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Robert Gates Expected to Stay On; Obamamania in Overdrive; What's in the Bailout for You?; Obama Criticized for Failing to Deliver Real Change in Appointments

Aired November 26, 2008 - 07:00   ET


JOE JOHNS, CNN ANCHOR: Encouraging news in the fight against cancer. A report says new cases were down between 2001 and 2005 by close to two percent a year in men and by about half a percent a year in women. Doctors are crediting early detection and better treatment, but they also say a slowing economy could stall progress since many people may lose their health insurance.
Breaking news this morning, the Secretary of Defense, Robert Gates, is staying on. One source says it's all but a done deal for Gates to stay on the job for at least the first year of the Obama administration. It's a historic move and it's the first time a Pentagon chief will be carried over from a president of a different party. And it's a move that may upset many people who backed Obama for his stance against the Iraq war.

Pentagon correspondent Barbara Starr is working her sources and joins us now -- Barbara.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, you know, Joe, a fascinating political development, but it certainly in these hallways, had been hinted at for weeks. People very close to Dr. Gates said that if the president-elect had asked him to stay, that it was likely Dr. Gates felt he could not say no. He would have to agree to stay.

But how is this all going to work that the defense secretary for President Bush today is for President Obama? One of the big issues, how do you make this $500 billion bureaucracy really work? Dr. Gates still is working with all of the old staff left behind by Don Rumsfeld. Will he have to clean house? What will that challenge be about? We asked the former top budget guy who used to work here at the Pentagon.


DOV ZACKHEIM, FMR. PENTAGON COMPTROLLER: If we don't have good civilian personnel alongside our good military personnel, we're not going to reform. It can't happen. You need the people to make it work.


STARR: So, you know, what we're looking at is the possibility that Bob Gates will start by cleaning house and getting rid of all the old Bush people. One of the questions that's already circulating, though, is, how will Dr. Gates suddenly be the chief policy and defense guy for an Obama administration that campaigned against the Bush administration that Mr. Gates represented? It's going to be hard to see, many people believe, how this will not be seen as Bob Gates repudiating President Bush and suddenly joining the Obama team -- Joe.

JOHNS: Well, for the Democrats who are now taking over, is there a real downside, would you say, for Gates to stay?

STARR: You know, the big challenge that many people in the U.S. military now see emerging is still Iraq. You know, President-elect Obama campaigned on a 16-month withdrawal. The military has always said, Gates has always said it can't be a timeline. It has to be conditions based. Suddenly you do begin to see wiggle room in that.

The military saying, well, maybe 16 months is doable. But the real military challenge starting in January for Gates and Obama will be Afghanistan. They have to get troops out of Iraq so they can send 20,000 more troops to Afghanistan. That may not be the most popular move.

Also, cutting defense spending. Still the big challenge. So if Gates, in fact, stays for the next year, it may not be as happy as his last two -- Joe.

JOHNS: Barbara Starr at the Pentagon. Thanks so much, as always.

CAROL COSTELLO, CNN ANCHOR: Suzanne Malveaux joins us now.

And, Suzanne, tell us more about this decision. How politically risky is it for Barack Obama to keep Gates on?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, you know, it's funny because there were a lot of people, a lot of discussions about internally, whether or not this was a good idea. But Barack Obama really established a good rapport with Gates and they felt that they needed something. That was a steady hand, a sense of continuity. But they do know and realize that the base, the people who supported him, largely on this anti-war platform so that is something that they obviously are thinking about.

Another thing that is -- a lot of people are talking about is whether or not Barack Obama is overshadowing President Bush in some way, releasing these teams, talking to these officials. Take a listen.


BARACK OBAMA (D), PRESIDENT-ELECT: There is only one president at a time. That president is George W. Bush, and he will be president until I'm sworn in on January 20th.


MALVEAUX: So, Carol, you know, that's really the thinking here is that he wants to show people that he's ready. He's not going to wait until January 20th before he rolls out his economic team. Very important. His national defense team, security team next week. These are all things that he's demonstrating to the American people so that they're not concerned about the economy or the war.

COSTELLO: Why doesn't he just become the president now? Why are we all pretending that he's not because it's not like George Bush is front and center any longer, is it?

MALVEAUX: Well, you know, he's got to -- he's got to walk a fine line. He realizes that as well.

COSTELLO: I think he's over that fine line, isn't he?

MALVEAUX: But you know, three press conferences in one week, you know. But I mean, he really wants to show people that they're ready, they're prepared. Even the stock market, you know, that there's a signal that they're moving forward.

COSTELLO: Suzanne Malveaux, thanks.

We're expecting another major economic announcement, by the way, from the president-elect this morning. He's holding, as Suzanne told you, his third news conference in as many days. See it live on CNN at 9:45 Eastern.

JOHNS: And excitement is building in Washington over anything and everything Obama as the nation counts down to the inauguration. Our Erica Hill found that from his cabinet to his little girls, Obama mania is now in serious overdrive.


ERICA HILL, CNN CORRESPONDENT (voice-over): With just over two months to go until the inauguration, Washington is going wild.

ANNE SCHROEDER MULLINS, POLITICO GOSSIP COLUMNIST: Washington, D.C., was pro-Obama and had Obamamania long before November 4th. But the moment November 4th occurred, I mean, all craziness sort of broke loose.

HILL: Craziness like what life will be like for the Obama girls. And, of course, the new administration's cabinet posts. Hillary anyone?

MULLINS: Washington loves parlor games. And so a transition right now and a new -- a new presidency, all that does is offer parlor games, I mean, 24 hours a day. It's like, who's going to get A.G.? Who's going to get HHS?

HILL: The other big question, who gets to see the inauguration? Only 240,000 seats are available for the swearing in, and even though the free tickets haven't been handed out yet, they're already being sold online with price tags in the thousands. A practice California's Senator Dianne Feinstein wants to make a crime punishable by up to a year in prison. SEN. DIANNE FEINSTEIN (D), CALIFORNIA: I find it unconscionable. These tickets are supposed to be free for people. And the chance to witness this solemn event should not be bought and sold like tickets to a football game.

HILL: It's not just scalpers of those nonexistent tickets after your hard-earned cash. From baseball cards to hot sauce, even hope on a rope, if there's a way to make a buck off of the president-elect, you can bet someone is selling it. With all the interest between one and four million people are expected for the festivities, security is the government's top concern.

FRED BURTON, FORMER STATE DEPT. SPECIAL AGENT: Any kind of contingency that you can think of, the Secret Service has game boarded and has got a plan in place to deal with.

HILL: While several airlines have added flights to D.C. for the festivities, once you get there, finding a hotel may be impossible. But you could try renting from the locals. A quick Craigslist search turned up hundreds of offers.

MULLINS: People who are not politically motivated or maybe you're Republican and you don't want to hang out and see all of the camaraderie, they're like, OK. I'll just rent out my apartment, make a few bucks and go to Jamaica.

HILL: Or you could stay in town and then hit the beach. Just book the inaugural package at the Ritz-Carlton in D.C.


HILL: You'll get tickets to the parade, one of the balls, and a trip to the Caribbean, all for 100 grand.

Erica Hill, CNN, New York.


JOHNS: An even bigger bailout. And this time it's for you. Details of the new $800 billion plan to get banks lending, people spending and the economy moving. And whether we can just keep throwing money at the problem.

It's 7:08.

Strange claim --


BUDD HOPKINS, UFO ABDUCTION RESEARCHER: Almost everything that we're discussing here sounds off the wall. But that doesn't mean it's not true.


JOHNS: Close encounters of the fourth kind. People who insist they've been abducted by aliens. And the man who's made it his mission to listen and believe.

You're watching the Most News in the Morning.



CONAN O'BRIEN, HOST, "LATE NIGHT WITH CONAN O'BRIEN": Citibank says they will not be able to sponsor the New York Mets' new stadium because the bank's finances have collapsed. Yes, the Mets are furious and said our sponsors don't collapse. We do. That's our job.



The banks got their share. Now average Americans may -- may finally be getting their bailout. The cost, $800 billion.

COSTELLO: The plan to get banks lending to you again for things like cars and student loans but critics say it could create the same credit problems that got us into this hole in the first place.

Joining us now is Lakshman Achuthan of the Economic Cycle Research Institute.


COSTELLO: Thanks for joining us.

Talk about this very complicated -- I'm not sure anyone understands this.

ACHUTHAN: That might be the intent. I think at the end of all of this.

JOHNS: Yes. So what is this thing? How does it work? And I think most Americans would just want to know, how soon is it going to affect the credit markets and help them out?

ACHUTHAN: Well, all right. There's no clear answer how it works, but the general impact we've seen so far is that mortgage rates have come down. That's the material thing I can say after this announcement of $800 billion, this newest plan.

The reality is, some of this isn't going to go into effect until next year, OK? Number one. Number two, just because credit is available to you doesn't mean that you're eager to take it. And that is a big part of this problem. A lot of us seeing what's going on around the world are saying, well, you know, we're going to rein it in a little bit. So someone shows up and says, hey, you want to borrow money? You say, well, maybe not yet. And therefore, it doesn't really do all that much.

COSTELLO: So why do they keep doing this because you know, remember, we were all shocked at the $700 billion thing. Oh, my God. It's so much money. Now it's like, whatever.

ACHUTHAN: Yes. Yes. There's this -- look, we have the business cycle. Policymakers, the governments want to pretend they have some control over it. They don't. they're along for the ride. So they're hanging on to the reins and they're tripping over themselves to announce bigger and bigger numbers, right, to get our attention, get the market's attention.

COSTELLO: But why not just step back and relax for a while?

ACHUTHAN: Well, because we do have a deepening recession. So they will be in trouble if they don't do something. And so, they've been trying to do a lot of catch-up and make up for it with bigger and bigger numbers. The problem is none of this goes away unless you start creating jobs. That is the key to all of this.

JOHNS: Now this new plan when you really sort of read through it, it sounds a lot like the old plan.


JOHNS: Only we're talking about now Fannie Mae, Freddie Mac and those guys, plus some money for consumers. Is it really that different or is it just the thing they said they're going to do in the first place?

ACHUTHAN: Yes. And you have to ask it like, how stubborn are they if they keep doing the same thing expecting a different result? You know, we've done bailouts all year long and what has happened?

We in one degree, there's a material thing. You've saved the system. Our credit cards still work. The banks are still open, some of them, right? So in that regard there's been success.

On the larger picture of is the business cycle turning around, are jobs becoming more stable? Are home prices stopping falling? The answer is absolutely no. And this won't do much to turn that around. What we really need it really comes down to jobs because if you solidify the job market, home prices stop falling. If home prices stop falling, these banks stop being as sick as they are and we slowly get back to normal.

So, are we going to get a recovery that's strong enough to generate jobs? In order to do that, they have to do something different. They have to be smart with the stimulus and time it better, rather than throwing it out.

COSTELLO: But the point is Barack Obama says he wants to create millions of jobs.


COSTELLO: Is that possible for him to do? It must mean he's on the right track with it. Is it possible?

ACHUTHAN: I think -- I think it's the right focus. I think it's possible. I think it's a real open question as to whether or not they'll succeed because I don't see policymakers talking about the timing of stimulus. They're all running to say a bigger, bigger number, right? They're all happy to say 800, 900 I raise you, right?

And the issue is, are we going to time that stimulus so it doesn't sink like a stone like the last one, and actually kind of pushes the economy like a swing. You push it at the right time and it goes very strongly. We need to be smart about the timing.

JOHNS: Lakshman Achuthan, thank you so much for coming in.

ACHUTHAN: All right. I hope that helped.

JOHNS: That did help a lot actually. Good common sense stuff. All right.

COSTELLO: I'm not really feeling better, but it did help.


COSTELLO: New questions about Barack Obama's cabinet picks. While many are praising his choices, some liberals are lashing out at the new economic team. The critics want to know, where is the change?

And as you may know them, you may know them actually as Disney sensations or you may know them as little Malia Obama's favorite boy band. The Jonas Brothers are here. Yay! And they have a big thanksgiving announcement.

It's 16 minutes after the hour.



SEN. JOHN MCCAIN (R), ARIZONA: It's time for us to sit down together and address the enormous challenges that we face. I think that, frankly, that Senator Obama has nominated some people to his economic team that we can work with, that are well respected.


JOHNS: Senator John McCain showing some support for some of Barack Obama's economic team. But the president-elect is also taking some political hits from allies who say Obama is falling short of his promise to deliver real change.

AMERICAN MORNING's Jim Acosta joins us live from Washington.

Good morning, Jim.


You know, the Obama economic team has gotten some good reviews so far from a range of experts. But some on the left are taking one look at this team and asking, where's the change? (BEGIN VIDEOTAPE)

OBAMA: Please be seated. Good morning, everybody.

ACOSTA (voice-over): Rolling out the latest editions to his economic team, Barack Obama insists change is happening.

OBAMA: We don't intend to stumble into the next administration.

ACOSTA: But some business experts say it's more like continuity, especially in the appointments of Tim Geithner to the Treasury Department and Larry Summers as a key economic adviser.

PETER MORICI, ECONOMIST, PROF. OF INTERNATIONAL BUSINESS: Geithner and Summers are very much aligned with Paulson and the others from the Bush administration. That may be disappointing to Obama supporters who were expecting a great deal of change.

DEAN BAKER, CENTER FOR ECONOMIC AND POLICY RESEARCH: These were people that certainly played a role in getting us into this mess. Now, that doesn't mean they won't do a good job this point going forward, but I think that's at least serious grounds for concern.

ACOSTA: Liberal economist Dean Baker points out that as treasury secretary during the Clinton administration, Summers once pushed deregulation in the very markets that led to the financial crisis.

LAWRENCE SUMMERS, FMR. SECRETARY OF THE TREASURY: The achievement of legal certainty and a modern, legal and regulatory framework for OTC derivatives is an issue of great importance to our financial system, the competitiveness of our markets and businesses and our economy.

ACOSTA: Liberal blogs went ballistic when word leaked out that Mr. Obama was considering Summers at Treasury. One went as far as to post a Facebook page dedicated to blocking the appointment. Others on the left are uncomfortable with Geithner, who has led New York's Federal Reserve during the recent bailouts on Wall Street.

SEN. CHARLES SCHUMER (D), NEW YORK: The question I guess I'll ask you, Mr. Geithner.

ACOSTA: Earlier this year, Geithner was grilled over his handling of the rescue of financial giant Bear Stearns.

SCHUMER: Could a reasonable regulator have known and been ahead of the curve here?

TIMOTHY GEITHNER, NEW YORK FEDERAL RESERVE PRESIDENT: It's easy to look back and say, but doesn't it look obvious. And I think that's somewhat unfair to the people.

ACOSTA: But that isn't silencing some critics who like to see an outsider at the helm.

BAKER: I think it's important that we be dictating policy to Wall Street, not getting policy dictated to us from Wall Street.


ACOSTA: And all of that grumbling may explain why some Republicans are praising the new economic team. The fact that doesn't seem to worry Mr. Obama who says he needs both parties to fix the economy -- Joe.

JOHNS: And, Jim, I understand the transition team is actually responding to some of this criticism. What are they saying?

ACOSTA: They are. We've got a quote from Nick Shapiro with the transition. He says, "In the late 1990s, Congress and the administration took steps that did away with an outdated set of regulations that were designed for an earlier era." "Unfortunately," they say, "we have not put in a place a new system of regulations for the 21st century financial environment, that strikes the appropriate balance between innovation and" -- here's a good word here -- "prudence." "We paid a high price for failing to take these steps."

And so, Joe, there seems to be some acknowledgment there that members of this economic team have changed their minds on regulatory matters. So there is some change there.

JOHNS: Jim Acosta in Washington, keeping on top of the story. Thanks, Jim.

ACOSTA: You bet.

COSTELLO: Alien abductions.


UNIDENTIFIED MALE: It's a very clinical. They don't have really empathy or sympathy. Tagging it, looking it over and then letting it go.


COSTELLO: Meet the man who says aliens snatched him and then trusted him with something that could change the world. Really?

You're watching the Most News in the Morning.


UNIDENTIFIED MALE: So you believe in these kind of things?

UNIDENTIFIED MALE: Let's just say I want to believe.

COSTELLO: Welcome back to the "Most News in the Morning." All this week, we're bringing you a special series "In Search of Aliens." And today, we're talking to a man who says he has made contact and says he's actually been abducted by aliens more than once.

Space correspondent Miles O'Brien is here. I don't mean to make fun, but come on.

MILES O'BRIEN, CNN SPACE CORRESPONDENT: Well, that's actually not unusual. A lot of abductees have had the experience more than one time. We're talking about close encounters of the fourth kind. That's when a human is abducted by an alien.

Now, before you scoff, Carol...

COSTELLO: I'm sorry.

O'BRIEN: ... and tune this out, these people we talked to are not crazy people. The majority of the people who say this has happened to them do not have symptoms of mental illness. They are ordinary people who swear they have endured a most extraordinary encounter.



O'BRIEN (voice-over): You never know what surprise you might find when you open a drawer in this Manhattan studio. Artist Budd Hopkins is the keeper of some images that will expand, blow or maybe even close your mind. There's a photo album devoted to odd mysterious scars.

Almost like a hole punch.

HOPKINS: Yes. It looks like a biopsy.

O'BRIEN: Boy if these walls could talk, there are stacks of drawings of little aliens called grays. You know, big head, tiny mouth, almond eyes. These aren't Budd's work. They come from his rather unusual assortment of friends.

Is that the same person?


O'BRIEN: Different?

HOPKINS: Different people. Now the important thing about this is all of these are really old.

O'BRIEN: Right.

HOPKINS: This is before this face was on every t-shirt.

O'BRIEN: Bud has become the father confessor for hundreds of people who are convinced they have been abducted by aliens.

HOPKINS: It sounds totally off the wall and I'm the first one to say almost everything that we're discussing here sounds off the wall. But that doesn't mean it's not true.

O'BRIEN: Ladies and gentlemen, tray table up, seat belts buckled. This will be a wild ride.

(on camera): Do you have any idea how common these encounters are?

HOPKINS: Well, my guess is that they're very common simply because I just keep running into so many cases.

O'BRIEN (voice-over): In 1964, Budd saw a UFO. And then in '76 wrote an article in New York's "Village Voice" about an alleged alien encounter in New Jersey. His phone hasn't stopped ringing since.

HOPKINS: The massive evidence gets heavier and heavier and heavier. And that's not a pleasant thought, you know, to me. Mind you, I'm looking into something that I don't really like and that I don't really want to hear about. But I'm working with people who have suffered.

UNIDENTIFIED MALE: It's a little bit confusing to me.

O'BRIEN: People like Mark who believes he's been abducted several times in his life. He came to Budd to fill in the blanks. The "Missing Time," which happens to be the title of Budd's first book. He uses hypnosis. Here's a tape of his first session with Mark.

UNIDENTIFIED MALE: There's something small and white, but it's glowing. It's glowing so brightly that I can't even make out the figure. And I'm really scared. Then it starts to climb up on the bed to reach for me.

O'BRIEN (on camera): So what do you think it was?

UNIDENTIFIED MALE: Well, I spent many years trying -- trying to guess, trying to, you know, logically, rationally explain it. And I can't think of anything other than an encounter with beings of some sort that aren't human.

O'BRIEN: Do you have any idea what they wanted?


O'BRIEN: You get a sense that they were threatening you?

UNIDENTIFIED MALE: It's very clinical. They don't have really empathy or sympathy. It's often like us going into the wild and tracking a lion or a wild beast, you know, tagging it, looking it over and then letting it go. We don't really have a true connection to this animal. We don't really care about it. We're just examining it, and that's what I get from this. There's no malice involved.

O'BRIEN (voice-over): Believe it or not, it gets weirder or as Mark put it --

UNIDENTIFIED MALE: This is going to push this whole thing into Wackiville (ph).

O'BRIEN: OK. Let's go to Wackiville.


O'BRIEN: See how we do that.


O'BRIEN: In Wackiville, the grays take Mark to an exam room in their spacecraft and hand him a fetus.

Do you have any idea what they wanted when they gave you the fetus?

UNIDENTIFIED MALE: No. But that's part of my original thought process is that eventually those hybrids, as we call them, are going to probably plant it. It's a frightening picture. But if you look at it like logically, it makes all the sense in the world.

O'BRIEN: Hybrids? Hi, bud, are you there? That's kind of off the wall.

The whole thing is off the wall.


O'BRIEN: Now we did talk to a psychiatrist who has studied this issue. He says there are some less off the wall psychological explanations, Carol. One that is mentioned most is sleep paralysis. It happens when you are nodding off or waking up. Your body is sleeping and thus paralyzed. Your mind is still conscious and often times you'll experience hallucinations. But Budd makes a key counterpoint. Most of the abductees he talks to were not sleeping when they had their close encounter. So, go figure.

COSTELLO: So how does he really know?

O'BRIEN: Well, you don't -- he's talked to hundreds of these people. 700 of them.

COSTELLO: But they say they weren't sleeping, but --

O'BRIEN: Yes. Well, yes, I mean at a certain point I guess you can doubt the whole thing.

COSTELLO: I know I'm just being cynical.

O'BRIEN: You are obviously in the deep skeptic column here.

COSTELLO: But I'm looking at all of these drawings. And it is fascinating that they were done by different people and they all look very similar.

O'BRIEN: Yes, they do. And what's even more interesting is these are old drawings. 25 years old or so, before they were - you know the Roswell T-shirts became so common. And there is this similarity here. Now this is -- when you talk to witnesses and you hear these stories about aliens, this figure, this kind of big headed almond eyed, tiny mouth space creature, whatever you want to call it really goes back all the way to the Roswell incident.

So, you know, has that been planted in their heads psychologically or are they seeing these in a genuine way?

COSTELLO: And I wonder people came up with this image. If it is a psychological problem why this figure?

O'BRIEN: Well, you know a lot of people say why does it look so humanoid. Are we reflecting our own image? But there's actually an evolutionary explanation. You know if life did evolve somewhere else from another planet, it stands to reason that if the planet is a lot like ours, then evolution would create at least similar creatures.

You know, stereoscopic vision, ears there, head up there. All that kind of thing might happen in an evolutionary thing. So there's the scientific reason they might sort of look like humans.

There you have it. Submitted for your approval, or disapproval.

COSTELLO: I know, but it's fascinating regardless.

Coming up tomorrow --


UNIDENTIFIED FEMALE: We're listening for something that we don't think can be produced by Mother Nature.


COSTELLO: We'll meet a woman who spent three decades searching the solar system waiting for word from aliens. She just got a big boost from a billionaire investor. It just might be a safer bet than stocks, right? And this lady is so convinced they are out there, she's got some bubbly on hand.

And have you seen something funny in the sky? Are you convinced that aliens exist or do you just think it's science fiction? We want to know. Send us your pictures and video at Just click on the i-report link. We'll check out a couple of them in the next hour.

JOHNS: Just in to CNN. Breaking news on the Obama transition. The president-elect is expected to announce the creation of a president's economic recovery advisory board chaired by former Federal Reserve chairman Paul Volcker. The announcement will come at a news conference later this morning. His third in the last three days.

A real bad sign for the holiday season and a first in the Internet age. Online sales are down so far for the month of November. Market research firm Comscore says Web sites sold about $8.2 billion worth so far this month, which is about 4 percent down.

Every day we hear it. The economy is a mess. And President- elect Barack Obama has said it's his number one issue. So now, we're focusing on the fix. Could it trigger more trouble? In our ongoing series looking at the issues facing the Obama administration.

Christine Romans has today's "Memo to the President."


CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT (voice-over): Mr. President, you are inheriting the worst economy since the Great Depression.

OBAMA: Good morning.

UNIDENTIFIED MALE: We need the government to spend more.

UNIDENTIFIED MALE: We need to go directly at the mortgage holder.

UNIDENTIFIED MALE: We need to get real and start talking straight to the American people.

ROMANS: And advice from the experts is pouring in.

OBAMA: This will not be easy. There are no short cuts or quick fixes to this crisis.

ROMANS: It will require leadership and billions in spending to stabilize the economy.

PROF. KEN ROGOFF, HARVARD UNIVERSITY: This is going to take a massive effort. Trillions of dollars in mortgage support and helping the banks, in fiscal stimulus.

ROMANS: Ken Rogoff, a Harvard economist, has analyzed 300 economic crises.

ROGOFF: We can scale back later, but we need to respond very, very aggressively. And on multiple fronts, partly because that's necessary and partly because nobody quite knows how things are going to work.

UNIDENTIFIED MALE: The experience of the United States during the Great Depression.

ROMANS: Business professor Nouriel Roubini says this could be the worst recession in 50 years. Unemployment could top 9 percent. He agrees the new president must spend.

PROF. NOURIEL ROUBINI, NEW YORK UNIVERSITY: We need the massive fiscal stimulus package. The government spending on infrastructures, giving money to state and local government, increasing unemployment benefits, giving food aid and food stamps.

ROMANS: Obama says he plans major spending on alternative energy and will put millions of people to work on the America's creaky infrastructure, what many call a new New Deal. But with it comes a warning from the former U.S. comptroller.

DAVID WALKER, FORMER U.S. COMPTROLLER: President Obama, you need to do what you have to in order to turn the economy around in the short term in order to restore public confidence. But you also need to be able to help the American people understand that this country has been living beyond its means too long.

ROMANS: This crisis brought on by bad debt will require hundreds of billions if not ultimately trillions to solve. That will explode the already gargantuan budget deficit piling on to a $10.5 trillion debt.


ROMANS (on-camera): That's the ultimate challenge for this president. Spend big enough and boldly enough, as he says, to jolt the economy back to life. Without piling on so much crippling debt that we're hobbled far into the future. Joe, Carol?

COSTELLO: Thanks, Christine.

Contain yourself, America. I know you'll want to scream when you hear this, but keep control. The Jonas Brothers are here live. They have a special Thanksgiving announcement for you. It is 36 minutes after the hour.



DAVID LETTERMAN, HOST, "THE LATE SHOW WITH DAVID LETTERMAN": This transitional period is a busy time for President Bush as well he's busy granting pardons. Today, he pardons Sarah Palin for her interview with Katie Couric. That's good. And -


JOHNS: It's 39 minutes past the hour. Time to fast forward to see what stories will be making news later today.

Free as a bird. Two turkeys will get a presidential pardon at the White House today at 11:15. Instead of dinner, they'll be grand marshals at Disney's Thanksgiving day parade.

Today they expand, tomorrow you do. Macy's inflates the Thanksgiving Day parade balloon starting at 3:00 here in New York City. Dr. Seuss, Spongebob and Snoopy will be there, of course.

Another Thanksgiving day tradition, traffic. Today is always one of the busiest travel days of the year. But AAA says it would be the first thanksgiving in six years that holiday travel declines. Which brings us to Rob and the question is, what's it going to be like out on those roads?

ROB MARCIANO, CNN, METEOROLOGIST: On the roads, it shouldn't be too bad, although a couple of spots, Joe, especially across the northeast. Had some moisture yesterday. Now you got cold air in place. And there have been some statements from the National Weather Service in and around the New York City area up through parts of New England where black ice could be a problem if not right now, later on tonight or tomorrow morning.

A little bit farther to the north and west, lake-effect snows off Erie and Ontario. We could see six to 12 inches of that pile up. So I-81 from Syracuse up through Watertown up to Canton. Look for the snows to be heavy at times and you could see whiteout conditions. So that could make travel pretty treacherous as well. I'm sliding back from buffalo, Erie, almost all the way to Cleveland, anywhere from 5 to 12 inches of snowfall there.

Rainfall on the West Coast is the first real rain that SoCal has seen. It comes directly after those fires that broke out over the past week and a half. As a matter of fact, they are taking precautions in Southern California. Some video for you in places like Santa Barbara and also in northern Los Angeles county, especially in Santa Barbara.

They'd reverse 911 calls in those burn areas. They are afraid that mudslides could become an issue. Because we've already seen in some cases an inch of rainfall and there's more rain that is expected today. So flash flood watches and warnings have been posted for these areas and we'll be watching them very carefully, Joe, to see if that dirt begins to slide.

Elsewhere in between that southwest and the northeast, pretty good travel day. So everyone be safe out there. Joe.

JOHNS: But for everybody, not a perfect day to drive by any stretch of the imagination. Great. Thanks, Rob.

MARCIANO: You bet.

COSTELLO: You may know them as the Disney sensation. The Jonas Brothers are here. They have a big Thanksgiving announcement. It's 42 minutes after the hour.



COSTELLO: Pretty good. That was the Jonas Brothers. If you don't know who they are, your children certainly do. These three are an absolute American sensation. They are joining us live now from Texas.

Welcome, Jonas Brothers.


COSTELLO: You know, when Joe Johns, my co-anchor, found out you were going to be with us, he was jumping up and down. He loves you.

JOHNS: I am thrilled. I think they are awesome. JONAS BROTHERS: Thank you. That means a lot.

COSTELLO: We'll expect an autographed picture from each of you for Joe Johns.

UNIDENTIFIED MALE: We can make that happen.

COSTELLO: But, you know, another person who really loves you is Malia Obama. How many times have you heard that Malia Obama loves you, especially you, Nick.

NICK JONAS, SINGER: We've heard about this. This is very funny. I mean, we got to meet the girls at "Ellen" actually when we were there. And we played ping-pong with them and they were very sweet girls.

COSTELLO: So will you be visiting them at the White House, do you think?

N. JONAS: That's kind of up to them, I guess.

KEVIN JONAS, SINGER: If we get the invitation, we'd absolutely love that. You know, we've been to the White House a couple of times now. I think it would be really amazing to go back. The girls are amazing. The family is great. And so we can't wait to see what happens.

COSTELLO: You know everyone is dying to go to the inauguration. I'm sure you guys would get an invitation for sure. Would you like to sing at the inauguration?

N. JONAS: It would be an honor.

K. JONAS: Very cool.

COSTELLO: Really? So what message do you have for the Obama family?

N. JONAS: I mean, they are doing a pretty incredible job so far. I would say, you know, that, yes, congratulations.

COSTELLO: Well two of you are old enough to vote, right? Two of you are? Like Kevin and Joe. You're both old enough to vote.


K. JONAS: Yes.

COSTELLO: So did you take part in this election?

K. JONAS: We definitely did vote. We're not in a position to endorse any specific candidate, but we really definitely wanted people to get out there and vote. That was their duty and their right as a citizen.

COSTELLO: I like that. And the youth movement was big this year. We're proud of the young people for turning out at the voting booth.

J. JONAS: Oh, yes.

COSTELLO: So just one last question about the Obamas because your picture is supposedly going to be plastered all over Malia Obama's wall. How does that feel?

N. JONAS: It's kind of a cool feeling.

K. JONAS: Definitely.

N. JONAS: Very sweet to meet them and they are very nice little girls.

COSTELLO: So tell me what you are doing at a football stadium this morning.

N. JONAS: We are working together with the Cowboys and the Salvation Army to talk about the Thanksgiving day game today. We're going to be performing at the halftime show. And we're so excited. Some great people here doing some great things. And the fact that we were asked to be a part of it this year is truly an honor and privilege.

COSTELLO: Why did you agree to work with the Salvation Army?

J. JONAS: It's an amazing cause. And to work with them and to inspire young people to go out there and give some money is really amazing. And everybody can do something. And it's just a great feeling to be a part of it and be playing tomorrow.

COSTELLO: And then, of course, I know you are Dallas fans. So you think Dallas is going to win. And I know that one of you told me, right, Dallas is going to win?

K. JONAS: Oh, I believe so, yes.

J. JONAS: Yes, for sure.

COSTELLO: For sure. And just the last question before you go because I know that you donate part of your earnings to charity. Tell me why it's so important for you guys to do that?

N. JONAS: I think for us, it's always been a very important thing for us because, you know, we remember the days where we didn't have much ourselves, and someone helping us would be great. And now we get to live our dreams because people did. And, you know, I think whatever we can do to help people now that we've been blessed with some things is definitely on all of our hearts. And we know that right now people are in need. And if we can do something to help, that would be amazing.

COSTELLO: Good for you. Thank you Jonas Brothers for being with us this morning.

J. JONAS: Thank you. COSTELLO: Have fun at the game.

N. JONAS: We'll see you soon.


You can learn more about the Red Kettle campaign at the -- Joe.

JOHNS: The reason why I like them is because they don't drink, don't smoke and don't swear. That's the kind of guy I want to date my daughter when she grows up.

Have you seen this guy flying by? Rocket man or should we call him jet pack man? Now the fearless flyer has landed back on earth to talk live on AMERICAN MORNING.


COSTELLO: Sounds alarming, traces of the toxin melamine found in baby formula here in the United States. We've heard of the thousands of sick babies in China linked to the toxin and even a number of deaths there. But this is the first time we've heard of it being found in America. Elizabeth Cohen joins us now.

And, Elizabeth, the Food and Drug Administration says there's no need to worry but they aren't even telling us which formula melamine was found in. Why is that?

ELIZABETH COHEN, CNN MEDICAL CORRESPONDENT: That's right. They said they are not going to release that information. They didn't explain why they're not going to release it but this is what they did tell us. They said that melamine was found in trace, tiny, tiny amounts in one sample. They said they looked at 77 different samples of formulas and only found these trace amounts in one of them.

So, the amounts are so tint. They are way, way less than what was found in the milk for the babies in China. So, here's the bottom line what the FDA says. They say absolutely, positively no danger to babies in the United States -- Carol.

COSTELLO: So, how would these traces of melamine find their way in baby formula anyway?

COHEN: Well, what happened in China was that someone actually went and contaminated the baby formula and that is not what happened here. What they think happen is that melamine is in certain plastic products like, say, the lining of an infant's formula can and they think perhaps it might have leaked from the lining into the formula or perhaps it leeched from some plastic part of the manufacturing process into the formula, that's their theory right now. But they are very clear, they say no one contaminated the formula in the United States.

COSTELLO: Elizabeth Cohen, thanks.

COHEN: Thanks. COSTELLO: It's 53 minutes after the hour.

JOHNS: Obama says he's keeping him, Robert Gates in charge of the war for years. Continuity, stability, controversy.


UNIDENTIFIED MALE: Secretary Gates is a Republican, who worked for President Bush and his father.


JOHNS: He's a Bush man. Plus, he's a rocket man. He shot across a canyon with a jet pack. Now, the man with no parachute, no fear, and no sense is here.

You're watching the Most News in the Morning.


JOHNS: Welcome back to the Most News in the Morning.

Right now, Detroit's Big Three have six days to come up with plan before Congress even considers forking over $25 billion. On Tuesday, the bosses of Ford, Chrysler, and GM must detail exactly how they'll spend the money. Joining me now is a man who has a vested interest in getting this bailout. Leo Gerard, president of the United Steel Workers.

Good morning, thanks for coming in and talking to us.

LEO GERARD, UNITED STEEL WORKERS, PRESIDENT: Good morning. It's a pleasure to be on the show.

JOHNS: So the bottom line, we've seen all these bailouts, a lot of money flying around there. Some say more than ever before, and yet the auto industry has not been bailed out. Why do you think that is?

GERARD: Well, I think it's a terrible bit of hypocrisy, we've been giving money hand over fist to the financial industry. $1.7 billion in loans. $3 billion in investments - excuse me, $3 trillion in investments, $3 trillion in guarantees. The fact is that the auto industry has to reorganize itself. It's doing that.

But let me make a point that auto sales are down across the board. Nissan sales were down 33 percent, Honda sales 22 percent, big three sales about 30 percent, and that's because people are afraid to buy cars. They're afraid to lose their jobs. They don't have credit. There's no credit available. So, the decline in the industries that we represent are directly results of the collapse on Wall Street.

And, again, let me make another point. This is not the first collapse on Wall Street since they deregulated the financial markets. This is one of many. And deregulating the financial markets was like letting three-year-old kids loose in a candy store, you know they're going to gorge themselves, make themselves sick, and when you go get them they'll throw up on your shoes, and that's what's happening to us.

JOHNS: You've had some pretty tough criticism obviously for Congress not stepping in. One of the things you said, we have a full screen of it. "The people who take a shower before they go to work get bailed out. The people that must take a shower after work get thrown out."

Now, that sort of suggests that in your view there's a little bit of discrimination going on here between Detroit and, say, Wall Street. Do you really think the government's discriminating?

GERARD: I really think that the Republican Party is discriminating. We've lost almost five million industrial jobs since George Bush and the Republicans were in power. We have Senator Shelby from Alabama saying that he would basically never give them a bailout, yet Senator Shelby was instrumental in dolling out hundreds of millions of dollars in subsidies to get foreign transplants to Alabama. I think that we've seen that the Democratic leadership wants to do something, and it's fair that they asked the industry to bring forward a plan.

But it's also not fair to blame the thing on the workers. Not fair to ask the workers to take concessions, because these guys went to work. Made the best vehicles they could. Made sacrifices all along to get here. What we need is to have an economic renewal plan in America that puts people back to work. We need to restrengthen our industrial base. It was the industrial America that made America great. It wasn't money movers on Wall Street. And I'm so angry. I can't tell you how angry I am.

This is one of about five economic collapses. And for our members, every time Wall Street collapses, we lose our pension investments. We've now lost another couple of trillion dollars in pension assets for retirees and for workers. It's time to re-regulate Wall Street and put Main Street back to work.

JOHNS: As you know, one of the talking points for a long time, on Capitol Hill from Republicans has been that unions and their demands have, in fact, sort of helped lead the auto industry into these kinds of problems.

What do you say to them?

GERARD: I think that they're delusional. How does a person that makes $57,000 a year, who works in excess of 40 hours a week sometimes to get to that level has some degree of health care, has some degree of pension, how does that cause the problem? The auto industry and General Motors used that as an example as $200 billion in sales, their labor costs are $10 billion, that's five percent of their overall cost. That isn't the problem.

The problem is we've had economic erosion of the manufacturing base of America for the last seven-and-three-quarters years. We've had collapse after collapse, scandal after scandal on Wall Street that has destroyed pension equity. I won't name the name of the company, because it's not fair. We have a major employer that we have a relationship with, that had a pension fund that was 100 percent funded.

They had to fund that pension through sacrifices we made at the bargaining table. Now all of a sudden they are 70 percent funded. Why is that the workers' fault? That's Wall Street's fault and our government has to step up and do something about it.

JOHNS: Leave it there.

Leo Gerard of the Steel Workers, thanks so much for talking to us this morning.

GERARD: Pleasure to be on, Joe. Thank you.