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Lou Dobbs Tonight
Team of Rivals?; Bailout Deadlock; Obama Promises to Curb Lobbyists; Outrage over Wall Street Bonuses; Grim Outlook for Big Three; Raging Wildfires
Aired November 17, 2008 - 19:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KITTY PILGRIM, GUEST HOST: Thanks, Wolf. Tonight a show of unity by President-elect Obama and Senator McCain at their first meeting since the election. We'll have complete coverage of that.
Also a complete absence of unity on Capitol Hill as lawmakers fight over a bailout for the automobile industry, the chairman of the powerful House Financial Services Committee, Congressman Barney Frank, will join me.
And wildfires, they're raging in southern California for a fifth consecutive day. Officials are concerned that heat and low humidity might intensify the fires. We'll have a live report. We'll have all of that, all the day's news, much more straight ahead here tonight.
ANNOUNCER: This is LOU DOBBS TONIGHT: news, debate, and opinion for Monday, November 17th. Live from New York, sitting in for Lou Dobbs, Kitty Pilgrim.
PILGRIM: Good evening everybody. President-elect Obama and Senator John McCain today held their first meeting since the election. Both men promised to put partisanship aside and work together on what they call critical challenges facing this nation.
There was no such bipartisanship on Capitol Hill though where lawmakers are facing off on the bailout for the big three automakers. Now both sides are locked in an increasingly bitter fight over how to help Detroit. Ed Henry reports from Chicago on today's meeting between the president-elect and Senator McCain.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: Thanks guys.
ED HENRY, CNN WHITE HOUSE CORRESPONDENT (voice-over): After the cameras were ushered out, the two former rivals privately discussed some controversial issues they plan to work together on next year as they turn the page on a bitter campaign. A senior Obama transition official told CNN they talked about trying to revive the immigration reform plan that fell apart last year and finding a way to close the military prison at Guantanamo Bay, Cuba. Those are hot button issues that will be hard to find common ground, especially since the body language suggested it will not be easy to heal their divisions.
SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT OF THE UNITED STATES: Hey, guys, what's up? HENRY: This moment had awkward written all over it. So Barack Obama and John McCain did what guys do. Talk football.
SEN. JOHN MCCAIN (R), ARIZONA: I noticed that yesterday's football...
OBAMA: Oh, see there.
MCCAIN: (INAUDIBLE)
OBAMA: Oh!
MCCAIN: Sports page...
OBAMA: They brought up the Bears.
HENRY: The loser relishing a chance to tweak the winner about how his Chicago Bears lost by 34 points on Sunday, though the president-elect deflected it with a complement about the quarterback on McCain's favorite team.
OBAMA: Arizona...
(CROSSTALK)
OBAMA: They've got a real -- Warner (ph) has turned out to be unbelievable.
MCCAIN: Turned out to be quite a performer...
HENRY: If this performance seems forced, let's not forget it was their first face-to-face since that final debate in New York when McCain got aggressive about Obama's ties to Bill Ayers.
MCCAIN: And you launched your political campaign in Mr. Ayers' living room.
OBAMA: That's absolutely not true.
HENRY: What is true? Both men need to bury the hatchet. McCain can't return to the Senate a sore loser. Obama wants to show his talk about bipartisanship is for real.
OBAMA: Just we're going to have a good conversation about how we can do some work together to fix up the country and also to offer thanks to Senator McCain for the outstanding service he's already rendered.
(END VIDEOTAPE)
HENRY: But there are limits to how far these two men will go to work together. People close to both of them say that McCain is not going to get a cabinet post in an Obama administration. However, speculation increasing that another former rival, Hillary Clinton, could get a cabinet post. Two Obama transition officials telling CNN that they have begun to start looking into Bill Clinton, the former president's finances, his charitable work at his foundation, his presidential library to try to do some early vetting to see if there's any sort of negative information that could derail a possible nomination of Hillary Clinton to be secretary of state. A lot of Democrats viewing that vetting as a sign that she's a very, very serious contender -- Kitty.
PILGRIM: All right, thanks very much. Ed Henry.
Well congressional officials say that much of the Wall Street bailout fund will not be used by the time President-elect Obama takes office. Now the Bush administration has told lawmakers it plans to spend only half of the $700 billion in the fund and that means as much as $350 billion will be left for the Obama administration to spend if it chooses to do so.
It was another bad day for the stock market. Investors were worried about the economic slowdown. Dow industrials falling 223 points, closing at 8273, crude oil prices fell again on those concerns about a global recession. Now crude oil prices ending the day more than $2 lower at just $55 a barrel.
And gasoline prices, they are falling across the country. AAA says the national average price has fallen almost two cents a gallon over the past 24 hours to just over $2.08 and that's more than $2 down from the all-time high set back in July. Now, 17 states have prices between -- below $2 from Arkansas to Virginia, only two states have prices of $3 or higher. That's Alaska and Hawaii.
The automobile industry says it's literally running out of money and it's demanding an urgent government bailout, but members of Congress are deadlocked over what to do. Now Democratic and Republican lawmakers are sharply divided over where the money for that bailout should come from. Dana Bash reports from Capitol Hill.
(BEGIN VIDEOTAPE)
DANA BASH, CNN CONGRESSIONAL CORRESPONDENT (voice-over): On the steps of the Capitol, some 50 newly elected lawmakers pose for a class photo.
UNIDENTIFIED FEMALE: Ready, one, two, three...
BASH: One of the first signs of big change coming to Washington. But, inside the halls of Congress, business as usual. Gridlock.
UNIDENTIFIED MALE: The Senate will come to order.
BASH: As the old Congress gathers for a post election session. Calls for emergency assistance to the struggling U.S. auto industry are colliding with a partisan divide over where the money should come from.
SEN. HARRY REID (D-NV), MAJORITY LEADER: The Federal Reserve, Chairman Bernanke, has authority to provide funds to the automobile industry, but that's for neither the Treasury Department or the Federal Reserve has done so.
BASH: Democrats are pushing a measure to give auto companies $25 billion, taken from the $700 billion bailout Congress approved for the financial industry, but most Republicans and the Bush White House still oppose helping the big three automakers in Detroit with funds intended for a rescue of Wall Street.
DANA PERINO, WHITE HOUSE PRESS SECRETARY: There's not an appetite in Congress or in the administration to open up the TARP funding for individual industries because once you start down that road it's a slippery slope.
BASH: The White House and Republicans insist they want to help the troubled auto industry but instead use money from a previously- approved fund for developing fuel-official vehicles which most Democrats call nonnegotiable. The result? Stale mate and palpable frustration among some ranking file veterans.
SEN. BARBARA MIKULSKI (D), MARYLAND: This session of the Senate should not be called a lame duck. We should neither be lame nor should we duck the big issue facing our country.
BASH: And newly elected senators like the Oregon's Jeff Merkley here for orientation.
SEN.-ELECT JEFF MERKLEY (D), OREGON: What's been very disheartening is the bitter partisan battles that have dominated the Hill. I hope that we will have the ability to end the paralysis that has afflicted the Senate.
(END VIDEOTAPE)
BASH: Now the Senate Democratic leadership is trying to lure Senate votes on their auto bailout industry legislation by saying that the auto executives, Kitty, wouldn't be able to get any bonuses. They're also making clear in black and white in this legislation that they introduced today that the government would have to get a very specific plan from these companies on how they would present some long term viability because those are some of the concerns of many lawmakers here, that they would give money to the auto industry and they're not really sure that it would really go for not. But you know talking to Democrats, talking to Republicans, Kitty, it seems very unlikely at this point that this legislation will get passed during this lame duck session.
PILGRIM: All right, Dana, on another point, there are new reports tonight on Senator Lieberman's role in the new Congress. What can you tell us about that?
BASH: That's right. We learned earlier today that it looks like Senator Joe Lieberman is likely to keep his chairmanship of the Homeland Security Committee. You know we had been reporting back a couple of weeks ago that he actually met with the Senate Democratic leader, the majority leader, Senator Harry Reid who told him, we were told in that private meeting that he wanted to actually strip him from that chairmanship. Why? Because of the fact that Lieberman had not only be campaigning for Senator John McCain, but pretty harsh against Barack Obama, specifically in his speech to the Republican Convention, but we are told in a very secretive meeting tomorrow morning that will take place in the U.S. Capitol, they are likely to hold a vote that will say he can keep that chairmanship which Lieberman really wanted to hold on to and they will instead strip him of something that is less prominent and that is the subcommittee chairmanship on the Environmental Committee.
It's very interesting, a very interesting development, given the fact that there was and has been (INAUDIBLE) a lot of anger among Democrats here, but you know Barack Obama, the president-elect, did weigh in privately with the Senate majority leader and said look, let's let bygones be bygones. Lieberman had made clear he might bolt the Democratic Party or at least caucusing with them and so this, we think, is how it's going to turn out tomorrow, but you never know. It's going to be a secret ballot.
PILGRIM: All right, thanks very much. Dana Bash. Thanks, Dana.
Well lobbyists from the automobile industry are aggressively pushing lawmakers to support a bailout for their industry. The lobbying campaign illustrates the huge power of special interests in Washington. President-elect Obama has promised to curb the influence of lobbyists, but skeptics do not believe that he will. Lisa Sylvester reports.
(BEGIN VIDEOTAPE)
LISA SYLVESTER, CNN CORRESPONDENT (voice-over): President-elect Obama on the campaign trail promised the days of lobbyists setting agenda in Washington are over.
OBAMA: They have not funded my campaign. They will not work in my White House. And they will not drown out the voices of the American people.
SYLVESTER: Fast forward to today and Obama's new team is peppered with Washington insiders. One of his transition co-chairs is John Podesta, a former lobbyist for the Center for American Progress that focuses on issues including national security and the economy.
Ron Klain is Vice President-elect Joe Biden's new chief of staff. He lobbied for Fannie Mae until 2005. Mark Gitenstein (ph) on Obama's advisory board, shown here in his law firm's Web site, has lobbied for big corporate heavyweights including the U.S. Chamber of Commerce and Boeing and the list goes on. Why are so many insiders part of an incoming administration that touts change?
MARY BOYLE, COMMON CAUSE: Lobbyists are available and accessible and tend to be the ones with their hands raised saying, pick me, pick me. And that's part of the reason that they are chosen.
SYLVESTER: K Street lobbying offices and think tanks also tend to be ripe for the picking because they know how Washington works. Obama's office did issue a list of strict rules for lobbyists who are part of the transition team.
SHEILA KRUMHOLZ, CENTER FOR RESPONSIVE POLITICS: The lobbyists may not donate to the transition team effort. They may not lobby. They may not be registered to lobby during this period. They may not work on issues on which they've lobbied over the last 12 months and they may not lobby in the future on the issues they are working on for the transition.
SYLVESTER: Watch dog groups and analysts say expect to see more examples of the revolving door from private sector to the government.
ROBERT WALKER, FMR. STAFF DIR. SEN. ETHICS CMTE.: The key is to make sure that when people go through that revolving door they keep the interest of their former employers on the other side that they've come from.
SYLVESTER: And that means lots of transparency and disclosure.
(END VIDEOTAPE)
SYLVESTER: John Podesta, co-chair of the Obama transition team called the new lobbyist rules the most far reaching ethic's rules of any transition team, but in fact we have seen Obama's position on this change from that original statement that you heard back in December of 2007 from no lobbyists in the White House to lobbyists won't dominate the White House, to lobbyists are OK as long as they agree to these ethics rules -- Kitty.
PILGRIM: Thanks very much. Lisa Sylvester.
Well, another big issue facing the new Obama administration is the war in Iraq. Now the president-elect says he will draw -- withdraw our combat troops from Iraq within 16 months, but a new security agreement with Iraq says that our troops don't have to leave Iraq until the end of 2011. That is three years from now.
Nine of our troops have been killed in Iraq so far this month. Two in a hard landing by a helicopter on Saturday; 4,199 of our troops killed since the war began; 30,793 troops wounded; 13,565 of them seriously.
There's new evidence today of communist China's aggressive spying effort in this country. A Chinese born scientist, Shu Quan-Sheng, today pleaded guilty in Virginia to illegally exporting U.S. space technology to China. Shu helped Chinese officials develop fuel systems for manned space rockets and future missions to the moon. China has established thousands of front companies in this country to steal our space and defense technology.
Still to come, sports team owner billionaire Mark Cuban faces charges of insider trading. We'll tell you all about that.
Also should struggling automakers be allowed to fail or should they receive a government bailout? One of the most powerful Congressional Democrats will join me for that. Also a top bank says it will lay off one in seven of its workers, tens of thousands of people. Will its executives walk away with bonuses? We'll have that story, too.
(COMMERCIAL BREAK)
PILGRIM: A handful of top executives at investment bank Goldman Sachs will not take their bonuses this year. The bank said the executives gave up their bonuses because in their words, it's the right thing to do. Well critics call it an empty gesture and there is a public backlash against Wall Street bonuses as trillions of taxpayer dollars are being used to keep the financial industry afloat. Ines Ferre reports.
(BEGIN VIDEOTAPE)
INES FERRE, CNN CORRESPONDENT (voice-over): The top seven execs at Goldman Sachs said they wouldn't take a bonus this year. This includes CEO Lloyd Blankfein, who last year reportedly took home almost $50 million in cash and stocks. Goldman Sachs is among the first banks to receive part of the bailout money. Some lawmakers say Goldman's announcement is a step in the right direction, but still not enough.
REP. MARCY KAPTUR (D), OHIO: This is not even a hit for first base, second base, third base or home plate and it's doing nothing to help the American people. I think it's a time for Wall Street to ask itself how can they be leaders of the Republic, not just heads of their companies.
FERRE: With taxpayers on the hook, Americans are wondering if executives from other large banks like JPMorgan Chase and Citigroup will follow suit. Citigroup has announced it will slash more than 50,000 jobs. One of the largest company cuts in the last 15 years.
The company says it will decide on bonuses after the end of the year, insisting compensation will not come from federal money, but lawmakers feel any bonus money would essentially be subsidized by federal dollars from hard-working Americans, many that will not see a cent in bonus compensation this year.
REP. MIKE ROGERS (R), MICHIGAN: Welcome to the rest of the United States of America. It's fundamentally wrong to ask every other American to make a sacrifice, except those in Wall Street who apparently are so smart and smarter than the rest of America that they have to have these huge cash bonuses when their companies were failing by their decisions. It defies logic.
FERRE: Compensation experts say top traders and bankers on Wall Street earn an average of $250,000 a year with bonuses on top of that. Estimates put Wall Street's bonus last year at more than $33 billion. This year experts expect it to be about half of that.
(END VIDEOTAPE)
FERRE: And Goldman's announcement doesn't mean that there will be no bonuses paid to other employees. It is only the top seven who are foregoing theirs and, Kitty, the top executives, obviously have to disclose what they make so this obviously puts pressure on other banks to do the same.
PILGRIM: Speaking of that pressure, Andrew Cuomo really stepped it up his effort, has he not?
FERRE: Oh, yeah, definitely. I mean in October he actually asked nine banks to give information regarding their bonus plans because he wanted to make sure that there were no -- there was no federal money that was going to those bonus plans, but he's also asked now that Citigroup, that their top executives not take bonuses because he says, you know with so many layoffs you just can't take these bonuses and he's asking for other firms to do the same.
PILGRIM: Thanks very much. Ines Ferre. Thanks, Ines.
FERRE: You're welcome.
PILGRIM: Well Mark Cuban, he's the owner of the NBA's Dallas Mavericks, was charged today with insider trading. According to the Securities and Exchange Commission, the billionaire entrepreneur sold all of his shares in an Internet search company after receiving confidential information.
Now the SEC said Mama.com gave Cuban nonpublic information which he promised to keep confidential, but an SEC statement said quote, "less than four hours later Mr. Cuban betrayed that trust by placing an order to sell all of his shares."
Now the SEC says Cuban avoided $750,000 in losses by selling early. Cuban denied the charges in a statement, saying, quote, "I am disappointed that the commission chose to bring this case based upon its enforcement staff's win at any cost ambitions. The staff's process was resulted-oriented, facts be damned. The government's claims are false and they will be proven to be so."
General Motors today took its case for a federal bailout directly to the American people. It posted a video on the Internet asking the public to lobby Congress to approve aid for Detroit. Now many critics say the automaker should be allowed to fail and that bankruptcy could be the best thing for the industry and the country. Bill Tucker has our report.
(BEGIN VIDEOTAPE)
BILL TUCKER, CNN CORRESPONDENT (voice-over): A video posted on YouTube by General Motors lays out what could happen if GM, Ford and Chrysler no longer existed. Using a report from the Center for Auto Research the scenario is grim and extreme. Critics of the auto industry say that bankruptcy would not mean the end of Detroit, but it would mean the end of Detroit as we know it. And that, they say, would ultimately be a good thing.
PROF. PETER MORICI, UNIVERSITY OF MARYLAND: They will either reemerge with the company strengthened, with stronger balance sheets and lower labor costs or they'll emerge as reorganized companies with new ownership, new management and they'll go forward.
TUCKER: Others are worried that if a car maker files for bankruptcy under Chapter 11 no one would buy its cars and that would spell the end of the company. The lawyers point out warranties would not be void.
PROF. MICHAEL LEVINE, NYU SCHOOL OF LAW: But if the company, when it goes into bankruptcy, first of all, is going into reorganization. It's not going out of business.
TUCKER: Some argue that's where the government could play an appropriate role providing some sort of absolute guarantee of vehicle warranties. Supporters of the bankruptcy option admit it's not pleasant, but sometimes it's necessary.
JACK WILLIAMS, AMERICAN BANKRUPTCY INST.: Bankruptcy, because of its transparency and its oversight, as a system, requires that management justify itself and requires that management justify its position and (INAUDIBLE) means that management justify its business plan.
TUCKER: Ironically, that type of scrutiny generally doesn't exist outside of the bankruptcy process. And the one thing both opponents and proponents of the bailout agree on bad management has brought the auto industry to this point.
(END VIDEOTAPE)
TUCKER: And critics of the automakers say Chapter 11 is a reality whether they get taxpayer loans or not. They believe the industry is so badly managed that it's a question of bankruptcy now or later -- Kitty.
PILGRIM: Bill, you know, what strikes me about this whole discussion is it's either bankruptcy or bailout.
TUCKER: Right.
PILGRIM: Is there any middle ground in this?
TUCKER: Well there are some people who are arguing about a middle ground and that Congress should impose some conditions on these loans, maybe insist that management be turned out. But so far there hasn't been any meaningful conversation where any of that is going to happen. They're just talking about giving them the money.
PILGRIM: All right, thanks very much. Bill Tucker.
Well, this is also the subject of our poll tonight. Do you believe that the American taxpayer should bail out the domestic automakers? Cast your vote at loudobbs.com. We'll bring you the results a little bit later in the broadcast.
Also coming up the drama over Detroit's fate moves to Congress. Will the American people end up bailing out the failing auto industry? The chairman of the House Financial Services Committee, Congressman Barney Frank will join me here.
Also firefighters struggle against raging wildfires that are ripping through southern California. Hundreds of homes destroyed. Thousands of residents evacuated. We'll have a live report next. Stay with us.
(COMMERCIAL BREAK)
PILGRIM: Firefighters in southern California are still battling wildfires. Now those fires have destroyed hundreds of homes. They've scorched thousands of acres. Kara Finnstrom is in Los Angeles where nearly 500 mobile homes were destroyed over the weekend. Kara, what's the latest on it?
KARA FINNSTROM, CNN CORRESPONDENT: Well Kitty the bulk of the devastation from these fires is right behind me. This used to be row after row of mobile homes. As you can see now, this is a wasteland of twisted medal and ash. And today homeowners here got their first chance to come back and see what's left and we understand actually, that right now, the last vanload of them is making its way through.
Those who had homes on the few blocks here that were spared are getting a chance to get out, to take look at their homes and to gather up a few belongings. Everyone else was simply driven past their charred lot. The home owners we spoke with told us they needed that opportunity for closure.
Now this is one of the three major wildfires that has been raging across the southland since Thursday. Today what firefighters got was a big break in the weather. Those winds have died down, the temperatures have dropped and Kitty, they are hoping to make the most of this time to truly gain an upper hand on these wildfires.
PILGRIM: Thanks very much. Kara Finnstrom. Thanks, Kara. Very sad, sad scene there.
Some northern parts of the country are still digging out from an early season snowstorm. The storm blanketed areas from Buffalo, New York to Cleveland, Ohio. Now the Cleveland area could see as much as 10 inches of snow by Tuesday afternoon. Akron, Ohio may be hit with as much as five inches. The storm dropped nearly two feet of snow on Elliot Hatfield (ph), New York 40 miles outside of Buffalo.
Coming up, a public display of unity by President-elect Obama and Senator McCain. Will that bipartisan spirit extend to Washington? Well, three top political analysts will join me.
Also more arrests as opposition escalates to laws that ban gay marriage. We'll have a special report on that.
And House Financial Services Committee Chairman Congressman Barney Frank demanding an urgent bailout of the big three automakers. And Congressman Frank is my guest next.
(COMMERCIAL BREAK) PILGRIM: Congress met today in a special lame duck session. Democratic leaders are pushing for action on an auto industry bailout, a plan the Bush administration opposes. The House leadership, including the Financial Services Chairman Barney Frank, met late this afternoon with Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke. Congressman Frank is drafting the House bailout legislation, and he joins me now.
Thanks for being with us, sir.
REP. BARNEY FRANK (D), FINANCIAL SERVICES CHMN.: You're welcome.
PILGRIM: It's a very critical issue for the country. Can you give us some -- maybe some elements that you would like to see in this legislation? I realize it's not formed yet.
FRANK: Yes. Let me add first that the main purpose of this meeting with Chairman Bernanke and Secretary Paulson was not the auto. That just came up at the end. It had been previously scheduled.
We're pressing them to do much more about mortgage foreclosure. We voted for the $700 billion under the assumption on our part made explicit that some of that would go to help reduce foreclosures. We are dissatisfied that they are not moving, and the secretary did indicate that he's going to take a look at that question. We'll be discussing it with him further.
On the auto industry, we do believe that a collapse of the auto industry would be unacceptable, particularly now. You know, if we were in a good economic time, where unemployment was down to less than 4 percent, where things were going well, you could more easily sustain this kind of loss. We're in a terrible economic situation, and to add the enormous blow of a collapse of the auto industry and people being out of work, of suppliers not being paid, small businesses going without -- is unacceptable.
So what we say is this -- we will lend them $25 billion. First of all, and it's going to be a separate bill. We are not going to do this secretly or out of some existing pot. Members are going to have to stand up and vote one way or the other.
The federal government will be the first in line to be repaid. We'll come ahead of bond holders, debt holders, preferred shares, common shares, et cetera.
Secondly, they will have to, by March 31st, give us a plan about how they intend to improve the energy efficiency and the marketability. If they present a plan on March 31st that isn't acceptable, then the loan has to be immediately paid.
Third, they may pay no dividends -- no dividends whatsoever.
We've learned from the TARP that we have to be tougher. We gave a little flexibility in the TARP, and some of the banks, frankly, abused it. So there'll be no flexibility here. PILGRIM: Let me follow up on this point, sir. Will there be more oversight than TARP? Because certainly that was the great criticism, that there should be more oversight when this amount of money is being distributed?
FRANK: Well, we have increased the oversight substantially. As a matter of fact, today, Speaker Pelosi and the majority leader announced the appointment of the three-member congressional board, which includes Damon Silvers from the AFL-CIO, Professor Elizabeth Warren from Harvard Law School and Richard Neiman, the bank superintendent of New York. They'll give some good, tough oversight with the staff.
But in this one, yes, we have added to the oversight board secretaries of the environment and labor, and frankly, I take some comfort from the fact that it will be the Obama administration's secretary of the environment and secretary of energy that will be administering this.
I should also add that no bonuses may be paid once they've gotten this loan to anybody who makes more than $200,000 a year. So -- and we will also be reaffirming the commitments that were made earlier this year to increase the fuel efficiency standards and to tool up for more efficient cars.
PILGRIM: Well, it certainly sounds very comprehensive. You're getting some opposition from President Bush, and I'd like to throw up what his press secretary today said about individual industries.
(BEGIN VIDEO CLIP)
DANA PERINO, WHITE HOUSE PRESS SECRETARY: We only think taxpayer dollars should go to companies that can show viability and a willingness to make tough decisions to restructure themselves so that they can be successful for the long term.
(END VIDEO CLIP)
PILGRIM: Now, the president says the logic is, you know, you bail out one industry and then a lot of other industries will like it. We did see today that the auto parts makers were also seeking aid. Where do you draw the line here?
FRANK: You draw the line where you think the balance is that you'll do more harm if you don't do something than good if you do.
The administration, did, after all, bail out without congressional authority -- the Bush administration through the Federal Reserve which it supported -- sent $85 billion to AIG. There's no guarantee of viability there. I wish there was.
We are saying that we're going to lend them this 25 and we want a plan that will show how they'll be viable, and we want the money back if they don't.
But you have to understand the president's full agenda, because we're also trying to get him to do -- support an economic stimulus package for the average American, which we badly need to get out of this recession, and his answer with regard to that and the auto is, OK, I'll trade you that for some more free trade pacts.
In other words, they are -- I think, unfortunately -- still indifferent to the negative impact on working America and want us to trade off our concern for workers in America for one more trade pact at a time when that is going to do us some damage.
PILGRIM: Congressman Frank, what do you say to many people that make the case that a bankruptcy might be good for the industry? It would help them restructure better.
FRANK: Well, in the first place, they don't need bankruptcy to restructure. Secondly, bankruptcies seems like a good idea to people who don't have to go through it.
We have suppliers. You mentioned the supply manufacturers and others. They don't want to see a bankruptcy. In a bankruptcy, they stop paying their debts. There are small businesses who will go without getting paid. Bankruptcy of three very large corporate enterprises will be very disruptive.
Now, as far as this is concerned, if people are worried that the current people are going to profit -- we're going to get our $25 billion back before any shareholder gets a nickel, before any bondholder gets a nickel. So to the extent that we are paying the taxpayers, we are doing that without bankruptcy. But forcing them into bankruptcy and having that negative impact on all the people they owe money to -- remember, that's what bankruptcies is. You don't pay your debts anymore.
Well, precisely the problem with the auto industry is that they're so important here. Are there automobile dealers who they may owe money to who aren't going to get paid? There are suppliers. That just doesn't seem to us a good way to deal with an economy that's already weakened at this moment.
PILGRIM: Well, that seems a very fair point. Congressman, we have to call it here. Congressman Barney Frank, thank you very much.
FRANK: You're welcome.
PILGRIM: A reminder now to vote in tonight's poll. Do you believe the American taxpayer should bail out the domestic automakers? Cast your vote at loudobbs.com. We'll bring you the results in just a few minutes.
There's a bitter batting raging tonight in Vermont over the pledge of allegiance. Elementary school officials in Woodbury, Vermont agreed to resume the pledge after parents petitioned the school but the officials won't allow it to be recited in classrooms saying it singles out children that don't want to participate. The children that want to recite the pledge of allegiance were taken to the school gym and then later the school lobby. Supporters of reciting the pledge say it should be said in the classroom. The pledge of allegiance is optional for schools and students across the country.
California's gay marriage ban sparking protest across the country. Thousands of opponents of proposition 8 demonstrated in cities coast to coast over the weekend. Susan Candiotti reports that supporters of gay marriage vow to keep protesting until the measure is overturned.
(BEGIN VIDEOTAPE)
SUSAN CANDIOTTI, CNN CORRESPONDENT: During spirited rallies from Los Angeles to Orlando, from Boston to Oklahoma City, same-sex marriage supporters promise a reenergized movement despite their defeat in the California.
UNIDENTIFIED MALE: We won't rest until we're all equal.
CANDIOTTI: Those are fighting words to some opposed to legalizing same sex marriage.
UNIDENTIFIED MALE: This is not a civil right issue. It is an issue with morality.
CANDIOTTI: Feelings are raw and accusations are flying. Some protesters accuse Mormons and other religions of crossing the line by helping to raise money to keep gays from marrying. Religious coalitions say the protests are getting out of hand.
FRANK SCHUBERT, CHMN., COALITION FOR PROP. 8: We're put off and we're offended that our voices are disrespected. That we're called bigots and we're analogized to Nazis.
CANDIOTTI: Even comedian Roseanne Barr is weighing in, taking aim on her website at a high percentage of African Americans in California that voted to ban same-sex marriage. She calls them, quote, as bigoted and ignorant as their white Christian white right wing counterparts. The NAACP, part of the legal challenge to overturn the California vote, insists that the organization clearly supports same sex marriage as a civil right.
RON HASSAN, PRES. NAACP BEVERLY HILLS: I'm not sure to what extent people of color received a large amount of information on this proposition.
CANDIOTTI: A gay right's advocate says everyone needs to take a deep breath.
EVAN WOLFSON, ATTORNEY & GAY RIGHTS ADVOCATE: This is not a question of blaming somebody or finding a racial group or an ethnic group or an age group. It's about having the conversation that moves people forward. There are fair people everywhere.
CANDIOTTI: Same-sex marriage supporters promise a long civil right battle they intend to win and they say the majority of Americans are on their side.
Susan Candiotti, CNN, New York. (END VIDEOTAPE)
PILGRIM: Coming up, can three former campaign rivals let bygones be bygones and join forces for the good of the country? Three of the nation's leading political analysts will join me to discuss that and a lot more.
Also, increasing pressure on the president elect over amnesty for illegal aliens and border security. We'll have a special report on the action the Obama administration might take. Stay with us.
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PILGRIM: New concerns tonight that recent gains made in secures our southern border could be undone, President-Elect Obama is under increasing pressure from special interest groups. And there are renewed calls to end workplace enforcement raids targeting employers of illegal aliens. Casey Wian reports.
(BEGIN VIDEOTAPE)
CASEY WIAN, CNN CORRESPONDENT: Barack Obama and John McCain were vague about the topics discussed at their meeting in Chicago on Monday.
SEN. BARACK OBAMA (D), PRESIDENT-ELECT: Just going off a good conversation about how we can do some work together to fix up the country.
WIAN: Clearly, needing a fix, the nation's broken borders and immigration law enforcement efforts. During the campaign the candidates saw nearly eye to eye on immigration, separated only by McCain new-found support for border security as a precondition for amnesty for illegal aliens. Now the force is pushing for comprehensive immigration reform are demanding action. One lobbying group, America's Voice, says we are thrilled to see these two important leaders coming together. Recently, House Speaker Nancy Pelosi advocating ending immigration and custom's enforcement raids of businesses employing illegal aliens. Outgoing Homeland Security Secretary Michael Chertoff warns against that approach.
MICHAEL CHERTOFF, HOMELAND SECURITY SECRETARY: It's important as we forward not to step away from the path we've taken. Not to reverse the direction or to bow to those that say it's bad for business to keep illegal migrants out. We need to continue to show the American people that we will enforce the law.
WIAN: A reminder of how often that doesn't happen came courtesy of the Houston Chronicle Sunday. It reports ICE failed to file paperwork to deport 75 percent of the Houston jail inmates who admitted to being illegal aliens during late 2007 and early this year. ICE blames a lack of resources and says improvements are coming. Still, some border state lawmakers worry.
REP. TED POE (R), TEXAS: I'm very concerned that the incoming administration will ignore border security totally. There hasn't been anything said about it from President-Elect Obama. That's unfortunate. Those of us that live there are very concerned about the illegal crossings and it's not just people coming over here looking for work. We're getting the good, the bad and the ugly because the borders are not secure.
WIAN: Poe offered to take President-Elect Obama on a tour of the southern border to demonstrate the urgency of securing the border first.
(END VIDEOTAPE)
WIAN: Obama's border security agenda will likely become clearer when he names his choice for homeland security secretary. One short list published today by the "Washington Post" includes Los Angeles police chief William Bratton, New York City Commissioner Raymond Kelly, California Congresswoman Jane Harman and Arizona Governor Janet Napolitano. Kitty?
PILGRIM: Thanks very much Casey Wian.
Coming up at the top of the hour, Campbell Brown.
Campbell, what are you working on?
CAMPBELL BROWN, CNN ANCHOR: Hey there Kitty. In just a few minutes we've got some important new developments that Senator Hillary Clinton's chances of getting one of the most important jobs in the Obama administration. Could Bill Clinton's activities stand in her way? We're going to have the very latest on that.
And we're shining a spotlight tonight on an important story, the alarming spike in racial threats and violence since the election.
Also, what Michelle Obama is thinking as her family to move into the white house. We'll talk to her biographer coming up in a few minutes as well.
Kitty, back to you.
PILGRIM: Thanks very much Campbell Brown.
Still ahead, President-Elect Obama meets with former rivals Hillary Clinton and John McCain. How will they help his new administration?
And the lame duck congress fights for the bailout over the auto industry. That's next.
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PILGRIM: We have three of the country's best political analysts, we have John Fund of the "Wall Street Journal," syndicated columnist and CNN contributor, Miguel Perez, and Miguel is also a journalism professor at Lehman College in New York and democratic strategist and CNN contributor, Robert Zimmerman. Gentlemen, thanks for being with us. We have this very tough act going on Capitol Hill about the auto industry and the bailout. Robert, what are your thoughts on this? This is not an easy situation.
ROBERT ZIMMERMAN, DEMOCRATIC STRATEGIST: This is a disgrace primarily because the arrogance of the automotive industry that brought this crisis upon us. Two years ago, their idea of incentive was to offer rebate or a discount or a subsidy of $1.99 per gallon of gasoline if you bought a Hummer or SUV. That was their mindset. That was great marketing tactic to buy more gas guzzlers.
The point here is there's a great recognition that we have to step up to the automotive industry. If GM goes under, that's a cost of $175 billion per year through a bankruptcy proceeding to that alone. So it's more cost-effective to step up for them. The issue simply is how are we going to do it? The republicans are arguing to take $25 billion from a fund that's reserved to provide fuel-efficient cars. They want to take money away from fuel efficient development to subsidize the auto industry.
PILGRIM: Plus another $25 billion to be progressive and then another $25 billion to bail them out. That's a lot of money.
MIGUEL PEREZ, SYNDICATED COLUMNIST: 25 and 25 makes 50 and it goes on and on and on. It's one bailout after another. We're torn here. I'm definitely torn. A know a lot of people are. They want to help the auto industry because they know that we can't be, you know, 2.5 million Americans unemployed.
PILGRIM: These are American jobs.
PEREZ: These are jobs we need to save. At the same time, these people have been so, you know, ridiculous in the way they've conducted this business, building these gas-guzzlers for year. Not seeing the future.
PILGRIM: You know, it seems to me, $25 billion to build green cars, that should have been done anyway.
ZIMMERMAN: They're going to take the money away from building green cars. That's -- that's the arrogance and travesty of what they're doing.
PILGRIM: John, you're being so patient. Weigh in here.
JOHN FUND, WALL STREET JOURNAL: My family is all from Michigan. My uncle worked for General Motors for over 30 years. But I'm not torn because the American people aren't buying American cars because of all of the mistakes that the unions and the companies have made. So now we're going to buy them another way using taxpayer dollars without demanding the full restructuring of these companies that they demand.
The United Autoworkers today announced we're not going to have any concessions as part of the bailout. They already have people sitting in rooms and drinking beer and watching television and get 95 percent of their salaries for doing nothing. And the companies themselves, of course, are still giving out bonuses to executives. There is excess there. If we're going to give this bailout, why don't we appoint a federal receiver with full authority to restructure the company? They won't do that. We're just subsidizing failure and incompetence.
ZIMMERMAN: We heard Congressman Barney Frank talk about strict standards for restructuring the industry. This could be a great opportunity to develop fuel-efficient cars and green jobs for the economy.
FUND: But the problem is not the transition to the green cars. That will come. The problems are the legacy costs of health care and pensions and everything else. Just remember, the last bailout that was touted was the Chrysler bailout. People forget that while they paid the money back, over half the jobs at Chrysler vanished even with the bailout. These jobs are not coming back. John McCain at least had the courage to say that last year in Michigan. And we have to recognize -- we can cushion the blow, but we cannot change economic reality.
PEREZ: We don't want --
FUND: They're going in the next couple of years.
PILGRIM: In this climate, you also have to take in context the economic climate at this point.
ZIMMERMAN: These jobs are going away. Obviously they're going to go away if we continue under the present path. If we do take them -- I still have confidence in American ingenuity.
FUND: There are a lot of American automobile jobs. They're in Ohio. They're in Tennessee. They're in Missouri. They're in Alabama, where the costs are not $85. They're $55.
ZIMMERMAN: That's the point. Obviously there has to be a renegotiation with management.
FUND: What about the unions?
ZIMMERMAN: The unions have actually stepped up and every time there's been a major crisis the unions have stepped up to the table.
FUND: You heard the UAW president today.
ZIMMERMAN: I have, indeed.
FUND: He says no way, no how.
ZIMMERMAN: This is called negotiating.
FUND: With a democratic congress and a democratic president, there's not going to be much negotiating.
ZIMMERMAN: You have a congress that -- FUND: Wait until January until they get a better deal.
PEREZ: I don't see how the union can turn anything down because otherwise they'll be out on the streets.
PILGRIM: Gentlemen, let's take a quick break and resume this in a second. We'll be right back with our panel in a moment. Stay with us.
(COMMERCIAL BREAK)
PILGRIM: We're back with John, Miguel, and Robert. We are debating the auto industry bailout heatedly. Let's take a listen. President-Elect Obama says he believes that the auto industry needs assistance. Let's hear what he had to say about it.
(BEGIN VIDEO CLIP)
OBAMA: For the auto industry to completely collapse would be a disaster in this kind of environment. Not just for individual families, but the repercussions across the economy would be dire. So it's my belief that we need to provide assistance to the auto industry. But I think that it can't be a blank check.
(END VIDEO CLIP)
PILGRIM: Now, if it doesn't get through the lame-duck congress, it will immediately be taken up by the new administration. Robert, thoughts on this.
ZIMMERMAN: Clearly I think where Barack Obama is outlining an idea, a program that I think is getting more and more support. I was talking to Patrick Murphy today, a congressman, a leading member of the blue dog democrats who are really very fiscal watchdogs. They're insistent upon any sort of assistance to General Motors being tied into a restructuring. That's where we're going on this and that's what the result is going to be.
PILGRIM: We had Senator Shelby saying that the senior executives should resign. Do you think that's constructive?
FUND: Well, that would be a start. This is basically the AIG bailout on wheels. If they get a bailout, do we have any principled way of saying that everyone else doesn't get a bailout? At some point I'm going to say, where is my bailout?
ZIMMERMAN: We have to look at the overall impact on our national economy. We have to look at what the -- if you're not bailed out, John, the economy is not going to suffer, although your book is a worthwhile --
FUND: No, the --
ZIMMERMAN: There has to be an evaluation on the impact of the economy. We're talking about 3 million jobs and we're talking about 600,000 people receiving a pension. There is a national crisis here that we have to address by restructuring our --
FUND: The big three sold 10 million vehicles last year. They'd still sell those cars if they went bankrupt. It would be just be restructuring in a different way.
PEREZ: I don't think so. I don't think they'd sell that many cars. I'm not going to buy a car from a company that's filed for bankruptcy.
FUND: Americans aren't buying cars now.
PEREZ: Some of us are.
ZIMMERMAN: It's at least $175 billion a year for one company, and the general -- a bankruptcy goes three years. You're talking about an extraordinary burn on the taxpayer if you pursue that path.
PILGRIM: Do you believe the parts and the suppliers, that's another story. It's a lot more jobs than the actual --
FUND: A lot of foreign car companies have subsidiaries in this country that are owned by Americans in many cases and hire American workers. Are we going to bail them out, too?
PEREZ: Whatever money we give them, it has to be about accountability and oversight. If the government doesn't look out for our money, they should not give them our money.
PILGRIM: That's sort of accountability, how do you restructure an industry from the outside? Shouldn't you have to restructure from the inside?
ZIMMERMAN: Because they've proven they're not responsible enough to restructure their own industry. If we're loaning the money as taxpayers, our government has a right to demand an accountability and a transparency.
FUND: Can you give me a name of the last bailout in which Congress really set harsh terms and actually followed through on enforcing them?
PILGRIM: That's a rhetorical question.
FUND: No, no, no, no, no.
PILGRIM: That has to be a rhetorical question. John Fund, Miguel Perez and Robert Zimmerman, thank you very much.
Tonight's poll results, 75 percent of you do not believe the American taxpayers should bail out the domestic automakers. Thanks for being with us. Please join us tomorrow. From all of us here, thanks for watching. Good night from New York. Campbell Brown starts right now.
