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CNN Larry King Live

Debating the Auto Industry Bailout

Aired December 05, 2008 - 21:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

LARRY KING, HOST: Tonight, bloodbath -- is it the worst employment news ever?
Jobs slashed across the country -- half a million in November alone. Twenty-two thousand positions gone in one day. More than 10 million people in America are now without work. One in 10 already on food stamps. AT&T, DuPont, Avis Viacom and NBC make big cuts.

And if the auto industry goes under, millions more will suffer.

Is the economy careening into a crash landing and can you ride it out?

But first, O.J. Simpson's headed to the slammer.

Did karma or justice put him in jail?

And Paula Deen is here giving holiday help and we really could use it.

All right now on LARRY KING LIVE.

Good evening.

O.J. Simpson is going to prison -- sentenced today to 15 years behind bars for armed robbery, kidnapping and assault stemming from a confrontation in a Las Vegas hotel. It involves some of his memorabilia. Simpson begged for mercy. The judge called him "arrogant" and "ignorant" then sentenced him to at least 15 years. He could be out after nine.

Joining us in Las Vegas, Yale Galanter, the O.J. Simpson defense attorney who's gotten so well-known. The other defense attorney, as well, Gabe Grasso.

Let's watch a little of Simpson talking today. And then we'll have questions for our attorneys.

Watch.

(BEGIN VIDEO CLIP)

O.J. SIMPSON: I stand before you today sorry, somewhat confused. I feel like apologetic to the people of the State of Nevada. I've been coming to Nevada since 1959. I worked summer jobs here for my uncle in '60 and '61 and I've been coming ever since and I've never gotten into any trouble. People have always been fine to me. When I came here, I came here for a wedding. I didn't come here to -- I didn't come here to reclaim property. I was told it was here.

When he told me that Monday, that the stuff was in Nevada -- when he knew I was going to be in Nevada -- I called my kids. I talked to my sisters. I called the Brown family and I told them I had a chance to get some of our property back -- property that, over the years, we've seen being sold on the Internet. We've seen pictures of ours that were stolen from our home going into the tabloids.

We've called the police and asked what to do. They told us what to try to do. But you could never find out who was selling it. And this was the first time I had an opportunity to catch the guys red- handed who had been stealing from my family.

I didn't want to steal anything from anybody. I don't think anybody there said I wanted anybody else's stuff -- just my own. I wanted my -- my daughter -- Miss. Brown gave her her mother's wedding ring -- stolen.

You know, my kids have pictures -- my oldest son has his own family now. He wanted the picture in the Oval Office with Gerald Ford when he was 5-years-old -- stolen.

All of these things are gone. My family knew what we were doing. And I don't want to hurt Bruce. I didn't want to hurt any of these guys. I know these guys. These guys have eaten in my home. I've done book reports with their kids. I've sung to their mothers when they were sick.

You know, I wasn't there to hurt anybody. I just wanted my personal things. And I realize now that was stupid of me. I'm sorry. I didn't mean to steal anything from anybody. And I didn't know I was doing anything illegal. I thought I was confronting friends and retrieving my property. So I'm sorry. I'm sorry for all of it.

(END VIDEO CLIP)

KING: All right, Yale, why was the judge so harsh?

YALE GALANTER, SIMPSON'S ATTORNEY: Actually, Larry, we think that she was more on the lenient end. She could have sentenced to him to life imprisonment at a minimum. She ended up sentencing him to nine year minimum. I mean, there are a lot numbers and a lot of counts. But when you look at the numbers, his range now is he could be out in as early as nine years or as much as 33.

The least she could have sentenced him to was six. The last two counts were the only two counts that she ran consecutive -- were the two assault counts, which we think the appellate court are going to end up dismissing, because they're part and parcel of the robbery count.

So we think there's a real good possibility that O.J. Could be out in as little as six. And when you were facing life, we think that Judge Glass was on the more lenient side today. KING: Do you have, Gabe, a few or more appealable issues?

GABRIEL GRASSO, SIMPSON'S ATTORNEY: No, we do have appealable issues. And when Yale talks about the sentencing today being out in six, that's assuming we -- you know, that's forgetting about the appeal and assuming that we don't appeal the case, which obviously is not going to happen.

We are going to appeal the case. We're waiting for the judgment of conviction to be filed, which is legal prerequisite, before we can file our notice of appeal. But the notice of appeal will be filed as soon as that document is filed -- the official court document stating the exact sentence that's been given to Mr. Simpson.

And -- and we do have appealable issues. I mean one of the issues that Yale just brought up is the fact that he was sentenced on an armed robbery and then he was also sentenced on an armed assault.

Now every -- you know, the legal argument goes every assault -- every robbery that's armed contains an armed assault. So, you know, it's double jeopardy for somebody to be charged with something like that and be sentenced on both.

KING: Yes.

GRASSO: So that's -- that's the issue. So that's why we think that, in the end, at the very least, those counts will be dismissed and therefore we'll end up with a range -- the range will be -- the range right now is nine to 33 years. The range, if those two counts are dismissed by the appellate court, will be six to 21.

KING: Yale...

GRASSO: And the number that matters -- for somebody in Nevada -- just so that people understand, O.J. Is somebody who is, number one, coming in without any prior convictions; and, number two, 60 or 61 years old without any prior convictions. And he's a first time offender. And he's coming in, you know, on a sentence like that, those are people who usually get paroled.

KING: Yale, he will serve his sentence where?

What prison?

GALANTER: Well, we're not sure. He hasn't been designated. He -- he's going to be right outside of Las Vegas probably in the next day or two. He's going to be in a place called the fishbowl (ph), where he'll be designated. And there are three or four different possibilities.

We actually think that he's -- he's going to stay close to Las Vegas. That's what we're hopeful for. But the Department of Corrections will make that designation in the next day or two.

KING: Yale, you know him so well.

In your opinion, how well will he handle incarceration on that long a period of time?

GALANTER: Larry, you know, that's a very good question. He's 61 years old. His health is OK -- certainly not great. You know, he's been through a lot of trials and tribulations in his life. That's probably the understatement.

But he -- you know, he's also a very resilient guy. I think he's going to do OK. He's got a lot of faith in his legal team. He really does believe in the process. He's very hopeful that this case will be reversed on appeal and eventually the sentence will be reduced.

So I think he's got a lot of hope. I don't think he expects to do six or nine years, whatever that ultimately turns out to be. We think that he believes he'll be out in a year or so. And he's very hopeful of that.

KING: Do you believe that this conviction, Gabe, tied into the non-conviction in Los Angeles years ago?

GRASSO: Obviously, the entire trial, from beginning to end -- the jury questionnaire. You know, this is a very weird case for me. I think for Yale, also. You know, this is the first case I've ever tried where -- usually when I try a case -- and I've tried my share -- my -- the jury doesn't know anything about my client other than what they hear from the witness stand. They don't know anything about maybe prior convictions or where he's from, unless it actually comes out in court.

In this case, you know, everybody knew pretty much everything about O.J. with respect to the '94-'95 case, the road rage case that Yale represented him on and acquitted him on. You know, so it is a different situation.

KING: Yes.

GRASSO: And I think, yes, definitely the L.A. Case played a role in this case.

KING: Good point.

Thank you both very much.

We'll be seeing a lot of you. Always good to see Yale and Gabe.

Good having you with us.

GALANTER: Take care, Larry.

GRASSO: Thanks.

KING: Yale Galanter and Gabe Grasso.

You can go to CNN.com/larryking, click on blog and tell us who should get government help first -- the auto industry, homeowners or the unemployed?

Your comments later in the show.

Next, your money questions answered.

Jean Chatzky and Ali Velshi are here.

Stay with us.

(COMMERCIAL BREAK)

KING: We're back.

The latest jobless figures are out tonight and they're staggering -- 533,000 jobs were lost in November. That's the largest monthly decline since December of 1974. That's in 34 years.

Job losses for 2008 stand at 1.9 million and may top two million by the year's end. And the unemployment rate last month rose to 6.7 percent -- the highest since October of '93. Translation -- 10 million Americans are looking for work.

Joining us in New York, Ali Velshi, CNN's chief business correspondent, host of "YOUR MONEY."

And Jean Chatzky, financial editor for NBC's "The Today Show" and a contributor to "The Oprah Winfrey Show."

Ali, these figures are staggering.

Do they surprise you?

ALI VELSHI, CNN CORRESPONDENT: They did surprise me. We expected very bad numbers today. We expected that November would cost us about 320,000 jobs.

When that number came out of 533,000 -- and, by the way, Larry, the last couple of months were revised, as well. That brought the total for this year to 1.9 million jobs lost.

And, you know, energy prices -- you still have a couple days or weeks to get used to. Most people don't get surprised into home foreclosure. They know they're headed that way. But we had one day this week where we lost 20,000 jobs in one day.

This affects people very seriously. And if the message that can get out to Americans tonight is that this can come upon you very quickly and there's a lot more to come. You have to just tighten up and try and prepare for this now. This is going to be very bad.

KING: Jean, what's to be done?

JEAN CHATZKY, MONEY EXPERT, AUTHOR, "PAY IT DOWN": Well, Ali is absolutely right. Even if you don't feel as if your job is potentially at risk, it is. And that means you have to take a good, hard look at your finances at home. And if you don't have a six month emergency cushion or even a nine or 12-month emergency cushion, now -- before you lose that job -- is the time to stop spending and start putting away as much money as you can, because not only are we losing more jobs, it's taking more time to get the next one.

So people really have to learn how to pull back, scale it in like our grandparents did, so that we can weather this storm.

KING: Jean, in a nutshell what went wrong?

CHATZKY: In a nutshell, it's very, very cyclical. We had the housing crunch and that started it all. And people found that they couldn't get additional credit. Companies started having trouble because people stopped spending. Those companies had to lay people off. More companies had more trouble, laid more people off. And it kept going down from there.

But in the very beginning, what happened was that we borrowed too much. I wrote a book four years ago talking about the fact that we had more home debt than ever before, more car debt than ever before, more student loan debt than ever before.

And the situation has simply escalated from there, until it got so bad that all of a sudden, this month, we started to see consumer borrowing scale back a little bit. But we haven't seen that since 1998.

KING: Ali, what does this say for the retail industry going into Christmas?

VELSHI: It's devastating.

CHATZKY: Um-hmm.

VELSHI: It's definitely -- it's actually good for consumers who have some money to spend, because the sales have been so deep. But, again, there are a lot of consumers who would have depended on some credit to make purchases and they either can't get more credit or they don't want to go into debt.

But this is devastating. You know, one of the interesting things about the job report -- remember, we get it -- we got it today for the month of November. You never ever, in November, see a drop-off in retail hiring. There was a loss in retail hiring.

This is very, very dangerous.

I also want to tell you one other thing. And Jean was sort of touching on it. We got into this recession out of a housing crisis. That's never happened before in America. A housing crisis led into a recession, which cost us jobs. Now the jobs are resulting in mortgage defaults. Those mortgage defaults -- we got those numbers today. They're up 76 percent from a year ago -- 1.3 million homes are in default.

Larry, 10 percent of all American mortgage holders are in some sort of distress -- they're either in default or they're delinquent. That is -- those aren't subprime people. Those aren't people that have bad credit ratings. Those aren't people who got in over their heads. Those are people who actually could afford it who lost their jobs who are now going to lose their homes.

KING: We'll be right back.

Your blog comments exactly a minute away.

Don't go away.

(COMMERCIAL BREAK)

KING: Welcome back to LARRY KING LIVE.

Let's check in with our own David Theall to see what you're saying on the blog -- David?

DAVID THEALL, LARRY KING LIVE PRODUCER:

Larry, we're going to run through a couple of comments and then we're going to ask the panel our question of the day -- a question of the day that can be seen on your blog at CNN.com/larryking.

That question was, who should get government help first -- the auto industry, homeowners or the unemployed?

You might think, with the animosity toward the auto industry of late, that it would be the homeowners or the unemployed. We were very surprised at some of the responses coming through on your blog, Larry.

Eric thinks it is the unemployed should -- who should be helped first. He said they suffer the most, so they should be the first priority.

Matthew, on the other hand, thinks homeowners need the help first because -- his logic -- people need a place to live before they need an overpriced American car.

Now, the majority of the comments support the auto industry.

Amber says -- she asked this question: "Doesn't anyone realize what will happen if the big three go under?"

And Hillary also thinks that the auto industry should be helped first with government funds. She says: "Only for the employees' sake, let's keep what little we have left in America."

Now, Larry, Kevin also came in, and, frankly, he ignored our question of the day, but we liked his comment so much, we thought we would throw it in there.

He says -- Kevin says: "I was laid off the day before Thanksgiving, along with half of my co-workers." And Kevin asks: "Someone bail me out."

We're going to continue this conversation, Larry, on your blog -- CNN.com/larryking.

KING: You've got it. Thanks, David Theall.

And we'll have some of those answers from our panel when we come back.

Don't go away.

(COMMERCIAL BREAK)

KING: We're back with Ali Velshi and Jean Chatzky.

Jean's book, by the way, is "Pay It Down."

We talked to some worried workers today. Here's a typical question on our King cam.

Watch.

UNIDENTIFIED MALE: Hey, Larry. I've got a stable job now, but I'm worried about unemployment. I keep hearing on the radio the news, everything. I'm wondering where my priorities should be this holiday season.

Should I be saving, investing or going out and spending my money?

KING: Ali, what should he do?

VELSHI: Really, saving and investing. You need to save. Everybody needs to save right now and be prepared for the fact that if you are out of work -- you know, Jean says things like this and I've got to say, there are some people who might laugh and say that you have to have several months worth of your expenses paid off because -- saved up -- because so many people don't in America.

What if you're laid off?

What if you lose that job?

So save first. Once you're saved and you've got something control over your debt, then you invest for the long-term.

KING: Yes.

VELSHI: Those are basics that you've got to think about it that way.

KING: Jean, if that's correct -- and we know it's the holiday, and it's a religious holiday, as well as a national holiday, maybe this year don't buy anything?

CHATZKY: Maybe this year give to charity, particularly the local ones that are absolutely hurting. We've started to see a lot of numbers coming in from the food banks across the country. Those are the folks that really need our help. Anybody that supports one of Maslow's three basic hierarchal needs really deserves a check in the mail, if you can afford it. KING: Ali, do you see any light at the end of this tunnel?

VELSHI: I do, Larry. I'll tell you, there are a few places where you can look for light. One is this -- the reason that this -- the fact that this is as drastic as it is means that everybody who can be involved in this is trying to solve this problem. You may think Washington is a mess, but the bottom line is they are all trying very hard to understand this.

You saw this at the auto hearings this week. They were very different from the last. The Congressmen and senators had really studied it. They had really understood it. That's number one.

Number two, home prices -- it's devastating that they continue to drop. But interest rates remain low. And at some point, they become low enough, those home prices, that people with money or access to credit will actually start buying homes and getting up -- you know, getting back into the market. And that will help people with -- who are trying to get rid of their homes, because the price of homes will come up.

And, number three, ultimately, there are six billion people on this Earth and the energy of those people will keep -- it will keep the world pulsating. It will come back. It always does.

And there are people who are making investments at this point. They will return.

You've got to be smart about it, but the bottom line is it will come back. It may be deep. It may take a while. But it will come back.

KING: Jean, with a lame duck president, are we kind of in a vacuum at the worst possible time?

CHATZKY: Washington may be in a vacuum, but I don't think that means that individuals sitting at home need to be in that vacuum. There are very many things, as Ali has been pointing out, that are really within our control. If you still have a job, then you save. If you still have a 401(k), that is matching your contributions. By all means get in there and grab every last one of those matching dollars, before they start taking them away.

Execute a plan for your investments so that you know, as the market starts to rise, you'll have the right combination of assets for your need and for your risk tolerance.

And if you're sitting on the sidelines with cash and you don't own a home, you're in a great position. The government is talking about taking mortgage rates down to 4.5 percent. That is an incredible opportunity to lock in to 4.5 percent for the next 30 years. We haven't been able to buy homes that cheaply in a long, long time.

KING: Ali Velshi and Jean Chatzky, thanks so much.

And when we come back, we'll talk about what's going on in the auto industry with Ben Stein and John Stoessel. Don't go away.

(COMMERCIAL BREAK)

KING: There is breaking news tonight that Congress could be getting close to an auto bailout deal. Speaker Pelosi has backed off her opposition to using $25 billion earlier set for fuel efficiency. The significant move may signal that the deadlock is coming to an end.

To talk about all of this, here in Los Angeles, Ben Stein, the economist, former presidential speechwriter, "New York Times" columnist and best-selling author. His most recent book is "How To Ruin the United States of America." He supports this bailout.

And in New York, John Stoessel, the Emmy-winning co-anchor of ABC's "20/20." On tonight's edition, he asks should taxpayers bail out the big three automakers?

What do you make of this news, Ben, about Nancy Pelosi?

BEN STEIN, ECONOMIST, AUTHOR: It's very good news. It's with the unthinkable -- in the midst of a jobs deterioration, such as we're having now, to kick another two or three million people out of work right away -- you can be an ideological purist about the auto industry and their failings. You can be as ideologically pure as you want when we get back to full employment.

But right now, we cannot lose anymore jobs. We've got to keep the auto industry going.

KING: John?

JOHN STOESSEL, CO-ANCHOR, "20/20": I disagree. I think we're probably going to have a recession. We will lose more jobs. And to bail out companies for failing encourages more failure.

STEIN: Well, but we simply cannot allow two to three million jobs more to be lost within the space of six to eight weeks. We simply cannot allow it. That is the way you get a recession turned into a depression.

I completely agree the auto companies have made big mistakes. I completely agree they've got to streamline themselves. You do not yell at a patient who's had a heart attack on his way to the coronary care unit. You get him fixed, then deal with his moral problems later.

KING: John, what's the argument against that?

STOESSEL: That assumes politicians can fix this problem and politicians cannot. Jobs will be lost. We may be in for a hard time, but the jobs go away if they declare bankruptcy. The machines don't go away. Smarter, more efficient companies hire them. And this is the creative destruction that allows more job growth later.

STEIN: Well, that's true. That's true, looking at it from the standpoint of a person who already has a job. If you're a worker in Detroit or Hamtanic (ph) or some town in Ohio who lost his job two years ago or three years ago and still can't get another job, you have a very different perspective.

Look, I agree. We've got to get the auto companies to work a lot better, work more like the Japanese auto companies.

But for right now, in this critical situation, we can just throw money at the problem. And, yes, there are some problems that are fixed by throwing money at them. And keeping people employed is one of them. And that's a big one now.

It's not an automatic rule of God that we won't have another great depression. We've got to be smarter than they were in the Hoover (INAUDIBLE).

KING: And, John, isn't that autoworker out there in Michigan -- isn't he valuable to you?

STOESSEL: He is very valuable to me. And by allowing him to find new employment in a sustainable industry, he's better off and America is better off. At the beginning of the pro...

STEIN: Well, that's...

STOESSEL: At the beginning of the program, you called it the worst financial news ever. And it is terrible news. But we are below 7 percent unemployment. That's bad news. But we had 10 percent unemployment in 1982 and we recovered.

We need to find a floor so we can move on.

STEIN, ECONOMIST: Well, the -- we did not have in 1982 the incredible credit crisis we have now. We have the credit crisis, the housing crisis, automobile crisis. Now we are having a consumer strike, so to speak, crisis.

We have so many crises going on right now. Why not do the humanitarian thing? Why not do the sensible thing? If Hoover had stepped in with enormous bailouts in 1931, we would probably not have had the Great Depression. There had been more smarter monetary policy. We wouldn't have had the Great Depression.

That cost way more than any bailout. A depression is enormously more costly than a bailout.

LARRY KING, CNN ANCHOR: John?

STOESSEL: Well, I agree about smarter monetary policy. But you're saying that if Hoover had stepped in he would have subsidized the wrong things and prolonged the depression and FDR did that by constantly changing plans for the next eight years.

KING: Ben...

STEIN: Well, that's a revisionist... KING: Ben, my -- my brother is with us for the weekend and he reminds me -- I didn't know this -- that Chrysler is owned by a hedge fund.

STEIN: Yes, Cerberus.

KING: Why don't they help them?

STEIN: They don't have any more money. They're in terrible shape. They also own GMAC -- for 51 percent. They have been devastated by both investments. They are in terrible, terrible shape from what I read in the newspapers.

The whole hedge fund industry is on the verge of catastrophe.

KING: John, what's your cure?

STOESSEL: (Speaking in foreign language). Let it find the bottom. Creative people, as Ali said earlier, will find a way to bring the economy up again if government doesn't prop it up.

Government, remember, government cannot create funds. Government takes from one group, one part of the bathtub, and puts it in the other. The hope is that will create a stimulus. But government has a lousy record at putting money where it ought to be spent.

STEIN: Sir, John, with all due respect, as much as I love you, government does create money. They can just write a check. The checks from the Federal Reserve are money. They don't need to raise taxes to do this.

The checks at the Federal Reserve are money. They should be flooding the society with money like right now, bailing out the auto industry, bailing out everybody. And when we can worry about sorting it out and getting the money out of the society later, they can create money. They don't have to tax you or me together.

STOESSEL: I worry about that now. We've got a $30 trillion Medicare liability coming. We're going to spend more money -- could have inflation like -- then why am I republic? People will carry...

STEIN: Well, that's a...

STOESSEL: ... dollars around in wheelbarrows.

STEIN: That is exactly what the people said when they said we are not going to bail out the government in -- people in 1931, '32 and '33. It turned out to be a big giant mistake. We can worry about inflation when there's...

STOESSEL: Well, they went too far in the other direction.

STEIN: We can worry about inflation when there's inflation. We don't have to worry about it now from our faces. So we are...

KING: John, John, do you want the automakers to declare bankruptcy?

STOESSEL: It's the only thing that makes sense to me. Start over, renegotiate contracts. Find a floor. Build cool new cars.

STEIN: Well, it's easy to say if you're -- if you are you. It is not so easy if you're one of them. And as I say, the economy is simply too fragile to play these games of who is the most ideologically pure. The problem now is putting bread on the table and keeping the roof over your head. You can debate on ideological purity at the University of Chicago Business School some other day.

KING: Ben Stein, John Stossel...

STOESSEL: It's a good play.

KING: Thank you very much.

John Stoessel of ABC's "20/20" and Ben Stein, a noted economist and former presidential speechwriter. And I imagine, based on this, both will be back frequently next week.

What will happen if the bailout is a bust? GM's development chief is here to tell us. It's an exclusive right after the break.

(COMMERCIAL BREAK)

KING: Joining us now in Detroit is Robert Lutz. He's General Motors' vice chairman of global product development. We thank him very much for joining us.

Robert, what do you make of the news from Nancy Pelosi?

ROBERT LUTZ, VICE CHAIRMAN DEVELOPMENT, GENERAL MOTORS: Well, I -- all I heard are rumors. I really can't comment on it until it's confirmed. But if true, it is, obviously, a step in the right direction.

KING: Well, we're reporting that she's open to using some of the $25 billion previously approved for fuel efficiency as part of the bailout. And some are saying that that could be the big hurdle you jumped over.

LUTZ: Well, again, let's wait until we have confirmation.

KING: What do you make of all of this? Your -- company is warning you will run out of money by the end of the month if you don't get help. What happens if you don't get help?

LUTZ: Well, as Rick Wagoner has said we are on the brink. And what everybody has to understand is that this is not a question of everybody in Detroit suddenly becoming stupid. We have excellent executives in Detroit.

Alan Mulally is the gentleman who saved -- basically saved the Boeing commercial airline business. Bob Nardelli has a terrific background as CEO of Home Depot. Before that, he was a senior executive at General Electric.

We do -- this -- this industry in Detroit does basically a terrific job. We matched the Japanese on productivity. We match them on quality. We have highly fuel efficient vehicles. General Motors has more vehicles that get over 30 miles per gallon on the highway than any other car. We have the most efficient trucks and so forth.

What has happened is the revenue has collapsed. And there is no automobile company in the world that can deal with the situation where 50 percent of your incoming, incoming revenue goes away because the automobile -- automobile business is one where you have extremely high fixed costs and when the revenue flow stops, boy, you run out of cash in a big hurry.

KING: So...

LUTZ: And the -- even the Chinese's OEMs are appealing to Beijing for aid. I know that German companies are looking at a 50 percent drop in revenue. Everybody is going to be in trouble. So this is the case where I think national government s are going to have to step in and especially our government is going to have to step in to save and in this moment of crisis, save the jobs in the automobile industry.

The automobile industry is the last major manufacturing industry that the United States has. I maintain you cannot trade dependence on foreign oil for dependence on foreign manufacturing. When you look at the knock-on effects of a failure of the automobile business, we have thousands of suppliers in 50 states.

There are 14,000 domestic automobile dealers with a huge payroll. We have millions of retirees. I mean, failure is just not an option. The American car companies are absolutely able to compete with anybody in the world. We just have to get past this tight spot.

KING: All right. The all electric car you have coming in the end of next year, actually 2010, is that going to be one of the saviors of GM?

LUTZ: Well, we've got lots of saviors of GM. You know, we've got -- the new Cadillac CTS was car of the year in relative terms, it is selling very well. Chevy Malibu was hailed as the best mid-market sedan in America. And it was named cars of the year.

Before that, the Saturn Aura was named car of the year, our full- sized trucks with the hybrid system were named the Green Car of the Year. So we've got lots of highly competitive vehicles. That's not the problem.

There's also no other car company that has spent as much on environmentally friendly technology like fuel cells, electric vehicles, hybrid systems and so forth. Yes, the Chevrolet Volt, I think, is -- if you will, it's assembled of everything that General Motors has been trying to do the past five or six years to basically take the automobile out of the environmental equation. Nobody else has anything like it. It'll be 40 miles purely electrically. And it's -- it could well be the transformation not only of General Motors but of the entire industry.

KING: Are you over -- are you optimistic, Robert?

LUTZ: I'm very optimistic. Look, in February, I will be 77 years old. I really don't need to work. I enjoy working. I feel a sense of mission. And if I felt that this were hopeless, believe me, I wouldn't be working. I'd be sitting in some vacation home someplace.

KING: You sure don't look 77.

LUTZ: Well, you don't look 88.

(LAUGHTER)

KING: Thanks, Robert. We'll call on you again.

Robert Lutz, general -- general manager and vice chairman of global product development for General Motors.

Paula Deen will be here when LARRY KING LIVE returns. And that's in 60 seconds.

(BEGIN VIDEO CLIP)

PAULA DEEN: Bring your butter and let's party!

(END VIDEO CLIP)

(COMMERCIAL BREAK)

KING: We're back. Repeating this breaking news tonight that Congress could be getting close to an auto bailout deal. Speaker Pelosi has backed off her opposition to using $25 billion earlier set for fuel efficiency.

The significant move may signal that the deadlock is coming to an end. Talks between all sides continue throughout the weekend. But sources caution the situation is still very fluid and details must be worked out. Today's bleak jobless report apparently prompted Pelosi's change of heart.

Get a little lighter now. And joining us is Paula Deen, the Food Network star, the bestselling cookbook author and the restaurant owner and entrepreneur.

You're building a down home southern fried lifestyle empire. How are you handling these tough times?

You know what, Larry? I'm kind of like everybody else. I'm honestly praying for our new president-elect and the powers that be that they make the right decisions for this country. And, of course, every day that goes by I think about ways that I can trim. And I'm also heavy on my heart of -- about the people who are really getting in trouble with this thing. And it's important...

KING: How is it affecting your business?

DEEN: Well, you know, we're off a little bit but not a whole bunch...

KING: No?

DEEN: Which I'm so thankful for that. You know, people still come to Savannah. They want to come here and visit our beautiful city. And so like I said, I -- I'm very fortunate and blessed that people are still able to travel to Savannah.

KING: And they still have to eat. We'll have more...

DEEN: They still have to eat.

KING: To eat.

(LAUGHTER)

DEEN: Yes.

KING: More with Paula Deen and the Food Network. And we'll come back when LARRY KING LIVE returns.

(COMMERCIAL BREAK)

KING: Anderson Cooper standing by. He'll host "AC 360" at the top of the hour. What's tonight?

ANDERSON COOPER, CNN ANCHOR: Larry, a lot going on tonight. O.J. Simpson, as you know, sentenced. He says what he did was stupid and he's sorry but his crimes will cost him at least nine years in prison.

You're going to hear his rambling apology in court today and we'll tell you where he's likely to serve his time which might be a lot longer than nine years.

Also, tonight, breaking news. There may be a compromise on the auto industry bailout. You've been talking about it, Larry, as we learned that more than half a million jobs lost in November. Will that grim report help the big three's case?

Also new developments in a stunning story about the teenager allegedly held captive, shackled in a basement for a year. One of his alleged captors, you see her there, was a Girl Scout leader. She was in court today and now the teen's brother is speaking out for the first time. You'll hear from him tonight.

All that and more, Larry, at the top of the hour.

KING: That's Anderson Cooper, 10:00 Eastern, 7:00 Pacific. "AC 360" at the top of the hour.

Our guest is Paula Deen, as we told you, the Food Network star, the bestselling cookbook author, she's written a multitude of books. She's kind of been an incredible story as a restaurant owner and entrepreneur.

Paula, because of this economy situation, we have to get to this, you have kitchen products on sale at JCPenney's and Wal-Mart as well as on your Web site. How is that - the economic turndown being felt there?

DEEN: Larry, once again, it -- we've had a fabulous response. But I think that's because my products, like my business, like my restaurant, I run it the same way. They are affordable.

I don't want people to come to my restaurant once every six months. I want them to be able to afford to come twice a week. So I try -- I try to hit the mainstream because that's who I am. I have shopped many a yard sale and estate sales, you know, to get things when I needed them.

So those are the people that I want to hit. The people that are in the homes that are like me. And so...

KING: Do you talk on your -- do you talk on your TV show and in your magazine about a more frugal approach? Do you try to help people to live more economically?

DEEN: On occasion, I do. On occasion, I do,, especially when it comes to food. In speaking of food, you know, Larry, Smithfield and I realized about a year ago that times were really to get hard out there through our food banks. So this year, together, we were able to feed 1.5 million people. And...

KING: Really.

DEEN: And I'm so happy -- yes, I mean that's a lot of people. And in -- I don't know what today's date is. But in about eight or ten days, I'm going to be dropping...

KING: It's the 5th.

DEEN: ... along with Smithfield -- it's the 5th, OK, in nine days I'm going to be bringing in 25,000 pounds of ham to Second Harvest here in Savannah to help families make it over the hump.

KING: What is your association? What's your association with Smithfield?

DEEN: Well, I am a partner of theirs. They've produced some of my products. And -- well, they produce my food products, my protein products.

KING: Pretty big company.

DEEN: And -- they're a big company. They're the oldest pork producer in the United States and they're the largest in the world. So you know...

KING: Are people -- are people at your restaurants, Paula, are people in your restaurants ordering less expensive dishes?

DEEN: Not really, Larry, because my -- my prices and my menu are already set to fit in a person's budget. So like I said I don't want somebody to come and have to spend $50 on a meal with me. You know food is only worth so much. So we work very, very hard at our businesses to keep the cost under control.

In fact, you know when the gas went up so high, a lot of our products actually went up 100 percent. And of course you just have to absorb that. You can't go out to the customer and say, oh listen, today, that peanut oil is through the roof. So you know, we have to learn to just tighten our belts and, of course, you know, we'll just show a smaller profit margin.

KING: Let me get a break. We'll be right back with more of Paula Deen of the Food Network, the best-selling author of many cookbooks and the restaurant owner and entrepreneur in her hometown of Savannah, Georgia. We'll be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

DEEN: It's butter than ever Christmas. You ain't got to ask mama twice.

(END VIDEO CLIP)

KING: Paula Deen. By the way, Michelle Obama was a guest on your show, "Paula's Party," back in September.

DEEN: Yes, she was.

KING: What was that like? Did you feed her?

DEEN: Honey, she can eat. I was so thrilled. I fried her shrimp, Larry. And she ate even all through the commercial break. And you know I said, I like this girl. I believe she's real.

She was a delight to have on the show. I found her to be warm and sincere. And I am looking forward to that ho-down on the White House lawn that she promised me.

KING: Is it, is it possible to celebrate the holidays and still have healthy foods at a low budget?

DEEN: You know, absolutely it is. You just need to clip those coupons. I think, probably more people are clipping coupons now than ever before. You choose your foods that are in season because they're usually a little bit more economical.

But there is certainly, certainly ways you can trim that budget down to a very good one, a very lean one, and still eat like a king, honey.

Speaking of kings, Larry, I've got a big old pot of my turkey carcass on my stove right now. Now I've got pennies in that. And as soon as this show's over I'm fixing to make some dumplings. So chicken and dumplings and I'll have less than two bucks in it.

KING: That would -- that would all it cost to make?

DEEN: Yes, because I'm using the pure bones from the turkey. I didn't waste none of it, Larry. Even that last piece going over the fence, he's in the pot, too.

KING: Do you cook every day?

DEEN: I try to cook every day that I'm home.

KING: And you're not a trained chef, right? You learned all of this on your own?

DEEN: No, no, no, honey. I'm a, I'm a cook. I'm a cook, not a chef. I learned at the side of my grandmother and my -- I didn't have my mother very long, but my aunts and my grandmothers who were fabulous cooks.

And you know I was going to school, and I didn't realize it, every moment I spent in the kitchen with my grandmother.

KING: What makes southern cooking different?

DEEN: Well, we -- we're not afraid to season our pots. We love the use of ham hock. We love the use of butter and bacon. And my grandmother, Larry, cooked that way until she was 91 years old and then it finally got her but you know at 91, I'll take that, honey. I will take 91.

KING: But what you just described -- wait a minute, Paula, what you just described sounds like a heart attack.

DEEN: Well, you know so much of it is genetic, Larry. I know people that are thin as a rail with very high cholesterol and all kind of health problems. And like I said, I think a lot of it is genetic. You're pre-dispositioned, I think, for some things just because of your ancestors.

My cholesterol, Larry, is 137. And to me that's not bad.

KING: Not bad at all. How are your sons doing?

DEEN: My sons are doing great. Hey, Jamie and Bobby, in fact, they're at home right now watching. I love you guys. And I continue to be so proud of y'all.

KING: Yes. They work in the store, right?

DEEN: They do. They work in the restaurant. If Mama's working they're going to work, by golly. KING: Do you ever get tired of cooking?

DEEN: Nobody gets a free ride. Who me?

KING: Yes.

DEEN: No, I never get tired of cooking. It's therapeutic, Larry. It's therapeutic. I get in there and I don't think about anything, anything negative except what's going on in my pot and the smell and the sight of it.

KING: I think about that a lot myself.

DEEN: It's a great way to -- do what?

KING: Think about what's in my pots.

DEEN: What did you say?

KING: I don't know. I've never cooked a thing in my life.

(LAUGHTER)

KING: I make toast.

DEEN: You hadn't.

KING: We're out time. Paula, thanks, baby. Paula Deen.

DEEN: Well, as long it's got plenty of butter...

KING: What a girl.

DEEN: ... I know it's good. Thank you, Larry. Happy holidays to you, dear.

KING: Thanks. You too.

We're waiting to hear from you on our blog. Go to CNN.com/larryking right now.

It's nice to end the week on some kind a high note. While you're there sign up for our newsletter, download our ring tones and check out our latest podcast which is Brad Pitt. Brad's quite a guy with his Make It Right Foundation, and his terrific new movie, "The Curious Case of Benjamin Button." This is a podcast you will not want to miss.

We'll see you Monday night with Victoria and Joel Osteen. Join us. Time now for Anderson Cooper and "AC 360."

Anderson?