get a tax cut. But everybody who owns a 401(k) in this country or has a retirement plan is going to get hit, is going to get taxed more by your proposal, and that's 50 percent or 60 percent of Americans. Then I think he needs to now cite the almost legendary figure, Kiran, in the culture after 24 hours, Joe, the plumber.

You know the guy I'm talking about. This is the guy that Barack Obama saw on the rope line, Joe the plumber. And Joe the Plumber said, you know, I take in $280,000 from all sources. And you're going to tax me. And Barack Obama said, yes, we need to spread the wealth around. And, again, ask the American people, before you make this very important decision, on November 4th, step back and think, is this really what you want?

CHETRY: I want to ask you about Sarah Palin, because it seems that at least of late she's turned into a controversial part of the ticket. Let's listen to what former Bush campaign adviser Matthew Dowd told John Roberts and a panel yesterday about Sarah Palin.

(BEGIN VIDEO CLIP)

MATTHEW DOWD, FMR. BUSH-CHENEY CHIEF STRATEGIST: He knows in his gut that he put somebody unqualified on the ballot. He knows that in his gut. And I think when this race is over, that is something he's going to have to live with. He knows that he put somebody out of nowhere and put them on the ballot and put the country, he knows that, at risk. He knows that.

(END VIDEO CLIP)

CHETRY: Does he know that and has Sarah Palin become a liability for the McCain ticket?

BENNETT: No. I don't think so. Look at the crowds that are turning out. There are a lot of intellectual, pseudo-intellectuals, a lot of former Bush advisors who are saying this thing. This will be a time to thin out one's Rolodex, by the way, sort out who, you know, who the friends are and who aren't.

Sarah Palin continues to get rave reviews from the base. Some people with Ph.D.'s aren't pleased with her. But this guy with a Ph.D. is very pleased with her.

CHETRY: I want to ask you about this, though, because there have been - we've run some stories and we've talked to people who said they were on the fence and felt that they couldn't vote for the McCain-Palin ticket because of concerns that if something, god forbid was to happen to John McCain that they don't believe that she's ready to be president. Do you believe that Sarah Palin is ready to be president?

BENNETT: Yes, I think she can be president. She's been a chief executive of a large state and I think that is - she's had more executive experience as you've heard than the other three combined. There's another thing, Sarah Palin earned her spurs by taking on the establishment in Alaska. She took on the machine, including the Republican machine. She showed her independence. Barack Obama will bring the Chicago political machine to Washington. He is entirely the product of the Chicago political machine. I am much happier with the prospect of Sarah Palin as president than I am Barack Obama as president.

Yes, she is not as eloquent and as intellectually attuned to, you know, the fine points of deconstructionism and modernism as is Barack Obama. She speaks like a plainspoken American, but that's not the worst thing. We've had that before in the presidency of Harry Truman and a few other people. So, yes, I think she's just fine.

I know that there are 30 or 40, you know, types who - who disapprove of her and sniff at her. I think, by the way, the treatment of her, the condescending attitude toward her, the T-shirts that people have worn at some of these rallies, if this stuff was done anywhere near Hillary Clinton, people would be going crazy. So, I think a little fairness here is in order.

CHETRY: All right. Bill Bennett, always great to talk to you. Thanks for being with us this morning.

BENNETT: Did I make my view clear?

CHETRY: Yes. And I'm out of time! But I'm sure we'll talk to you after tonight's debate. I know you'll be watching. We will all be watching here as well.

BENNETT: Thanks, Kiran. I'll see you tonight. I'll be there with you guys tonight.

CHETRY: We look forward to it. Thanks, Bill.

ROBERTS: Left nothing to the imagination there.

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