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Lou Dobbs This Week
Huge Economic Challenges; Staffing Obama's Administration
Aired November 08, 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: Tonight: President-elect Obama preparing to take over the White House and beginning to make top-level staff appointments. We'll have complete coverage of the transition to governance.
And tonight: New evidence of the huge economic challenges facing the president-elect and this nation. The unemployment rate is now at the highest level in 14 years. I'll be joined by three of the best economic thinkers in the country.
We'll have all of that and much more: straight ahead tonight.
ANNOUNCER: This is LOU DOBBS THIS WEEK: News, debate, and opinion. Here now: Lou Dobbs.
DOBBS: Good evening, everybody.
President-elect Obama is making the worsening economy his top priority. The president-elect meeting with his top economic advisers in Chicago Friday, that meeting coming amid new evidence that the economic crisis is worsening, having a severe effect on working men and women and their families.
The latest unemployment report showing the economy lost almost 250,000 jobs last month. The unemployment rate has risen to 6 1/2 percent. That's the highest unemployment rate since 1994.
Candy Crowley reports now from Chicago on President-elect Obama's preparations to take power.
(BEGIN VIDEOTAPE)
CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT (voice-over): Old routines, the daily trip to the gym, now mixed with new ones. The first top level intelligence briefing and phone calls with nine world leaders who offered congratulations and began the getting-to-know-you phase.
Behind closed doors, one of the hallmarks of democracy is under way -- the peaceful transfer of power. The incoming first couple will meet at the White House Monday with the outgoing first couple.
PRES. GEORGE W. BUSH, UNITED STATES OF AMERICA: We will ask administration officials to brief the Obama Team on ongoing policy issues, ranging from the financial markets to the war in Iraq. I look forward to discussing those issues with the president-elect early next week. CROWLEY: In Chicago, the basics of the new team is coming together with old team faces, in what a source describes, as done. Obama's senior White House adviser is likely to be David Axelrod, the main architect of the campaign, a longtime Obama friend.
As low key as he is fiercely loyal, Axelrod is said to be the last person Obama calls at night.
Already lined up: his chief of staff, Illinois Congressman Rahm Emanuel, an alumnus of the Clinton White House. Temperamentally, the polar opposite of the cool, deliberative president-elect, Emanuel is hard charging, blunt, hyper-partisan, which is to say, tough enough to keep everybody in their lanes at the White House, keep Hill Democrats in the corral, and protect the president and his agenda.
In discussions for press secretary, the most visible White House job, Robert Gibbs, also a loyal longtime Obama adviser who helped shaped the campaign. Limbo is a tricky place as one Obama source put it, "there's only one president at a time and we want to honor that."
Candy Crowley, CNN, Chicago.
(END VIDEOTAPE)
DOBBS: President Bush this week said what amounts to an early good-bye to his White House staff. President Bush telling staff that it's important for the transition to the new administration to be as smooth as possible, saying it's the first wartime transition in four decades. President Bush is also saying, the economic challenges facing the nation will not pause.
The Republican Party's big election losses have sparked turmoil within the Republican Party. There is disarray at the top of the Republican leadership in the House of Representatives.
Brian Todd has our report from Washington.
(BEGIN VIDEOTAPE)
BRIAN TODD, CNN CORRESPONDENT (voice-over): The Election Day defeat for Republicans claims another top leader. The GOP's number two in the House will step aside. Roy Blunt joins their number three, Adam Putnam, in giving up a leadership post, after the Republicans' defeat in the polls. Two conservative Republicans have the support of Minority Leader John Boehner to take over.
How will the new GOP minority deal with the new Democratic president? Conservatives say Republicans need to stand firm, less spending, less government and lower taxes. But one former congressional aide offers them this advice.
JOHN FEEHERY, FMR. GOP CONGRESSIONAL AIDE: Think of what Barack Obama is saying and find ways that you could find agreement with him, and then find ways that you can -- with your principles -- you can principally oppose him but don't just knee-jerk oppose him right at the top. TODD: And top Republicans say, the burden is on President-elect Obama to keep his agenda moderate if he wants any GOP help.
MIKE DUNCAN, RNC CHAIRMAN: To turn change we can believe in into change we can actually see, he'll need Republicans' help, fighting back the rigid liberal orthodoxy of his congressional leadership.
TODD: And if the Democrats overreach when they take the reins in January?
SUSAN MOLINARI, FMR. GOP CONGRESSWOMAN: It's not just good enough to take advantage of Democrats in states. You have to make sure that the Republicans show that they have the right solution.
TODD (on camera): In the meantime, Republican insiders tell us, there are at least two advantages to being in the minority -- when things go wrong, they won't be to blame and the Democrats will be providing them with a target-rich environment in Washington.
Brian Todd, CNN, Washington.
(END VIDEOTAPE)
DOBBS: Joining me now, three of the best political analysts: Errol Louis, columnist of the "New York Daily News," host of WWRL's "Morning Show" and a CNN contributor; Miguel Perez, syndicated columnist, also, a CNN contributor; and, John Fund of the "Wall Street Journal," author of the book "Stealing Elections: How Voter Fraud Threatens our Democracy."
Good to have you all here.
John, let me turn to you and ask you, this unemployment rate rising to 6.5 percent, 1.2 million jobs lost in 10 months of this year -- this is not -- this is not a minor challenge for this new president.
JOHN FUND, WALL STREET JOURNAL: We are going to have clearly the worse recession since 1981. That recession took unemployment to 10.4 percent, and it lasted 18 months. You take 18 months from today, that will go well into the first term of the Obama administration. It will present a tremendous challenge to him.
And here's his challenge: The last two Democratic presidents took office with the economy in the upswing. Obama is taking office with the economy on the downswing. He should not repeat the mistake the last two Democratic presidents, Carter and Clinton, did, which is -- let the Democratic congressional leadership set the agenda. And I think that's why he's gotten Rahm Emanuel as his chief of staff. He is sending a signal to Congress, "I'm in charge and Rahm Emanuel is my enforcer."
DOBBS: And, Errol, do you think he can successfully, (A), deliver the message, and then (B), back it up?
ERROL LOUIS, CNN CONTRIBUTOR: Well, the message will be delivered. I mean, he's got his own Dick Cheney, basically, somebody familiar with the Congress, a former congressman himself.
DOBBS: You know, you're scaring people all over this country.
(LAUGHTER)
UNIDENTIFIED MALE: And he needs to.
LOUIS: Well, that's the intended effect. That is very much the intended effect is that when he calls, people are going to know they mean business and it works for Obama in general to have a bad cop to his benign sort of a paternalistic approach to government. He wants to reassure the public not to scare us.
I do think, though, that they're going to have to move quickly, as John says. I think they're going to also have to make sure that they don't fritter any of it away before they take office. This talk about a rump session later this year to do a nandy-pandy kind of stimulus package is a horrible idea. They should -- they should...
DOBBS: Well, that would be Nancy Pelosi's idea, the speaker very much savoring the concept of bringing the Congress back into session to play "Hail to the Queen."
LOUIS: Big, big mistake. I'm assuming and hoping that somebody's going to make a call from the transition team and say, you know, maybe you should take the rest of the year off.
DOBBS: Miguel?
MIGUEL PEREZ, CNN CONTRIBUTOR: Let me follow up on what my colleagues have just said. In the case of Rahm Emanuel, right view (ph), if you're the man of the people, if you campaign all this time, saying that you're going to have much, you're going to be much more accessible, why do you hire a pit bull to guard the door of the White House?
DOBBS: And no lipstick.
PEREZ: And that is exactly what has happened here.
(LAUGHTER)
DOBBS: Well, this business with Rahm Emanuel, he is already getting criticism, very mixed reactions.
FUND: He likes criticism, though. He wants to be seen as mean and tough, because that will enhance his reputation when he calls and says, "I'm not going to let you do this. The president wants this, and you're going to have to follow and tow the line."
DOBBS: And John Boehner, the minority leader, he's sort of left in a peculiar position, severely weakened in the minority position. What can possibly the Republican strategy be here? What is their role?
FUND: I think the role is going to be the loyal opposition, but they're going to sort out their ideology and their principles because let's face it -- for the last eight years, they had the courage of other people's convictions, not their own. I think the Republican Party has to go back, repair its name brand and start from scratch. And right now, they've got a lot of rebuilding to do and that's what they need to do, rather than attack President Obama.
DOBBS: Well, here's the bridge from John Boehner, the Republican minority leader, saying of Rahm Emanuel, "an ironic choice for a president-elect who has promised to change Washington, make politics more civil, and govern from the center."
Errol, I think salvos have been fired.
LOUIS: Well, I think, he should probably rethink a statement like that. I mean, there's no point in trying to pick a fight with a party that just cleaned their clocks and will control all of the committees for the foreseeable future. I think, well, there's going to be a blood-letting on the Republican side. Somebody is going to have to take the blame for what just happened.
And, once they figure that out, some of the conservatives who were trying to step back...
DOBBS: The minority whip, Roy Blunt, is one of those to take the fall, obviously.
PEREZ: But -- look, they have to expand their agenda. They have to be more inclusive. The Republican base alone has been proven, cannot win an election.
FUND: Well, the Democrats have to expand their base, too, because right now, they're having their own blood-letting. Henry Waxman is challenging John Dingell for the chairmanship of one of the most powerful committees. You are seeing old time -- Democrats are being knocked off by radical Democrats to challenge their committee chairmanships. Is the Democratic Party going to move even further to the left?
ERROL: What's a radical Democrat?
FUND: Henry Waxman from Hollywood, look at his voting record, just look at it.
(CROSSTALK)
DOBBS: There is a time when John Dingell...
(CROSSTALK)
ERROL: Next, we're going to go back to calling them socialists. I mean, you know, there is no radical...
(CROSSTALK)
FUND: He does call himself a socialist.
DOBBS: We can't do that. Actually, both parties...
FUND: (INAUDIBLE) he'll say he's socialist.
DOBBS: After both parties embraced a $1 trillion bailout, they're both socialists as far as I'm concerned. So, we're going to continue that conversation with our panel in just a moment.
Also, a rising concerns that House Speaker Pelosi will impose a radical left-wing liberal agenda on the new Obama administration. We'll try to sort all of that out.
And will Congress pass that second stimulus package? We'll have the very latest for you. Stay with us.
(COMMERCIAL BREAK)
DOBBS: The speaker and Senate Majority Leader Harry Reid tonight appeared determined to impose a liberal agenda on the president-elect and the American people.
Lisa Sylvester has our report from Washington.
(BEGIN VIDEOTAPE)
LISA SYLVESTER, CNN CORRESPONDENT (voice-over): The White House changing hands and Democrats solidifying their hold on the House and Senate.
MIKE DUNCAN, RNC CHAIRMAN: I woke up this morning, feeling like Lincoln's young boy who stubbed his toe. Some of you know the story. It hurts, too bad to laugh and I'm too big to cry. I think some of you felt that way before.
SYLVESTER: The Democratic pick up of at least five more Senate seats and, at least, 20 House seats will make it harder for Republicans to use filibusters to stop legislation. House Speaker Nancy Pelosi says Democratic bills, some that were blocked by either a filibuster or a veto threat, will make a comeback. Some of those issues included: extending unemployment insurance, expanding healthcare for children, stem cell research, immigration reform, and pulling troops out of Iraq.
REP. NANCY PELOSI, (D) HOUSE SPEAKER: Our increased numbers in the House better enable to us work closely with our new president for a vision for America and a plan to succeed again as we unify the American people.
SYLVESTER: But that doesn't mean that Pelosi and the Democrats will have free rein. First, there are moderate Democrats like senators, Ben Nelson of Nebraska and Blanche Lincoln of Arkansas, who don't always fall in line behind their party leaders.
JENNIFER DUFFY, COOK POLITICAL REPORT: I mean, these are senators who vote with their party maybe a little more than 50 percent of the time, and so, it's going to be hard for the more liberal elements of the caucus to hijack the party. SYLVESTER: And there's history. When President Bill Clinton took office, Democrats also controlled Capitol Hill, but Clinton's liberal agenda didn't get far off the ground.
JIM THURBER, AMERICAN UNIVERSITY: And he pushed healthcare reform so hard that there was a little reaction to it and he lost the House and the Senate for the next six years.
(END VIDEOTAPE)
SLYVESTER: Democrats remember what happened and so do Republicans. The take-away lesson from that was -- if you want to hold on to the House and Senate in the next election, govern not at the extremes but somewhere in the middle -- Lou.
DOBBS: A lesson that obviously eluded the Republicans still fresh from their history lesson, courtesy of the Democrats.
Thank you very much, Lisa Sylvester, from Washington.
DOBBS: The government already has spent hundreds of billions of dollars bailing out Wall Street. House Speaker Nancy Pelosi and the Democratic-led Congress are now pushing for a second economic stimulus package. The package, aimed at helping state and local agencies, they say -- and as Louise Schiavone now reports -- the Democrats want that plan passed before the new president takes office.
(BEGIN VIDEOTAPE)
LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): Democrat also have a stronger majority next year, but House Speaker Nancy Pelosi says, this Congress has more work to do, principally a second economic stimulus bill.
PELOSI: I'm in communication with the White House about such a stimulus package to grow our economy by creating jobs, to do it in a newer, greener way.
SCHIAVONE: A spokesman for Senate Majority Leader Harry Reid tells CNN that Senate Democrats are onboard with the speaker for a second stimulus package that would extend unemployment insurance, increase food stamp funding, expand funds for the low-income home- heating assistance program, and help strapped Americans in peril of losing their homes.
The next president went on record with CNN in support of the second stimulus bill.
SEN. BARACK OBAMA, PRESIDENT-ELECT: I think we are going to need a second stimulus, one of my commitments is to make sure that that stimulus includes a tax cut for 95 percent of working Americans.
SCHIAVONE: But the question is: Will the current president support a Democratic bill? A White House spokesman tells CNN, quote, "We haven't seen a stimulus package from the Democrats, and it's not at all clear that they have a plan," end quote. House Republican Leader John Boehner told us the GOP is eager to respond to economic troubles with a meaningful approach, but, quote, "not hundreds of billions in new government spending, masquerading as economic stimulus," end quote. The Republican leader wants any stimulus to include tax incentives, such as more money for child tax credits, and a capital gains tax reduction to allow Americans to rebuild their 401(k) retirement funds.
It all adds up, says this former Bush administration economist...
J.D. FOSTER, HERITAGE FOUNDATION: Senator Obama -- President- elect Obama now has a very long list of expensive programs he wants to put through. I think he's going to find that the size of the deficit and the weakness in the economy are going to be very limiting.
(END VIDEOTAPE)
SCHIAVONE: Lou, the expectation is, that the 110th Congress will return for a lame duck session in a little less than two weeks. What new members show up for orientation and both parties select leaders, but it's not clear that members will be able to accomplish much more than that -- Lou.
DOBBS: Thank you very much, Louise -- Louise Schiavone.
Coming up next: Rising concerns on Wall Street about our weakening economy and challenges facing President-elect Obama. Three top economic thinkers join me.
And the Bush administration is warning the president-elect about our illegal immigration and the border security crisis. How will our next president handle that challenge? We'll have the special report. Stay with us. We're coming right back.
(COMMERCIAL BREAK)
DOBBS: New warnings tonight about increasing security threats along our border with Mexico. Border security advocates are concerned that recent progress along the border could be jeopardized by President-elect Obama's policies on border security and his support for amnesty for illegal aliens.
Casey Wian has our report.
(BEGIN VIDEOTAPE)
CASEY WIAN, CNN CORRESPONDENT (voice-over): The nation's borders are now in a, quote, "period of heightened alert," according to the Department of Homeland Security. There are concerns that the presidential transition could cause officials to ignore the growing threat of violence from drug and illegal alien smugglers and even terrorist.
MICHAEL CHERTOFF, HOMELAND SECURITY SECRETARY: Any time there's a transition, there's a danger or a risk that vulnerability will increase because people become distracted. WIAN: "LOU DOBBS TONIGHT" reported last week that Mexican drug cartels operating in Texas are under orders to engage U.S. law enforcement personnel. Now, we've obtained a Border Patrol officer safety bulletin describing a recent incident near Abram, Texas where agents spotted a vehicle loaded with marijuana. A group of suspects confronted the agents, one opened fire with an automatic weapon, missing the agents, before the smugglers escaped to Mexico.
Although the Bush administration has made progress toward border security, huge gaps remain as this video shows. It's the new Web site operated by border security advocates using hidden cameras to show illegal crossings.
Unlike his former opponent, President-elect Barack Obama has not committed to securing the nation's borders before legalizing illegal aliens.
OBAMA: We can't deport 12 million people. Instead, we'll require them to pay a fine and learn English and they need to go to the back of the line for citizenship, behind those who came here legally. That's just fair. But at the same time, we're going to secure our borders, and crackdown on the kinds of employers we saw in Iowa, hiring 13-year-olds to work at a meat packing plant.
WIAN: That effort is complicated by this week's announced resignation of Julie Myers, head of Immigration and Customs Enforcement. During her tenure, ICE has sharply increased the number of raids of businesses employing the illegal aliens as well as apprehensions and deportations of immigration fugitives, gang members and other criminals.
(END VIDEOTAPE)
WIAN: Pressure on the soon-to-be Obama administration to end those enforcement actions is already growing. Street demonstrations are planned for here on Los Angeles next month, and just yesterday, House Speaker Nancy Pelosi called or an end to ICE raids, Lou.
DOBBS: All right, Casey. Thank you very much -- Casey Wian.
Well, more evidence tonight that this country is, as I've been saying for literally years now, the most welcoming country in all of the world. More than 1 million people took the Oath of Allegiance and became naturalized citizens over this past year. It is the largest number of naturalized citizens in our nation's history.
And imprisoned former Border Patrols agents, Ramos and Compean will be re-sentenced the 12th of November and 13th, respectively, by the same El Paso federal judge who delivered their original sentences. This follows an appellate court ruling that overturned some of their convictions. We are following this story closely. We'll have a full report for you as developments warrant over the next week.
Many of you have been writing in about the possibility of a pardon from President Bush in these final hours for Compean and Ramos. Jimmy in Florida wrote in to say: "Please remind your viewers to e- mail, to write or to call the White House to ask President Bush to do the right thing and pardon these wrongly imprisoned Border Patrol Agents Ramos and Compean before he leaves office. That they were imprisoned at all is truly an injustice."
And Glenn in Wisconsin, "Lou, do you think President Bush will now finally do the right thing and pardon the two Border Patrol agents who should never been charged in the first place?"
And Robert in Texas: "Lou, do you think that President Bush will grant full pardons to the two Texas Border Patrol agents? If not, maybe we can get the new president to do this. Haven't they spent enough time in prison? Can we do something about this?"
Well, I would suggest you write, you call the White House, and make your views known. We certainly need to reverse what is one of the worst injustices in Texas prosecutorial history. To each of you whose e-mail receives -- is read here -- receives a copy of my new book, "Independents Day: Awakening the American Spirit," now available in paperback.
Coming up next: President-elect Obama is getting ready to set his cabinet. Three top political analysts join us to tell us who they think will fill out the Obama administration's top jobs.
And the big three carmakers struggling to survive. Will they get help from the government? We'll find out.
And the economic slowdown is worsening. Manufacturing employment is now at the lowest level since 1942. Three of the best economic thinkers join me here next. Stay with us.
(COMMERCIAL BREAK)
DOBBS: Pharmaceutical maker Pfizer is reportedly training foreign technology workers at facilities in Connecticut. They're using U.S. workers to do the training, workers that the H1-B visa workers are replacing. The Connecticut newspaper, "The Day" -- the "New London Day" reporting that foreign workers will replace American workers receiving less pay. "The Day" is also reporting that Pfizer is planning to move much of its I.T. operations overseas. "The Day" saying Pfizer wouldn't comment on that story.
Contrary to Pfizer's policy, helping manufacturing jobs in this country is key to regaining control of our economy in the minds of many. Joining me now: three of the best economic thinkers in the country of the moment (ph): David Walker, the president and CEO of the Peter G. Peterson Foundation and former comptroller general of the United States; William Isaac, chairman of the Secura Group and former chairman of the FDIC; and with us, Eugene Flood, CEO of Smith Breeden Associates.
Good to have you all here.
All right. Let me turn to you first, David. This economy, we've got two days, we now have matched the performance of a market crash in 1987. What is going on? DAVID WALKER, PETER G. PETERSON FOUNDATION: Well, clearly there's a lack of confidence right now, and what the president's going to have to do is he's going to have to end up taking a number of steps to try to turn the economy around to effectively implement these new authorities that Washington has passed. But what he's also going to have to do is going to have to go to the American people and let them understand that we've got a bigger subprime crisis that could hit us if we don't get our own financial house in order.
DOBBS: A bigger subprime crisis.
WALKER: That's right. The federal government's own problem -- I mean, it's got a huge problem itself. But first thing's first, let's get the economy turned around, implement these new authorities, but let's also try to defuse the ticking time bomb associated with the government's finances.
LOU DOBBS, HOST: Gene, the idea that we put $1 trillion into the Federal Reserve system, we're approaching $1 trillion in what will be spent to stimulate this economy and to bail out institutions through equity investment on the part of the federal government -- I mean, when are we going to start to see some sort of result from this program -- Gene?
EUGENE FLOOD, CEO, SMITH BREEDEN ASSOCIATES: It's still going to take some time. We are already seeing some results. And so, there are some improvements in some parts of the capital markets, but this is a many-faceted problem and it's going to take time to work through them.
And there's really three different parts to deal with. The first part deals with the confidence issue that David was talking about, the lack of confidence in how that has led to a freeze up of lending in the capital markets. The second thing is the housing sector -- and that still needs to be stabilized. And then the third thing is to stabilize consumption -- that is the real economy, through some job creation.
So, each part of these things is going to take more time.
DOBBS: Bill Isaac, do we have that kind of time?
WILLIAM ISAAC, CHMN., SECURA GROUP: I don't think we have a lot of time. I think our president-elect is going to have to start acting very decisively, very quickly. And one of the things I hope he'll do very soon is named his chief financial people.
DOBBS: Do you think that he should make -- because one of the things that I'm very concerned about, and I'd like to hear your thinking on this, to see more -- you know, we were told this is a crisis and that Congress had to rush through $700 billion. They had to add, of course, $150 billion in pork to get that done.
They had no concept, this treasury secretary had no idea in the world what he was going to do with that money, and the result has been the inverse of what he described to Congress. Wouldn't it be better for the president-elect to just be extraordinarily careful in selecting that team, to take time here to do a very, very thorough, careful job in selecting that team? Because we've seen a silly political dance in Washington of acting urgent and jumping in through hoops and, you know, it looked like a P.R., you know, a charade rather than substantive governance.
I would hope, you know, I feel differently than you do on this obviously, Bill.
ISAAC: Well, I'm not sure we feel any differently about it. I would say that I believe a fundamental problem we have is that people have lost faith in their government.
DOBBS: Right.
ISAAC: And that's why I think that we're blessed in a way that we've just had an election, whoever had won it, I think we would have been blessed to have a new team come in, and I think that...
DOBBS: That's what some endorsement that (INAUDIBLE).
(LAUGHTER)
ISAAC: No, I mean, people -- I mean, I really think that's the problem. I think a lot of people have just lost faith in the ability of our government to deal with this problem.
DOBBS: Well, and by the way, I think only a fool would not have lost faith in this situation with this government and the way it's handled itself.
ISAAC: Yes, I'm one of the most optimistic people in the world and I've lost faith in government.
DOBBS: Well, this administration has broken trust with the American people. It's that straightforward to me. David?
FLOOD: I think...
DOBBS: Go ahead, Gene.
FLOOD: Yes. There is a number of things which I think they can start off with. And there's been some work done in each one of these areas, but there's more work that needs to get done. So, for example, getting right to work on something as simple as clarifying the status of the GOCs, that has the implications for capital flows into the mortgage back through these markets.
DOBBS: Are you talking about Fannie Mae and Freddie Mac?
FLOOD: Yes, with Fannie Mae and Freddie Mac, that has implications for the biggest fixed income markets in the country. We need...
DOBBS: David Walker -- I'm sorry, Gene (INAUDIBLE). WALKER: Real quickly, I think the key is you need to not just assure that you've got the right people with the right capability -- they've got to have credibility. So, it's not just who they are, it's where they're coming from and that's important as well. And you need to pick a whole economic team...
DOBBS: Is Wall Street an appropriate place for them to be coming from?
WALKER: Well, they might have to have an understanding, but I would question whether or not it's the time to be pulling somebody from Wall Street.
ISAAC: If you ask me to answer that, in my opinion, is absolutely not, yes.
DOBBS: Gentlemen, thank you very much for being here. Gene, we appreciate it. David, thank you, sir. I appreciate it. Bill, thank you.
WALKER: Thank you.
DOBBS: Up next: President-elect Obama meeting with his economic advisers. We'll talk with Nobel Prize-winning economist Paul Krugman -- next.
And Governor Palin firing back at the media, and the McCain campaign insiders. Stay with us. We'll tell you what the governor had to say.
And more bad news for the automobile industry. The big three are going to Washington asking for a multibillion-dollar bailout. We'll have that report -- next.
(COMMERCIAL BREAK)
DOBBS: The automobile industry tonight pushing for a bailout, an additional bailout. The CEOs of the nation's big three carmakers and the president of the United Autoworkers Union today meeting with House Speaker Nancy Pelosi. Their closed door meeting comes after the worst month for auto sales in a quarter century.
Bill Tucker reports.
(BEGIN VIDEOTAPE)
BILL TUCKER, CNN CORRESPONDENT (voice-over): Detroit, following in the example of Wall Street, has gone to Washington, seeking help. The heads of Ford, Chrysler, General Motors and the United Autoworkers met with the Speaker of the House Nancy Pelosi to make their case for loans. There's no question the hard sell is on.
Michigan's governor says too much is at stake.
GOV. JENNIFER GRANHOLM, (D) MICHIGAN: But the bottom line is, a domestic auto industry is critical for our national security. It is a critical national need. To allow this industry to fail is not acceptable.
TUCKER: But there are a lot of critics who see no need for any more taxpayer dollars supporting industries they see is the victims of bad leadership.
DAN IKENSON, CATO INSTITUTE: Where is it written in scripture and in stone that we need to have a big three and that we -- and that if one of them has to go down then the whole industry is threatened? If one of them goes down, the industry will be doing much better.
TUCKER: Bankruptcy, they argue, can have a cleansing effect.
JAMES GATTUSO, HERITAGE FOUNDATION: In bankruptcy, the management most likely would be completely replaced by a new team.
TUCKER: Some supporters of the loans being sought by the industry say they understand the desire, even the need to punish bad management. But...
AARON BRAGMAN, HIS GLOBAL INSIGHT: These automakers have actually taken a number of steps over the last three, four years to bring themselves into the new modern age and to respond to the changing market. It's just that with the market changing so dramatically and so quickly and the economy tanking faster than anybody could have possibly foreseen, they've been thrown off-track and they need help.
TUCKER: It's not just the automakers' fates that are at risk.
(END VIDEOTAPE)
TUCKER: The auto industry spends $12 billion a year in research and development, and for the last several years, the industry spent about $10 billion a year here at home in the United States in retooling factory upgrades, new factories, employee salaries, healthcare and the like, Lou. So, a lot of money from the industry coming into our economy.
DOBBS: Well, a lot of money from the industry, but we're talking now of $50 billion, presumably, in additional bailout money, $25 billion in addition to the original $25 billion. How soon will there be a decision? Will there be a clear political pathway for this money?
TUCKER: Well, Obama, when he was campaigning, indicated that he wanted to help Detroit. Senate leaders at the moment and leaders in the House seem hesitant to do anything right away, most likely not until after the inauguration. But, they were down there getting in line first today, no doubt about it.
DOBBS: All right. Thank you, Bill Tucker.
Up next: President-elect Obama holding his first top level meeting on the economy. Nobel Prize-winning economist and "New York Times" columnist, Paul Krugman, joins me next. The president-elect naming Rahm Emanuel as his new chief of staff. We'll tell you what that choice says about the new administration. And Democrats in Congress say they have a mandate. Will Democrats reach across the aisle? Three of the best political analysts join us here -- next. We'll be right back.
(COMMERCIAL BREAK)
DOBBS: President-elect Obama today told the American people at his first news conference as president-elect that his top priority is to create jobs and to help our struggling middle-class when he does take office.
My guest tonight writes in his column in the "New York Times" that the president-elect should work quickly and aggressively to achieve his goals. Joining me now is: Nobel Prize-winning economist and "New York Times" columnist, Paul Krugman.
Paul, good to have you with us.
PAUL KRUGMAN, COLUMNIST, NEW YORK TIMES: Good to be on.
DOBBS: And again, congratulations on your Nobel Prize. It's wonderful.
KRUGMAN: It's pretty nice. Thank you.
(LAUGHTER)
DOBBS: Well, as we listened to, you know, not even the first press conference today but to watch Barack Obama as president-elect on Tuesday night, I mean it's a sobering set of challenges that he faces. He's obviously keenly aware of them. The idea of more stimulus, though, in this economy, as he called for upon taking office -- I mean we've got over $2 trillion in stimulus when you look at what the Fed has done with the banking system and what will be spent as a result of the bailout. How much more stimulus do we need?
KRUGMAN: Lots, unfortunately, and this is -- this is like you've got some infection, and you tried all of the usual antibiotics and they haven't worked. And so, now, you go for the really heavy stuff. I'm sorry, but this is bad. This is clearly the worst thing in 25 years, and it's probably the worst in 70 years. This is -- this is bad.
DOBBS: All right. The worst in 70 years -- I mean, that covers some pretty profound area, when we're talking about the depression, a banking system that came to a halt, capital markets that were effectively defunct.
KRUGMAN: Well, you know, but the thing is -- the modern banking system is mostly not banks. It's stuff that functions like banks but isn't treated like banks. There's shadow banking system. And that has really collapsed.
You think about a couple of -- auctionary securities, that was up $300 billion effectively of banking system that's got disappeared. As, in fact, commercial paper was $1.2 trillion, it's now like $600 billion, $600 billion in banking disappeared. This is big stuff and it takes...
DOBBS: But that's with the support of now the Federal Reserve in the commercial paper.
KRUGMAN: (INAUDIBLE) kept it from even going down even further. So, that's right. So, we're doing -- this is -- there's nothing -- Ben Bernanke has done everything we can but we need now -- we need now Uncle Sam.
DOBBS: We need Uncle Sam. We've got Uncle Sam to this degree. We've got a $700 billion bailout. We've got just approaching what will be about $900 billion in capital into, injection into the Federal Reserve. We've got another $500 billion in Fannie Mae, Freddie Mac. I mean, the list goes on.
KRUGMAN: But, all of that is financial, right?
DOBBS: I understand.
KRUGMAN: And what's happened really in the last two months is now the epicenter of the earthquake has shifted from the financial system from Wall Street to Main Street. And now comes the time when you really have to do -- we now need to talk about jobs. We need to talk about stuff that's really going to support Main Street.
DOBBS: Is it possible -- is it conceivable, Paul, that, to this sake (ph), was focusing on the financial economy rather than the real economy to begin with?
KRUGMAN: You need to do both. I mean, it's like -- the financial system you can't have a working economy if that falls apart. You got to rescue the banking system. But, for whatever reason we didn't do it soon enough or just too much accumulated trouble, now we got to rescue the rest. It's awesome. I mean, I don't like the prospect of it, you know, a more than $1 trillion deficit, but I don't see how we avoid it.
DOBBS: It looks like we're on the paths of $1 trillion to $1.2 trillion barrier.
KRUGMAN: Yes.
DOBBS: The estimates make great sense. But even with that debt which should be -- I mean, it should be stimulated beyond belief. We still have a president-elect talking about trying to encourage job creation, which is a short-term approach. But one can clearly see a path to a short-term approach to job creation. We've watched manufacturing today, is now down to a level of 1942 in this country.
KRUGMAN: Yes.
DOBBS: We haven't got a way in -- I can't find a way in which there is a direct correlation between the money the federal government can spend and the jobs that can be created for our middle-class.
KRUGMAN: Well, a lot of what we can do is -- for starters -- construction. I mean, there's a lot of infrastructure that needs to be built or repaired, and a lot of things we can do there. You just had earlier in the program all about the state and local governments cutting, that's slashing. You know, give them some money so they don't have to do that. It's actually destructive. It's doubly destructive now. Not only are we cutting services but we're also destroying jobs by doing that.
So, there's a lot that Uncle Sam can do. Now, manufacturing is a concern. You know, exports has been one of the good things for our economy, but now, the rest of the world is in trouble. So, that's a problem, but you do, you know, lots of stuff. There's no single answer.
DOBBS: And if we continue then, we do spend, what do you thin, we're going to need to spend -- another $1 trillion?
KRUGMAN: I think we're probably looking, I'm guessing 4 percent to 5 percent of GDP, which is basically saying, $600 billion, $700 billion of stimulus.
DOBBS: I'm going to round it up to $1 trillion.
KRUGMAN: Well, there's other stuff, you know. We're -- you know, we're going to be (INAUDIBLE).
DOBBS: So, now we're talking about that level of stimulus, matching the size of the entire federal budget in one year in stimulus. And when we talk about those jobs for infrastructure, we have a president, who for eight years has been talking about we have jobs that Americans won't do, one of the jobs is construction.
We have a situation which Wal-Mart, when we drive purchase of goods in the consumer market -- we're talking about Chinese goods. We're not getting the multiplier effect back because we don't have that production. It's a very difficult formula, isn't it?
KRUGMAN: There's parts of it. I mean, I think you're exaggerating. You know, even buying stuff from Wal-Mart, most of the price of what you buy in Wal-Mart is not Chinese. Most of it is actually U.S. value-added. So, you want -- now, it's true, some of this will spill over, but you know, you got to do what you do.
DOBBS: Paul, I don't want to argue with the Nobel Prize winner, but -- and point of fact, that Wal-Mart is the third largest exporter from China and most of those goods are from China.
KRUGMAN: The goods are, but in fact is a lot of -- we can do anything and argue numbers but it's -- you know you can see the fact that the multiplier still works you can see by the fact that we're in such big trouble now. If it was all from China, then the collapse of our housing bubble wouldn't have done so much damage to our economy.
DOBBS: What can we do for that housing bubble? KRUGMAN: Housing, you know, you can't. Housing was overbuilt, overpriced.
DOBBS: I wish it were a bubble. I misspoke. But the collapse of the housing bubble.
KRUGMAN: Right. Well, there's a line that economists sometimes use, you don't have to fill a flat tire through the hole.
DOBBS: Right.
KRUGMAN: We don't have to -- and we don't have to reflate the things that were overinflated and have collapsed, but we do need -- you know, we can do a lot. Again, infrastructure, we can do a lot of spending. It's not easy, but -- and nobody says we're going to bring prosperity. We're really just talking about trying to minimize the damage.
DOBBS: All right. Well, I wish we could end on a happier note, but, Paul, thank you very much, as always. We appreciate your insightful analysis, and again, our congratulations to you.
Paul is the author as well of the book, and I don't even like to use the title, but the book is "The Return of Depression Economics and The Crisis of 2008."
Paul, thanks a lot for being here.
KRUGMAN: Thanks a lot.
DOBBS: Coming up next: Our political panel returns to consider all the hype over voter turnout in this election. Stay with us.
(COMMERCIAL BREAK)
DOBBS: We're back with Errol Louis, Miguel Perez, and John Fund.
One of the things we found here and all the criticism of the national media over the course of this campaign, a surprising criticism now laid in the direction of the national media and that is over-hyping the turnout, over-hyping the engagement of the youth vote. It turns out that the turnout -- it turns out the turnout is the same as 2004.
Are you surprised and why did the national media fall into this euphoria?
MIGUEL PEREZ, CNN CONTRIBUTOR: Well, it's the same thing that they have been falling into throughout the campaign, favoring Obama and playing up the youth vote, playing up the fact that, you know, that all these people are going to vote for Obama including my people. I'm a Hispanic and they have been playing up how the Hispanic vote was going to turnout bigger than ever. It turned out bigger than ever, not necessarily for Obama.
DOBBS: Right. PEREZ: It turned out to be bigger than ever because every four years, we're more -- there's more of us.
DOBBS: Right.
PEREZ: More registered voters, more citizens. And naturally, there are going to be more voters. It's not because Obama drove us to the polls.
DOBBS: What do you think, Errol?
ERROL LOUIS, CNN CONTRIBUTOR: My sense of the youth is that they did register in bigger numbers.
DOBBS: Right.
PEREZ: It could help (ph) -- of course, they registered with bigger numbers.
LOUIS: They turned out in bigger numbers, it may not have been huge numbers.
DOBBS: Right.
LOUIS: I think, that you got other metrics that we didn't necessarily capture. I mean, were they more involved? Look at the top campaign staff. Look at the people who put together that magnificent Web site and all of the different things that went with it -- all the thinking that went behind it. I mean -- so, that's a level of youth involvement, young people involved in politics that we just haven't seen before.
DOBBS: In the campaign, but I think, we completed headline after headline, story after story across the national media, and particularly print media, talking about this was going to be a huge turn out. It was a...
JOHN FUND, WALL STREET JOURNAL: Lou, they got suckered by the same old story. Every year, turnout is going to go up. Look -- early voting and absentee voting expanding at dramatically to now 35 percent of the vote that's cast before Election Day. It has been sold as increasing voter turnout. We now know conclusively, it doesn't increase voter turnout.
Now, in the next administration, we're going to see three proposals -- expand felon voting, same-day registration, we register and vote the same day, and nationwide early voting. These are all mistakes because they're going to be sold as fool's gold. They're going to say they're going to increase turnout, and guess what? They are tilting the playing field in one party's direction.
LOUIS: Before we swallow too much of this sour grapes, when you look at South Bend which gave the margin in Indiana, Notre Dame. When you look at the Research Triangle in North Carolina, which gave the margin in North Carolina, states that hadn't gone Democratic in 40 years. DOBBS: Right.
LOUIS: The fact is, there are tons of students in those areas, I think that's got to mean something. You know, you can look at it...
(CROSSTALK)
FUND: Look at Colorado.
(CROSSTALK)
FUND: No. Did it go up? No, it did not. End of story.
LOUIS: No, no, only the beginning of the story. Although, I must say, if you want to stick to that story, what you'll find is in election after election, mysteriously there will be no youth impact and mysteriously, Democrats will continue to get elected.
DOBBS: You know, that's an interesting issue because some of the analysis that we've had to this point shows that -- and I love this because Latino voting bloc will tell you they were absolutely determinative in the outcome of this election.
LOUIS: Well, everybody did. The unions (INAUDIBLE).
DOBBS: The blacks, the unions, young voters...
(CROSSTALK)
DOBBS: By the way, the one group that you don't hear claiming credit are Roman Catholics who over came the abortion issue, the pro- life issue, and voted not for the pro-life candidate, but for Barack Obama.
FUND: Forty-four percent. And it's very impressive.
DOBBS: How do you explain that, Miguel?
PEREZ: I don't. Look -- the bottom line here is that people are voting at the last minute because they feel that this is something new. They are voting for change, without knowing really what change means.
DOBBS: Right.
PEREZ: And we are about to find out. You know, this man...
DOBBS: By the way, I voted...
PEREZ: ... has incredible task ahead of him. And we don't know how he's going to accomplish all of this.
DOBBS: I know about you, Miguel, but I think, not only are we about to find out, I think Barack Obama is about to find out.
PEREZ: Absolutely. DOBBS: I don't believe he has and nor could he be expected to have any real concept of the challenges facing this country. He's already laid the groundwork for changing expectations, if not lower expectations.
FUND: Let's give him the benefit of the doubt. I think he's shown remarkable surefootedness until now. His early moves clearly show that he understands Washington better than a lot of people expected. I think we have to presume he's going to take charge and have a program and get it through Congress.
LOUIS: You know, I don't think it was imagination, but when he gave the victory speech in Chicago...
DOBBS: Right.
LOUIS: There was a certain somberness there, a certain gravity there.
DOBBS: Oh, absolutely.
LOUIS: I don't think he was acting. And that was before he got his first national security briefing.
DOBBS: Yes.
PEREZ: But that victory speech indicated to me there was a complete turnaround five minutes after he got elected. He was already saying...
FUND: He was lowering expectations.
PEREZ: Yes, absolutely. He got -- five minutes before, he was like, "I'm going to give you this, I'm going to give you that, I want to give you the other." And then 10 minutes to five minutes later, "You got to help me with this. It's going to be difficult. It's going to take more than four years." He even announced his second term.
(LAUGHTER)
DOBBS: Yes. Well, no one has accused Barack Obama of being a fool. He is meeting next week with the president. They will meet in the Oval Office. What do you think that conversation is going to be like, Errol?
LOUIS: Well, other than, you know, get out my chair?
(LAUGHTER)
LOUIS: No. I think they're going to be respectful. They both recognize that the presidency is bigger than they as individual politicians or even as individual Americans. I think there is a great reverence that both of them have for the country, for its institutions. The White House is the pinnacle of all that.
So, I think they're going to have the kind of conversation we al think that they should have which is to say, you know, how do we...
DOBBS: Get out of my chair.
(LAUGHTER)
LOUIS: Well, how do we pass this great trust from one party to the next?
FUND: I think Bush is going to warn him that Joe Biden was right. The day after the election, the Russian president said...
DOBBS: Yes.
FUND: We're going to put missiles on Poland's border to counteract your anti-missile system. I think Bush is going to say, you are going to be challenged and it's going to be nothing personnel. They just want to rattle the cages of the United States and see if the new guy can take charge. And he says, I think Bush will him -- seize that initiative and fire back strongly in terms of rhetoric.
PEREZ: I wonder if there are things that Obama can ask of Bush now, though. Can you get this started for me? Can you recommend this for me?
FUND: But there is a lot of cooperation. There seems to be a lot of cooperation between these both men (ph).
DOBBS: Well, the two men agree on a host of issues. In reality, well, (INAUDIBLE) them, illegal immigration and border security -- all that are going to be issues according to Speaker Pelosi, depending on whose agenda we do follow here. You know, that they are going to bring them forward. The tax cut issues, he's already be declared that it my not happen.
FUND: Like with Clinton. Clinton promised a middle-class tax cut, it never arrived.
DOBBS: Well, what has arrived for this president-elect, however, is something we all wish should not, and that's a set of challenges that are difficult indeed.
All right. Thank you very much. Appreciate it. Miguel, thank you. Thank you, Errol. And thank you, John.
And we thank you for joining us. Please join us tomorrow and please join me on the radio Monday through Friday for the "Lou Dobbs Show," go to LouDobbsRadio.com to get your local listings. For all of us here, thanks for watching and good night from New York.
