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American Morning
Senate Rejects $148 Rescue Plan; Clinton Hearings May Include Former President; Obama Vows Probe of Contacts with Government
Aired December 12, 2008 - 08:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN CO-HOST: It's 58 past the hour, here are this morning's top stories. Right now the White House weighing its options in one of the automotive bailout collapse. Last night the Senate rejected the plan the $14 billion plan. Senate majority leader Harry Reid calling it, "a loss for the country."
News of the Senate killing that auto bailout bill sent oil prices plunging. Right now, about 45 bucks a barrel. Can you believe it? And that's translating into cheaper gas prices. This morning, AAA is reporting a gallon of regular is now about $1.65 a gallon. Former Nasdaq stock chair, 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, "a big lie." Madoff faces up to 20 years behind bars and a $5 million fine if he's convicted.
Asian stocks plunging overnight after the U.S. auto bailout crashed and burned in the senate. And signs pointing to a lower opening at this hour. Japan's Nikkei Index and the Hang Seng in Hong Kong both lost more than five percent. The $14 billion rescue plan collapsed when the United Autoworkers' rejected a demand by republicans for immediate pay cuts. The failure of the bailout will 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 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: 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)
COSTELLO: Christine Romans is here "Minding Your Business." So, let's take a look at what Harry Reid said. You know, he dreads looking at Wall Street. Is he right? CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: He's right that futures are down some 260 points. They had been down about 310. A caveat here. They have been just a little bit unpredictable lately because there's been so much volatility. It's been pretty erratic on Wall Street. So remember some morning, you've seen the futures down big and then markets have actually turned around.
Another thing about the markets, we've had a huge bear market rally. The S&P is up double digit percent over the past, you know, week, week and a half. So, it also can be an excuse why people take some of their profits a little bit. But we do know that there are concerns about what -- you know, what this blow to Detroit would mean for the overall economy, and how that, you know, hits things at kind of a really terrible time.
COSTELLO: Well, let me ask you this. You know, everybody says, oh, if we don't get this bailout, we're going to have to declare bankruptcy. I mean, is that really, really true with Chrysler and GM?
ROMANS: GM is -- everyone agrees that GM is in the worst position here. And that the "Wall Street Journal" and the Reuters are reporting they've already hired bankruptcy attorneys and they're exploring these options. Cerberus is a private equity firm owns Chrysler. They're next in line in terms of how dire the straits are. And the CEOs of this have gotten -- they said we don't have a plan "B." I mean, this is it. This is do or die for these companies.
KIRAN CHETRY, CNN ANCHOR: Yes. As we've heard from Dana Milbank and Tara Wall, there are some who don't believe that the government is going to let this happen whether -- whether it comes in the form of the fed, Federal Reserve giving the money, whether it comes in the form of the White House Treasury secretary saying go ahead and give them some of this money. I mean -- so, it's not a total death nail yet.
ROMANS: Not this particular deal is dead. But is there another deal that comes out of ashes? Maybe. And I want to make a quick point about Ford, too. Keep in mind that Ford went to Congress and said we would like a line of credit. We'd like I think $9 billion. It was $9 billion, I think. And we needed it as a backstop as -- just in case, but we hope we don't have to use it.
So Ford is in the best position of all three of them. So a lot of people are saying, is bankruptcy possible? Bankruptcy is pretty likely first for GM and then for Chrysler. Ford is in a better position. But if one of the other two goes bankrupt, then the suppliers really get hurt. And then you start to see supplier bankruptcies and then Ford gets in trouble because it can't get some of its parts and it has disruptions to its own production. So, you know, --
CHETRY: There's a ripple effect.
ROMANS: It really is. There really is. So, we'll see what happens next. The White House may have to step in. And there's $15 billion left to the bank bailout. $15 billion left to the bank bailout. A lot of money is gone to the banks, insurance companies. There's $15 billion left with that first bank bailout.
COSTELLO: Thanks, Christine.
ROMANS: You're welcome.
CHETRY: Well, in his first interview since the elections. Former Secretary of State Colin Powell sat down for an exclusive interview with CNN's Fareed Zakaria, about the conflict that he saw in the Bush cabinet, and he says he believes that the Obama administration needs to rethink the military's policy of don't ask, don't tell. He also talks about problems that he sees within the Republican Party.
(BEGIN VIDEOTAPE)
FAREED ZAKARIA, CNN ANCHOR: 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, FORMER 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 value system from the South Bronx.
And when they came to Virginia and said the southern part of Virginia is good but the northern part of Virginia is bad, the only problem with that is there are more votes in the northern part of Virginia than there are in the southern part of Virginia. So that doesn't work. But it was that attempt on the part of the party to use polarization for political advantage that I think backfired. And I think the party has to take a hard look at itself.
There's nothing wrong with being conservative. There's nothing wrong with having socially conservative views. I don't object to that. But if the party wants to have a future in this country, it has to face some realities.
In another 20 years, the majority in this country will be the minority. The Republican Party has to now start listening to the African-American community and to the Hispanic and Asian and other minority communities, and see what's in their hearts and minds, and not just try to influence them by Republican principles and dogma.
And so I think the party has to stop shouting at the world and at the country. I think the party has to take a hard look at itself.
ZAKARIA: Governor Palin, as the standard bearer for the next election, would not be the right direction? POWELL: I think she came out on the national stage a little too soon, but she is -- she's a smart woman and she's a very distinguished woman. I just don't think that she contributed to the ticket at this time.
And we're going to have to not just rely on slogans. "Joe the Plumber" and "They're socialists" and that kind of labeling, which shifted almost every day, was not an effective response to what Senator Obama was doing in showing a consistent set of views with respect to how to deal with the economic issue. And that, I think, hurt Senator McCain. And I hope the party will not only analyze the problems we have with minorities, but take a look at how Senator Obama ran that campaign and the kinds of things that work.
ZAKARIA: Let me ask you about one social issue that you were associated with, which was Don't Ask, Don't Tell, the policy toward gay people being in the military openly.
Do you feel like the country has moved to a place where we could reevaluate "Don't Ask, Don't Tell?"
POWELL: We definitely should reevaluate it. It's been 15 years since we put in Don't Ask, Don't Tell, which was a policy that became a law. I didn't want it to become a law, but it became law. Congress felt that strongly about it. But it's been 15 years and attitudes have changed. And so I think it is time for the Congress, since it is their law, to have a full review of it. And I'm quite sure that's what President-elect Obama will want to do.
ZAKARIA: Let me ask you about how to organize a White House, because President-elect Obama has talked about a team of rivals. And the thing I was wondering about was, how come President Bush's team of rivals didn't quite work? There were strong personalities with strong views -- you, Dick Cheney, Don Rumsfeld. But it seemed as though it didn't quite work.
POWELL: We got a lot done. It wasn't we were fighting for four straight years over every issue. But there were disagreements, serious disagreements about how to handle Iraq. There were serious disagreements in the aftermath of the collapse of Baghdad. And there were serious disagreements about detainee policy that were well publicized.
And frankly, the system didn't function in a way that I thought it should have functioned, and we didn't always vet everything in front of the president in the manner that I thought it should be vetted. And for that reason, you know, I was somewhat disappointed. And at one point I said to the president, "It's time for you to make changes, and I shouldn't be part of that change."
(END VIDEOTAPE)
CHETRY: You can watch Powell's full interview on GPS with Fareed Zakaria this Sunday, 1:00 p.m. Eastern Time.
Well, he may be the pink elephant in Hillary Clinton's confirmation hearings, but will former President Clinton be in the room -- actually, in the room or will he be called to testify?
COSTELLO: I'm just getting over the description of the pink elephant for Bill Clinton -- sorry.
And Barack Obama's commitment to transparency this morning being put to the test. Do his promises together, all the facts go far enough? It's eight minutes after the hour.
(COMMERCIAL BREAK)
CHETRY: Well, Senator John McCain is putting the election behind him, and he's showing some support for his one-time rival now President-elect Obama. Last night on the "Late Show With David Letterman," McCain commended Obama's choice of Hillary Clinton for secretary of state.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R), ARIZONA: I have traveled with Hillary Clinton 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 wise choices, which I think shows a --
(END VIDEO CLIP)
CHETRY: There you go, he thinks he's made a number of wise choices.
COSTELLO: That's right. Bipartisanship is a beautiful thing.
CHETRY: True.
COSTELLO: Before Hillary Clinton can become the next secretary of state, she must be confirmed by the Senate. And the biggest obstacle between Clinton and her new job may be her husband. Samantha Hayes has more on the Senate hearings and how they could get sticky.
SAMANTHA HAYES, CNN NATIONAL 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 said 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: Bill Clinton wants his wife to become the next secretary of state, but his test would include complicate her confirmation. We will ask James Carville, too, about the Clinton factor. It's 15 minutes past the hour.
(COMMERCIAL BREAK)
COSTELLO: Welcome back to the "Most News in the Morning." And 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. 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 persists surrounding Chief-of-Staff Rahm Emanuel. CNN's Elaine Quijano is working the story, live, in Chicago.
Good morning.
ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Good morning to you, Carol. Well, President-elect Barack Obama did not shed any more light on exactly what context there may have been between members of his team and the Illinois governor's office. But Mr. Obama did give himself some wiggle room saying his staff was looking into it.
(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.
(END VIDEOTAPE) QUIJANO: Now, to be clear, it would not be wrong or even unusual for there to be high-level contacts between members of the Obama team and the Illinois governor's office about this vacant Senate seat. But until any staff contacts are made public, the questions remain.
Carol?
COSTELLO: Well, Elaine, I have a question for you. Rahm Emanuel was not by Barack Obama's side during yesterday's press conference. And a lot of people are wondering why or why Rahm Emanuel isn't talking to reporters about this issue?
QUIJANO: Well, that continues to be the open question, Carol. I can tell you there's a report in this morning's "Chicago Sun-Times," here, the local paper -- one of the local paper saying that Rahm Emanuel is actually spotted at city hall not too long after that news conference by Barack Obama. He did not answer reporter's questions. He was apparently at city hall according to this report in order to watch his children play at a concert there. But he was pressed on this question, didn't take any questions from reporters.
Carol?
COSTELLO: No, I think he said he's with his kids. I'm not answering any questions of a political nature. Let's see if he does today. Elaine Quijano live in Chicago this morning.
CHETRY: Well, the governor of his state is accused of trying to sell his Senate seat. Is Barack Obama doing enough to address the scandal, or is this really not a scandal, when it comes to the White House? We're going to ask a man who's been in the trenches, James Carville.
Keeping your closet current in an economic downturn is no easy task. But we have our own "recessionista." How about that? Lola Ogunnaike has some tips on keeping you looking fabulous without breaking the bank. And she actually is wearing one of her finds. So, we'll check her out.
LOLA OGUNNAIKE, CNN ENTERTAINMENT CORRESPONDENT: (INAUDIBLE).
CHETRY: Yes! At 22-1/2 minutes after the hour.
(COMMERCIAL BREAK)
CHETRY: Welcome back to the "Most News in the Morning." James Carville had a front-row seat to some of the scandals that dogged the Clinton White House. So how does he think President-elect Barack Obama is handling the Blagojevich situation? We're going to ask him now. He joins us from Washington.
James, thanks for being with us this morning.
JAMES CARVILLE, CNN CONTRIBUTOR: Great.
CHETRY: Do you think -- there seems to be two schools of though depending on I guess where you fall politically, on whether or not this is Barack Obama's scandal, is it?
CARVILLE: I have no idea. There's no allegation at all it has anything to do with Barack Obama. The United States attorney said that has nothing to do with Barack Obama. There's a front-page story on the front of "Washington Post" today about how Obama distanced himself over the last year to Governor Blagojevich. They're not even close. So somebody has got to make something up here.
CHETRY: What about Rahm Emanuel not wanting to answer questions about what involvement if any. Why don't they just sort of just laid it all bare about any conversations, because it really wouldn't be out of the realm to be having conversations with the governor of your state.
CARVILLE: Right. We said in our report, it would be nothing unusual. In fact, it would be perfectly expected that he would have these conversations. And I expected to give two things that are probably at work. Number one is that they are going to release whatever contacts anybody had. You like to get these things right the first time.
Secondly, I suspect, that before they do that, they would let Mr. Fitzgerald know and make sure it doesn't touch on some other part of the investigation. So, I think that they would like to get this out very fast themselves, because -- you're right, there's nothing at all that is anything (INAUDIBLE) about Mr. Emanuel calling the governor's office, open his opinion on who the next senator should be.
CHETRY: Should there be a raised expectations, I guess, when you talk about Barack Obama talking about change, talking about transparency and talking about the need to get past some of the politics of corruption, to be more outspoken, to have more anger, if you will, about the Blagojevich, about the blatant things that we are hearing on this wiretap?
CARVILLE: Well, they called on him to resign.
(CROSSTALK)
CHETRY: He described it (INAUDIBLE)
(CROSSTALK)
CARVILLE: I don't know what he's supposed to do.
CHETRY: For example, for example --
(CROSSTALK)
CHETRY: For example, he called the situation sad, right? And he said that he was sad about the situation. There are some out there who say he should be a little more angry.
CARVILLE: Didn't he call him to resign? That's a pretty --
CHETRY: At first he didn't, and then he did, right? CARVILLE: At first he didn't, but he did call him to resign, didn't he?
CHETRY: Yes, eventually.
CARVILLE: OK. So, I mean, I guess he can't like convict him before he goes to the jury. I mean, maybe we can say he should have done something. I don't know. He's come out. He's not close to Blagojevich. He had nothing to do with this. The United States attorney said that the President-elect had nothing to do with this. He said he is saddened by it and he said Blagojevich ought to resign.
Maybe -- I mean, look, there's nothing that he's going to do that is going to satisfy everybody. But strikes me, he's out there pretty good. I know for a fact that the president-elect, nor his people are very close to Blagojevich. They've never been on the same political, you know, coach, or anything like that. So we're going to try to milk this thing. We might not be from Wisconsin but we're going to try to milk this for everything it's worth. And in terms of president-elect and Rahm Emanuel, there's not much milk in that cow.
CHETRY: Let's talk about the bailout, because huge news, of course, it died last night in the Senate. GOP leaders effectively killing it even though the Bush administration wanted it to happen. And Democrats wanted it to happen. What happens next politically? You know, is this just going to be a hot potato that then gets passed either to the Treasury secretary or to the Federal Reserve?
CARVILLE: Yes, the Senate Republicans are dying to just be a southern Republican Party. That's clearly what they're trying to attain. And, of course, the thing that bothered them the most was is that they really wanted to drive wages down. That is the core philosophy of the modern Republican Party that working people shouldn't make less money and corporate executives should make more money.
They offered Wall Street bailout but they couldn't help these car companies. But, yes, I think that they're going to have to do something, because they're going to be a lot of people thrown out of work here very fast. I'm not sure how much that prospect upsets the Senate Republicans but that's what's going to happen.
CHETRY: But then again, how much does it affect the American people. Because apparently a lot of them are saying that their constituents are angry about it and say, you know, enough is enough. This barn door has to be shut at some point.
CARVILLE: It probably does need to be shut at some point, but when we look at what unemployment compensation costs are going to be, when we look at what happen to these pension funds. The other thing is that, you know, these American car companies, and I drive one, are making, you know, really, really good automobiles now. And, you know, maybe if we can tie them over a little bit and they get back in, I don't think they can compete anywhere in the world. I mean, we tend to forget it. The quality of American cars is very high. CHETRY: No, I drive one, too. But I agree with you, what the Senate Republican's argument was that look you got to bring these wages and you got to bring these benefits in line with what the Japanese car workers are paying their workers here in the United States. Is that unreasonable?
CARVILLE: Right. You know, there was an excellent - somebody pointed out, if they did that, that would save $800 million. The difference between what a UAW automaker works is $29 an hour.
The Japanese auto worker makes 26. I am not offended that people make a living. It does not offend me that working people make a giving and get some health care, might pass something to pinch it. The UAW has time and again cut back these benefits. They had worked tirelessly to try to bring it down and help these American car companies.
But you know a lot of republicans just don't like the idea of people working, and making a decent salary and having some health care benefits. I actually like the idea of people working and making a decent salary, having some health care benefits that we're talking about. I actually think I like that. I think it's good.
CHETRY: We're going to get the opposite side, actually, Senator Corker is going to join us in a few moments. He's the one that you know put forth a couple of those stipulations that -- about the auto workers as it relates to that. James Carville always great to talk to you, CNN's political contributor and democratic strategist, thanks.
CARVILLE: You bet.
CHETRY: Carol.
COSTELLO: 31 minutes past the hour now. Breaking news this morning. Dow futures plunging right now after the $14 billion lifeline to the auto industry died in the Senate, that threatens to deepen the recession that we're already in. GM has already hired lawyers to consider filing for bankruptcy. Bank of America announcing colossal job cuts as many as 35,000 over the next three years. Bank shareholders just approved the purchase of Merrill Lynch, some of the layoffs will come over because of that takeover and Bank of America said workers of both firms are in jeopardy.
Former Secretary of State Colin Powell has some advise for the rest of the republican party. He sat down for an exclusive interview with CNN's Fareed Zakaria, saying republicans need to stop shouting at the world. The retired general telling the party to reach out to blacks, to Hispanics and other minorities and to stop polarizing voters. More on now on our top story. The world feeling the fallout after this. The Senate tells the big three was carmakers, you're on your own now. CNN's Becky Anderson live in London. I'm almost afraid to ask how the world markets are faring after this.
BECKY ANDERSON, CNN LONDON: Should I move on? Yes, they didn't like it. It's horrible out there today. Yes, they didn't like it at all. We got the market in London down about four, 4.5 percent. We got the German market down more than five at the moment. And this is only halfway through the trading day in Europe. And they're looking at those Dow futures now and they don't like what they see at all. But expect that the markets will come off even further. This is the afternoon paper in the U.K. and simply sums up the story as this "U.S. car collapse rocks the city."
Here is the person who made the X factor in Britain. Let me tell you there's more trading going on whether or not she will win at the moment than there is on whether there ever be a bailout plan for the auto industry. It's really ugly out there at the moment. It's been a fairly good week as far as these European markets are concerned. They'd been watching what's been going on on the Hill. And they quite like what they saw as the U.S. markets towards the beginning of the week but thank goodness it's Friday. I think a lot of traders here in Europe will be saying as we move into the weekend. It's really not a nice picture.
COSTELLO: OK. Let's move on to another topic though, shall we? Because I have heard that Germany is launching a blistering attack on Gordon Brown. So what's going on?
ANDERSON: You couldn't make this one up. I mean, there's a summit going on of the 27 leaders of the member countries of the E.U.. It's going on in Brussels today. These things are normally about the most boring conferences to report that you could ever report. I mean, they really, really dry, normally. But this one is something else. Europe cannot afford to make a show of division at this time. That is what the president of France is saying. He is the outgoing, revolving leader of the E.U., and he's saying that because of this. There is a war of words going on between the Germans and the Brits at the moment.
Let me show you what we've got here on the front page of "The Daily Mail." "Don't mention the economy" diplomatic war erupts as German's salvage Brown's grand plan to save the world from financial crisis. And what they are saying is this. They are saying that Gordon Brown is being crass and irresponsible in spending the billions of dollars that he is spending on the U.K. economy to try and bail it out. We're looking at a Europe wise bailout of something like 250, $260 billion at the moment but it's really, really ugly out there. Watch this, it's going to get better -- Carol.
COSTELLO: Sounds just like the democrats and republicans here in the United States. Becky Anderson, live in London this morning. Thanks.
CHETRY: And just in to CNN now, new economic indicators out right now. Retail sales numbers for the month of November. We go to Christine Romans who is tracking it all for us right now. Hi, Christine.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Hi there, Kiran, and a record five straight months of declines for retail sales in this country. For the month of November, retail sales falling 1.8 percent. It's really rare for the American consumer to spend less, one month to the next and now we've done this five months in a row. It's an indication of just how tight the family budget is. Another indication that came late yesterday, the Federal Reserve reported that for the first time since records have been kept, Americans were paying down their debt. That's something that had never happened before. Americans actually shrank their household debt for the first time in some 50 years from yesterday.
Producer prices another number just crossing (INAUDIBLE). The commodity crash very clear and evident here. Producer prices down 2.2 percent. This is likely to raise fresh fears about falling prices. It's good for consumers right now. But it's bad at what it says about the economy and deflation or some of the fears that it raises. So watch the prices tumble here. Kiran.
CHETRY: Unbelievable. All right. Christine Romans for us, thank you.
With the economy putting a squeeze on your wallet, your days of buying the latest couture may be on hold as well but that doesn't mean you have to wear last season's styles. How to be a recessionista. 36 minutes after the hour.
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(MUSIC PLAYING)
COSTELLO: Yes, Beyonce this morning. All right. You wistfully look at your favorite fashion magazine showing the latest look for winter and spring but you're worried about your job and your shrinking holiday budget. Who can really afford a shopping spree for themselves? Well our resident recessionista Lola Ogunnaike has some fabulous tips for shopping second hand.
(BEGIN VIDEOTAPE)
LOLA OGUNNAIKE, CNN ENTERTAINMENT CORRESPONDENT: So what's a nice girl like you doing in a place like this?
EMILIA LOPEZ, THRIFT STORE FASHIONISTA: Well, I think that this store are the place to shop nowadays.
OGUNNAIKE: So you got your pants from the Salvation Army?
LOPEZ: I did. Yes.
OGUNNAIKE: And they are how much?
LOPEZ: I paid $8.
OGUNNAIKE: Let's go shopping.
So what about this polka-dot number. You know it's here, you could sort of make it sexy, like night time.
LOPEZ: No, I don't see it happening at all.
OGUNNAIKE: I love that. And that's only $14.99?
LOPEZ: Actually, it's $7.50. Because it says half off.
OGUNNAIKE: The assumption is everyone who comes here and shops here is poor, they don't have any money.
LOPEZ: Well I think it's quite the contrary. I come here because I really want to find 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 this retailed at $200. This would normally go for $10,000. It's new. It's probably Gloria's dress.
MILO BERNSTERIN, CO-OWNER, INA CONSIGNMENT STORE: We have a Vera Wang top that you can see still has its tags on it. It was originally $695. You can see that we're selling it here at Ina for $235.
OGUNNAIKE: No armpit stains?
BERNSTEIN: No, we wouldn't take that definitely.
RICHARD VORISEK, PRE., HOUSING WORKS THRIFT SHOP: Sales are excellent. We're running about 10 percent since July which is obviously better than general retail is faring.
OGUNNAIKE: This is the show stopper.
VORISEK: She was rolling into studio 54 with this thing on.
OGUNNAIKE: How much will this sell for?
VORISEK: This is going to sell for only $150.
VORISEK: Our actual price per garment for woman 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: Yes.
That's $11. I broke the bank with that one. Ho, ho, ho, Merry Christmas.
(END VIDEOTAPE)
COSTELLO: Look at you, even keeping the clothes.
OGUNNAIKE: Keeping the clothes.
CHETRY: There's something in there for everyone.
COSTELLO: I'm sure that's what we'll be getting this Christmas.
OGUNNAIKE: A little something for you and you, Kiran.
CHETRY: Tell us about your sweater.
OGUNNAIKE: This sweater was 50 bucks. I got this at consignment shop, Ina. It would probably be about 350 in tax. But I got a deal on this.
CHETRY: Why there's gold thread on it or something?
OGUNNAIKE: No. It's cashmere, 100 percent cashmere.
COSTELLO: It feels nice. It feels good, doesn't it?
Talk to us about your - this spectacular find for under $10.
OGUNNAIKE: I think my favorite find was the coat with the detachable faux fur collar for $8. It was actually $16 but at the Salvation Army on Wednesdays, you get half off so it was $8. The lining is a little, little troublesome but I'll fix that at 10 bucks at a tailor and we're good to go.
COSTELLO: I thought you were going to do it yourself.
OGUNNAIKE: Yes, I'm dawning socks than fixing my lining as well.
COSTELLO: Thank you.
OGUNNAIKE: Thank you.
CHETRY: Well actress Diane lane is embarking on a new role and popping in some of the poorest nations in the world. She's joining us to tell how you can help this holiday season. And she has her adorable daughter with her as well.
COSTELLO: And a cow.
CHETRY: That's right.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: ... fall in love with someone. I want to make a family and you become what you think what you're supposed to be.
(END VIDEO CLIP)
COSTELLO: That was Academy Award nominated actress Diane Lane in her most recent film "The Nights of Rodanthe." Now, the movie star is taking on a new world of fighting world poverty and hunger. She recently traveled to the Republic of Rwanda to witness the gift of giving live stock to some of the poorest people in the world. And joining me now from Los Angeles is Diane Lane and her 15-year-old daughter Eleanor, and her cow. Welcome to both of you.
DIANE LANE, ACADEMY AWARD WINNING ACTRESS: Thank you and good morning. Thank you for having us. This is Betty, by the way.
COSTELLO: This is Betty. So what is up with Betty? Tell us how she connects to Rwanda.
LANE: Well, what's interesting, is the benefit that a cow can give through the Heifer program. It's amazing. And there's many different live stock in many different countries that have benefits, and takes the people out of poverty and into self-reliance. We've got -
ELEANOR LAMBERT, DAUGHTER OF DIANE LANE: ... ducks, rabbits, sheeps, cows, honeybees, and water buffalos and a bunch of a porch of different animals.
LANE: We've given one of each.
ELEANOR: Yes.
COSTELLO: So you are talking about bringing this live stock into the poor and starving in Rwanda, and they can raise the live stock for food and also sell what is coming from the live stock, right?
LANE: Yes, they benefit tremendously. There's a huge ripple effect. I also want to mention that the smart thing about Heifer versus a lot of other programs that may exist in the world, is they've been around 60 years. And they give the training. And the training is such an important part. You can't just have a cow showing up in your life. I mean zero grazing takes some effort. And these people are so grateful when they get it. We saw the passing on of the gift.
ELEANOR: We saw the passing off of the gift -
LANE: Which is a wonderful ceremony.
ELEANOR: They passed off the offspring of the first born calf.
LANE: Of course, all of the people are so jubilant.
COSTELLO: Oh, I bet they are.
LANE: You think you know gratitude. And then you see these people jump up and down for joy. They know they have such great hopes because of getting a cow. COSTELLO: And you know, all of this takes donations for very generous people. But you know the economy is so bad in the United States right now I think that a lot of people are saying, I wish I could give. But we're having a hard time ourselves.
LANE: This is a very smart gift-giving idea. Because first of all, $20 goes so much further -
ELEANOR: Than it does here. The value -
LANE: Exactly. It goes a long way. This is value. This is not - how can I say? It's a great conversation starter for sure. And you don't have to deal with any lines, any parking hassles. You don't have to wonder if -
ELEANOR: And it means a lot more.
LANE: Exactly. It's not a meaningless gift. It has tremendous impact. And you can start a dialogue with your family about value versus money. And at this time of year, a $20 gift, and starting that type of conversation for eggs, and milk and wool and fertilizer.
(CROSSTALK)
COSTELLO: Tell people where they can send their donations.
ELEANOR: Yes.
LANE: H-e-I -
ELEANOR: H-E-I-F-E-R.org.
COSTELLO: Heifer.org.
LANE: It's an amazing web site. We went and went on a study tour. That's how we went to Rwanda over the summer.
COSTELLO: Oh, that's awesome.
Hey I just have to tell you that John Roberts who is off today, is a big fan of yours, and I wonder if you could give him a shout out. Because I'm sure he'll be crushed that he missed you.
LANE: That's so sweet. Well, Mr. Roberts, it's very nice to meet you, almost.
COSTELLO: I don't think that will be quite enough for him but it will have to do.
ELEANOR: You said his name, he will be thrilled.
COSTELLO: Exactly. That's enough for him. Thank you both for joining us this morning and thank you for your wonderful in Rwanda.
ELEANOR: Thank you for having us.
LANE: Happy holidays.
COSTELLO: You, too.
CHETRY: Thanks for being with us.
We're going to show you a school where stopping obesity is part of the curriculum. Coming up Dr. Sanjay Gupta tells us how a forward- thinking principal changed the culture in the health of the students. It's 49 minutes after the hour.
(COMMERCIAL BREAK)
CHETRY: Breaking news this morning, market futures tanking after the auto industry bailout died in the senate. My next guest offered up his own alternative to the deal that was backed by democrats in the White House, but opposed by Senate republicans. He's Bob Corker of Tennessee. Thanks for being with us this morning, senator.
SEN. BOB CORKER (R), TENNESSEE: Hello, Kiran. How are you?
CHETRY: Great. I like to talk to you about the situation. GM and Chrysler painting a real dire picture for themselves. They said it's not likely that they'll survive through this month without the government aid.
CORKER: Right.
CHETRY: But they're already agreed carry out some of these sweeping reorganization plan in exchange for the help. Wouldn't it be worse for them to go belly up than just take all of those jobs with them than just to give the bailout money, this federal loan?
CORKER: we had an arrangement last night that we were just six minutes away from a full agreement that would have really caused these companies to be able to go into the future very healthily. We worked out the capital structure which is the amount of debt these companies had. We had bond exchanges. WE had equity cram-downs. We had all kinds of things that we agreed to. And it came down to one thing. And that was just getting the UAW to agree to a date certain that they would be competitive. Not exactly you know line for line but competitive with the companies, BMW, Honda, Nissan and Toyota were actually spelled out as certified by the Secretary of Labor, which is going to be an Obama administration secretary of Labor. So -
CHETRY: So in essence, I understand what you're saying, you wanted the United Auto Union workers to agree to certain things which included pay cuts. And I just want to let you hear what James Carville said earlier on the show, democratic strategist, about that situation.
CORKER: Sure. OK.
(BEGIN VIDEO CLIP)
JAMES CARVILLE, DEMOCRATIC STRATEGIST: That is the core philosophy of the modern republican party that working people shouldn't make less money and corporate executives should make more money. They offered Wall Street bailout but they couldn't help these car companies.
(END VIDEO CLIP)
CHETRY: It's a question that democrats and some others are asking, why did we just give hundreds of billions to the Wall Street firms to the banks to AIG but we're really being - holding the car companies to perhaps a different standard?
CORKER: Well I don't think this were a real general standard, actually. By the way, we were offering the $14 billion that was asked. The bond holders existed around the country and groups that represented them were going to take 30 cents on a dollar. 30 cents on the dollar. There was a lot of pain. Management - the equity was being crammed down. Their equity was basically being diluted so much. It was worth almost nothing if this deal would have been completed. So there was a lot of pain. And the one thing - listen, again, please know that terms were really general. They were be competitive with these groups, and, as certified by the Secretary of Labor, meaning that that person can take into account a lot of judgments about it. I mean, nuance. There wasn't any you know hard-set wage, nothing like that.
CHETRY: But let me ask you -
CORKER: And all -- let me say this. And offered a date. You know, just give me a date when we can reach that point. Give me any date in '09. And really all I wanted was them to give me a date back, and I mean literally in a matter of just a few minutes we could have had a deal that did fund these companies. It's hard for - I want you to think about - look, I know that on the democratic side, the UAW has to say, this is a great deal for us. That was the only way they were going to support it. We know they'd never -
CHETRY: Let me ask you one quick question. You said that - you were asking for generalities but apparently so OK the auto makers would have been required to cut wages and benefits to match the average hourly wage and the average benefits of a Toyota, Honda, the Japanese companies here in the U.S. and they wanted to extend that until 2011 when the current UAW contract expires. Why was that not acceptable? You said you wanted a date?
CORKER: Well, in essence, let me tell you what they really were saying is that we want to continue to do what we're doing. By the way, they never agreed to 2011. That was sort of you know they still wanted the loose language that said they would plan to be there. Our members were willing to do a lot of things that, candidly, they didn't really want to do to save these companies. But one of the things they wanted to make sure is, that there was some date in the future that was finite that they knew the UAW would be competitive with these companies, and I mean, I have to tell you, as I step away today, after getting a few hours sleep, it's almost surreal to me, because of the way I was offering this to be done, in such a general way. I have to tell you, it's pretty surreal that they were willing to let it go where it is today. I'm not up you know - CHETRY: Right.
CORKER: Anyway -
CHETRY: I hear you.
CORKER: That's it.
CHETRY: So it's out of the hands, at least for now, of Congress. And we'll see what else develops today. But I want to thank you for your time and perspective. Senator Bob corker, thanks.
CORKER: Thank you.
COSTELLO: Leave your cupcakes and your soda at the door. Zero tolerance means something different at an elementary school in Georgia. Dr. Gupta explains in his "Fit Nation" report. That's straight ahead. It's 55 minutes past.
(COMMERCIAL BREAK)
CHETRY: Sugar is banned at school and now students and teachers are reaping a sweet reward. Sanjay Gupta explains.
(BEGIN VIDEOTAPE)
DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Dr. Yvonne Sanders Butler is principal here at Browns Mill Elementary School in Lithonia, Georgia, a place where preventing obesity is as important as reading, writing and arithmetic.
DR. YVONNE SANDERS BUTLER, BROWNS MILL ELEMENTARY SCHOOL: Our children get 60 minutes of physical activity each and every day. We start the school day dancing.
GUPTA: Ten years ago, before it was the popular thing to do, she even got rid of soda machines and banned birthday cupcakes.
BUTLER: One of the first things I heard from some of my peers that if you go and change the menu you will probably lose your job. And I'm saying that if we don't do something, that we're talking about children that are probably going to lose their life.
GUPTA: Ten years later, she's still employed and her school-wide program has shown results.
BUTLER: The amount of discipline that we were seeing, referred by teachers went down by 23 percent and the first year that we did standardized test scores, they went up 15 percent.
GUPTA: And her local solution is getting some international attention. Dr. Butler's program was honored at a global diabetes summit in Belgium just last month.
DR. KEN MORITSUGU, ACTING U.S. SURGEON GENERAL: Here is a great example of how a person in the local community, saw the issue, saw the problem and said I'm going to help be part of the solution.
GUPTA: Dr. Butler said she wouldn't have it any other way.
BUTLER: Childhood obesity is our tsunami. It's our Katrina. It's Wall Street today. And so if we're really thinking about the best interest of the young people that we deal with each and every day. Then we will take a stand.
(END VIDEOTAPE)
GUPTA: You know one of the real questions is, do these programs work? There's a lot of program proposals being put forward. But this is an example how something works. They'd seen some of the positive benefits in their children over the last 10 years. These things can make a difference, Kiran.
CHETRY: Wow. And they certainly a great model for other schools to perhaps adopt.
Sanjay Gupta, thanks so much.
And before we leave you on this AMERICAN MORNING, we just want to take a moment to say good-bye to Abbie Vacanti. She is one of our producers who will be sorely missed.
We want to say good-bye and good luck.
COSTELLO: Look at her.
CHETRY: She's so adorable. Well, she should really be in front of a camera. But she's moving on to greener pastures. She's going to be going to Denver, Colorado. She'll wave to us from the slopes, Carol.
COSTELLO: She's going to enter the evil world of politics. Good luck, Abbie.
CHETRY: Well, she gets to talk about it for so long, she might as well jump right in with that speed.
COSTELLO: Exactly.
CHETRY: And thanks so much for joining us on this AMERICAN MORNING. It was great to have you as well, Carol. Thanks for being here.
COSTELLO: I'll be back Monday.
CHETRY: Good. All right. Well, we'll see you back here Monday morning. Here's Heidi Collins.
