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Lou Dobbs This Week
Republicans in Disarray?; Obama Picks Cabinet; Can Obama Defeat Partisanship?
Aired November 22, 2008 - 19:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KITTY PILGRIM, HOST: Tonight: President-elect Obama chooses more cabinet members. Now, will his cabinet be a "team of rivals"? And can Obama overcome political partisanship? We'll have complete coverage.
And: The Republican Party is in disarray after its sweeping election losses. One of this country's most influential conservatives, Tony Perkins will join me. We'll have all that and much more -- straight ahead tonight.
ANNOUNCER: This is LOU DOBBS THIS WEEK: News, debate, and opinion: Here now: Kitty Pilgrim.
PILGRIM: Good evening, everybody.
Efforts to bail out Wall Street and Detroit tonight are in chaos. Treasury Secretary Hank Paulson is facing blistering criticism for the way that he has handled the bailout of Wall Street. And critics say the program is shrouded in secrecy and has failed to stabilize our banking system. Meanwhile, the Congress has refused to bail out the Big Three automakers. This, despite two days of fear-mongering by auto executives on Capitol Hill and their warnings of economic collapse.
Dana Bash has the report.
(BEGIN VIDEOTAPE)
DANA BASH, CNN CORRESPONDENT (voice-over): A hastily arranged news conference to announce that struggling auto companies will get no federal assistance until they present viable business plans.
REP. NANCY PELOSI, (D) HOUSE SPEAKER: Until they show the plans, we cannot show them the money.
BASH: Well aware that they risk blame for leaving Washington and doing nothing, Democratic leaders emerged from a closed door meeting determined to put the onus on Detroit -- a December 2nd deadline for auto companies to present a business plan. Congress will return mid- December, only if lawmakers deem the Big Three proposal is acceptable.
SEN. HARRY REID, (D) SENATE MAJORTY LEADER: Yes, we're kicking the can down the road because that will give us the opportunity to do something positive. But that will only happen if they get their act together.
BASH: Lawmakers are frustrated that auto CEOs spent two days pleading for help but could not answer the key questions.
RICK WAGONER, G.M. CEO: The total availability against that facility to G.M. of $10 million to $12 million.
REP. PAUL KANJORSKI, (D) PENNSYLVANIA: Maybe I'm dense or something, Mr. Wagoner, I don't quite understand what the hell you just told me.
BASH: And executives undermined their quest for taxpayer money by flying to Washington on private jets.
REID: I know it wasn't planned, but these guys flying in their big corporate jets doesn't send a good message to people in Searchlight, Nevada, or Las Vegas, or Reno, any place in this country.
BASH: The decision to reject an auto bailout now undercut lawmakers pushing a compromise idea to help the industry immediately.
SEN. GEORGE VOINOVICH, (R) OHIO: If we don't get this done, and they do go under, I believe that we're going to have a deep recession and quite frankly, from what I can pick up, we may just go over the cliff.
BASH: But Democratic leaders said because of skepticism towards Detroit, no compromise could pass.
REID: What kind of a message do we send to the American people by having a bunch of failed votes here?
BASH: Auto companies released statements saying they welcome the chance to address Congress' concerns. But some Democratic sources quietly suggest to CNN, Detroit may not see a bailout until Barack Obama takes office.
(on camera): But remember, Obama called for assistance now. So, why didn't he use his considerable influence to break Congress' deadlock? Well, one of his closest confidants told us it's because this is still the old Congress which is bitterly divided. So, Obama intentionally stayed out of the debate, no phone calls, no arm-twisting, nothing.
Dana Bash, CNN, Capitol Hill.
(END VIDEOTAPE)
PILGRIM: Many Democrats wanted to use money from the government's Wall Street bailout to help the automakers. Now, that bailout, engineered by Treasury Secretary Hank Paulson, is facing strong criticism on Capitol Hill.
Lisa Sylvester reports from Washington.
(BEGIN VIDEOTAPE)
LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Some lawmakers are calling it like they see it, saying Secretary Henry Paulson doesn't seem to have a clue how to staunch the financial crisis.
REP. GARY ACKERMAN, (D) NEW YORK: It appears that you seem to be flying a $700 billion plane by the seat of your pants.
SYLVESTER: Lawmakers say banks are not lending like they're supposed to, help to homeowners that was promised is not being delivered, and the Paulson plan has morphed into something completely different than what was initially sold to Congress. Congress gave Paulson the purse springs to half of the $700 million approved for the financial bailout. Paulson says he will hold the remaining $350 billion for the Obama administration.
But Senator Bernie Sanders wants to cut off future bailout funds. He has introduced legislation to free spending of the second $350 billion tranche.
SEN. BERNIE SANDERS, (I) VERMONT: I think the American people are outraged at the greed and recklessness of Wall Street and the fact that we have to have the middle-class bail out these masters of the universe.
SYLVESTER: You might expect that from the Senate's only self- proclaimed socialist. But conservative Republican James Inhofe has introduced a similar bill. Some fiscal conservatives are dismayed at the lack of accountability and transparency.
STEPHEN MOORE, WALL STREET JOURNAL: Among the members of Congress that I've been talking to, the more conservative ones, they are having a little bit of buyers' remorse right now.
SYLVESTER: Paulson defending his decisions that economic conditions on Wall Street were rapidly deteriorating, it required him to move quickly and change course when it was necessary.
(on camera): Senator Sanders is hopeful that his bill will be taken up. But there is a reality here -- Congress is on a holiday break. We call Senate Majority Leader Harry Reid staff to see if these bills will be taken up in the near future, their answer -- very unlikely.
Lisa Sylvester, CNN, Washington.
(END VIDEOTAPE)
PILGRIM: Joining me now for their perspective and what's next for President-elect Obama, three members of the best political team on television. From Chicago, we're joined by Jessica Yellin, also, Ed Henry -- both are covering the president-elect's transition to power. And from Washington, we have CNN political editor, Mark Preston.
And thank you all for being with me today. Let's start with the automaker bailout. They left empty-handed. They have to come back with another plan or they will not see money.
Jessica, thoughts on the Obama team, the mess that they're going to inherit, and why, perhaps they're not in this a little bit more?
JESSICA YELLIN, CNN CORRESPONDENT: Kitty, I've spoken with one of Obama's top aides about this. And look -- they've maintained this man is in an odd position right now. He doesn't even have a vote in the Senate. He's no longer a sitting senator, Barack Obama. He doesn't have the veto pen in the White House. So, there's only so much control he can excerpt.
And it's true, Dana Bash has reported that Barack Obama is not making lobbying calls behind the scene pushing for this bailout. Obama's aides insist it's because there's only so much he can do. He's made it clear publicly that he wants Congress to get this done. And it's sort of on them.
On the flip side -- look -- politically, maybe he doesn't want to own whatever is going to come out of Congress. He wants to be able to have a fresh start if this doesn't work in a few months to say, "I want to change, let's do something different."
PILGRIM: Right.
YELLIN: There's politics involved.
PILGRIM: Now, that makes perfect sense.
Ed, thoughts on the bailout?
ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Well, interesting, I mean, Jessica is absolutely right. And that, you know, you hear the mantra from the Obama camp that there's only one president at a time and they can't really interfere with what is right now President Bush's economy.
But, on the other hand, there's essentially a leadership vacuum right now. You have a lame duck president who doesn't seem to have a lot of credibility in terms of dealing with the financial crisis, the economy. You mentioned Treasury Secretary Paulson also under fire in recent weeks over transparency and all of these other issues. And you have Barack Obama who doesn't have any authority as president yet. And so, there's this leadership vacuum and there could be a lot more financial chaos between now and January 20th without a clear leader in terms of who is really in charge.
PILGRIM: It's particularly distressing, Ed, you make a great point -- I'll get Mark's thoughts on this -- that Obama ran on an election platform, especially the last few weeks of this election, it was I mean, an economy platform, it was -- it was really about middle class, about jobs, about the economy for Obama. And now he's in this bizarre position where he is not in charge and the things are deteriorating much further -- Mark.
MARK PRESTON, CNN POLITICAL EDITOR: Yes, absolutely, Kitty. I mean, he really is in this tight position. He has said all along that he is not the president at this point and that this is George Bush's deal. He has to fill out his term.
But I'll tell you, who's been in the worse position at this point is congressional Democrats. They were really pushing for this $25 billion to be pushed over to the auto industry. And then you have these executives come in to Washington, D.C. on private jets. That was very embarrassing to them and, of course, they had to push off the vote. Now, they'll come back. We'll expect to see a plan from these auto executives on December 2nd.
I'm told by congressional Democrats that in fact they will be back on December 8th to really look at this plan. But, if it is not a viable plan, then don't expect congressional Democrats to be onboard.
PILGRIM: All right. Jessica, let's now change topic a little bit and talk about the cabinets and what we're seeing is emerging as potential cabinet picks. So, we have the attorney general, we have former Senator Tom Daschle potentially in the Health and Human Services. What do you see informing about the Obama leadership and some of these earlier names that are turning up?
YELLIN: Well, first of all, let me say that his aides are going to great pains to make it clear that despite all our reporting, none of these things is final until they're announced, that things can always fall apart between now and then. So -- but we do know that they're confirming these are the names that Obama is really looking for in his cabinet. And they're all real, they're experience people.
Back in campaign trail, Obama would have called them Washington insiders, truthfully, but it's a nod to the fact that, look, you can't be a maverick on this one, if you will. He has to pick people who can get in there and start working the levers of power immediately because these are crisis times. It's appealing to some conservatives and centrists because he has not picked what they are calling "lefties" in most case. But it's also upsetting to some of his netroots, the liberals, because they don't see these people as the change agents they wanted.
PILGRIM: Well, Ed, you know, we also have this speech from the Obama transition team. It's not official yet. But as these unofficial names are coming forward, we're also getting some very unofficial criticism and there are some discussion about Clinton and secretary of state and what her -- what Bill Clinton finances might look.
We're looking at Tom Daschle, which many applaud the appointment. But then his lobbying ties are being questioned. We're seeing this back- and-forth, the real debate, as if the jobs were absolutely offered at this point. What are you making of the debate over these appointments right now?
HENRY: Oh, I think Jessica is right. You know, the negative side of it, you could say your perspective of what a Washington insider means can really change from when you're candidate to when you're a president-elect. All of the sudden, those Washington insiders look a little bit better. Also, the Clinton insiders that Barack Obama kept saying we need to turn the page from the Clinton years, essentially, we need some new faces -- all of the sudden, a lot of the faces are the same: Tom Daschle, Hillary Clinton. I'm also hearing that somebody who's in line is retired General Jim Jones, either as national security advisor or another senior foreign policy post.
And so, on the negative side, you've got a lot of familiar faces who are Washington insiders. On the positive side, though, I think what you could potentially say about Barack Obama early on here is he seems comfortable in his own skin. He's not afraid to bring in some high- powered people.
And the criticism of President Bush has been that he brought in a lot of "yes people." People wouldn't really stand up to him and tell him when things were going wrong in Iraq. Barack Obama is suggesting he's bringing in some real power players and he's willing to bring them around the table, this so-called "team of rivals." I guess, on the flip side, though, you have to wonder -- how do you get all of those egos together? Will this so-called "team of rivals" really be rowing in the same boat, Kitty?
PILGRIM: That would be his big challenge. But you make a very good point. I mean, the level of expertise that's being brought in is considerable.
And, Mark, it really speaks to the times too that you probably need the best team you can possibly assemble at this point, right?
PRESTON: Yes, really. And, you know, Kitty, what's interesting about all these names that we've seen come up in the media and in our reporting is that we haven't heard a lot of opposition, certainly, not to Hillary Clinton's name. We haven't heard much about oppositions from Republicans to Tom Daschle.
But really, what is important is when will these cabinet secretaries get a vote in the Senate and what I've been told right now is that the transition -- Obama's transition team has been talking with Senate Democratic leaders about trying to get a vote as early as possible. And a senior Republican leadership aide told me that, "Look, if we can get hearings started in the first week in January, we would be prepared to vote on the qualified nominees on the day that Barack Obama is sworn in."
So, of course, we're in some very hard times right now with the economic crisis and, of course, what's going on around the world. So I think you could see this people in position very quickly.
PILGRIM: And that would indeed be considerable progress. That would be great.
Thanks very much. Jessica Yellin, Ed Henry, and Mark Preston -- thank you.
Still to come: Communist China and Russia launched a new challenge to the U.S. interests in our own hemisphere. We'll have a special report.
Also, we'll tell why some of the nation's biggest transit systems are joining the lines for a government bailout. It's an astonishing story of a tax dodge that went bad. Stay with us for that.
(COMMERCIAL BREAK)
PILGRIM: Anti-American leaders are wasting absolutely no time in sending a message to President-elect Obama. Communists and Chinese and Russian leaders are visiting Cuba, Venezuela and other left- leaning countries in this hemisphere and they're taking advantage of the transition between the Bush and the Obama administration to bolster their position in the region.
(BEGIN VIDEOTAPE)
PILGRIM (voice-over): Chinese President Hu Jintao this week is on a state visit to Cuba to "promote the close ties between both countries," attending a trade fair in Havana as one of Cuba's largest trading partners. Russian President Dmitry Medvedev is also visiting the region, Peru, Brazil, and Cuba -- the first trip by a Russian leader to Havana in eight years. In a dramatic move this week, Russia said it would help build Venezuela's first nuclear reactor.
Many say, Obama, who during the campaign signaled the willingness to talk to adversaries, is now being tested.
FRANK GAFFNEY, CENTER FOR SECURITY POLICY: He needs to signal as soon as possible that his administration is not going to be trifled with by adversaries. While he seeks better relations, it is not going to be at the expense of America's vital interest and those of its allies.
PILGRIM: Some say Russia is acting out on a long list of grievances against U.S. influence in its neighborhood. Retaliation for U.S. agreement to base missiles in Poland, the expansion of NATO, and what Russia views as interference in its conflict with Georgia.
GLEN HOWARD, JAMESTOWN FOUNDATION: What we're seeing is, is that the Russians view Latin America as part of our backyard. And they see it as a part of the testing of the sphere of influence.
PILGRIM: During the campaign, foreign policy was not often discussed. So, Obama's position on many issues is still unclear.
PETER BROOKES, HERITAGE FOUNDATION: We didn't get a really good sense. Remember, the economy dominated the latter parts of the campaign. So, many very, very important issues, I don't think, necessarily were addressed.
PILGRIM: Obama has made only a few comments about China trade and even fewer remarks about Russia and missile defense.
(END VIDEOTAPE)
PILGRIM: Some say all of this is timed not only as a parting shot at President Bush but as a power play during the key transition period. The Russian president, in Washington, last week says hopefully the new president will have the willingness to discuss the missile defense issue and not just rubber-stamp the missile defense policies of the Bush administration.
Well, new efforts this week to tackle the crisis over dangerous imports from communist China. The Food and Drug Administration is finally opening offices in China. Now, a high-ranking U.S. officials were in China this week, a staff of about a dozen will be responsible for ensuring the safety of the Chinese food and drugs heading to the United States. But there are questions about just how effective these new inspectors will be.
Eunice Yoon reports.
(BEGIN VIDEOTAPE)
EUNICE YOON, CNN ASIA BUSINESS EDITOR (voice-over): U.S. Health Secretary Michael Leavitt is examining fish at this Chinese factory to help keep America's food safe. Secretary Leavitt is in China to open the Food and Drug Administration's first international offices ever.
MICHAEL LEAVITT, HEALTH & HUMAN SVCS. SECY.: The United States now imports an enormous amount of food, drugs, and devices. Having people on the ground to conduct those person-to-person relationships is critical.
YOON (on camera): If it's so critical to have these kinds of relationships, why didn't you open the offices earlier?
LEAVITT: This is an issue that is only emerging now. What we're seeing is the maturing of a global marketplace. We've begun to see problems.
YOON (voice-over): Problems ranging from last year's pet food scandal, tainted blood thinner Heparin, and now, a poisonous chemical deliberately added to China's milk.
LEAVITT: There are 400,000 processors of food in this country. It's a complex society to govern. However, it's in our interest to help them.
YOON: Eight FDA officials, including four inspectors, will work in Beijing, Shanghai, and Guangzhou.
(on camera): Four inspectors, it sounds like a very, very small number.
LEAVITT: We don't intend for those four people to inspect everything that comes from China. Those people are here to build relationships that will allow the Chinese to have a more robust inspection that we can have confidence in.
YOON: Fish like these are going to end up on dinner tables all over America. Businesses here want to make sure that Americans have faith in the "Made-in-China" brand.
(voice-over): Yet, it's a tough sell since China has had difficulty policing its own food supply. The FDA says progress will depend on cooperation from the often secretive Chinese government.
LEAVITT: Do I expect that we'll see inspectors from the FDA going into Chinese plants? Absolutely. Do I think they'll go hand-in-hand with Chinese -- with their Chinese counterparts? Yes, I do. Do I expect it to be perfectly smooth? No. Are we going to have to learn from each other? Yes.
YOON: Eunice Yoon, CNN, Guangzhou, China.
(END VIDEOTAPE) PILGRIM: Communist China itself is working to repair its image as an exporter of contaminated food. The Chinese governments Thursday announce a wide range of food safety rules. And those rules are aimed at China's dairy industry. Many dairy products in China have been contaminated with melamine, it's an industrial plastic. And some of those contaminated products were found in stores here in the United States.
Coming up: A new threat from Mexico's drug cartels. They may be buying their way into the Border Patrol. We'll have a special report.
And, amid all of the talk of bailouts, why is no one helping our struggling middle-class? We'll have a report. Stay with us.
(COMMERCIAL BREAK)
PILGRIM: The deadly Mexican drug cartels are expanding their reach into this country. And now, according to the FBI, the cartels are actually recruiting people to apply for jobs as U.S. Border Patrol agents. And, in a few case, they've apparently succeeded.
Casey Wian has our report.
(BEGIN VIDEOTAPE)
CASEY WIAN, CNN CORRESPONDENT (voice-over): Former Customs and Border Protection agent Margarita Crispin pled guilty this year to importing more than a ton of marijuana into the United States. She and a handful of other agents along the border in recent years have been found to be cooperating with the drug and alien smuggling organizations.
According to the FBI in El Paso, Texas, a new trend is emerging -- drug cartels are recruiting their American contacts to apply for jobs as Border Patrol agents. They're attempting to exploit the Bush administration's mandate that the Border Patrol hire 6,000 agents in two years.
T.J. BONNER, PRES., NATL. BORDER PATROL COUNCIL: The most critical failure that has allowed cartel members and other criminals to infiltrate the Border Patrol has been the fact that the screening process has been watered down. No longer is the Border Patrol conducting a full background investigation before it offers people a job and brings them onboard and provides them with training.
WIAN: The Border Patrol denies that its recruiting standards have been weakened and says all applicants undergo the same background check as the FBI and Secret Service. Still, a Border Patrol spokesman says, "We're very concerned that as we expand our reach, we will continue to see these efforts by drug and alien smuggling organizations to infiltrate our agency."
The FBI's lead agent tells LOU DOBBS TONIGHT, the number of cases of cartel-affiliated Border Patrol agents is very small, but he stresses that even one or two can have serious consequences.
ANNOUNCER: The Border Patrol.
WIAN: The Border Patrol says it has increased its use of lie detector tests and it's working with other law enforcement agencies to screen out potential cartel operatives. But veteran agents say that's not enough. They want tougher standards for new agents.
(on camera): The FBI emphasizes: The vast majority of Border Patrol agents are honorable and hardworking. But as border security efforts intensify, drug cartel tactics are becoming more brazen. And federal authorities are struggling to keep up.
Casey Wian, CNN, Los Angeles.
(END VIDEOTAPE)
PILGRIM: Corruption fueled by Mexico's drug cartels today reached deep into Mexico's federal police agency. Ricardo Gutierrez Vargas, Mexico's chief liaison with Interpol is suspected of leaking information to Mexico's deadly drug cartels. Now, Gutierrez Vargas is being held under house arrest. He is the fourth Mexican official arrested recently as part of an anti-corruption sweep. Interpol is sending a special team to Mexico to determine just how much sensitive information may have been passed on to those cartels.
A leader in the local crackdown against illegal immigration, Sheriff Joe Arpaio is taking on a new role. Now, the Maricopa County, Arizona sheriff will star in his own reality television show, "Smile, You're Under Arrest." It will premiere in December on the FOX Reality Channel. The show will use comic actors and scenarios to lure wanted felons out of hiding.
Coming up: Many of the nation's transit systems are facing financial chaos, and it's a mess of their own making. We'll tell you why. Also, new demands for government help for the rising number of middle- class Americans in danger of losing their homes. And, we'll examine the role of the religion in politics with one of the nation's leading Christian conservatives.
All of that and more -- coming up.
(COMMERCIAL BREAK)
DON LEMON, CNN ANCHOR: Hello, everybody. I'm Don Lemon at the CNN World Headquarters. And here's some headlines for you. Two more U.S. banks have been taken over by federal regulators. Southern California's Downey Savings & Loan and PFF Bank & Trust suffered from bad mortgage loans. Twenty-two U.S. banks have failed this year.
A final overseas trip as president. George W. Bush is at a global economic summit in Lima, Peru tonight with a warning for other world leaders. He's telling them not to restrict free trade despite the global economic crisis.
It's one of the most visible roles in any presidential administration, President-elect Barack Obama has named Robert Gibbs as White House Press Secretary. Gibbs has been at Obama's side since his 2004 Senate campaign. He's known as a tough talker.
I'm Don Lemon, join us tonight, midnight. We're on late. And we'll get back to our taped programming after a quick break.
ANNOUNCER: This is "Lou Dobbs This Week." News, debate and opinion, an independent view. Here again, Kitty Pilgrim.
KITTY PILGRIM, CNN HOST: Tonight, a tax scheme gone bad. Now what makes this scheme particularly outrageous. Transit authorities of major cities attempted to manipulate the U.S. tax code. And now that scheme is backfired and those agencies want to use more of your tax dollars to get them out of the mess of their own making. Drew Griffin has our special report.
(BEGIN VIDEOTAPE)
DREW GRIFFIN, CNN SPECIAL INVESTIGATIONS UNIT (voice-over): Transit agencies from New York to San Francisco are in a panic trying to figure out how to survive a go-go financial scheme of the '90s that now threatens to derail their trains just as they are seeing record ridership.
BEVERLY SCOTT, AMERICAN PUBLIC TRANSPORT ASSN.: 31 of the nation's largest transit systems, including my own, MARTA, would be financially crippled in the coming months if nothing is done to resolve this crisis.
GRIFFIN: It's a crisis of their own making, deal making, that has transit agencies playing with the U.S. tax code. How? Just like a shell game. Public transit agencies that pay no taxes started selling tax shelters to banks that needed a tax break.
GRIFFIN (on camera): It worked like this - banks would buy rail cars from transit agencies like these at Metro and DC. The banks would immediately leave the rail cars right back to the transit agencies, but now could depreciate the investment. Accounting terminology for getting a huge tax break. And they'd split the tax break with the agency.
GRIFFIN (voice-over): The problem is to the IRS, it looked and smelled like a tax dodge.
CAROL KISSAL, CFO, WASHINGTON METRO: It does look like that. I mean, to some extent, that's why Congress made the ruling.
GRIFFIN: The first ruling banned U.S. banks from participating in the tax dodge. No problem - the transit agencies then went overseas. Metro and DC sold some rail cars to a Belgian bank. Then in 2003, Congress killed the whole scheme, which was fine for transit agencies. They still had long-term leases and their share of the tax shelter was in their pockets. But the banks got burned. They were leasing back rail cars they now owned but could no longer write off.
Now the twist of unintended consequences - the deals were almost exclusively back by the teetering insurance giant and bailout beneficiary, AIG. JOSEPH HENCHMAN, TAX FOUNDATION: A lot of the deals had a clause that if AIG's credit rating ever drop, then the banks would either - the transit agencies would have to find a new endorser or terminate the agreement and pay out huge termination fees. And transit agencies signed these agreements anyways fully knowing that they would not be able to pay these termination fees. They thought they would never have to but now they do.
GRIFFIN: And now the transit agencies say they need a bailout too. Just don't call it that.
JOHN CATOE, GEN. MANAGER, WASHINGTON METRO: This is not a bailout request. This is not a request for a loan of money. This is a request for the federal government in the process of working with various institutions to support public transit.
GRIFFIN: So, they are heading to Capitol Hill with their hand out hoping for hundreds of millions of dollars in taxpayer money to cover what the IRS already called an abusive tax scheme. Joe Henchman with the Tax Foundation says it would be a reward for a really bad deal.
HENCHMAN: If Congress and the administration want to spend more money on transit, they should do it through the appropriation process, not through the tax code.
GRIFFIN: Drew Griffin, CNN, Washington.
(END VIDEOTAPE)
PILGRIM: The Bush administration remains sharply divided over how to help mortgage owners who are danger of losing their homes. But on Thursday, Fannie Mae and Freddie Mac says they will suspend all foreclosure sales of occupied homes until next year. Ines Ferre has our report.
(BEGIN VIDEOTAPE)
INES FERRE, CNN CORRESPONDENT: In Cleveland, Ohio, over 300 homeowners came to this foreclosure prevention workshop trying to save their homes.
UNIDENTIFIED FEMALE: I just didn't know what else to do. You know, I tried to - I tried to get help with the foreclosure. It's been very hard, you know, not knowing if I'm going to keep the house or lose the house.
UNIDENTIFIED FEMALE: We basically came because we needed help. Once I had lost my job a couple months back and it was hard catching up.
FERRE: Four million homeowners are behind in their payments and Moody's economy.com said up to five million homeowners would lose their home between 2008 and 2010. Most of the current mortgage modification plans extend the terms of the loan are reduced interest rates. But they do little to help people who lose their jobs or those with underwater mortgages where they owe more than the home is worth.
LYNETTE KHALFANI-COX, AUTHOR "ZERO DEBT": By some estimates, as many as a third of all homeowners out there are, in fact, underwater. Even if you got a low modification and you owe $400,000 on your mortgage but the house is only worth $350,000, the loan modification is not going to help you with that.
FERRE: Some banks have their own plans, but mostly cover only the loans they own. For example, JPMorgan's latest plan applies to about 23 percent of the $1.5 trillion of mortgages it services. The rest are tied up in agreements with third parties and investors.
DEAN BAKER, CTR. FOR ECON. & POLICY RESEARCH: Many servicers are reluctant to step forward and say we're going to do more modification without having everyone onboard. And of course, it's very hard. You might have ten, 15 parties who have a claim on a mortgage.
FERRE: Which makes it that much harder for homeowners seeking help.
(END VIDEOTAPE)
FERRE: And a relief to some homeowners, Fannie Mae and Freddie Mac announced that they would be temporarily suspending foreclosure sales of occupied homes and evictions until January 9 to give borrowers time to modify their loans. But this is expected to affect only at least 16,000 borrowers with home foreclosure sales. More and more housing advocates are asking for a nationwide modification plan, one that will cover everyone, Kitty?
PILGRIM: It certainly is clear that more needs be done. Thank you very much. Ines Ferre.
Coming up, the religious right pinned its hopes on the McCain-Palin ticket? And what will they do now? The president of the family research council will join me here. Also the Obama team waste absolutely no time. We'll tell you who the president-elect wants on his team. Three of the nation's best political thinkers will discuss those issues and more. Stay with us.
(COMMERCIAL BREAK)
PILGRIM: The republican party is scrambling to regroup after Senator McCain's defeat in the presidential election. A growing number of conservatives believe the GOP must return to its conservative roots to regain its political clout. Well, Tony Perkins is president of the Family Research Council. He's one of those conservatives. He's also the co-author of "Personal Faith and Public Policy." And Tony Perkins joins us now from Baton Rouge, Louisiana. Thanks for being with us.
TONY PERKINS, AUTHOR "PERSONAL FAITH AND PUBLIC POLICY": Good evening, Kitty. How are you?
PILGRIM: Good. You joined us many times during the campaign. You always said that the evangelical Christians and social conservatives were unable to relate to either candidate. How do you feel now that the election is decided? PERKINS: I feel the same way. They had a hard time relating to the two candidates. I thin the republican brand was damaged before John McCain picked up or was given the mantle of the republican party. And I think if the republicans want to be successful, they're going to somehow find those conservative bread crumbs that they dropped on their way into the political wilderness. I think they can do that. But it's going to have to be, as you point out, returning to those conservative principles. Fiscal conservatism, that means smaller government, social conservatism, personal responsibility, and a strong military, a strong but responsible military and foreign policy. And that's not what we've seen.
PILGRIM: Mm-hmm. You have just - you attended a very big meeting of conservative leaders, Grover Norquist of Americans for Tax Reform, Brent Bozell, the founder of Media Research Center was there. Big discussion, big pow wow. Was there a strategy discussed?
PERKINS: Well, I think there is, a strategy that's going to be going forward for the conservative movement. I think many in the conservative movement, if you will, believe that the republican party took over the conservative movement and kind of ran it off of the road. Conservatives are ready to take back control of the conservative movement. And if the republican party wants to be a governing party again as it has been in the past, it's going to have to return to those conservative principles. Look, America is a center-right nation. Barack Obama and the policies that he reflects are not reflective of the nation. I think he offered - you know, what he called change. And I think Americans were ready for change.
The republicans have not governed well and America was looking for a new path. And Barack Obama offered that. Now, his success is going to depend on whether or not he can govern as a moderate as he campaigned, or if he's going to be a liberal as he is - his record would indicate.
PILGRIM: You know I'd like to take you through a couple of issues here. And the really big conservative issue is proposition 8 in California. We've had some movement on that. The Supreme Court in California rejected efforts to block the ban, but they say they will also leave open arguments challenging the ban on gay marriage to leave themselves open to hearing other arguments. What do you make of all of the activity around proposition 8 in California?
PERKINS: Well, Kitty, ideally the court would have just said the people have spoken to the constitutional means and we're going to, you know, allow the rule of law to take place. And the people have spoken. I don't think the court has shown that they can allow the people the last word on the issue. It would have been best if they would have left it alone. But they did two things which are encouraging. One they did not stay the implementation of the constitutional amendment. So the definition of marriage is restored in the state of California. And secondly, they allowed the pro marriage or pro proposition 8 organizations to intervene in the case. So instead of having the Attorney General Jerry Brown who made no bones or did not disguise the fact that he was not for this, he will not be the sole individual defending the constitutional amendment. So that's a positive development.
PILGRIM: Let me ask you about stem cell research. President-elect Obama plans to roll back many of the Bush policies, and including some dealing with stem cells. But in Spain, doctors have successfully carried out a transplant with a human windpipe using the patient's own stem cells. Adult stem cells, is this issue over?
PERKINS: I don't think so. It's been fascinating just this week as you pointed out, a windpipe - a woman's windpipe re-created through her own adult stem cells. There's been other amazing reports this week on the success of adult stem cells. But where the problem is that Barack Obama is making some appointments to his transition team and in fact announcing that Tom Daschle will be the head of HHS, who has you know had a really bad record on the life issue as the majority leader in the United States Senate. So there's a concern that, yes, many of these pro life policies that have forced really more research with adult stem cells which has led to over 70 now known treatments with adult stem cells, that this could hurt this by funneling more money into embryonic stem cell research which is, one, unethical, it's the destruction of a human embryo and secondly, it's produced no results. So we're going to continue to argue that we should be putting - if we're going to put taxpayer money into research, which we should. We should put it in to research that is working. And it is adult stem cells that's working.
PILGRIM: All right. Tony Perkins, thank you very much for joining us.
PERKINS: Thanks, Kitty.
PILGRIM: Coming up, rising fury over the Wall Street bailout. How will an Obama administration handle this crisis? Three of the best political minds will join me with their thoughts on that and much more. Stay with us.
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PILGRIM: Joining me now for the latest on Obama's path to power are four of our nations' best political minds. We're joined by James Freeman of the opinionjournal.com. CNN contributor and Pulitzer Prize winning columnist for "The New York Daily News," Michael Goodwin. CNN contributor democratic strategist and democratic national committeeman, Robert Zimmerman and joining me from Washington is senior editor at Politico, Beth Frerking and thank you all for being here.
We have to start with all the cabinet discussion. And, you know, nothing is official yet. But an awful lot is being discussed for an unofficial roster. We'll start with Secretary of State Hillary Clinton, who reportedly that is in the works and about to be completed. Robert, thoughts on this?
ROBERT ZIMMERMAN, DEMOCRATIC STRATEGIST: The operative phrase is that the discussions are on track. And clearly we're getting an impression that both sides are feeling very enthusiastic and optimistic about how the discussion process is going. The more important point to me though is if you look at the whole range of options that Barack Obama is looking at, he's recognizing that the problems we're facing in America have to also addressed in an international environment.
PILGRIM: Right.
ZIMMERMAN: And the people he's putting together truly do speak to the fact that he's reaching out to individuals who are not necessarily part of the old buddy system, but individuals who represent the best type of approach, whether it's Hillary Clinton, who, of course, ran against him. Or, perhaps, a man who's very close to John McCain, General Jim Jones, a very well respected military leader who is being talked about for national security advisor.
PILGRIM: That's right. Well you know certainly in international profile, Hillary Clinton is well recognized and well known around the world and would be a very good and logical choice for secretary of state. Beth thoughts on this appointment.
BETH FRERKING, SENIOR EDITOR, POLITICO: Well you know I think one of her most effective times during the campaign if you'll remember was the in the campaign, if you remember, is the 3:00 a.m. ad, you know, would be the 3:00 a.m. ad, would he be ready for crises around the world and that was something that got her a lot of attention and I think a lot of support in places early on during you know during the primaries. I think it is a place that she has strength and I think the other thing that we have to think about is the old adage of keep your friends close and your rivals even closer. You know there are some people who are saying that the drama that might happen here would be not good for him. But I think he's as Robert said, he's pulling people in that he might not see eye to eye with on everything and she does have a lot of respect in terms of her international experience.
PILGRIM: Michael, where does this put her in terms of her political aspirations though if she takes this?
MICHAEL GOODWIN, CNN CONTRIBUTOR: Well, I think they're probably be dead at least for years but before we even get there, I think the issue of Bill Clinton is still isn't unresolved. You know this is something Obama raised on the campaign trail. Bill Clinton's disclosure of the contributors to his presidential library and to his foundation, and to the paid speeches that he gives around the world. I mean, Bill Clinton as raised $500 million. We generally do not know where that money has come from. Now Obama's people supposedly are vetting this. But if Obama's people are just going to be part of the secret, I don't think that reassures the public. So whatever they find out and whatever deals they make with Bill Clinton about avoiding conflicts of interests going forward. I think the public has to be in on this secret now too.
PILGRIM: Right. This has gone so far though, it's almost going to be very hard to turn this around, isn't it, James?
JAMES FREEMAN, OPINIONJOURNAL.COM: Honestly I don't see the upside for either Obama or Hillary. She doesn't get to be her own boss anymore and he hires someone who likes to be her own boss, the Bill Clinton baggage comes with her. I really - I don't see how it's a winner for either one.
ZIMMERMAN: I think the reason it's a winner not just in regards to Senator Hillary Clinton, but the other names that are being discussed for prominent positions in the administration.
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FREEMAN: I voted for change and I would have voted for her.
ZIMMERMAN: And that is - and Eric Holder represents a tremendous change from John Ashcroft and Hillary Clinton represents a dramatic change from Condoleezza Rice. If you're looking for a change on policy that comes from the president, having a team around him to have the leadership and the stature to implement that policy is really what it's all about.
GOODWIN: Robert mentioned Eric Holder. There's a classic example of Clinton baggage. Eric Holder was deputy attorney general, really acting attorney general toward the end of the Clinton years and approved the pardon of Mark Rich. That was the most disgraceful episode, I believe, more so than Monica Lewinsky in terms substance. Because Mark Rich was a fugitive from justice and everybody -
PILGRIM: It was President Clinton who pardoned him.
GOODWIN: And yes, but Eric Holder passed on it and said it's OK. Now, he's going to have to explain that.
PILGRIM: Beth, go ahead.
FRERKING: Well I think that will come up during the confirmation hearings. I do think that that's going to be an issue that it's going to be questioned by a lot of the senators. But back with Senator Hillary Clinton, I think what's interesting here is, you know, he is - as someone said earlier, this is about leadership and I think if it works and he is able to contain her somewhat, that really says something about his leadership, you know, maybe some people would call it a Hail Mary pass. I don't think you can say that, because she has experience. But the fact is that he's taking a risk and if it works, then he wins bigger.
PILGRIM: James.
FREEMAN: I think that's right, I mean you don't want to be hoping that it works out. You would like to have confidence that they are going to be working for you and not for themselves and I think that's the big question with the Clintons, but Eric Holder, another Clinton administration refugee, or veteran or whatever you want to call him. It's not just the Mark Rich issue, he started this series of memos that very controversial, basically trying to strip away the rights of defendants if they happen to work at a corporation. I know this is something that got Lou pretty angry during those years when these powers were being exercised. And it's going to be interesting to see how that plays as well.
PILGRIM: Robert, I'll let you respond but we're really should take a quick break. We'll be right back in just a moment with our political round table right after this.
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PILGRIM: We're back now with out panel. James Freeman, Michael Goodwin, Robert Zimmerman and Beth Frerking. Let's - we're right in the middle of a big discussion about potential cabinet appointments and you know we really should talk about in the context of the economy. We have a potential Treasury Secretary appointment. Tim Geithner, president of the New York Federal Reserve, very credible, very solid appointment. Thoughts on this Robert?
ZIMMERMAN: Well, I think what we can expect I'm being told from friends and associates involved in the process that we could expect next week announcements from the transition team regarding Treasury appointments and the economic team being appointed next week and then after Thanksgiving, the foreign policy team. And I think that speaks to the Obama strategy of trying to provide some message regarding the economy. Clearly, we can't have two presidents. We can't have conflicting messages but I think by the appointment that he made by Tim Geithner and the jump that the stock market got, here's a person whose credentials go back to Ronald Reagan and even Jim is going to have a hard time opposing someone of those standards -
FREEMAN: We actually see another Clinton era appointee.
ZIMMERMAN: All roads lead back, right, Jim?
FREEMAN: Well look I think it's great -
PILGRIM: You cannot quibble with his pedigree. I mean it is -
FREEMAN: Well I'll say this. I'm really glad that the markets rallied on this choice. I think this is a time where certainly there is something to be said about stability and continuity. But this is a guy who likes interventions. So if you liked the Bear Stearns bailout in March, if you liked AIG, if you like the whole series and you want more federal intervention in the banking sector this year, then this is your guy.
GOODWIN: And speaking of this confirmation, you know as James said, I mean he was very much involved in all of these decisions, of course being in New York, that was the most important fed spot under the chairman. And so he was clearly involved in all of Ben Bernanke's big decisions as Fed chairman. So I think that there are going to be a lot of issues and I also thought it was remarkable the way the rally and the stock market took off after his name, went straight up during the last half hour. But I think it's kind of pathetic to him. It's like what Barack Obama says you know we only have one president at a time. In fact we don't seem to have a president at all right now. I mean we have got a real vacuum of leadership in this country. So I think it was kind of telling that the market was kind of grabbing for anything for good news.
PILGRIM: Well, or the magnitude of the problems exceeds even two potential presidents. Beth, thoughts on this? FRERKING: Well you know I think that as with the markets going up, I know our reporter who looked into this, talked to a lot of people on Wall Street today who were very happy with the choice of Geithner, and he doesn't come with some of the political baggage that Larry Somers comes with. So, you know, I think that it's a solid choice from what it sounds like as somebody said earlier, you know, he is an interventionist and clearly that's going to be something that we're going to see. But I think it's right that we're not going to really hear any plans from the Obama people until we hear who's in place for their Treasury team. And then we may start hearing more about what they're going to do. It would have been putting the cart before the horse.
PILGRIM: We must leave it there. Thank you very much for being with us. Robert Zimmerman, Michael Goodwin, James Freeman and Beth Frerking, thank you.
FRERKING: Thank you.
PILGRIM: Thank you for joining us. Please join us tomorrow and join Lou on the radio Monday through Friday for the "Lou Dobbs Show." Go to loudobbsradio.com to find local listings for the "Lou Dobbs Show" on the radio. For all of us here, thanks for watching. Good night from New York.
