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Lou Dobbs This Week

Auto Industry Bailout; Credit Card Rates

Aired December 20, 2008 - 19:00   ET

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

LOU DOBBS, HOST: Tonight: The Bush administration bailing out General Motors and Chrysler. But will the carmakers and outsourcing stop offshoring of production? Will they quit exporting American jobs overseas? We'll have a complete coverage.
And tonight: Consumers seething with anger over skyrocketing interest rates by some credit card companies, as banks receive huge sums of taxpayer money. We'll have that report.

All of that and all of the day's news from an independent perspective -- straight ahead.

ANNOUNCER: This is LOU DOBBS THIS WEEK: News, debate, and opinion. Here now: Lou Dobbs.

DOBBS: Good evening, everyone.

The Bush White House is offering General Motors and Chrysler more than $17 billion in emergency loans. President Bush said allowing the car companies to collapse isn't a responsible course of action. In return for that money, the Bush administration demands sweeping reforms from the carmakers, and the United Auto Workers union. Ford, however, says it doesn't need immediate help from the federal government.

Kathleen Koch has our report from the White House -- Kathleen?

KATHLEEN KOCH, CNN CORRESPONDENT: Lou, President Bush said from the outset that this was something he wanted to avoid, that he was a free market guy, and that many of the troubles facing the automakers were largely of their own making. But still, Friday morning, the president decided to go ahead and make these emergency bridge loans available to basically keep Chrysler and G.M. from going under.

(BEGIN VIDEO CLIP)

PRES. GEORGE W. BUSH, UNITED STATES OF AMERICA: There's too great a risk that bankruptcy now would lead to a disorderly liquidation of American auto companies. My economic advisers believe that such a collapse would deal an unacceptably painful blow to hard-working Americans, far beyond the auto industry. It would worsen a weak job market, and exacerbate the financial crisis. It could send our suffering economy into a deeper and longer recession. And it would lead the next president to confront the demise of a major American industry in his first days of office.

(END VIDEO CLIP) KOCH: The plan allots $9.4 billion to General Motors, $4 billion to Chrysler. The two companies would have access to potentially another $4 billion in 2009. They would have to, though, pay that money back immediately if they can't come up with a long-term plan for viability by March 31st.

Now, determining whether or not those plans were good would be not a "car czar" but someone the White House is calling a designee. Treasury Secretary Henry Paulson would fill that role for the remainder of the Bush presidency. And then President-elect Obama would pick his own designee when he takes office.

There will be strings. There will be conditions. There will be limits on executive pay. The notorious corporate jets will be a thing of the past.

Reaction on Capitol Hill -- many lawmakers from auto-producing states are very pleased but fiscal conservatives, like Senate Minority Leader Mitch McConnell, Senator Jon Kyl of Arizona, are furious. They say they have both strong objections to the bailout. That it thwarts the will of Congress and that it basically doesn't force these companies to make the tough decisions that will eventually make them competitive -- Lou?

DOBBS: Thank you, Kathleen -- Kathleen Koch reporting from the White House.

The president-elect welcomed those emergency loans for General Motors and Chrysler but Barack Obama said the carmakers must make some hard choices to achieve long-term viability. President-elect Obama said, "The auto companies must not squander this chance to reform bad management practices, and begin the long-term restructuring that is absolutely required to save this critical industry, and the millions of American jobs that depend on it."

Well, joining me now, two people who have been reporting extensively on this worsening crisis in the auto industry: Christine Romans who's here in the New York studios with me; Lisa Sylvester who is in our Washington, D.C. bureau.

Thank you, both, for being here.

Christine, first of all, what took so long?

CHRISTINE ROMANS, CNN CORRESPONDENT: What took so long is right. I mean, it looks like this is in Congress, the White House had been working with congressional Democrats to try to get something very similar through, it didn't work. The White House is waiting and waiting, saying they weren't going to use the bailout money, and then in the end, they did, the 11th hour. I mean, G.M. had said they had to have $4 billion by Christmas to stay alive. It did take quite awhile, didn't it?

DOBBS: They could have done this two months ago without any problem whatsoever. Lisa Sylvester, the idea that the administration makes it clear the United Auto Workers union must -- well -- take a huge, huge pay cut in both wages -- compensation and benefits, (AUDIO BREAK) they're going to rein in executive compensation, this, at least, in part sounds like the right approach, doesn't it?

LISA SYLVESTER, CNN CORRESPONDENT: Well, it does. I mean, if you take a look at the raw numbers, just in terms of the labor costs of the United Auto Workers, for instance, there was a study that a professor, Mark Perry, from the University of Michigan did, and what he found is that UAW workers are paid roughly about $73.20, that's the total cost for the company. By comparison, Toyota's workers are only paid about $48 per hour, when you factor in healthcare and so forth, and pensions and the like -- that the average U.S. worker only pays $28 an hour.

And so, when you take a look at that, a lot of people are asking, "Well, there's quite a disparity, quite a difference between $28 an hour for the average worker and $73 or so for the average UAW worker."

DOBBS: But, you know, Lisa, what has to impress our fellow citizens is the fact that this Congress and this president checked off on hundreds of billions of dollars, going to bail out Hank Paulson, the treasury secretary's buddies on Wall Street, and they didn't ask for reining in their compensation, their benefits. Heck, even their bonuses, firms and banks have lost billions and billions of dollars, handing out bonuses of tens of billions of dollars. And there's just no equity in that, is there?

SYLVESTER: No, there isn't. In fact, there was quite a different approach. I mean, just in terms of the congressional scrutiny, you know, we saw members of Congress, they wanted the Big Three, they wanted their CEOs and they grilled them. Whereas with the bank owners, the bank's CEOs rather, what they did is basically they gave them a free pass, and they said, "Here's a blank check. Go out and lend."

And what we found out is a lot of those banks didn't do that. They are using that money for other purposes, which is one of the reasons why we're still in the situation that we're in, Lou.

DOBBS: It would be like -- it would be as if, you know, Chrysler and General Motors decided not to make any cars after the bailout. Your thoughts, Christine?

ROMANS: I think it was a big game of chicken this week, too. I mean, you had Chrysler that said we're going to stop production for a month and then the White House came back and said, "We're talking about maybe a managed bankruptcy," and then the carmakers and the UAW came back and said, OK, we can all -- I think the autoworker was watching some really ugly politics. I mean, this has taken a really long time and the scrutiny on the automakers and scrutiny on autoworkers, frankly, after $700 billion was approved for banks with, as you guys say, no strings, no scrutiny, no oversight.

DOBBS: And we should also point out that it appears by most estimates, somewhere between $7 trillion and $8 trillion, through both the Treasury Department and the Federal Reserve has been pledged, loaned or spent to stimulate this economy. Lisa, do we have any sense as to whether or not this is going to be enough, and is there great hope that it will be effective?

SYLVESTER: You know, there are many people on Capitol Hill who are very skeptical. And, you know, as part of this reach-out, the Treasury Department is now reaching out to Congress, and suggesting that they want to tap into the second $350 billion. But a lot of lawmakers are saying, "Look, what happened to the first $350 billion? We haven't seen a lot of accountability there, and yet you're going to turn around and ask for even more money, and there are no results that we're seeing. It's still credit still frozen. People are having a hard time and you could see that they keep trying one effort after another. And no guarantee that it's actually going to work."

DOBBS: And as this money was loaned by the Bush White House, 60 percent of Americans in survey after survey opposed that bailout. They opposed the overall bailout of Wall Street, what's next?

ROMANS: This will be the year of the bailout. I mean, it will go down in history. And this president, you know, this week had to go in front of the American Enterprise Institute, a free market think-tank and try to explain himself, explain what has happened here, all of these bailouts.

And, you know, Lou, he said something I found so interesting. He said he was trying to stave off something greater than the Great Depression, the same president right here just a year and a day ago was the first time we ever could report that he'd even admitted that there was anything wrong in the economy, and 366 days he went from storm clouds on the horizon to something greater than the Great Depression.

DOBBS: Well, let's hope that we have something less than extended recession. We might as well go for the best we can possibly go, given the circumstances. Christine, thank you very much. Lisa, thank you very much. Lisa Sylvester and Christine Romans.

Up next here: Will the new Obama administration give the automobile industry more help? Three top political analysts join me.

Also, a shocking new example of the FDA's complete refusal to protect the American consumer.

An ethnocentric special interest groups again are ignoring the drug cartel wars in Mexico as they try to ram down the throats of the American people and Congress an open borders amnesty agenda.

(COMMERCIAL BREAK)

DOBBS: Well, new evidence tonight of the Mexican drug cartels increasingly brazen tactics, and this occurred right on the border near Douglas, Arizona. All of it caught on tape by the U.S. Border Patrol. In the video, smugglers in one of two trucks -- and there you see them, use a ramp to drive not through the border fence, but over it. Watch. I mean, this is amazing. This is -- talk about brazen. And then the trucks were stopped by a spike strip that had been laid down. One of the drug smugglers then started shooting. Fortunately, they didn't hit any of our Border Patrol agents. Then others began throwing the bales of pot that they had aboard back across the border into Mexico. All of this, as the Border Patrol was moving in. Then the men seeing the Border Patrol set fire the one truck and fled, in the other truck, agents found a half ton of marijuana valued at $1 million. No arrests were made.

The drug wars raging along our border with Mexico is being ignored by many ethnocentric special interest groups because they support open borders and amnesty for illegal aliens, and want to maintain current levels of illegal immigration. The groups say that amnesty would be adopted under the incoming Obama administration and they are pressing hard, irrespective of the national interest or our immigration laws.

Casey Wian has the report.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): Supporters of amnesty for illegal aliens are cheering as inauguration day approaches. They believe Barack Obama and his cabinet will soon push for a massive legalization program.

BARACK OBAMA, PRESIDENT-ELECT: I'm strongly in favor of a comprehensive immigration approach.

WIAN: Pro-amnesty groups such as the U.S. Conference of Catholic Bishops and America's Voice, this week, announced plans to lobby for a legalization program. They cite cabinet nominees Janet Napolitano and Bill Richardson as allies. But the amnesty advocates often ignore the border security component of comprehensive immigration reform which even their presumed allies stress.

GOV. BILL RICHARDSON, (D) COMMERCE SECRETARY NOMINEE: We've got to secure our borders. We've got to find those that knowingly hire illegal workers but there has to be a legalization plan.

GOV. JANET NAPOLITANO, HOMELAND SECURITY NOMINEE: It means enforcing our immigration law, enforcing at the border but also in the interior of our country, particularly against employers who continue to hire illegal labor.

WIAN: Complicating their plans, the growing threat of illegal labor competing for American jobs amid the economic crisis. The Mexican government and the Federation for American Immigration Reform have both reported a growing number of illegal aliens have left the United States on their own. Remittances, money sent home by Mexicans living in the United States are down about 2 percent so far this year, but are still expected to exceed $23 billion.

The soon-to-be Obama administration has been nearly silent on the issue the Justice Department this week called the biggest organized crime threat to the United States -- Mexican drug cartels. Their victims include more than 7,000 Mexicans, killed in the last two years in the drug war escalating along our southern border, and more than 20 million American addicts and other users of illegal drugs.

JOSEPH CALIFAO, COLUMBIA UNIVERSITY: I think we have to address both supply and demand. On the supply side, we have to both reduce the drugs coming in to this country. With respect to the demand side, we need a major public education campaign.

WIAN: Nearly 9,000 Americans died from illegal drug abuse in 2005, according to the Centers for Disease Control. Despite billions of dollars in additional resources and a doubling of the size of the Border Patrol during the Bush administration, there has been only a small decrease in the supply of drugs coming across our southern border.

(END VIDEOTAPE)

WIAN: Senate Majority Leader Harry Reid recently talked about the likelihood of comprehensive immigration reform passing next year, saying, quote, "I don't expect much of a fight at all." Border security advocates say the fight against drug cartels for control of our nation's borders should come first, Lou.

DOBBS: Yes, one would think and Senator Reid, the Senate majority leader, as you say, also bragging about a conversation with John McCain a few weeks ago in which he said he and McCain had basically a deal. John McCain dancing himself something of a power broker on this issue apparently.

And the American people, we're going to find out just how much they want to have a voice in this society. It's really extraordinary. By the way, you mentioned America's Voice, and you mentioned the Catholic bishops. A lot of folks probably don't know what America's Voice really is. Why don't you tell us?

WIAN: Well, it's a group that is advocating for what they call comprehensive immigration reform, what we on this broadcast call "amnesty for illegal aliens," Lou.

DOBBS: And they are supported by the usual suspects, the business lobby, the ethnocentric lobbyists, the usual suspects?

WIAN: I believe so, Lou. I don't have it in my head a complete list of who their supporters are, but I think you're right.

DOBBS: All right. Good. Sometimes, I get lucky. All right, thanks, Casey -- Casey Wian.

Up next: The FDA again failing to protect the American consumer. The agency is going against the recommendation of its own scientists.

Also, credit card delinquencies continue to rise but new rules may provide some relief to consumers. We'll tell you when that's due to take place.

And mayors across the country are all taking a page out of the book that Congress has really extended to a high level of expertise -- pork. They want $73 billion to rebuild infrastructure, they say. Just one problem, it isn't about infrastructure. We'll have that report next.

(COMMERCIAL BREAK)

DOBBS: Well, for years, the federal government has warned women and children about the unsafe levels of mercury in fish. But new internal FDA documents obtained by LOU DOBBS TONIGHT now suggest that the FDA is backing away from its own scientific guidance, and doing so in the face of opposition from yet another government agency, the EPA.

Louise Schiavone has our report.

(BEGIN VIDEOTAPE)

LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): As the clock runs out on the Bush administration's Food and Drug Administration, there's new concern about food safety guidelines, this time involving a potentially new take on mercury levels in fish.

SONYA LUNDER, ENVIRONMENTAL WORKING GROUP: And it would put American children at risk for increased levels of mercury in their bodies and brain damage.

SCHIAVONE: A draft FDA report leaked to the Environmental Working Group and obtained by CNN retreats from a 2004 recommendation that pregnant and lactating women consume no more than 12 ounces of low- mercury fish weekly, that new guidance is still under consideration by the Bush administration states to the contrary, quote, "The greatest benefits are predicted for fish consumption above 12 ounces per week. Limiting consumption to no more than 12 ounces per week causes a reduction in the size of the average benefit on a population."

The FDA cites recent studies in the Seychelles in Faroe Islands, this in addition to what they say is a trend in other research in favor of consumption of fish. The fishing industry's trade group applauds the FDA draft.

GAVIN GIBBONS, NATIONAL FISHERIES INSTITUTE: The latest science shows that the benefits of seafood far outweigh any theoretical risk, even from mercury.

SCHIAVONE: But that's not how the Environmental Protection Agency views the draft. Scientists there advising early this month, quote, "There are serious scientific flaws and this is not a product that EPA should endorse."

CAROLINE SMITH DEWAAL, FOOD SAFETY ADVOCATE: Unless the FDA is prepared to put big red "Do Not Eat" stickers on high mercury- containing fish, things like shark, swordfish, mackerel, or tilefish, the agency should be very clear that consumption of fish during pregnancy carrying some risk.

SCHIAVONE: The FDA tells CNN the report in question is still in draft status, that the FDA is working in conjunction with the EPA in a process involving, quote, "ample public input."

(END VIDEOTAPE) SCHIAVONE: But for the FDA, challenge for its positions on melamine in baby formula and the chemical bisphenol A in plastics, Lou, the question of mercury levels in fish is just another public relations nightmare -- Lou?

DOBBS: All right, Louise, sort it out for us. Should we or should we not be concerned about mercury in fish particularly young children and pregnant mothers and women?

SCHIAVONE: The issue is, whether or not there are ample levels of mercury in the big fish, they're talking about the big fish, like the tuna, especially albacore tuna, swordfish, tilefish, shark. And the science so far is that there are levels of mercury that could pose a risk to the neural development of the fetus in a mother. And...

DOBBS: What levels of consumption, though?

SCHIAVONE: The overall recommendation is that there should be no more than 12 ounces of fish consumed, low mercury fish, consumed by a pregnant woman in any given week. Now, the fish industry is, of course, thrilled with this new draft proposal by the FDA that you can eat more than 12 ounces and that's just good for you.

DOBBS: You know, I understand that, you know, having the fish industry tell us how much fish to eat is...

SCHIAVONE: Exactly right.

DOBBS: ... is not exactly the way to go.

SCHIAVONE: That's -- and you know, that's as we know, Lou, has been the issue with the Food and Drug Administration.

DOBBS: Yes.

SCHIAVONE: The charge is, that they are closer to the industry than to the people they're supposed to be serving.

DOBBS: For pregnant women, for mothers of young children, for those, and fathers of young children, where can they go to get intelligent, honest, objective guidelines on the safety of consuming fish and which fish containing the greatest and the lowest amounts of mercury?

SCHIAVONE: Well, you know, the recommendations still are up on the EPA Web site. You can go to any of the public interest groups. They will tell you. These recommendations have not changed yet. We're just talking about a draft report that we at LOU DOBBS TONIGHT were able to obtain.

DOBBS: All right. Louise, thank you very much -- Louise Schiavone.

Up next: Bailing out Detroit. What will the new Obama administration do? Three leading political analysts join me.

Also, you won't believe how much pork is in a $73 billion so-called "infrastructure plan" put forward by the nation's mayors. And banks receiving federal bailout money -- well, they're trying to profit from the financial troubles of their credit card holders. We'll tell you all about that -- next.

(COMMERCIAL BREAK)

CHRIS SMITH, CNN METEOROLOGIST: Hey, I'm meteorologist Chris Smith here in the CNN weather center, continuing to track three different storm systems across the country, wreaking havoc with travelers across the Northwest. We're talking about Seattle back down towards Portland. You don't get a lot of snow but over the past week, you've gotten a good bit of snow and it's continuing to snow from Portland back up towards to Seattle area.

As far as how much snowfall? Well, five to 10 inches down towards Portland possibly. Now, not in Seattle, you won't see 12 to 24. That's going to be up into n the Cascade Range, with blizzard conditions. You'll also see blizzard conditions back up in to the Olympic Range up there as well. Seattle, you're going to probably get anywhere maybe three, possibly five inches of snowfall when this is all said and done with all the windy conditions as well.

Central portion of the country -- this is the storm system rolling through here now. Most of the storm is done back over to the west in Minneapolis, although blowing snow is the huge problem. The snow falling from the sky right now across portions of Wisconsin back down towards Milwaukee, Chicago -- you're going to see a good bit of snow out of this as well. You're going to see anywhere from maybe three to five inches of snowfall. Wind gusts 24 to 21 miles an hour. Windchill factors over the next few days, minus 20 degrees.

We're continuing to track the cold weather across the country. Now, we're going to send it back to LOU DOBBS THIS WEEK.

ANNOUNCER: This is LOU DOBBS THIS WEEK: News, debate, and opinion. Here again: Mr. Independent -- Lou Dobbs.

DOBBS: Welcome back.

Federal regulators are adopting new rules to protect credit card holders from unfair industry practices or at least some of those practices. Among the changes: credit card companies will now be barred from raising interest rates without sufficient notice to their customers. Customers must also be given a grace period to pay their bills. Most of those new rules were proposed back in May.

And here's the kicker -- they don't go into effect until the middle of 2010. That long wait could be extraordinarily difficult for many Americans. Because according to the Federal Reserve, 5 percent of all credit card holders now, in the third quarter of this year, are delinquent.

Well, one questionable industry practice that appears to be on the rise is so-called "rate-jacking." That's where banks reset credit card interest rates at often unreasonable levels with little or no notice to the cardholder. Drew Griffin has our report.

(BEGIN VIDEOTAPE)

DREW GRIFFIN, SPECIAL INVESTIGATIONS UNIT, CORRESPONDENT: It arrived in Rich Stevens' mailbox a few weeks ago, the notice he and his wife were being rate jacked on their Citibank visa cards.

RICH STEVENS, CREDIT CARD HOLDER: In my case 9.5 to 16.95. In her case, I'm not sure what her initial rate was but it went up to 18.99.

GRIFFIN: Stevens doesn't know why. He's got great credit. But like thousands of credit card customers he's been notified his rate is skyrocketing.

STEVENS: It almost borders on loan sharking from my perspective.

GRIFFIN: In the blogosphere, writers are livid at the instant skyrocketing rates now dubbed rate jacking. And Citigroup seems to be the target of most blogger venom partly because Citigroup issues so many credit cards and also because Citi began sending the notices right around the same time it was getting a huge government bailout, a $20 billion investment from you, the taxpayer.

We couldn't find a single person at Citigroup, not one in that whole building who would come out and talk to us on camera. Instead, Citigroup sent us a statement saying that to continue lending in this difficult credit and funding environment, Citi is repricing a group of customers. Citi told us anyone unhappy with the new rates can opt out, continue paying the lower interest but they must close their account when their card expires. It's all in the fine print.

New York Congresswoman Carolyn Maloney is sick of the fine print. The problem has been credit card companies get away with whatever they want as long as they put it in the fine print, right?

REP. CAROLYN MALONEY (D), NEW YORK: Exactly. They all have this provision that says they can raise the rate any time, any reason.

GRIFFIN: In September, she got the house to pass the credit cardholder's bill of rights that would have stopped rate jacking and other fees that she says banks have been getting away with. It passed by 200 votes. Yours was the first house vote that went against these banks and credit card companies.

MALONEY: First in history.

GRIFFIN: First in history. You passed overwhelmingly like you said with a huge vote. It goes to the Senate, it goes no where, why?

MALONEY: We have to keep working. We have to pass it. There's a lot of pushback from the financial industry.

GRIFFIN: Critics say that pushback is because of greenbacks, money donated to politicians who pass or don't pass laws that regulate credit cards. Keeping them honest, we contacted the Senate banking committee where Maloney's bill has just sat since September. The chairman of the committee is Connecticut Senator Chris Dodd. His staff told us the senator has his own credit card bill with tough language to stop things like rate jacking and shortening the billing cycles. All the things that make consumers angry, but even his own bill seems stuck in his own committee. No action since July. Maloney won't criticize fellow democrats but does say the pressure from the financial sector is intense, and Dodd took in more than $4 million from that financial sector during his last campaign. Dodd's office didn't respond to our questions about that, but did say that he's tried repeatedly to protect consumers but legislation has been met with stiff opposition by the credit card industry.

(END VIDEOTAPE)

GRIFFIN: Those new Federal Reserve rules, Lou, that you talked about, do limit interest rate jacking, basically saying that they can raise your interest rate, but only if you have your card a year, actually they do go into effect 19 months from now. That's 19 billing cycles away, this after the Federal Reserve supposedly has been studying what they call unfair practices for the last four years. Lou.

DOBBS: Drew, that seems like such, first of all, an unreasonable delay in supporting and protecting the American consumer from the egregious practices of many credit card companies. Why such a long period?

GRIFFIN: Well, you have to look at these regulation groups work like the Federal Reserve. They are basically in the business of making nice with these banks. They're really a lot of critics not out for us, the consumers, who are going to have to pay 19 credit card bills before these rules go into effect. Now, there's a lot of push in Congress for all these bills, tougher bills, Lou, to be pushed through Congress in the next couple of months but as you saw in my report, really the political will is not there, because so much money comes from Wall Street, comes from credit card companies that put pressure on these lawmakers just not to do anything.

DOBBS: Drew, thank you very much. Outstanding report and again, all of that $3 billion in lobbying money in Washington, D.C., by corporate and special interests appears to be paying off, just not for the American people.

Up next here on the brink of collapse, President Bush approves a $17 billion bailout of the auto industry, at least General Motors and Chrysler. Also President-elect Obama invites Pastor Rick Warren to deliver the invocation at his inauguration. An invitation has thank has angered some of his most loyal supporters. Three of the country's very best political thinkers join me to talk about that and more.

Also your government at work again, a $73 billion plan, this time at the local level, to repair infrastructure, is full of pork. Imagine that. Mayors across the country taking lessons from our Congress. We'll be right back.

(COMMERCIAL BREAK) DOBBS: Mayors across the country like state governments are desperate to fight off budget cuts and layoffs. They want Congress, these mayors do, to hand over $73 billion to them in emergency funds for infrastructure projects. Those mayors say the project will create jobs and stimulate economies but critics say that many of those projects appear to be more pork and they benefit special interests and not taxpayers at large. Abbie Boudreau has our report. Abbie.

ABBIE BOUDREAU, CNN INVESTIGATIVE CORRESPONDENT: Lou, if you take a look at this 800-page report from the U.S. conference of mayors. You'll see some of the ready-to-go projects include rebuilding roads, waterways and schools. But we discovered other projects that are raising red flags.

BOUDREAU: You usually don't think a nearly $5 million polar bear exhibit in Rhode Island would help turn around the economy, but the U.S. conference of mayors sure think so. It's one of more than 11,300 ready-to-go infrastructure projects proposed by 427 cities at a total cost of $73 billion.

PETE SEPP, NATIONAL TAXPAYERS UNION: To the people supporting them, these proposals aren't a joke but to the taxpayers funding them, yes it will be a joke to them, only they won't be laughing.

BOUDREAU: Just this month, Miami mayor Manny Diaz, the president of the U.S. conference of mayors, and other big city leaders went to Capitol Hill to make the case for their list of critical projects.

MAYOR MANNY DIAZ, U.S. COURT OF MAYORS PRESIDENT: Our plan calls for investments that will stimulate our economy by quickly creating jobs.

BOUDREAU: Mayor Diaz even held up the report saying the projects weren't a bailout but a build out to put Americans back to work. Did you have a chance to even read the report?

DIAZ: I read through a lot of it. Obviously I didn't sit there and look at all 11,300 projects that were submitted.

BOUDREAU: Why is that?

DIAZ: Why is that? I didn't have time.

BOUDREAU: If he made the time, he would have found projects like a $20 million minor league baseball museum, $42 million for improvements to zoos, $3 million for murals and even $1.5 million for a new water park ride.

DIAZ: We just can't simply just say that because something sounds like it isn't right that it isn't, in fact, right.

BOUDREAU: A new ride at a water park?

DIAZ: Well, you know, again, I'd have to look at that particular project and try to understand why that city feels that it's an important project but again, we're talking about 11,300 projects, not just one. BOUDREAU: The new ride at the water park is in your city.

DIAZ: Um-hum.

BOUDREAU: So what is your response? I'm asking you as a mayor. I'm surprised you didn't know about the new ride at the water park.

DIAZ: Well, we had a number of projects and I don't know which one you're referring to but we just built a new water park and it may be related to the water park or maybe outside the city. I'm not sure.

BOUDREAU: A $1.5 million for a new ride at the water park.

DIAZ: But he point is rather that part of investing in infrastructure also includes parks.

BOUDREAU: Well, there were plenty of roads, bridges and water treatment projects on the list, we also found plenty of other interesting multimillion-dollar projects, like skateboard parks, museum and zoo renovations, aquatic centers, bike and horse path, a dog park, even programs beyond infrastructure to help prostitutes get off the street, and buy thousands of tasers for police departments. The total cost, more than $300 million, and many of the proposals in the report don't create jobs. Pete Sepp of the National Taxpayer's Union says it smells like pork.

SEPP: It's impossible for any normal tax paying American to read this and not come away scratching your head and saying, wait a minute. This isn't about infrastructure. This is about political power grabs, money grabs.

BOUDREAU: To the average American, doesn't this sound like pork?

DIAZ: I don't know. You'd have to ask the average American.

(END VIDEOTAPE)

BOUDREAU: Mayor Diaz says he would hope that members of Congress would read the entire list of projects his group submitted to make sure that they are legitimate before handing over billions of dollars. He also tells us there will be even more proposed projects from other cities by the end of the year. Lou.

DOBBS: Remarkable, whether at the local, the state, or federal level. The seeming indifference to detail, whether it is the U.S. Senate that fails to read more than 90 percent of the legislation before it, or Mayor Diaz needing your instruction, Abbie, to understand that there's a new ride sought for the water park there in Miami. It's remarkable.

BOUDREAU: Yes, absolutely. We were pretty surprised that he didn't know about projects in his own city, but that's what happens and that's why critics are saying we have to - you just can't turn over this 800-page report without reading it. It needs to be read.

DOBBS: Absolutely. And thank you for doing so. Terrific reporting, thank you, Abbie Boudreau. Up next, some liberals blasting President-elect Obama's choice to do the invocation at his inauguration. What's going on here? And the White House approving a bailout for Detroit. What does that mean for President-elect Obama and for the country. Three of the best political analysts join me next.

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DOBBS: Joining me now, three terrific political analysts. Democratic strategist and CNN contributor Hank Sheinkopf. Hank, good to have you with us. "New York Daily News" columnist, Errol Louis, who is also a CNN contributor and the host of New York's WWRL morning show, good to have you with us, Errol. And in our D.C. bureau, Mark Preston, CNN political director, Mark, great to have you. Let's start, folks, with this. A bailout, Hank, a bailout finally from the white house $17 billion worth for Chrysler and General Motors. What do you think?

HANK SHEINKOPF, DEMOCRATIC STRATEGIST: Structured bankruptcy would have been a better idea probably. Keep the vendors less anxious. Keep people working, better than Chrysler. Chrysler put the ultimate threat on the table which is that they would shut down production without this occurring. There's no guarantee they won't do that anyway but it is the last gasp of the Bush administration to try to get something done.

DOBBS: All right. Errol?

ERROL LOUIS, "NEW YORK DAILY NEWS": It would have been great if they had move a lot faster, not waited for Congress. They had this power all along to structure some kind of a bailout, get a lifeline loan out to the auto industry. Meanwhile, you know, Michigan is going into seven-plus years of recession before this crisis hit, and it's going to be awful. The fallout is going to be awful no matter what happens.

DOBBS: And as a matter of fact, this administration refused to do precisely what they ultimately did at the end of this past week. Mark, your thoughts?

MARK PRESTON, CNN POLITICAL DIRECTOR: Well, I'll tell you what, politically they had to get the bridge to the New Year and they had to get the bridge to the new administration. We do know that the Bush administration was talking to President-elect Obama's aides, telling them what the plan was going to look like and let's look down the road, 10 years down the road. President Bush has also got to be concerned about his legacy. He's certainly under his watch did not want the automobile industry to collapse.

DOBBS: His legacy, this is the week, this past week, famously that George W. Bush said he abandoned free market principles to save the free market system. I mean, we have reached a level of rhetoric that's breath-taking here.

SHEINKOPF: Absolutely ridiculous. Free market principles, free market principle is a non-supervision, non-transparency, non- regulation of a certain portion of the securities industry, result in a situation which endangered in fact the free market system, forcing this president to do things that he was forced to do and did not want to do.

DOBBS: Were those remarks, do you think, intentionally designed to (obiscate) the fact that what he really embraced was unfettered capitalism?

LOUIS: Well I think what he did was he found his way back to historical truth. I mean there's been this revisionist movement to act as if the new deal was some gigantic failure, that moving the unemployment rate from 25 percent to 12 percent, which is what FDT did in those first few years with massive government intervention was somehow a mistake. He's been faced with this choice all along. Is that - you know, we have a government. We have a society in which 30 percent of the GDP is government spending. You know, you can act as if that doesn't exist. I mean, what they talk about when they say free market principles in many cases, people are talking about something equivalent to religious faith, just sort of always believing, no matter what, that government is going to be a problem, even if government is the only solution and that was the case here.

DOBBS: Well that's an intriguing way to put it, Mark. First I just got to say that also you know there's a room in our economy also for investment and for the consumer, comprising almost three times as much as government spending historically. Mark?

PRESTON: Well I'll tell you what, this really became a moral issue, Lou. The clock is ticking right now. We're bumping up against Christmas. Something had to be done. We've seen these auto plants are going to close down for weeks at a time, and look, they were going to collapse and I think what we heard President Bush say, look, I am a free marketer but sometimes you just have to abandon those principles to deal with the situation that we're in right now.

DOBBS: Well one other thing that's been abandoned here is a sense of proportion it seems. $8 trillion more than $8 trillion pledged here, pledged, loaned and spent, beginning with the Wall Street bailout, the Federal Reserve serving conventional paper market and then the explosion of government intervention since then. Is this something from which politically we're going to recover any time soon?

SHEINKOPF: Long pool ahead, Lou, and inflation is around the corner. You don't have to be a Harvard-trained economist to know that. You print that much money. You put it out there and you're going to have problems for people.

LOUIS: I'm not so sure about that. We're in what looks like the beginnings of a deflation, which is a sort of a different kind of a problem and equally important one. I think all of the government spending if you look at it, you compare it as a percentage of GDP, it's not huge. We've been down this road before. We were down this road before with the marshall plan and the second world war. When the nation needs it, when the economy demands it, sometimes you do have to sort of go out an on a limb and spend what needs to be spent. The fact it's not being spent wisely I think is the real problem.

DOBBS: Wisely, effectively. Mark? PRESTON: Well, you know the hole has already been dug and the money has already been spent right now. We know it's out the door. I tell you the real mark for us is going to be when Barack Obama unveils his stimulus plan, what he's going to do to try to create the 2.5 million jobs or at least save these 2.5 million jobs he's been talking about. So let's wait until Barack Obama gets in office and really that's the market we need to start from as we move forward.

DOBBS: We're going to be back with our panel in just a moment. And when we come back we'll be assessing what does it mean to create or save 2.5 million jobs. Is that a big deal or is it just a big deal if it's your job or mine? We'll return in one minute.

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DOBBS: We're back with our panel. I just want to turn to Mark. 2.5 million jobs, the president-elect says he's going to save or create 2.5 million jobs. Now, no one seems to, in the national media, seems to like to say nor any of his staff like to amplify there are 156 million people working in this country. 2.5 million is a miniscule portion of that, especially when he's saying create or save, when millions upon millions of jobs are created and saved each year in this economy.

PRESTON: You know, Lou, you made a really good point there, because you know when you talk to the average person, they hear 2.5 million and they think that is a very large number but the fact is, when you look at the grand scheme of things it's not and the fact is Barack Obama has given himself a lot of wiggle room. He's either going to create or save so really what is the benchmark there? If he saves 2.5 million jobs, isn't he just doing his job as president, trying to stem the problems that we're in right now. So you know a lot of wiggle room for him.

DOBBS: Yes. And we've lost just about two million jobs just this year alone, and by all forecasts it's likely to get much, much worse. The president-elect choosing evangelical pastor, Rick Warren. What an outcry from gay rights groups and advocates. Hank, he is getting more heat from the left wing of his party, which is supposedly his home base. What's going on?

SHEINKOPF: There's the left wing of his party was never really his home base and the rhetoric that he used during the presidential campaign may not, in fact, be who Barack Obama really is. Democrats are then punished by the electorate time and time again, except the case of Jimmy Carter and Bill Clinton for going against religion and being the party of the irreligious. Now here's the case where Barack Obama says look, I'm going to pass that by.

DOBBS: The heat that he's getting, it will subside or is this going to be a significant problem for the president?

LOUIS: No, it won't be a significant problem. Listen, I've been asking people on my radio show, where were you when Barack Obama went to Saddleback church, and they had this national debate that was staged right there? I didn't hear a lot of outcry. I mean you know the reality is, trying to read somebody out of the mainstream, trying to say this guy should not be on the podium at the inauguration. That's a very dangerous game for a minority group to play, and let's keep in mind, those who favor gay marriage are a minority. Now somebody was going to offend somebody. You know.

DOBBS: Not just a minority, we should be careful. Everybody, for group identity politics, everybody in this country should be, you know, this tolerance, you know, that's a nice catchword for people use it rather glibly but what it means is embracing the idea that we can disagree without being disagreeable.

LOUIS: Well, it's the whole meaning of that day, of all days, the inauguration.

DOBBS: Exactly. And this president was elected to bring that. We'll see if he walks the walk but so far, so good. Your thoughts, Mark?

PRESTON: Well, you know, remember, Rick Warren invited Barack Obama into Saddleback a couple of years ago and came under a lot of criticism from the right wing part of the republican party.

DOBBS: The left and the right. Somebody ought to tell them both, you know, we don't care whether you're happy or not. We've just about had a belly full of left and right wings. Let's try to embrace the center and what this country is all about. What do you think?

LOUIS: Yes, and that's what Barack Obama has been talking about. Let's see if he actually, he talks the talk, let's see if he does actually walk the walk. And you can't talk about change and changing things in Washington if you can't be open to other people's ideas. Of course, the gay and lesbian community are very upset but this is what they might be more upset about Lou is we don't see an openly gay cabinet member right now in his administration.

DOBBS: Yes, I mean, how significant is that? Do you expect to see, well the cabinet members have been completed, the cabinet choices. How do you see the Obama administration expressing inclusion when it comes to an openly gay senior member of his administration?

SHEINKOPF: That occurs at the subcabinet level, the FDA, something like that, where he may not have picked someone yet.

DOBBS: And what do you want to bet?

LOUIS: I suspect that will happen. What we're seeing with the cabinet is he's looking for a team of legislators, you know state, and commerce, and interior and labor, all former legislators. He's got a legislative agenda and that's going to dominate everything I think for the first term.

DOBBS: And he brings in to the labor department Congresswoman Hilda Solis, good appointment or bad?

LOUIS: Well, labor is ecstatic. They like her. She's on record as supporting their number one agenda. DOBBS: Let me try that again. I really don't care whether labor is ecstatic. You know I saw business get ecstatic with Elaine Chao for the last few years. I don't want to hear you know a constituency group.

LOUIS: Let's put it this way she is fully in support of the major labor initiative of this administration, which is going to be passage of the employee free choice act and again as a member of Congress, she'll know how to move that.

DOBBS: Mark?

PRESTON: Well, I think that Hilda Solis will be to labor what Elaine Chao was to business in America. I mean, clearly they're not going to be happy pretty much with anybody that Obama brought in, I'm sure and she's going to push the labor agenda and quite frankly, she's going to push Obama's labor agenda.

DOBBS: And yes, and adios, Elaine and Hello, Hilda. I don't know whether or not who is going to be best served here. But one thing you can be sure of again we're going to have a labor secretary at the bidding of one of the constituent interest groups. It's always good to have this opportunity every four years, isn't it? Thank you very much, gentlemen. Appreciate it. Thank you.

And thank you for being with us. Join us here tomorrow for all of us, thanks for watching and good night from New York.

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