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American Morning
Auto Bailout Rejected by Senate; Obama Vows Probe of Contacts in the Blagojevich Case; Will Bill Clinton Testify for Hillary Clinton's Confirmation; Soap Operas Struggling; Oil Prices Fall
Aired December 12, 2008 - 06:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEO CLIP)
KIRAN CHETRY, CNN ANCHOR (voice-over): Breaking news. Detroit's hopes die in D.C.
SEN. BOB CORKER (R), TENNESSEE: We drafted a bill as if we're saving the world. We're talking about three companies.
CHETRY: Now the world braces for another market meltdown and millions wondering how long their jobs will last.
SEN. HARRY REID (D), MAJORITY LEADER: It's not going to be a pleasant sight.
CHETRY: And how do you defend this guy?
GOV. ROD BLAGOJEVICH (D), ILLINOIS: I don't believe there's any cloud that hangs over me.
CHETRY: The lawyer who has to prove that the Illinois governor wasn't looking for a payday and isn't drunk with power.
BLAGOJEVICH: I think there's nothing but sunshine hanging over me.
CHETRY: On this AMERICAN MORNING.
(END VIDEO CLIP)
CHETRY: Welcome. Glad you're with us. And for people, they're going, wait a minute, what's going on? Yes, there are two ladies here today. Carol Costello is in for John Roberts. Great to see you.
CAROL COSTELLO, CNN CO-ANCHOR: I'm glad you referred to us as ladies.
CHETRY: That's right. Compared to what people were referring to us backstage.
COSTELLO: Exactly. Exactly.
Good morning, everyone. Welcome to AMERICAN MORNING. Let's get right to it, shall we?
We begin with a late night rejection of the auto bailout on Capitol Hill. The Senate failing to follow the House and approve a $14 billion lifeline for Detroit's automakers.
Senate Majority Leader Harry Reid calling it a "loss for the country. Democrats and Republicans tried desperately to reach a compromise that would save the emergency loan package.
We'll have more on how the deal went bust and the financial fallout with Christine Romans in just a minute.
The bad news for automakers comes amid more good news for drivers. Gas prices falling overnight. AAA reporting a gallon of regular is now going for around $1.65 a gallon. The last time you could find gas at that price, February of 2004.
Some blunt talk from former Republican Secretary of State Colin Powell. He's speaking candidly about the problems with his own party including the effect of Sarah Palin during the election.
CNN's Fareed Zakaria got the exclusive.
(BEGIN VIDEO CLIP)
FAREED ZAKARIA, HOST, "FAREED ZAKARIA GPS": What do you think is going to happen to the Republican Party? You sounded concerned then, and you always have been concerned about certain aspects of your party. Do you think it's moving in the right direction?
COLIN POWELL, FMR. SECRETARY OF STATE: We don't know yet. I don't know yet. I think that in the latter months of the campaign, the party moved further to the right. Governor Palin to some extent pushed the party more to the right. And I think she had something of a polarizing effect when she talked about small town values are good.
Well, most of us don't live in small towns and I was raised in the South Bronx. And there's nothing wrong with my values system from the South Bronx. And when they came to Virginia and said, you know, the southern part of Virginia is good but the northern part of Virginia is bad. The only problem with that is there more votes in the northern part of Virginia than there are in the southern part of Virginia.
(END VIDEO CLIP)
COSTELLO: Colin Powell had a lot more to say to Fareed. You can see the entire interview this Sunday at 1:00 p.m. Eastern.
CHETRY: Well, breaking news. Asian markets plunging overnight after the U.S. auto bailout crashed and burned in the Senate. Japan's Nikkei index and the Hang Seng in Hong Kong losing more than five percent. The financial markets reacting to the collapse of the $14 billion rescue plan for Detroit automakers.
The deal breaker was the United Auto Workers rejecting a demand by Republicans for pay cuts to bring it in line with Japanese carmakers in the U.S. The failure of the bailout could put two of Detroit's big three, Chrysler and General Motors, on the brink of bankruptcy with no help likely until the new president and Congress take office.
Lawmakers are also concerned about the fallout.
(BEGIN VIDEO CLIP)
SEN. HARRY REID (D), MAJORITY LEADER: I dread, Mr. President -- I dread looking at Wall Street tomorrow. Christmas is approaching. This can be a very, very bad Christmas for a lot of people as a result of what takes place here tonight.
SEN. MITCH MCCONNELL (R), MINORITY LEADER: And we've had before is this -- the whole question of the viability of the American automobile manufacturers. And none of us want to see them go down. But very few of us had anything to do with the dilemma that they've created for themselves.
(END VIDEO CLIP)
CHETRY: Well, Christine Romans is here "Minding Your Business." And, you know, we talk a lot. I don't know if it's the boy that cried wolf syndrome but both GM and Chrysler say, we don't know if we're going to make it past the month. And it still isn't happening for them in the halls of Congress.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: There's really little question that there is bankruptcy looming for one or two or maybe more of these automakers. GM probably first, a lot of people are saying, followed quickly by Chrysler. This could be in coming weeks.
They have said to Congress that there is no plan "B," that this is what they need to survive. Ford in a better position. Ford went to Congress and said, look, we'd like a line of credit, if you will, a backstop, something a stop gap measure in case we need it. We don't think we're going to.
So GM and Chrysler are the ones we're really watching here. And this is the utter collapse of this bailout deal. The intensity of the politics really incredible. The back and forth and who's to blame.
And you heard Senator Mitch McConnell say, look, we didn't bring the industry here. You know, we're going to get a lot of heat for not -- the Republicans are going to get a lot of heat for asking for tougher strings on this money, but we didn't get them here. You know, we just -- what happens next, I don't know.
Does the White House say that TARP money, some of the bailout money can be used? Maybe. They sort of signaled that before this vote. They signal that might be possible.
Earlier they said well, that would not be possible. So there is that bailout money that's also available. Also, there have been some talk in some of the congressional hearings about the Federal Reserve potentially stepping in and giving its own bridge loan, low interest loan to these companies. And the White House has signaled that that might not be a good idea. And that was last week. The politics of the whole thing has changed over the past week quite incredibly. You know, the Fed is already loaning an awful lot of money to all different kinds of businesses. Hundreds of billions of dollars are being loaned out there. $14 billion is what this loan was about. You put that in perspective with the $700 billion bailout and there are a lot of people who are tied to the automotive industry who are saying, why all issue and (ph) cry over $14 billion for autos when tens of billions went to AIG with no questions asked, and Citi and other companies.
COSTELLO: Exactly. So are the Republicans sort of like making up for voting for the $700 billion bailout and bailing out the banks?
ROMANS: All of this comes underneath the big shadow of the thing we call TARP, the Troubled Asset Relief Program. A lot of people are feeling stung and they're being criticized by their constituents. And they don't want to make that mistake again.
CHETRY: The other thing as it relates to the United Auto Workers union. I mean, this is another big thing. They're being asked basically to tell their people to take pay cuts.
ROMANS: Right.
CHETRY: I mean, bring them in line with what the Japanese automakers in the U.S. are paying. And they seem unwilling to do that. Now, if the companies go belly up and they lose jobs, I mean, did they win here?
ROMANS: And -- right. It's an impossible situation for everybody. I mean, it really is. Either you're taking a pay cut, you're agreeing with the Republicans and you're taking a pay cut to make you in line with the Japanese and you have to sell that to your constituents.
CHETRY: Right.
ROMANS: Or, you know, you have to face the real possibility of true bankruptcy and then there are no jobs, you know. So, I mean, does this get solved in a bankruptcy court? I don't know.
We do know that times are so tough out there for getting credit. You go into bankruptcy and you renegotiate. You renegotiate. You're getting new loans. It's really a very difficult position right now. It's not normal times. It's not normal times to be trying to reorganize under bankruptcy.
CHETRY: All right. Christine, we'll be following this throughout the morning.
ROMANS: Sure.
CHETRY: Thanks.
COSTELLO: Thanks. Happening right now in Chicago, President-elect Barack Obama's aides are scrambling to compile any information about contacts they may have had with Illinois Governor Rod Blagojevich or his staffers. Information Obama has pledged to release to the public, to us. It is the first major test of his promise to run the most transparent shop in history.
Obama vigorously defended his staff during yesterday's press conference saying they knew nothing but questions persist surrounding his chief of staff, Rahm Emanuel. CNN's Elaine Quijano is working the story from Chicago.
(BEGIN VIDEOTAPE)
ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT (voice-over): President-elect Barack Obama tried to put to rest lingering questions about his team and embattled Illinois Governor Rod Blagojevich, who's facing federal corruption allegations including trying to sell Obama's vacant Senate seat.
BARACK OBAMA (D), PRESIDENT-ELECT: I have never spoken to the governor on this subject. I am confident that no representatives of mine would have any part of any deals related to this seat.
QUIJANO: The U.S. attorney in the case has made clear the president-elect is not accused of any wrongdoing. In fact, the 76- page complaint portrays the Obama camp in a positive light, unwilling to be a part of any deal making.
OBAMA: You know, I won't pull back some of the things that were said about me. So -- this is a family program I know.
QUIJANO: Still, Mr. Obama offered no new details on what talks his aides may have had with the governor or his office.
OBAMA: I've asked my team to gather the facts of any contacts with the governor's office about this vacancy.
RICK PEARSON, "CHICAGO TRIBUNE": I think the same questions are still there.
QUIJANO: "Chicago Tribune" political reporter Rick Pearson says the biggest question centers on Obama's incoming chief of staff, Rahm Emanuel.
PEARSON: Rahm is the kind of the nexus between these two guys. Part of all of Rod Blagojevich's efforts in Illinois to try to expand health care and make Illinois one of the leading health care providing states in the country is basically Rahm Emanuel's advice to Rod Blagojevich. If Rod Blagojevich is going to call somebody, it would be Rahm Emanuel.
QUIJANO (on camera): To be clear, it would not be wrong or even unusual for there to be contact between the Obama team and the governor's office about the vacant Senate seat. But until any staff contact is made public, the questions remain. Elaine Quijano, CNN, Chicago.
(END VIDEOTAPE)
CHETRY: Well, this morning we're learning new details about the investigation into the fighter jet crash that killed a family in San Diego earlier this week. One congressman says investigators believe that the pilot who survived could not control the jet after both engines failed.
And you're looking right now at exclusive video obtained by CNN just moments after the crash. The video was captured by a neighbor on Monday and it shows the home engulfed in flames. Tragically, two little baby girls and their mother and grandmother died. The jet's debris scattered across the road. The pilot was able to eject safely at just 2,200 feet.
And Republican Senator John McCain sharing his thoughts on how President-elect Barack Obama is doing so far. Appearing on "The Late Show with David Letterman," McCain commended Obama for his staff choices, including his pick for secretary of state, Senator Hillary Clinton.
(BEGIN VIDEO CLIP, "THE LATE SHOW WITH DAVID LETTERMAN")
SEN. JOHN MCCAIN (R), ARIZONA: I have traveled with Senator Clinton and -- to a lot of places in the world. I think she is extremely knowledgeable on the issues. I think it's a good team, and I think it's a very wise choice. And I would like to say that I think that President-elect Obama has made a number of very wise choices, which I think shows a centrist approach to government which obviously the way America and the world is today is necessary. So I applaud his --
(END VIDEO CLIP)
CHETRY: McCain also told Letterman that he met with Illinois Governor Rod Blagojevich after he was elected governor and Blagojevich said he was going to "be a great reformer."
COSTELLO: Hillary Clinton may have company on the hot seat during her confirmation hearing. We'll tell you why some Republicans want the former president to testify, too.
And breaking news. The Senate killing plans to throw the auto industry a lifeline. Why trouble in car land could sink the soap opera industry. We'll break it all down.
It's 10 minutes after the hour.
(COMMERCIAL BREAK)
CHETRY: I thought that song was just playing in my head. But no, it's actually really here. Wow. Flashback to the '90s.
Welcome back to the "Most News in the Morning." Bill Clinton wants his wife, of course, to be the next secretary of state but the former president may be the biggest obstacle to Hillary Clinton's confirmation. CNN's Samantha Hayes is following that for us.
SAMANTHA HAYES, CNN CORRESPONDENT: Kiran and Carol, there are some Republicans in the Senate who would like to zero in on the most controversial aspect of Senator Clinton's nomination, that being her husband's overseas business dealings. Some are indicating they would like to call him to testify.
(BEGIN VIDEOTAPE)
HAYES (voice-over): As we wait to see what happens, a man worth watching is Senator Dick Lugar of Indiana, the top Republican on the Foreign Relations Committee and he met with Senator Clinton yesterday.
GLENN THRUSH, WRITER, "THE POLITICO": I think Senator Lugar would be the one that would have to make a lot of the decisions on this. You know, a lot of the conservatives on the committee are making noise and they really want to pressure the Clintons into disclosing as much as possible and potentially embarrassing them.
HAYES: The former president agreed to restrict his work overseas and provide a long list of donors to his foundation to clear the way for his wife's nomination.
BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: She's going to be secretary of state and I operate globally. And I have people who contribute to these efforts globally. I think that it's important to make it totally transparent, say who the donors are and let people know that there's no connection to the decisions made by America's national security team, including the secretary of state.
HAYES: Republican strategist Ron Bonjean says probing further is a high stakes game for the GOP.
RON BONJEAN, REPUBLICAN STRATEGIST: They have to look like they're just trying to make sure that the American people are protected with any loyalties that the president has given to other -- to his clients and to countries who have paid him for speeches and paid him for international deals. They can't go overboard, though. This could seriously backfire on Senate Republicans if they really pushed it.
HAYES: Bill Clinton's office tells CNN that senator and President Clinton have the highest respect for the Senate Foreign Relations Committee and are cooperating fully with the committee's process. It's not just a question of whether Clinton will be called to testify but of how much attention Republicans can focus on his activities.
LARRY SABATO, DIRECTOR, CENTER FOR POLITICS: I just can't imagine this will actually happen. I'm sure that a compromise would be reached whereby Hillary Clinton herself would answer questions about former President Clinton's activities.
(END VIDEOTAPE) HAYES: The key here really is Senator Dick Lugar, who gets along very well with Democrats on the committee and Senator Hillary Clinton. So there doesn't seem to be at this point a serious threat to her nomination -- Carol, Kiran.
COSTELLO: Breaking news for the failed auto bailout. It's sending overseas markets down this morning, but it could also mean big trouble for a staple of daytime TV. Soap operas. We'll explain.
Shoppers are feeling the economic pinch, too. But there are tons of bargains around this holiday season and you'll be surprised where to find them.
Sixteen minutes after the hour.
(COMMERCIAL BREAK)
EUNICE YOON, CNN CORRESPONDENT: Welcome back to the "Most News in the Morning." I'm Eunice Yoon in Hong Kong.
The demise of the U.S. automakers' rescue plan sent Asian markets into a tailspin. Fears are growing that a sudden collapse of the American auto giants could have a devastating impact on companies that depend on the industry worldwide like makers of steel, tires and metals. Markets in Japan, Hong Kong and South Korea all ended the day in the red -- Kiran, Carol.
COSTELLO: Economic troubles in the United States are doing a number on world markets as you just heard from banks to automakers. It seems like everybody needs a bailout these days including TV soap operas. Could they be next in line? CNN's Kareen Wynter explains why the soaps are sinking.
(BEGIN VIDEOTAPE)
KAREEN WYNTER, CNN ENTERTAINMENT CORRESPONDENT: There's no shortage of drama when it comes to daytime soaps, but now there's plenty of it unfolding off the set.
(BEGIN VIDEO CLIP, "ALL MY CHILDREN" FROM ABC)
SUSAN LUCCI, ACTRESS: I'm so afraid.
(END VIDEO CLIP)
WYNTER: Long-running soap operas like ABC's "All My Children" and NBC's "Days of Our Lives" are being hit with a double economic whammy. Ratings are down. Advertisers are cutting back.
LYNN LEAHEY, EDITORIAL DIRECTOR, "SOAP OPERA DIGEST": It's been very difficult because much of the advertising is car dealers and that advertising is dried up right now.
WYNTER: "Soap Opera Digest" editorial director Lynn Leahey says tough financial times have forced networks to slash salaries even for seasoned soap stars like Susan Lucci. Some veteran actors have been released from their contracts, but Leahey says it's not just slumping ratings driving the cuts. Local automotive dealers, traditionally the meat and potatoes of daytime TV advertising dollars are spending significantly less, some nothing at all.
STEVEN MCCLINTOCK, DIR. OF MARKETING AND MEDIA, LACARGUY: 1.09 You've got everybody a little bit in a panic mode right now.
WYNTER: Steven McClintock with LAcarGUY says last year the California dealership spent $350,000 on TV advertising.
(on camera): And this year?
MCCLINTOCK: Maybe 100 grand. The audience has decreased. We know it. The ratings have changed. We have to weigh what we can afford to spend versus what we're going to get out of it.
WYNTER (voice-over): For now, with the daytime dramas' viewership on the downturn, he's looking at less costly and more creative ways to reach consumers.
(BEGIN VIDEO CLIP, "ALL MY CHILDREN" FROM ABC)
UNIDENTIFIED MALE: So keep your opinions to yourself and stay the hell out of my life.
(END VIDEO CLIP)
WYNTER (on camera): Like the car industry, television networks say they're also finding new ways to control costs and maintain production quality.
Kareen Wynter, CNN, Hollywood.
(END VIDEOTAPE)
CHETRY: All right. We're following breaking news this morning. Word that oil prices have now dropped below $45 on news of the Senate bailout failing in the Senate. Christine Romans is tracking the story for us.
How quickly times have changed. $45 a barrel.
ROMANS: I know. Think of it, the same barrel of crude oil is worth $100 less today than it was even just a couple of months ago.
COSTELLO: What happened to those predictions that we're going to hit $200?
ROMANS: I know. It always looks like a bubble after it's popped, right? And it came down so quickly. But there's this concern about demand, about demand destruction, as they call it. The global economy so weak that it's driving prices down.
And then now, you've got concerns after a little bit of a rally yesterday. We've got concerns about the fallout of the collapse of this bailout bill hurting stocks, hurting oil, hurting, you know, the sentiment in the market here today. And so that's what we're watching.
So $44.91 a barrel. I mean, incredible to think that it was $147 a barrel back on July 3rd or earlier this summer. A huge decline. I want to see that again this morning.
COSTELLO: You know what else is fascinating? I mean, gas is cheap. That's pretty cheap now, right?
ROMANS: Right.
CHETRY: Yes.
COSTELLO: Not many more people are driving. They're saying, no, thank you, Mr. Oil, Mr. Gas station.
ROMANS: And that's exactly what this is all about. You've got the prices tumbling because demand is tumbling right there along with it.
You've got a -- this is the silver lining of a global recession. Cheaper oil. But if you've got demand down so much because people aren't using it because they're hurting everywhere else where the economy is weak in general, that's what this whole thing is about.
CHETRY: So something that seemed preposterous even months ago that gas could be a $1 a gallon is...
ROMANS: Yes.
CHETRY: ... a reality?
ROMANS: Right. Every day for 85 days in a row.
CHETRY: Is it really possible it could be a dollar?
ROMANS: It is possible it could be a dollar. I mean, I would say that would be an outlandish statement three months ago and then now I'm saying nothing is impossible. I mean, there has been a crash in commodity markets, in many commodity markets, including oil. And that's because, you know, what the textbooks call demand destruction.
The economy is so weak we're not using as much stuff. Companies aren't using as much stuff and that's driving the prices lower. The whole auto bailout feeds into the whole thing. If they're concerned about more job losses, if they're concerned about some sort of de- contraction in Detroit, if they're concerned about a knock-on effect on the U.S. economy and the global economy, that hurts global demand even more.
COSTELLO: You know, maybe there's a silver lining here and this is a big correction, like prices will come down to where they should have been all along and people aren't ripping us off anymore.
ROMANS: That's a really good point. I mean, these are all cycles. Things get too hot on the upside, they get too cool on the downside. And then, you know, we have to ride it out. The one thing I will say --
CHETRY: And no one thinks it's great if there's no more cars -- you know, if no one's making cars.
ROMANS: Right.
CHETRY: Of course, gas is 50 cents a gallon because there's no cars.
ROMANS: Look, a $1.66 or a $1.64 a gallon for gas, that is a stimulus. I mean, this is so important for a lot of people. This is -- this is what Congress hasn't been able to agree on and what we're waiting for the next administration to do in terms of a stimulus. It's already happening. It is billions of dollars back in America's pockets. So that should act as some sort of stimulus for the economy.
COSTELLO: We'll see. We'll see. But you need a job.
ROMANS: Yes.
COSTELLO: You need a job.
ROMANS: And you know, you got to make sure your house isn't getting foreclosed.
CHETRY: Exactly.
ROMANS: I will be a little chirpy --
COSTELLO: Please, give us some --
ROMANS: Ninety percent of mortgages right now people are paying them on time and they're -- you know, we've got unfortunately record numbers of defaults and foreclosures, but 90 percent of people with their home loans are watching us and saying, wait, I'm paying my bills on time. There will be millions of people who will be OK.
CHETRY: All right. Christine, thanks.
Well, this morning, tough questions for President-elect Barack Obama. He insists that his staff knew nothing about the corruption case against Illinois Governor Blagojevich. So why is Obama's chief of staff now facing questions of his own? We're going to talk about it at 25 minutes after the hour.
(BEGIN VIDEOTAPE)
ROB MARCIANO, AMS METEOROLOGIST (voice-over): Typical store coolers and freezers in the United States use a refrigerant that's a powerful greenhouse gas, 1,400 times as potent as carbon dioxide, according to the EPA. So Ben & Jerry's is testing freezers that keep their cool with an eco-friendlier fuel.
SEAN GREENWOOD, BEN & JERRY'S: The fuel that's in these freezers is liquid propane just like you use in your grill at home, or kind of, you know, your barbecue. So the difference is this one has about three cigarette lighters full of fuel where at home on your grill on the back deck, you've got 20 pound of liquid propane with a sparker two or three feet away.
MARCIANO: The EPA is reviewing the safety of so-called cleaner, greener freezers. Three hundred million freezers and refrigerators around the world already use similar technology.
DRUSILLA HUFFORD, EPA: We're really excited about the possibilities for future refrigerants that are even more environmentally protective than what we're relying on now. But we also want to make sure that they're safe for consumers and for service technicians.
UNIDENTIFIED MALE: Ice cream that's in there is still solid as a rock.
MARCIANO: Another benefit of propane, it's 10 percent more efficient than the current refrigerant. And if it's approved and its use spread, stores' bottom lines will benefit because of lower energy cost.
ROBERT TILLMAN, STORE OWNER: We have 11 or 12 different coolers of varying sizes that all use electricity 24 hours a day. If every single one of those was decreased by 10, 15 percent, that's huge.
MARCIANO: The EPA is evaluating not only Ben & Jerry's freezers but proposals to use propane and similar chemicals in home refrigerators and car air-conditioners as well.
GREENWOOD: We're really hoping it's the start of something great.
MARCIANO: Rob Marciano, CNN.
(END VIDEOTAPE)
(COMMERCIAL BREAK)
COSTELLO: Just about half past the hour now, checking our top stories.
The $14 billion auto bailout hits a dead end in the Senate causing Asian stocks to plunge overnight. Senate compromise talks collapsed after the United Auto Workers rejected a Republican demand for wage cuts to be equivalent to foreign-owned car factories. With no financial lifeline, Chrysler and General Motors could run out of cash within weeks and have to file for bankruptcy. The White House calls the bailout failure and disappointing.
In Florida, investigators are trying to identify the skeletal remains of a young child. They were found less than a half mile from the home of 3-year-old Caylee Anthony, who's been missing since June. Her case has drawn national attention. Caylee's mother, Casey Anthony, has been charged with her daughter's murder based mainly on circumstantial evidence. And former NASDAQ stock chairman Bernard Madoff out on $10 million bond this morning. He was charged yesterday with securities fraud. The federal complaint accuses him of conning the super rich out of billions of dollars. The report also alleges Madoff told senior employees yesterday the investment business was, quote, "a big lie." Madoff faces up to 20 years behind bars and a $5 million fine if convicted.
CHETRY: President-elect Barack Obama is promising full disclosure of any contact between his staff and Illinois Governor Rod Blagojevich.
(BEGIN VIDEO CLIP)
BARACK OBAMA (D), PRESIDENT-ELECT: What I want to do is to gather all the facts about any staff contacts that I may have -- that may have taken place between the transition office and the governor's office. And we'll have those in the next few days and we'll present them.
(END VIDEO CLIP)
CHETRY: Well, Obama has been under tremendous pressure to be more transparent about the Blagojevich corruption case.
Ben Smith is a senior political reporter for the "Politico.com."
Thanks for being with us this morning, Ben.
One of the questions as it relates to Rahm Emanuel, Barack Obama's chief of staff, yesterday when some Chicago reporters tried to talk to him, he pushed the recorder away saying, "You're wasting your time." There are some questions and some speculation that he may have even been the one that tipped off authorities that something shady was happening. So, what could this mean for Rahm Emanuel?
BEN SMITH, SR. POLITICAL PREPORTER, "POLITICO.COM": Well, you know, these guys all know each other. It's a small, fairly small political world, Democratic Chicago. They worked together. Obama had always kept his distance from Blagojevich more. And in recent years, everybody knew Blagojevich was under investigation. Rahm is a very savvy operator. So -- and I think, if you read the transcript, it kind of looks like people know they're being taped by the FBI. So -- but I think, you know, a lot depends really on what, you know, on what comes out in this review that Obama has decided to lead internally.
CHETRY: How is that going to happen? One of the other -- it was an interesting article actually from your Web site that said there's just so much to tackle with this incoming administration between hiring staff, worrying about policy, getting the transition team ready to go, that to launch an internal investigation, and to say that you're going to do that quickly, is perhaps unrealistic at best and at worst could end up biting them by digging up things that perhaps they don't want to focus on right now. What's your take on that?
SMITH: Yes, I mean, there's some debate whether this was a good idea. But they've taken the step. Brought in his campaign outside (ph) counsel, Bob Bauer to -- and really, you know, to invest -- it's really a matter of talking to like three or four of Obama's top close aides, because those are the ones who would have been in the mix here.
There were talking of -- Blagojevich was talking about negotiating for a Senate seat for Valerie Jarrett. That's a very close Obama aide. The question is she's a very real Chicago insider. So, the question is, you know, would this have gone on without her knowing about it?
CHETRY: There are two very different takes on the blogs and, of course, in the political world whether you're perhaps on Barack Obama's side, or whether you're an enemy or a foe.
But Charles Hurt writes in today's "New York Post" in an op-ed that Obama shouldn't be sad and sober but express more anger at the situation. He says he opens himself up to harsh criticism that maybe he's not the great reformer he makes himself out to be. What a type of public reaction in the days ahead do people want from Barack Obama as it relates to the Blagojevich scandal?
SMITH: Honestly, I think the auto bailout collapse takes a lot of pressure off Obama. And I think people feel a lot more emotional about that right now. But, you know, I mean, he kind of eased in to a more emotional reaction yesterday, saying he was appalled. But he hasn't come out and condemned Blagojevich. He hasn't called him a crook.
And I think a lot of Illinois officials seem to be kind of walking on egg shells here a little. Maybe they're trying to kind of talk Blagojevich down from the job without producing a huge confrontation and probably don't also want Blagojevich going - turning around and going after them, and, you know, trying to detail every contact he ever had with Barack Obama, trying to kind of tar Obama with the same brush.
CHETRY: Yes, and at the same time, there are others who say, you know, this isn't Barack Obama's scandal. Jim Leach, weighing in on your site as well, a former member of Congress said, this is a scandal that relates to the governor of Illinois, not the government-in-the- making in Washington. So, how does the Obamas camp minimize this distraction and make sure people realize this maybe what happened in Illinois, but this isn't us and it's not going to be our White House?
SMITH: Well, the way they've chosen to do this -- to do this investigation, I think what that means is that if they find, you know, if they find that one of Obama's, you know, really senior aides was, you know, negotiating inappropriately with Blagojevich, that they can't -- that they can't join the administration. I don't see how they get around that.
CHETRY: All right. Ben Smith with the "Politico," senior political reporter. Thanks.
SMITH: Thank you. COSTELLO: Americans are watching their wallets this holiday season, but you can still find great gifts for less. We're going to show you where the "recessionistas" are finding some real deals. It's 34 minutes past the hour.
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JAY LENO, HOST, "THE TONIGHT SHOW WITH JAY LENO": Caught in the "Washington Post," during his eight years in office, President Bush spent 2,496 hours on the treadmill, elliptical machine and mountain bike, and spent another 15 minutes working on the economy.
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COSTELLO: Ouch. Maybe that's the problem.
Retail sales may be sagging during these tough economic times, but business at thrift and consignment shops is booming. Goodwill and the Salvation Army report sales are up by 10 percent. Our "recessionista," Lola Ogunnaike -- do you like being call that? Anyway, she hit the resale shops to find cheap, chic looks that won't break the bank.
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LOLA OGUNNAIKE, CNN ENTERTAINMENT CORRESPONDENT (on camera): So what's a nice girl like you doing in a place like this?
UNIDENTIFIED FEMALE: Well, I think that the stores are the place to shop nowadays.
OGUNNAIKE: So you got your pants from the Salvation Army?
UNIDENTIFIED FEMALE: I did, yes.
OGUNNAIKE: And they're how much?
UNIDENTIFIED FEMALE: I paid $8.
OGUNNAIKE: Let's go shopping.
So what about this polka dot number? You know, it's sheer. You could sort of make it sexy like nighttime.
UNIDENTIFIED FEMALE: No, I don't -- I don't see it happening at all.
OGUNNAIKE: I love that. And it's only $14.99.
UNIDENTIFIED FEMALE: Actually, it's $7.50 because today's half off.
OGUNNAIKE: The assumption is that everyone who comes here and shops here is poor, they don't have any money. EMILIA LOPEZ, THRIFT STORE "FASHIONISTA": Well, I think it's almost quite the contrary. I come here because I really want to find, you know, unique things that are really one of a kind that I can't find anywhere else.
VIVIAN FARONE, MGR., GOODWILL THRIFT STORE: This is a beautiful Gloria Vanderbilt wedding dress and it is retailed at $200. This normally would go for $10,000. It's new. It's probably Gloria's dress.
MILO BERNSTEIN, CO-OWNER, INA CONSIGNMENT STORE: We have a Vera Wang top that you can see still has its tags on it. It was originally $6.95, and you can see we're selling it here at Ina for $2.35.
OGUNNAIKE: No armpit stains.
BERNSTEIN: No, we wouldn't take that definitely.
RICHARD VORISEK, PRES., HOUSING WORKS THRIFT SHOPS: Sales at Housing Works are excellent. We are running up about 10 percent since July, which is obviously much better than general retail is faring.
OGUNNAIKE: This is a show stopper.
VORISEK: Honey, she was rolling into Studio 54 with this thing on.
OGUNNAIKE: How much is this going to sell for?
VORISEK: This is going to sell for only $150.
UNIDENTIFIED MALE: Our actual price for garment for women is $5.49, $5.50, which is amazing.
OGUNNAIKE: $5.99. $10. $10. $8. I cannot believe it. Half off, right?
UNIDENTIFIED FEMALE: Yes.
OGUNNAIKE: Yehey! That's $11. I broke the bank with that one. Ho, ho, ho, Merry Christmas.
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COSTELLO: You're giving your family gifts from the Salvation Army?
OGUNNAIKE: Absolutely!
CHETRY: You're actually modeling one of your find. Tell us about it.
OGUNNAIKE: This is one of my finds. This is a Vince sweater. I got it for 50 bucks at this consignment shop named Aina (ph). It would probably cost me about $300 in the store, so --
CHETRY: Love it.
OGUNNAIKE: I got a deal. And it's 100 percent Kashmir. Rub it, love it.
COSTELLO: Feels good.
CHETRY: Carol was a little leery about this before she saw that there were still price tags on the Vera Wang top. See?
COSTELLO: For some reason, wearing clothes that others have worn especially shoes, it kind of freaks me out. I know it sounds bad but it does.
OGUNNAIKE: It's OK. But the interesting thing is that a lot of this stuff is donated by fashion editors and stylists and models who have never worn this before.
COSTELLO: Yes, maybe in New York, but what about Poughkeepsie?
OGUNNAIKE: You just take it to the dry cleaner, pay 10 or 15 bucks to clean it up, spray some perfume on it and your done.
CHETRY: Carol, did you have an older sister?
COSTELLO: Yes, I did.
CHETRY: Did you have to wear her clothes?
COSTELLO: I wear her clothes.
CHETRY: See? That's why. It's childhood coming back. You know, I'm an only child. I don't mind sharing clothes. You can have mine. I'll wear yours.
OGUNNAIKE: Childhood trauma. We'll work it out, Carol. We'll work it out.
CHETRY: Years and years of hand me downs. She will never shop at Salvation Army.
COSTELLO: Should we ask you a few tips about how to find good stuff in the stores?
OGUNNAIKE: Well, one of the tips is you've got to search these items very carefully. Look for the stains, look for gaping holes. If it looks too complicated, then just leave it on the rack. And, also, you can haggle with some of these places like Good Will and Salvation Army. Maybe you can say, the hem is a little weird, can I get 10 percent off? They're more inclined to do that than say a Sacks or a Bergdorf.
CHETRY: And I got to tell you another tip, I've gotten the best Halloween costumes ever, ever from the Salvation Army. It's the first place I look.
OGUNNAIKE: There you go. CHETRY: Carol is not convinced. Carol, no? Still not?
COSTELLO: I'm going to go. I'm going to go. Lola, thanks.
CHETRY: Well, a big surprise from the big easy. Record snow blanketing New Orleans and other parts of the south this morning. Extreme weather could slow down your weekend. Rob Marciano tracking it all for us when we come right back.
Also, your tax dollars being used to line more than 150 employee pockets at AIG with bonuses? Say it ain't so.
Well, after taking tens of billions in a government bailout, you'll be shocked to find what the insurance giant is doing with the cash. It's 42 minutes after the hour.
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CHETRY: Welcome back to the "Most News in the Morning." Time to fast forward to some of the stories you're going to be hearing about on CNN today. Bank of America planning to eliminate 35,000 jobs over the next three years. The bank will be the nation's largest financial services firm when its merger with Merrill Lynch becomes official. And these cuts are going to be from both companies affecting all lines of business.
There's a government report this morning that could provide fresh evidence of a deepening recession. The Commerce Department will announce retail sales figures for November at 8:30 Eastern Time. The National Retail Federation has projected that this will be the worst holiday season in six years.
Boston cigar and Hookah Bars will be drawing up their appeals to the city's health commission today. City officials just approved a ban on the establishment. Although it doesn't take effect for another decade. The city's health commission also banned cigarette sales at drugstores, as well as college campuses.
Well, we're also watching extreme weather this morning. Rob Marciano is at the weather center for us in Atlanta. Did you guys get any of the white stuff?
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CHETRY: Rob, thanks. 47 minutes past the hour.
COSTELLO: Taking pot shots at the governor's hair. He said he's got nothing to hide.
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GOV. ROD BLAGOJEVICH (D), ILLINOIS: If anybody wants to tape my conversations, go right ahead.
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COSTELLO: But there's got to be something under there.
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BLAGOJEVICH: I think there's nothing but sunshine hanging over me.
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COSTELLO: Why he might be the only one who thinks that. You're watching the "Most News in the Morning."
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COSTELLO: The scandal surrounding Illinois Governor Rod Blagojevich may be no laughing matter, but comics everywhere finding him an irresistible target. Pure comedy, gold. CNN's Jeanne Moos looks at the new political punch line.
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JEANNE MOOS, CNN NATIONAL NEWS CORRESPONDENT (voice-over): There's the polite way of saying it and the not so polite. What seems to be driving everybody nuts is the governor of Illinois's hair.
CRAIG FERGUSON, HOST, "LATE LATE SHOW WITH CRAIG FERGUSON": That's too much hair. He's crossed over from virile to monkey.
MOOS: A courtroom sketch on the blogs sparkle pony prompted someone to post, perhaps he is in fact a ChiaPet. Rod Blagojevich's terrible hair found guilty of everything, screamed one cat. Across perhaps between star of "No Country for Old Men" --
UNIDENTIFIED ACTOR: You don't know what you're talking about.
MOOS: And a Lego. Blah-lego-vitch was the name coined by the Web site Chicagoist. Now, Lego under arrest.
BLAGOJEVICH: And the things I'm interested in doing are always lawful.
JON STEWART, THE DAILY SHOW WITH JON STEWART: Well, clearly, this man has nothing to hide except perhaps whatever is written on his forehead.
MOOS: A "Chicago Sun-Times" photo caught the governor next to a rat termination warning.
JAY LENO, HOST, "THE TONIGHT SHOW WITH JAY LENO": It was so blatant how he was selling the seat. Did you see the footage? It was so blatant. Take a look.
UNIDENTIFIED MALE: I have a Senate seat up for sale. Formerly Barack Obama's Senate seat, Obama, Obama, Obama. $125,000. It's only $5000, sold.
MOOS (on camera): Whenever there's one of these political scandals, it takes the folks who make T-shirts about 24 hours to jump on the bandwagon.
(voice-over): There's the classified ad, For Sale: U.S. Senate seat, hardly used. Or the "I Gave Governor Blagojevich a Bribe and All I Got Was This Lousy "Expletive Deleted" T-shirt."
For apparent irony, it's hard to beat the governor describing his mother's advice, years ago.
BLAGOJEVICH: Promise me, son, you'll never take bribes. I said of course I will never take bribes. Not only would that be dishonest, it would be illegal.
MOOS: Now his name --
LENO: Rod blah-son-of-a-bitch.
MOOS: He's being dragged through the mud, though the pronunciation maybe muddy.
LOU DOBBS, HOST, "LOU DOBBS TONIGHT": The Illinois's Governor Rod Blago -- Blago - Blagojevich. Governor Blago -- with the governor of Illinois.
WOLF BLITZER, THE SITUATION ROOM: Rod Blagojevich, I know you'll get it right by the top of the hour.
DOBBS: It's not that hard. I'll say it three times, Blagojevich, Blagojevich, Blagojevich.
MOOS: Yes, Wolf, not that hard. Not until the next day any way.
BLITZER: Illinois Governor Rod Blago -- Blagojevich's wife.
MOOS: We know a CNN staffer who remembers it by thinking of Goya beans.
DAVID LETTERMAN, THE LATE SHOW WITH DAVID LETTERMAN: And then he was charged with one count of Blagojeviching.
MOOS: Jeanne Moos...
STEPHEN COLBERT, HOST, "THE COLBERT SHOW": Blagojevich
MOOS: ...CNN
STEWART: Rod Blagojevich.
MOOS: ...New York.
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CHETRY: Taking back the streets. As the FBI goes global, crime at home is soaring.
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UNIDENTIFIED MALE: Narcotic violations, disturbances and misdemeanor of batteries.
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CHETRY: A Memo to the President from the police.
Plus, brewing up, the Obama blend.
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UNIDENTIFIED FEMALE: I've never noticed a president with so much stuff before.
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CHETRY: From coffee to your Christmas tree. How the next president is already boosting the economy? You're watching the "Most News in the Morning."
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BARACK OBAMA (D), PRESIDENT-ELECT: I have never spoken to the governor on this subject. I'm confident that no representatives of mine would have any part of any deals related to this seat.
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COSTELLO: President-elect is wiping his hands of Illinois Governor Rod Blagojevich. But the political fallout from this case has only just begun. What will it mean for the president-elect, and how will the case be tried if Blagojevich was only talking about doing something illegal?
Joining me now a man who knows the governor and the prosecutor personally, Chicago criminal defense attorney Steve Greenberg.
Welcome, Steve.
STEVE GREENBERG, CRIMINAL DEFENSE ATTORNEY: Good morning. I have to tell, I saw the last bit. I wouldn't mind having his hair although I wouldn't want his problems.
COSTELLO: No, I don't think many people would want to have his problems. Let's start right there. You know the governor and you've read the affidavit. I mean, I'm sure you've -- you know, he said he was going to do a lot of things, but he actually -- he did not actually do them. So what kinds of problems does that present to prosecutors?
GREENBERG: Well, there's conflicting reports on those issues. He's charged with soliciting bribes to sell the Senate seat. That's the most well known of the charges. There's some other charges. If he just talked with his aides and said, you know, we should try and get something for this -- whether it's political favors, jobs for himself or his wife, or anything of the sort, and if people don't give us something, then we shouldn't go along with who they want in the Senate appointment. That's not enough to convict him. That's sort of the kind of political talk that goes on all the time. But --
COSTELLO: Really? That kind of political talk goes on all the time? That was pretty extreme.
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GREENBERG: Well, it might be extreme, but it's still political horse trading. It went on -- an example that popped into my mind was when President-elect Obama, who I'm very fond of, said I'll help Hillary Clinton reduce her campaign debt if she endorses me.
COSTELLO: Oh, but that's way different than what Blagojevich said.
GREENBERG: Well, it maybe different -- it maybe different --
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COSTELLO: I mean, he was asking for money for his campaign, for political favors.
GREENBERG: It may be different than what he said, but it may not be different from a criminal standpoint. Now, if they actually then went out and said to people, OK, we want you to raise money or we want you to do something, and in exchange for that, we'll go along with who you want in the Senate and Blagojevich was going to personally benefit or his campaign. He was going to benefit. That is what they call out of services fraud, and that would be a crime.
There are reports this morning that in fact last weekend, Blagojevich attended a fund-raiser for his campaign that was put together by representatives of Jesse Jackson Jr. for the express purpose of moving along Jesse Jr.'s bid to be the U.S. senator. So, if that's the case, then he may have more problems.
COSTELLO: Well, don't you think that investigators have more on this guy other than what we've heard publicly?
GREENBERG: Sure. A criminal complaint is typically all they need. It's the tip of the iceberg. It's the minimum they need to get the case into court to get the arrest warrant. Chances are they've got way more than what we've already heard about.
They were listening to his phone conversations for two months. The criminal complaint probably contains the sexiest parts, the best parts, the best sound bites, but I'm sure there's a lot more there. This prosecutor who's got this case, the three prosecutors who have the case have done a lot of -- very big time case there.
They did Lord Black, who was a publisher of one of the newspapers, Tony Rezko trial, and our U.S. Attorney who is very well known to the Valerie Plame and Scooter Libby controversy. He doesn't make too many mistakes in charging people. And he would have gone so public on this. I don't believe, unless he had a lot there. COSTELLO: We'll see. Steve Greenburg, thanks for joining us this morning. We appreciate.
GREENBERG: Thank you.
