Return to Transcripts main page
GOP Governors Meet; Should Auto Manufacturers Receive Bailout?; Eonomic Summit
Aired November 13, 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: It's going to be an interesting four years of jockeying to see who becomes the nominee.
Dana Bash in Miami for us this morning. Dana, thanks.
KIRAN CHETRY, CNN ANCHOR: Well, it's 7:00 here in New York. Breaking this morning, a global market plunge.
Hong Kong and Japan posting more than five percent losses after the Dow dropped more than 400 points. Twenty-nine of the 30 Dow components finished lower. Only General Motors posted a gain.
And also breaking now, Wal-Mart says its third quarter profit was up. The world's largest retail chain is reportedly reporting quarterly revenues of close to $98 billion. It's the only stock in the Dow Jones Industrial Average that is higher on the year. It's hard to believe it's news now when a company actually post a profit.
The Cheneys will host the Bidens this afternoon. The vice president- elect and Jill Biden, his wife, will get a tour of their new home on the grounds of the Naval Observatory. Joe Biden has been a senator since 1973 but has never lived in Washington.
No love lost between the incoming and outgoing veeps. Biden called Cheney probably the most dangerous vice president in American history during his debate with Sarah Palin.
And the Feds say they are looking at selling leases to drill for oil and natural gas off of the Virginia coast. The president paved the way for this when he lifted the offshore drilling ban in most areas of the U.S. back in July. Congress followed by letting the moratorium expire on banning offshore drilling in September.
ROBERTS: Well, it was the bailout that we were urgently told we could not live without. That the economy would collapse without it. But now, the Treasury Department is abandoning it's original plan and spending your $700 billion in many other creative ways.
Treasury Secretary Henry Paulson came out yesterday and said the focus is shifting from buying up bad mortgages, the so-called toxic assets, to the consumer and saving credit markets.
(BEGIN VIDEO CLIP)
HENRY PAULSON, TREASURY SECRETARY: When we went to Congress, the liquid assets looked like the way to go. As the situation worsened, the facts changed. I will never apologize for changing an approach or strategy when the facts change.
(END VIDEO CLIP)
ROBERTS: So here's the breakdown as it stands now. $250 billion set aside to buy shares in banks, 40 billion to insurance giant AIG, 60 billion yet to be committed which leaves $350 billion up for grabs. Will the auto industry get a hunk of that?
A lot of questions to ask this morning. Christine Romans here "Minding Your Business" this morning.
First question I have is, Henry Paulson used to run a financial firm, right?
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Yes. That's right.
ROBERTS: He's supposed to know about this stuff?
ROMANS: Well, you know, we are in unchartered waters here. And there -- he says he's not making any apologies because he is not going to say I'm going to apologize for changing as the conditions on the ground change. That things changed so quickly from when they started their plan to when they actually got the money from Congress, that the TARP, that buying of the toxic assets became irrelevant. But we just now learning officially they're not going to be buying those toxic assets. Has nervousness in the markets, nervousness among the people who are saying, look, what's going on here and how well are we ahead of this problem?
The treasury secretary telling reporters, telling Congress, the financial system has stabilized but there's still a lot of work to be done. And we know -- we know that's true. The treasury secretary also has to go to Congress, John, before he can get any more money.
There's $350 billion that he has to ask Congress for, and there are people in Congress who are going to be asking a lot of questions before they are going to sign off on that last half of the chunk. He's got 60 billion left over to spend. There are people who want the auto industry to have some of that. But definitely the treasury secretary saying consumer finance is a focus.
He's going to take now. Also, that means, you know, credit card companies, auto loan companies, 40 percent of consumer credit comes from securitizing, you know, these loans and these areas. And consumer finance, he's going to focus in on that.
Now, all of this happening as the crisis rages in the housing market. We know now that every day thousands of people are literally being locked out of their homes, the padlock from the sheriff on the front door; 84,868 homes lost to foreclosure just in October and look at the number of filings.
This is people, default filings, foreclosure filings all the way down the line -- 279,000 filings. So while the government is trying to figure out who to help, how to help them, how much money to put where, the housing crisis still rages. ROBERTS: You know, I was looking at some real estate in New York and there's still some of these developments are offering five percent down payment on these properties.
ROMANS: Oh --
ROBERTS: Still going on out there.
ROMANS: It certainly is.
ROBERTS: Christine, thanks so much for that -- Kiran.
CHETRY: Well, bailout or bankruptcy for the big three? That's a debate going on right now in Washington. Cutting another rescue check perhaps.
Democrats say they'll try to save the American auto industry with or without the president.
Kate Bolduan is live for us on Capitol Hill. And the Democrats have been urging the White House to step up. They're not saying right now if they will or they won't. What's the latest on the debate?
KATE BOLDUAN, CNN CORRESPONDENT: Well, the debate right now, Kiran, very simply is Democrats are sending a message that if the White House won't step up and assist automakers, well, then, Congress will. And Congress could be looking at a new bill and a vote next week.
BOLDUAN (voice-over): Democrats are ratcheting up pressure on President Bush to go along with bailing out the American auto industry, despite fresh pushback from congressional Republicans and the White House.
REP. BARNEY FRANK (D), FINANCIAL SERVICES CHAIRMAN: We will pass the bill and then he can decide to veto it or not.
BOLDUAN: Barney Frank, chairman of the House Financial Services Committee, is the man tapped to craft the automaker bailout bill. According to a Democratic aide, the new bill will include a provision giving taxpayers an ownership stake in the automakers raising the question of whether the government will demand reforms. A bill could be ready as early as Tuesday, perhaps $25 billion coming from the Wall Street bailout package, money, Frank says, is needed.
FRANK: And if we can condition that the economy is in, the total collapse of the American automobile industry would do more damage than not doing anything.
BOLDUAN: This may make next week's lame-duck session one last showdown with President Bush. Conservative Republicans are finding it hard to stomach the idea of coming hot on the heels of a string of government rescues.
REP. RANDY NEUGEBAUER (R), TEXAS: Members of Congress all have these voting cards. Right now, we're using them as credit cards.
BOLDUAN: Republicans like Alabama Congressman Spencer Bachus asked, "Where do the bailouts end?"
REP. SPENCER BACHUS (R), ALABAMA: And I'm afraid if we don't answer the question very soon, when does this stop, that it's going to stop when we run out of money. If we don't, I think the American people will simply rise up and stop us.
BOLDUAN: Now, one big question is what happens in the Senate? Democrats in the Senate, they right now maintain a slim voting majority and there is some skepticism among Republicans there. But it's still unclear if there's enough opposition to block this new bill -- John, Kiran.
CHETRY: Kate Bolduan for us this morning. Thanks so much.
We'll find out a little bit more about that as well. We're going to be speaking to the Michigan governor. She's also pushing for some help for the "Big Three."
ROBERTS: Can you imagine if General Motors were to go bankrupt?
CHETRY: We talked about the ripple effect a little bit yesterday as well.
ROBERTS: Coming up now at seven minutes after the hour. We're going to have a little fun here.
If you're like us, you probably spend more time with your co-workers than you do with your actual husband or wife. And according to a new survey, close to 25 percent of workers say that they also have a work spouse.
CHETRY: So what exactly is a work spouse? Well, it's a co-worker of the opposite sex with whom you have a close platonic, platonic relationship.
ROBERTS: So how do you identify if you got a work spouse. Well, straight from CNN.com, here are the seven signs.
Number one, you depend on a particular co-worker for office supply, snacks and aspirin. Number two, there are inside jokes that you and a specific co-worker share.
CHETRY: You can be bluntly honest with this person about his or her appearance, hygiene and hair, which is, of course, a big thing on our show or vice versa.
Also, when something eventful happens at work, this is the first person you seek out to get the scoop.
ROBERTS: At breakfast, lunch, coffee breaks, you go out for lunch whatever, your closest co-worker knows what to order for you and how you like your coffee and, of course, vice versa. And here's another sign. You and your co-worker can finish each other's sentences. There you go.
CHETRY: Finally, someone at your office knows almost as much about your personal life as maybe your best friend or your real life spouse does.
Somebody feel like they're going down the road, but I know what you like to eat. We borrow emergency packets and Red Bull from each other. And what else?
ROBERTS: You have about five work spouses.
CHETRY: You know --
ROBERTS: You're a work spouse polygamist.
CHETRY: Oh, please. You also are the first one to give me some hair advice, right?
ROBERTS: There you go.
CHETRY: I guess we're married.
ROBERTS: So, do you have a work spouse? Check it out at CNN.com.
CHETRY: Still ahead, disgraced Pastor Ted Haggard is speaking out. He's dropping a bombshell. We're going to hear what he says started to rage in his heart at eight and a half minutes after the hour.
ROBERTS: The education president.
(BEGIN VIDEO CLIP)
ARNE DUNCAN, CEO, CHICAGO PUBLIC SCHOOLS: There is a tremendous sense of urgency around public education. We can't wait. We'll lose another generation of children.
(END VIDEO CLIP)
ROBERTS: Teaching the kids. A top priority for the president-elect. But will the financial meltdown break down the education budget?
You're watching the "Most News in the Morning."
(BEGIN VIDEO CLIP, "THE TONIGHT SHOW WITH JAY LENO")
JAY LENO, HOST, "THE TONIGHT SHOW WITH JAY LENO": In his first public comment since he got caught with an underage male intern, former Congressman Mark Foley, remember him? Well, he said there's a huge difference between hitting on prepubescent boys and sending dirty text messages to 17-year-old young men. As soon as he can figure out what the difference is, he'll let us know.
(END VIDEO CLIP)
CHETRY: That's Jay Leno talking about disgraced former congressman, Mark Foley. Foley breaking his two-year silence in an emotional interview. It's the first time that we've heard from the Florida Republican since the scandal over lewd instant messages to congressional pages, messages he admits were inappropriate but that he -- but says that's as far as it went.
(BEGIN VIDEO CLIP)
FMR. REP. MARK FOLEY (R), FLORIDA: I never had sex with a child. I never had sex with a minor. A pedophile is somebody who is having sex with a prepubescent person. And that is an outrage to be called that. Now I understand why my critics would, and I accept the fact that that's going to be so. But I don't have to accept the title, and I won't accept the title because it's not true.
(END VIDEO CLIP)
CHETRY: Forced resignation from Congress, Foley checked into rehab for alcoholism and also got treatment to help him deal with being sexually abused by a priest when he was 12.
ROBERTS: Well, disgraced evangelical pastor, Ted Haggard, also speaking out for the first time after accusations that he had an affair with a male escort. Haggard was back in the pulpit earlier this month, not in front of the mega church that he founded, mind you, but from a friend's pulpit instead. And he dropped a bombshell while he was there.
Carol Costello joins us now live from Washington with more on this. What was the bombshell, Carol?
CAROL COSTELLO, CNN CORRESPONDENT: Oh, he did drop a bombshell, John. I mean, former Pastor Ted Haggard has made a stunning confession. The disgraced evangelical preacher told a small congregation in Illinois he'd been sexually abused by a man when he was in the second grade and that might have been what he "sinned so horribly two years ago."
(BEGIN VIDEO CLIP)
VOICE OF TED HAGGARD, FORMER EVANGELICAL PASTOR: My dad was pretty, pretty successful. He had a lot of workers. One of those workers had a sexual experience with me. I was 7 years old.
(END VIDEO CLIP)
COSTELLO: Now, you may remember a former male escort named Mike Jones accused Haggard of having sex with and buying crystal meth from him. Haggard admitted to sexual immorality and resigned as senior pastor from the mega church he founded. Today, he said he's a stronger Christian than he's ever been in his life but he had a terrible secret he kept hidden for years.
(BEGIN VIDEO CLIP) VOICE OF TED HAGGARD, FORMER EVANGELICAL PASTOR: There I was 50 years old, a conservative Republican, loving the word of God, an evangelical, born-again, spirit-filled, charismatic, all those things. But some of the things that were buried in the depths of the sea from when I was in the second grade started to rage in my mind and in my heart.
(END VIDEO CLIP)
COSTELLO: Haggard also told the congregation the allegations against him were exaggerated. Certainly, a change in tone from two years ago when at first he said he didn't even know Mike Jones.
(BEGIN VIDEO CLIP)
TED HAGGARD, FORMER EVANGELICAL PASTOR: We are not hesitant at all with an independent group asking the questions, what did you say his name was?
UNIDENTIFIED FEMALE: Mike.
HAGGARD: Mike. And hearing him and then investigating it and then deciding what I should, what should be done with me.
(END VIDEO CLIP)
COSTELLO: Haggard's November 2nd pulpit confession came two years almost to the day after his sex scandal became public. In his sermon, Haggard talked of a time when he was both broke spiritually and financially.
(BEGIN VIDEO CLIP)
VOICE OF TED HAGGARD, FORMER EVANGELICAL PASTOR: There came a moment in my life when we were so alone and there was so much despair that I became suicidal. And I'd figured out how I was going to kill myself and rid the world of the horrible curse of Ted Haggard.
(END VIDEO CLIP)
COSTELLO: The pastor of the church where Haggard gave his two sermons is a friend of Haggard's. Haggard is now, by the way, working at a mortgage insurance company and has not gotten back to us with a comment that we reached out to him several times.
COSTELLO: That's what he's doing now, John.
ROBERTS: Bombshell indeed.
COSTELLO: Yes. Yes.
ROBERTS: Carol, thanks for that.
COSTELLO: Sure. CHETRY: Automakers on the brink of collapse and the Detroit three are begging for government bailout money. So is Michigan's governor. She's going to join us live to talk more about why she thinks it's necessary not only for her state but for the whole country.
Sixteen minutes after the hour.
ROBERTS: Pure ecstasy from the dance floor to the psychiatrist's office.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: It's embarrassing to be in your 30s and be afraid to go into your house, you know, or to be alone in your house.
(END VIDEO CLIP)
ROBERTS: Healed by a common street drug.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: I fought it once, and it never happened again.
(END VIDEO CLIP)
ROBERTS: We're paging Dr. Gupta.
You're watching the "Most News in the Morning."
CHETRY: Welcome back to the "Most Politics in the Morning." As the Obamas get ready to move to the White House, they're also trying to choose a school for the new first daughters, Sasha and Malia. But their choice between public or private schools points to another big challenge for the president-elect. It's America's crumbling education system.
Jim Acosta is live in D.C. with more on this for us this morning.
JIM ACOSTA, CNN CORRESPONDENT: Hey, Kiran. One thing we can tell you is that the D.C. public school officials have confirmed to CNN they have discussed education options with the Obama family. But the issue of education is much bigger than public or private.
ACOSTA (voice-over): If Barack Obama puts his two daughters in private schools in Washington, it will be for good reason. The public school system in D.C. is one of the worst in the nation. The elementary school zoned for the White House was just closed over the summer and merged with the closest middle school. That means pre-K students are on the same campus with eighth graders. This parent say things are improving but not fast enough. MICHELLE NEWBY, PARENT: I didn't like it when the children didn't have books to bring home. I did not like that. I didn't like that they had to leave their books at school.
ACOSTA: During the campaign, Obama cited education reform as one of his top five priorities.
SEN. BARACK OBAMA (D), PRESIDENT-ELECT: I don't want to just hold our teachers accountable. I want you to hold our government accountable. I want you to hold me accountable.
ACOSTA: He pledged to spend $10 billion a year on early childhood education, put money in the under-funded No Child Left Behind program and double the funding for charter schools.
Sounds promising to the man who runs the public schools in Obama's hometown of Chicago, Arne Duncan, a reformer who is being mentioned as the possible next secretary of education.
ARNE DUNCAN, CEO, CHICAGO PUBLIC SCHOOLS: I think he could be the best education president we've had in decades.
ACOSTA: Duncan dismisses any notion that the economy will push education to the backburner.
DUNCAN: There's a tremendous sense of urgency around public education. We have to do better. Our children deserve better. We have to do it now.
We can't wait, you know, three years, four years, five years. We'll lose another generation of children.
ACOSTA: But President-elect Obama has another looming education problem? Budget cuts.
A new study on the impact of the economic downturn on public education says 62 percent of school superintendents are lowering their thermostats -- yes, thermostats, to save money. Forty-eight percent are reducing hiring. Thirty percent are considering layoffs. Many of the cutbacks at under-funded schools.
WENDY KOPP, FOUNDER, TEACH FOR AMERICA: We're absolutely starting to hear from school systems that they're projecting significant budget cuts. Faced with huge budget cuts, they will have to layoff teachers. They will lay off the most recently hired teachers.
ACOSTA: Which is why a lot of professional educators are tying their issues straight to the economy. As the leader of an association of schools superintendents put it, a strong public school system produces a strong workforce -- Kiran.
CHETRY: If they do choose public school, Barack Obama for his two kids, what are their options in D.C.? ACOSTA: Well, it is good to point out and the D.C. public school officials would like us to point out that they do have school choice in the district and so the Obamas would not necessarily have to send their kids to the school that they are zoned for. And if you look at the pictures of that elementary school in our piece, you would find that that would be a good thing.
And a lot of people in this town have described the system as a petri dish for school reform. So there's a lot to be had here for the Obama family but this system, let's not -- let's not mince words here, has a long way to go, Kiran.
CHETRY: All right. Jim Acosta for us this morning. Thanks.
ACOSTA: You bet.
ROBERTS: The ever changing federal bailout. The new plan for your money. Is it a bait and switch, or is it a good idea? We'll check in with economist Jeffrey Sachs coming up.
And is there any money in that bailout for the automakers? Michigan's governor, Jennifer Granholm, says there needs to be. She'll make her case for why the "Big Three" need help.
It's 23 minutes after the hour.
(BEGIN VIDEO CLIP)
HENRY PAULSON, TREASURY SECRETARY: When we went to Congress, the liquid assets look like the way to go. As the situation worsened, the facts changed. I will never apologize for changing an approach or strategy when the facts change.
(END VIDEO CLIP)
ROBERTS: That was Treasury Secretary Henry Paulson. He's making a dramatic shift to the bailout plan that he sold Congress and the American public on back in September. Instead of buying up those troubled bank assets, so-called toxic assets, the government will buy stock in banks and provide financial institutions with cash. It's a program called recapitalization.
Joining me now is Jeffrey Sachs. He's the director of the Earth Institute at Columbia University, special adviser to the United Nations.
You know, we were told and members of Congress were told by Henry Paulson that if we don't do this toxic-asset buyout, and this was on a Thursday, I think you said that by Monday we may not have an economy anymore. Now he's saying, oh, that was all a bad idea.
JEFFREY SACHS, SPECIAL ADVISER, UNITED NATIONS: Well, they had no plan. That was the problem. They were completely scrambling once Lehman Brothers went under and then there was a worldwide panic. They panicked. Now they wanted to do something, but they didn't have a plan in place. And they still don't have a plan in place. And we have a new administration coming in and they're going to be the ones that really make the plan.
ROBERTS: What I find fascinating about this, though, was that you were one of a small group of economists who were saying from the outset, this toxic asset buyout is a bad idea.
SACHS: It didn't make sense at the time. It wasn't going to solve the problems so that the banks needed recapitalization. The economy needs lending again. So I think he's groping towards the right direction right now, secretary Paulson, but they never did figure out what to do.
Time has run out on this administration. Now we're in this difficult period until January 20, but the new administration will come in, I think, with a much stronger plan.
ROBERTS: So you think he's on the right track. Other economists, other business people like George Soros think that he's going to be on the right track now too, because he was against the toxic-asset buyout. But the market doesn't like these shifting sands. Sam Stovall...
SACHS: That's exactly right.
ROBERTS: Sam Stovall from Standard and Poor said investors are hungry for a steady, deliberate recovery plan and are not happy with Paulson's "ad hoc approach."
SACHS: Well, when he announced yesterday forget it, $700 billion we're not doing it. You saw markets all over the world tumble because people want clarity. They want a vision. They want a direction. But an outgoing administration that has failed can't provide it any more. That the true fact of life.
So we need the new government to come in. They have to unveil a strategy that is credible, that the world can believe in, and also that coordinates with other countries. That's going to be very important.
ROBERTS: But in the meantime, President Bush is giving a speech on the economy today and then Friday and Saturday at the White House. He's got this big international economic summit. Are you saying that that's a moot point that nothing can come out of it because we don't have an effective government in place?
SACHS: Well, it's a strange timing. The most that can come out of it is that the world says we're going to work together to stimulate the global economy which is just seeing the floor fall through right now. And so, we need the cooperation of Japan, of China, of Europe, the United States working together. No finger pointing, cooperation.
China did something very important at the beginning of this week that got very little notice relatively. They announced a huge stimulus package. I wish the president of the United States had said that's wonderful, let's make this a basis for cooperation, because that's the way we're going get out of this is a global cooperation on what is now a global crisis.
ROBERTS: You know, just to -- what President Obama will be facing when he takes office. You've said all along that this country can't afford the tax cuts that John McCain was proposing, but then you also said we can't afford the tax cuts that President-elect Obama is proposing. What needs to happen?
SACHS: The first year is going to be huge deficits. That's already built in in the same way that the recession is built in. But we're going to need a strategy in the out years that shows we're not going to have trillion dollar budget holes year after year after year. Otherwise, we'll have no credibility.
The United States in world markets, we're still borrowing heavily from abroad. So we need a multi-year scenario, how are we going to get out of the mess. And that's why only a new administration can make that kind of approach.
ROBERTS: All right. You're suggesting that they may indeed have to raise taxes?
SACHS: Well, they're going to have to raise the revenues as a share of national income over time. That's for sure because we've got a hole that's many percent of GNP. They're going to have to tell us how that hole will be closed over time.
ROBERTS: Jeffrey, we got to run, but it's great to see you as always.
SACHS: Thank you so much. Thanks a lot.
CHETRY: Well, it is 7:30 here in New York. A look at the top stories.
Gas prices falling overnight for the 57th day in a row. The national average now, $2.18 a gallon. According to AAA, six states now have prices below two bucks a gallon.
The Republican Party wants you to throw out the McCain-Feingold campaign finance rules. The GOP expected to file two lawsuits today. The move is seen as a slap in the face to John McCain whose own laws may have worked against him in this election. He was drastically outspent by Barack Obama.
And check out these dramatic pictures coming to us from Colombia. Thousands of protesters taking to the streets, all of it in response to scams by illegal loan companies that robbed thousands of people of millions of dollars. Cops used tear gas to try to subdue the angry mob. These protests occurred in at least 10 different cities.
Well, this morning we've been talking about where this $700 billion of your money for the bailout is really going to go. Now Detroit's big three automakers want in on the help as well.
And our next guest is warning of dire consequences if we don't help the automakers out of the mess, not just for the state of Michigan but for the country as a whole.
Joining me now from Motor City, Detroit, Michigan is Michigan governor, Jennifer Granholm.
Governor, thanks for being with us this morning.
GOV. JENNIFER GRANHOLM (D), MICHIGAN: You bet. Thanks for having me on.
CHETRY: First of all, tell us in a nutshell how much trouble the big three automakers are in?
GRANHOLM: Well, the situation is extremely serious. And, you know, of course, the auto companies support one in ten jobs across the country. If they are permitted to fail, it will mean huge consequences across the nation.
These auto industries, whether it's the advertising industry or the dealerships or the -- parts makers, which have tens of thousands of parts all across the country would be devastated. This is why it is so important to not allow them to fail.
CHETRY: The critics say that the government shouldn't be bailing out the auto industry. Pete Morici is a business professor. He's a former chief economist, as well, at the U.S. International Trade Commission.
Here's what he said about the big three automakers and the possibility of a bailout. Let's listen.
(BEGIN VIDEO CLIP)
PETER MORICI, UNIVERSITY OF MARYLAND ECONOMIST: General Motors, Ford and Chrysler have been some of the worse run companies in America. That's why they are in the fix that they are in. That you can pay your workers too much, you can sloppy management, and you can be slow to the market with new products and the government will bail you out.
It simply makes no sense to send that kind of message to the private sector in America.
(END VIDEO CLIP)
CHETRY: Do you believe that it's in bad business decision on the part of the big three are the reasons they're in the mess they're in right now?
GRANHOLM: Well, the big three has been in the middle of a restructuring now for the past several years. Believe me, we've seen it in Michigan. Two of the three have brand new leadership. In fact, two of the CEOs are not even from the auto industry. The auto industry will tell you that they want to lead this nation in producing fuel efficient vehicles, electric vehicles, plug-in electric, hybrid vehicles. It is critical to the nation that we have an auto industry that will help to pull -- to make us energy independent.
If we see that territory to foreign competitors, that means the batteries that will be producing these electric vehicles will be made in Asia. It means that the oil will come from the Middle East and our energy security is compromised.
This is a moment of crisis that allows us to invest in this industry through a loan, you get your money back, but through a loan and ensure that the American auto industry, American manufacturing industry leads us to energy independence and energy security.
CHETRY: Would there be assurances that they really have streamlined, changed their ways, found a better business model? If all this was money goes into them, where -- is the assurance that -- as you said it's a loan -- that taxpayers would see their money back?
GRANHOLM: I think that there will be assurance. I know that there will be because it's part of the business plan that they have been adopting. For example, General Motors has the Volt online for 2010. The Volt is an all-electric vehicle. It's what people want.
They want to see -- and Ford has five hybrids right now in the pipeline and on the streets. We want to make sure that these vehicles, that these -- this auto industry, in partnership with Congress will survive and will help to lead us to energy independence.
I think that there will be demands. I think these executives, when they come and testify next week, will tell you that this is not your father's automobile company. That this is the new auto industry and the new auto industry wants to be a partner and leading.
CHETRY: I understand what you're saying. There are critics, though, who say that they are a little bit late to the game, that foreign automakers have already seen this, anticipated it, and they're -- have their cars already going online and are already out there in the marketplace.
One of your -- well, Republican congressman Jeb Hensarling telling the "Wall Street Journal" that really we can't be in the business of picking winners and losers, for example, should this money also go to help faltering airlines and other companies as well.
I mean how do you decide that it's OK to do it for the automakers and not for other companies or businesses?
GRANHOLM: Well, I mean, the -- we decided that the financial industry was too important to fail by putting $700 billion into it. All the auto industry is asking is for $25 billion of that $700 billion because they, too, are too important to fail in terms of the number of jobs, in terms of what it would do to our GDP, to our national economy, and certainly how it would compromise our ability to be energy independent.
That is a critical national need. This is a national issue. This energy independence and having an auto industry that can help lead us there is critical for the nation.
CHETRY: Certainly a tough spot to be in, not only for your -- for your state but as you said the repercussions, it's like throwing a pebble in the water and the waves certainly go out far.
Governor Jennifer Granholm, thanks so much for joining us this morning.
GRANHOLM: You bet. Thank you.
ROBERTS: Two super powers competing on the global stage. An Obama administration will no doubt mean a huge shift in America's foreign policies. So how will the president-elect deal with the challenge of China?
And a new treatment for post-traumatic stress. In a remarkable leap of faith researchers have turned to a street drug with a dangerous reputation to help people who have suffered through terrible things. So does it work? We're paging our Dr. Gupta this morning.
You're watching the most news in the morning.
ANNOUNCER: "Minding Your Business" brought to you by...
ROBERTS: Welcome back to the most news in the morning.
In preparation for a new Obama administration we are looking into the issues certain to lands on his Oval Office desk.
Our State Department correspond Zain Verjee has today's "Memo to the President" on the rise of China.
ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT (voice over): Mr. President, China is gaining on the U.S. It's super power drive on the march at the Olympics. In its first space walk. Its real power. Its military might. Expanding at such an alarming pace that the U.S. needs to counter the threat.
Its silent clout with U.S., China owning more than half a trillion dollars of U.S. debt, competing for vital resources, locking up key oil and mineral deals.
(On camera): Victor Cha is a former White House official and a China expert. He's now with Georgetown University.
China is a massive country, more than a billion people live there and it really does dominate the entire region.
Victor, in your view, what's the key number one issue on the president's desk when it comes to China?
VICTOR CHA, GEORGETOWN UNIVERSITY: Well, the president needs to understand, Zain, that the most important unanswered question in international politics today is the rise of China. And the United States must address that rise.
VERJEE: What choices does the president have?
CHA: I think the next president needs to start from the very beginning with the Chinese at a very high level and single out the areas upon which there can be a lot of cooperation.
VERJEE (voice over): But first experts say the U.S. must give China its due as a true world power while pressing Beijing to step up to that responsibility.
An early challenge, dealing with a nuclear armed North Korea, amid rising fears Kim Jong-Il could die plunging North Korea into chaos. The U.S. must persuade China to work with the U.S. on issues such as global warming and not back down on selling U.S. arms to Taiwan or criticizing China's human rights record.
VERJEE: China has become really essential to the U.S. Just pick an issue, there's almost no issue that can be dealt with without working with China or where China has a major influence on whatever outcome -- John?
ROBERTS: You know, looking back over history, Zain, President Clinton described China as a strategic ally. Governor Bush came along in the fall of 2000 during the debate...
ROBERTS: ... and said it's not a strategic ally. It's a strategic competitor.
How do experts think that President Obama should describe China?
VERJEE: Right. You're exactly right, John. I mean the U.S. has seen China as both critical to it, also as a rival. Experts are now saying what the U.S. needs to do is to develop something completely new.
They're calling it a doctrine of interdependence where that needs to be the centerpiece of an Obama foreign policy plan or there will be trouble on every single agenda item that we just pointed out -- John?
ROBERTS: Interesting. We'll see how they handle it.
Zain Verjee for us this morning. Zain, thanks so much.
Tomorrow our "Memo to the President" will look into what's next for the Navy's detainment camp at Guantanamo Bay, Cuba. That's right here on AMERICAN MORNING. CHETRY: Well, now that the search is on for the first pet for the Obama girls, every dog breeder on earth is whining to be picked. The D.C. dog lobbyist getting quite aggressive.
AMERICAN MORNING viewer Kenny Chesney is on top of the country music world again. The (INAUDIBLE) of his big night.
You're watching the most news in the morning.
CHETRY: That's Kenny Chesney taking country music's top prize, Entertainer of the Year. He's a dynasty. It's Kenny Chesney's fourth win in just five years for the coveted, coveted, award. And now he's tied with Garth Brooks for most of all time.
Carrie Underwood also winning big. She got her third straight Female Vocalist of the Year award as well.
Someone who was up late watching the CMA is our Reynolds Wolf, maybe even Rob Marciano because he's not in today and you are.
REYNOLDS WOLF, CNN METEOROLOGIST: Oh, yes. Yes, and you're right I did stay up late and -- definitely I have a TiVo so I can watch it over and over and over again because those moments, they live forever.
CHETRY: I like the Nashville shout-out this morning. All right, Reynolds...
WOLF: There you go.
CHETRY: ... always thinking. Thank you.
ROBERTS: A radical new way to treat post-traumatic stress disorder using the drug ecstasy. We're paging Dr. Gupta for the news on ecstasy therapy to see if it works.
And Sarah Palin has been all over the air waves. But as the Republican Party regroups after big losses on Election Day, should she really be the new face of the GOP? See what the experts say.
ROBERTS: There's a new study out that looks at an unusual treatment for post-traumatic stress disorder. The drug is called Methylenedioxymethamphetamine. You probably know it better as ecstasy.
We're paging our Dr. Gupta, CNN's chief medical correspondent, in Atlanta this morning.
This is really fascinating stuff, Doc.
DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: It is. And, you know, we were the first at CNN to report it when federal officials approved the study, this very unusual study.
Now we know the results of the study. They came out. They're being presented today. But what we really wanted to do, John, was find one of the study participants and hear directly what went into the study. We did. Take a look.
GUPTA (voice over): Gail Westerfield is showing us a tape of her therapy session. She's under the influence of MDMA.
GAIL WESTERFIELD, SUFFERED PTSD: I had a happy childhood, and when I think about it, I feel really, like it wasn't that happy.
GUPTA: Westerfield struggled with depression almost all of her life and the sense of being out of it. She says it goes back to a childhood assault and later being raped in college.
I mean it's embarrassing to be in your 30s and be afraid to go into your house, you know, or to be alone in your house.
GUPTA: She was diagnosed with post-traumatic stress disorder but nothing helped her. And so she met Dr. Michael Mithoefer who was researching MDMA as a part of therapy.
(On camera): MDMA, of course, is better known by its street name, ecstasy. Take a look here. At least 99 different types of pills as you see right there. When taken it causes the brain to be flooded with neuro-transmitters, especially serotonin. And that's the key to our moods and our emotions.
Some doctors say it's the well-known effects of ecstasy --open alertness, euphoria, calmness -- that could prove useful when it comes to therapy.
(Voice over): Dr. Michael Mithoefer pilot study involved 21 patients, those getting MDMA with therapy saw more improvement in their mental wellbeing than patients who got a placebo.
Just as important, there were no major side effects. Some illicit ecstasy users run into problems like a rapid heart rate and depression.
I'm excited that we got this kind of result, but it is only a first step.
GUPTA (on camera): Did it work?
WESTERFIELD: Oh, I'd say absolutely.
I can't believe I had this in my head. I can't believe it's in me.
I had recurrent dreams since I was a little bit. I can be walking through a house and the lights would turn out and then this force will overwhelm me. After the MDMA, I fought it once and it never happened again.
GUPTA: Four years since the last MDMA session, the nightmares are gone.
GUPTA: You know, we've been doing a lot of reporting about post- traumatic stress disorder. It is very difficult to diagnosis. It is very difficult to treat and that's what prompts studies like the one we just told you about there.
There are also studies undergoing on the same treatment in Canada, in Israel and Switzerland. So this is getting closer and closer to being main stream, John.
ROBERTS: Sanjay, we hear so much about the potential dangers of ecstasy. You, yourself, you had 99 different variations of it.
ROBERTS: Does this mean the drug is, in fact, safe or is it how it's formulated?
GUPTA: Well, you know, on this -- the study, it was in a very controlled situation. So they monitor blood pressure, checked vital signs every 15 minutes. They had a doctor standing by.
In the short term, it could cause some serious side effects. It could cause overheating, it can cause dehydration, problems of the heart, and that's if you're in one place. People get behind the wheel on ecstasy, even more problems. So, you know, no one is advocating this to be used for anything other than a control situation like this. But you see the potential benefits in that particular instance.
ROBERTS: And in some of the street formulations of it, as well, there are impurities along with the raw drug, are there not?
GUPTA: That's right. And so with this particular study, we talked to Dr. Mithoefer specifically about that, they're using a pure form of it, they're using the chemical form of it...
GUPTA: ... that induces these effects.
ROBERTS: Fascinating stuff. Dr. Sanjay Gupta, with that this morning -- Doc, thanks so much.
GUPTA: Thanks, John.
ROBERTS: 53 minutes after the hour.
CHETRY (voice over): After the military banned YouTube, TroopTube is born. UNIDENTIFIED FEMALE: Birthdays, the first softball game, my son losing a tooth.
CHETRY: Love and assurance, uploaded.
UNIDENTIFIED FEMALE: We can't wait to see you.
CHETRY: You're watching the most news in the morning.
ANNOUNCER: "Paging Dr. Gupta" brought to you by...
(BEGIN VIDEO CLIP)
GOV. SARAH PALIN (R), ALASKA: It's crazy to close the door before you even know what's opened in front of you. You -- you travel this road in life and as you turn a corner, and there may be something there that -- circumstances change. You've got to call an audible and you decide to shift gears, take another direction, I'm always open for that.
(END VIDEO CLIP)
ROBERTS: That's Alaska governor, Sarah Palin, dropping some hints about her future in an interview with CNN's Wolf Blitzer yesterday. But should Palin be the new face of the GOP?
Joining me now from Miami to talk about that and more, CNN contributor, Bill Bennett, host of "Morning in America."
We also want to point out, Bill, you used to be the drug czar, previous administration.
BILL BENNETT, CNN POLITICAL CONTRIBUTOR: Right.
ROBERTS: And you just want to add a little bit, a little coda, to what Sanjay Gupta was saying about ecstasy.
BENNETT: Good. Exactly. Good question you raised about impurities in ecstasy and don't get it on the street. Most often young people run into ecstasy in clubs. It's known as a club drug. They use alcohol and ecstasy. Very, very dangerous as both you and Sanjay pointed out.
Very-controlled circumstances may work, but this is not a general use drug, be very careful. Stay away from it unless you're talking to your doctor.
ROBERTS: Yes, don't go trying that at home.
Let me ask you about Sarah Palin. A lot of air this week. Do you think she could be the future of this party, Bill?
BENNETT: Well, she's -- I think she's certainly could be, one of the -- one piece of the future of the party, but I think a lot of us think here at the Republican Governor Association meeting, there are lots of people who are part of that future.
BENNETT: I think most of the attention that's -- Tim Pawlenty, Bobby Jindal. I was on a panel with Governor Jindal yesterday. John Huntsman from Utah. There's a lot of talent here. And Republicans are good at -- being governor. You know it's a more practical thing.
But she - as Sarah's obviously getting a ton of attention, the media just can't stay away from her, I think there's too much exposure, but, you know, a lot of people think the world of her. She has become a star, a celebrity. And, sure, she's got a right to put her in and let's see what happens.
I wouldn't make the mistake of thinking, you know, she's the only one on the list. There's a lot on the list.
ROBERTS: OK. Let me call you out on that. You said that Republicans make good governors. If that is, in fact, the case, why, come January, will there only be 21 out of 50?
BENNETT: Well, that's partly the cycle, it's partly the situation we've been in, it's partly the last eight years, which have been difficult time for Republicans. But I got to tell you, John, I've been watching a lot of the coverage, of course, mostly CNN, I'm a good loyal CNN watcher.
ROBERTS: And we appreciate that.
BENNETT: And the mood -- the mood -- well, I got to be, you know. But the mood that's being reported of depression is not right. I equate to a sports team. We lost the big game, but people said, you know, let's build for the next one. Disappointment but a lot of resolve, a lot of good ideas yesterday.
And I'll tell you, when you're around a lot of these governors, it's very, very encouraging.
ROBERTS: Hey now.
BENNETT: Look, they have a good run with Democrats.
ROBERTS: Look what the Boston Red Sox did.
BENNETT: Yes, that's right.
BENNETT: They had a good -- the Dems have had a good run, that's for sure. And we congratulate President-elect Obama. But the Republicans will be back. When you look at this bench.
BENNETT: Sarah Palin and others. It's good. ROBERTS: Well, let's talk about that. You were on a panel yesterday with Tim Pawlenty. Tim Pawlenty says that in terms of rebuilding, the Republican Party needs more than a, quote, "comb over."
When you were talking on this panel about possible things to do to rebuild the Republican Party, where were the thoughts running? Where were the ideas running?
BENNETT: Well, well, the governors, of course, were very practical. Said get back to our message that was suggested by the governor of North Dakota, the new governor of North Dakota that, you know, the message never got across.
Most of the economic talk was about earmarks and not the basic economic message about how democratic capitalism frees up all sorts of other things...
BENNETT: ... generates revenues, creates jobs. We got off message. There's a real open question, I think, John, as to whether a conservative agenda was run on and defeated or it was such a hibernized agenda that it wasn't really a test of the basic ideas.
I tend to believe that's true. I don't think basic conservative principals were tested and defeated. I think they weren't advanced.
ROBERTS: All right. Well, we'll be watching very closely this morning. Of course, Governor Palin is going to be speaking today as well as Governor Sanford from South Carolina. So we'll see what ideas bubble up.
ROBERTS: Bill Bennett, it's good to see you. Thanks for being with us and we appreciate...
BENNETT: Thanks, John. Thanks very much.
ROBERTS: We appreciate your loyalty.
BENNETT: Thank you. Thank you. You got it.
CHETRY: Just about 8:00 here in New York. A look at the top stories this morning.
Asian financial markets plunge over night. Japan's Nikkei index and Hong Kong's Hang Seng, both down more than 5 percent. Dow futures point to a flat opening this morning after Wednesday's 411-point loss.
And the Bush administration abandoning the original strategy for the $700 billion bailout. Instead of making the decision to buy up toxic mortgage debt, they're instead planning to invest that money directly in banks and to use it to encourage consumer lending.