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Obama: "Cannot Afford Inaction"

Aired January 28, 2009 - 21:00   ET


JOHN KING, GUEST HOST: Tonight, the House passes a massive economic stimulus plan with a price tag of $800 billion plus. President Obama pushed it.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: When it comes to rebuilding our economy, we don't have a moment to spare.


KING: Republicans rebuffed it.


UNIDENTIFIED MALE: We are disappointed.

UNIDENTIFIED MALE: It's not good enough.

UNIDENTIFIED FEMALE: Full of wasteful spending.

UNIDENTIFIED MALE: It's short on the ability to create jobs.

UNIDENTIFIED MALE: We think there's a better way.


KING: Will this work?

Will it save your job?

Your house?

Your dreams of a better life for your kids?

And what happens if it doesn't do the trick?

Can President Obama rescue you from economic disaster?

It's all next on LARRY KING LIVE.

Good evening from Washington.

I'm John King.

Larry is off tonight. Let's go straight to today's big breaking news. The House passing the big stimulus plan, giving President Obama a victory in his early days in office. The vote was 244-188. Not one Republican voted in favor of this plan. A handful -- 12, actually -- Democrats voted against the measure.

We're joined tonight by two leading members of the Congress.

Congressman Barney Frank, Democrat of Massachusetts, is the chairman of the House Financial Services Committee.

And Marsha Blackburn, congresswoman, Republican of Tennessee, is the deputy minority whip.

Let me get Congresswoman Blackburn, to you first.

All Americans agree the economy is in crisis. The economy needs help. Not one Republican steps forward to vote for this bill.

Now, I know you have some significant policy issues with it.


KING: But in some ways, was it a free vote for your caucus in that President Obama came up to meet with Republicans and said that he thinks it will get better in the Senate, that he will actually try to get the Senate to adopt some of your ideas?

So did you have a free pass today?

BLACKBURN: Not at all. And I think that we are very concerned about what we see happening in the economy. We have a difference of philosophy and a difference of how you should go about addressing this situation.

I think we all know the best economic stimulus is a job. And the way you generate jobs growth is by putting that focus on small business. And looking at this how you go about generating that -- tax reductions, maybe even reducing some federal spending, moving money to different places within the federal budget.

But, John, $836 billion dollars -- over a trillion dollars by the time you add the interest -- that is -- that's a lot of money. And that adds to our debt, which is now at $10.7 trillion. Our deficit for this year is already over a trillion dollars. You know, this is -- this is something -- there is a better way to go about this and we know that.

KING: But, Mr. Chairman, when she says there's a better way, address that specifically. And some of the money in here, some people have said worthy cause -- investigating climate change, money to fight sexually transmitted diseases. The Senate is now thinking of adding $75 million for anti-smoking measures. I think everyone at this table would agree those are worthy causes.

But do they create a job in the next three to six months... REP. BARNEY FRANK (D), MASSACHUSETTS: Yes, they do...

KING: ...which has been the goal of what this is about?

FRANK: Do you think people fight sexually transmitted diseases as volunteers, John?

They get paid to do that. The notion that it's only a job if you're breaking cement or I don't know what else, isn't right. These services that we provide that improve the quality of people's lives -- education, health care -- those are also jobs.

Now, part of what we are doing is to help the people who have lost their jobs. That's classic economic counter-cyclical activity.

When people lose their jobs, they stop spending, so that unemployment compensation, food stamps -- programs that go to help people who are out of work allow them to spend.

It is a cyclical thing when you get economic trouble. People lose their jobs. They stop spending. That causes other problems.

So there are a number of ways in which you stimulate the economy. Small business is one of them. But the notion that it's only small business -- again, you have people who are unemployed.

You have -- and a major factor right now, if you look at job creation during this past year, state and local governments have been an important part of it and health care and education.

What we're saying here is we don't want them laying people off. If you can keep states from laying off policemen and teachers and firemen and keep those people working, that's very good job creation.

KING: But what does it say for the long-term, though, Mr. Chairman, that no Republicans voted for this?

You had 12 Democrats -- mostly conservative Democrats -- say they could not support it either. One of them from the Congresswoman's home state, Jim Cooper, said, you know, this is the old bulls -- essentially saying the liberal leaders in the House are trying to put all their policy ideas in there.

So what does it say when we get to Medicare, Social Security...

FRANK: It says that...

KING: ...climate change?

If you don't have Republicans and conservative Democrats, can you have a bipartisan Washington?

FRANK: No. By definition, if you don't have Republicans, you can't have bipartisanship. We've seen this before. But it does also say that elections matter. What you had was an election in which the philosophy that the Republicans had put forward -- and Representative Blackburn is right, there were differences in philosophies.

That philosophy lost fairly heavily in the Congress. A different philosophy won. When George Bush was president, his philosophy was don't regulate financial activity, cut the estate tax, cut taxes. I think that did not work very well.

And so I accept the fact that there are differences. There will be other issues where it will be more nearly -- there will be some Republicans in a minority. But I -- you know, that's what elections are about. Elections are about people with different philosophies going before the voters and one party wins and one party doesn't win nearly as much. And the party that wins doesn't get it all, but they get the dominant position.

The Republicans under George Bush, from 2001 until we won back the Congress in 2006, pretty much dominated. They passed things that sometimes had no Democratic support. That was legitimate. We now differ. The electorate has said no, we want to go a different way. And that's what we're doing.

KING: Well, to his point...


KING: ...the Democrats did win the election. Now, Barack Obama lost 47 percent of the vote, but the Democrats did win. Obama won with 53 percent. The Democrats picked up seats in the House.

In the sense that was it just a safe vote for Republicans who tend to be from conservative districts -- in the House, I'm talking about now -- to just vote no?

BLACKBURN: No. Not at all, because we are very concerned. But when you have a bill which has -- 10 percent of this big enormous spending bill is going be spent this year -- only 10 percent. Stimulus is supposed to be targeted, immediate, focused spending that will generate or jump-start the economy.

When you have spending that spans over 10 years, that is not stimulus spending. That is spending.

Now, not all stimulus is spending. Some stimulus can be tax reductions. Some stimulus can be regulatory change. And certainly there is some regulatory change that should have been done. There is some spending reduction at the federal level that should be done. When families are hurting, when communities are hurting, when everybody is cutting back, the federal government ought to be cutting back, also.

And, you know, regulation. Mr. Chairman, you know full well that there are many of us and the president back in 2003 that wanted to move forward and regulate Fannie and Freddie and...

KING: This is...

FRANK: Let's discuss that.


BLACKBURN: You know?

FRANK: No, I want to...

BLACKBURN: And you didn't want to do that.

FRANK: Can I ask you a question?

KING: Let me...

FRANK: No. Ms. Blackburn, why didn't you?

Ms. Blackburn just said in 2003 she and the Republicans wanted to regulate Fannie Mae and Freddy Mac and that we didn't let them.

In fact, I worked with Mike...

BLACKBURN: We wanted some oversight.

FRANK: Please -- please let me continue.

BLACKBURN: Sure. I'll be happy to.

FRANK: You -- your party was on the majority in 2003.

BLACKBURN: Yes, sir.

FRANK: Mr. Bush was the president. You had a majority in the House and a majority in the Senate. You didn't regulate. You said you wanted to. I must tell you, the notion that I stopped Tom DeLay and President Bush and the Republicans from doing what they really wanted to do -- if I was going to stop you from doing things, we wouldn't have had a war in Iraq, we wouldn't have had a lot of other, I think, terrible mistakes.


FRANK: In fact, Fannie Mae and Freddie Mac were not regulated when the Republicans were in power. When the Democrats won the election in 2006 and I became the chairman of the committee in 2007, by March we had passed a bill to regulate Fannie Mae and Freddie Mac.

Mike Oxley, who was the Republican who was chairman of the Finance -- of the Financial Services Committee, said in 2005 he wanted to regulate Fannie Mae and Freddy Mac. I supported him. And he said the Bush administration stopped him.

But the key point is this when you raise that. You said you wanted to regulate it. You had the majority in the House. You had the majority in the Senate...


KING: Let me...

FRANK: You had...


BLACKBURN: "The New York Times"...

KING: Let me look forward.

FRANK: ...the presidency and you didn't do it...

KING: Let me -- time out.

FRANK: And we did it...

KING: Time out.

FRANK: ...and we did it in 2007.


KING: Time out.

BLACKBURN: No, "The New York Times" in...

KING: Let me look forward.


KING: Let me look forward. We're about to run out of time here.

We're about to run out of time to save it.

FRANK: Well, but why didn't you do it?

KING: But I want a quick...

FRANK: You haven't answered my question.

KING: ...a quick (INAUDIBLE)...

FRANK: You said you wanted to regulate it.


FRANK: What stopped you?

KING: There's -- let me.

FRANK: I stopped the...


FRANK: ...Republican majority?

BLACKBURN: ...ranking member and you're on the record...

KING: Let me steer us forward for a minute... BLACKBURN: ...for not having wanted to.

KING: Let me steer us forward.


KING: We have a -- just a few seconds left, so...

FRANK: I understand. (INAUDIBLE).

KING: More than $800 billion in this stimulus bill. It may grow to more than $900 billion when it comes back to the House from the Senate.


KING: $700 billion allocated for this financial bailout.

Mr. Chairman, it's your committee that's going to have to decide how much more money.

Wall Street says already the banks are saying this is not enough, they're going to need more.

How much more are the American taxpayers going have to pay...

FRANK: It depends...

KING: bail out financial institutions?

FRANK: We're going to have an experiment now. George Bush got deploy $350 billion of that rescue plan that he asked us to pass. And the Congress passed it. And that was pretty bipartisan, by the way. A minority in the House, but a big minority, and a majority of Republican and Democrats in the Senate.

They deployed $350 billion. We think they did it badly. They did nothing about foreclosure. They didn't do anything about making the banks lend. They didn't do anything about smaller banks.

Now, the Obama administration will get to do the second $350 billion. And you're going to have a comparison. I think you're going to see, under the Obama administration, that that $350 billion is used in a very good way.

KING: But...

FRANK: Their ability to get more will depend. You asked the question...

KING: But...

FRANK: They will have to show the American people that they can spend the $350 billion in a way that reduces foreclosures and gets money re-leant and helps community banks.

If they can do that, then they can come back and we'll consider more. Until they do that, that's off the table.

KING: You're shaking your head.

We're out of time...

BLACKBURN: I -- listen...

KING: ...but just quickly.

BLACKBURN: Yes. The Frank-Dodd Bill, Paulson, President Bush, Plan A didn't work. The American people know that it didn't work.

FRANK: It wasn't the Frank-Dodd...

BLACKBURN: Plan B, it's not going work. People know that. They are very concerned about that and concerned about what options may be (INAUDIBLE).

FRANK: Oh, I agree.


FRANK: Under President Bush, the plan did not work nearly as well as it should have. And now I think -- and I look for this. I look for...

BLACKBURN: It didn't have oversight.

FRANK: I look for a comparison...


FRANK: Oh, it had a great deal of oversight.

BLACKBURN: It didn't have oversight.

FRANK: That's how we know that -- what went wrong.

KING: Yes.

BLACKBURN: We don't know where the money went.

FRANK: And you're going to see President...


FRANK: You're going to see President Obama...


KING: Wait...

FRANK: this in a way that puts President Bush's record in the dark.

KING: If I don't get to a break, I'm going to be out of a job. (LAUGHTER)

KING: Chairman Barney Frank, Congresswoman Marsha Blackburn, thank you so much for joining us.

BLACKBURN: Thank you.

KING: We will continue this discussion in the days and weeks ahead. They're making very important points here.

When we come back, two men who know the policy but also know how to make you laugh. We'll continue this economic discussion with Paul Begala and Ben Stein.

And we can have more of this discussion. You're watching LARRY KING LIVE now. Tune in on Sunday morning, as well. We'll continue this discussion and find out where your money is being spent, on "STATE OF THE UNION." That's 9:00 a.m. Eastern right here, through 1:00 p.m. Eastern on CNN.

Stay with us.


KING: Straight back to our discussion of the day's big news -- a big victory for President Obama. The House passing a big economic stimulus plan -- more than $800 billion in spending.

Joining our conversation now here in Washington with me, Paul Begala, the Democratic strategist and CNN political contributor. He served as a counselor in the Clinton administration.

And in Los Angeles, Ben Stein, commentator, economist, a "New York Times" columnist, former presidential speechwriter and the best- selling author. His latest book is "How to Ruin the United States of America."

Let me pick up right on that note right there. Your reaction to this stimulus plan.

Is it going help or will this huge price tag on top of the bailout and the more money coming, help ruin it?

BEN STEIN, ECONOMIST, "NEW YORK TIMES" COLUMNIST: I don't think it will ruin America. But it's an awful lot of money, when you think that they just spent $819 billion with less than 24 hours of deliberation about it. That's kind of terrifying.

You could get -- there are four million long-term unemployed in America. You could have given each one of them $200,000 for that. And that might have helped, too.

I think it will work in the sense that there will be some stimulus, although it would have been better if it had been more immediate. And I think Mr. Obama is practicing nothing more than standard pork barrel politics. And I'm sure if the Republicans were in charge, they would have done something similar, only on the tax side.

But I'm thinking to myself, we've got a credit crisis. We've got a bank crisis. I think the way out of this is to give loan guarantees and increase the amount of credit flowing out of banks. That will get it done without anywhere near the amount of burden on the U.S. taxpayer.

I really worry at some point, we're going to have so much debt, that one day we're going to wake up and Standard & Poor's or Moody's is going to say the U.S. sovereign debt is of questionable value. And then we're really going to have some problems.

KING: Well, Paul, what about Ben's point that -- you know, the financial the bailout is unpopular. Americans see money going to banks and say it's not trickling down to us.

But what about his point that if it is a financial problem -- we've had higher unemployment rates in the past, going back even in recent history.

If it's more of a financial problem, why won't the politicians say we're just going worry about the financial institutions and give that six months, see if that helps and then deal with these other issues?

PAUL BEGALA, CNN CONTRIBUTOR, DEMOCRATIC STRATEGIST: Right. I think they have the sense that it's a whole lot bigger than that. There is this -- I saw Chairman Frank explaining this -- the first half of the $700 billion, which I think a lot of people think was squandered. I certainly do. Because it was given to these big banks with no strings attached.

So 90 percent of the bank executives who were presumably making bad decisions, took government money and they're still there. The lending decreased by 1.4 percent in at least 10 of the top banks that got this, according to a "Wall Street Journal" analysis.

So the first half of that, I think, failed. We'll see how President Obama now -- his new Treasury secretary, Timothy Geithner, do with the second half of that. But that is for the capital markets and the credit crisis that has been talked about.

But there -- there are a whole lot more crises. As unemployment spikes, I think -- I mean what do I care?

No, but it's certainly over 7 percent. We lost 71,000 jobs on Monday, I think another 15,000 on Tuesday. I don't know, Ben might be able to tell us. The January unemployment, we may lose 600,000, 700,000, 800,000 jobs in the month of January.

STEIN: No, no. That's very...

BEGALA: I mean it's catastrophic.

STEIN: Now, sir -- and Paul, my old friend and debating partner, they announced that many job losses. Those jobs will be lost over a period of months or years. But it's bad. Any amount of unemployment of a person who doesn't want to be unemployed is not a good thing. It's a very bad thing.

The question is how to get them back to work fast. Companies need to borrow money. They're laying off people because they can't meet their payroll, because they can't buy supplies, because they cannot keep the lights on.

If the banks would lend them money, if the Federal Reserve and the Treasury would get together and say we will guarantee your loans. As long as there's no fraud, we'll guarantee the loans. You go into your local bank, the federal government guarantees the loan as long as there's no fraud, businesses will be able to borrow, the economy will start moving.

But I'd like to say something that I don't think is mentioned on TV very much. There are some faint pink signs of dawn in the economy. Housing sales are rallying. The stock market seems to have put in, at least temporarily, a floor. There's more lending in risky areas. There are signs of hope...

KING: Signs of hope...

STEIN: ...already. Even now.

KING: That's encouraging to hear.

Paul, in about 30 seconds -- and then I'll talk to you more on the other side of the break.

Is it bad news that you have no Republicans voting for this and 11 -- I said 12 earlier -- 11 Democrats voting against it?

We'll argue the policy.

But in terms of the political crisis, bipartisanship would be favorable to these lines being drawn already early in the administration?

BEGALA: I don't know what more Barack Obama could have done. He cut out some things that he liked. You know, Democrats put family planning money in there. Republicans criticized it. He took it out. And he's getting attacked by Planned Parenthood for doing that. But he took it out.

He put in some pro-business tax breaks that even his own team is a little dubious about whether they will actually work. He went to the Hill. He did everything he could and he got -- as we say in the Catholic Church -- bupkus. He got nothing.


BEGALA: And, you know, I think that's a huge problem for the Republicans.

Did they not know that we had an election or did they not know we have a recession?

KING: All right, we'll keep talking about that...

BEGALA: Because they look clueless.

KING: We need to work in a break.

We'll stay. You're coming back.

And send in your questions to the blog. David Theall is waiting by to see you in the blog -- questions for us tonight here, questions for our panels, especially our consumer finance panel at the end of the show will be taking your questions and answer them on the air. Send those in to

And we'll be right back.

More of our discussion on the other side of the break.


KING: The new president is well aware the public has a great deal of skepticism when it comes to $700 billion in bank bailout money, more than $800 billion now in stimulus money for the economy.

Trying to address that skepticism, the president spoke about all this earlier today at the White House after meeting with CEOs.


OBAMA: I know that there are some who are skeptical of the size and scale of this recovery plan. And I understand that skepticism given some of the things that have happened in this town in the past.

That's why this recovery plan will include unprecedented measures that will allow the American people to hold my administration accountable. Instead of just throwing money at our problems, we'll try something new in Washington. We will invest in what works.

Instead of politicians doling out money behind a veil of secrecy, decisions about where we invest will be made public on the Internet and will be informed by independent experts whenever possible.

We will launch a sweeping effort to root out waste, inefficiency and unnecessary spending in our government. And every American will be able to see how and where we spend taxpayer dollars by going to a new Web site called Because I firmly believe in what Justice Louis Brandeis once said, that sunlight is the best disinfectant.

And I know that restoring transparency is not only the surest way to achieve results, but also to earn back the trust in government, without which we cannot deliver the changes the American people sent us here to make.


KING: Let's get a quick reaction now from Ben Stein and Paul Begala.

Paul, let me start with you.

As a communicator -- a persuasive communicator -- how is he doing?

Because, on that point he makes, trust -- if people don't trust him, this is his economy now. The layoffs announced this week happened on his watch. If they don't trust him, those sky high approval numbers will disappear.

BEGALA: Well, but he's leveraging that, right?

He has those approval numbers because they do trust him. They think he's the guy who can bring change. And I've got to tell you, you pass this -- at least through the House -- a pretty important hurdle -- after only eight days. That's a pretty impressive accomplishment.

I like that he's giving voice to the skepticism, though. I think we're all tired, particularly listening to former President Bush talk about the economy or even the war on Iraq -- you know, as we say in Texas, you know, don't pee on my boots and tell me it's raining.

We never felt like we were being leveled with by our president. This guy seems to be telling the truth. He said look, I know this is a lot of money. I know your skeptical about it. But here are the new protections we will put in place. This is what FDR did with the New Deal. He had very tough watchdogs making sure that the money wasn't wasted.

KING: Can he keep the trust, Ben Stein, with all this bad news trickling out?

STEIN: Well, I was kind of amused by him saying we're only going to do what works.

How does he know what works?

Nobody knows what works. He's been on the job seven-and-a-half days.

How on earth does he think he knows what works?

It amazes me that the new presidents -- Republican or Democrat -- always take office full of confidence that they know what's going to work and what's not going to work. After they've been on the job a few years, beat up a bit, they are a little more humble.

I would have liked to see a little bit more humility about what works and what doesn't work. And I'd really like to see a little more caution about burdening our children with almost a trillion dollars worth of debt.

KING: All right...

STEIN: Why not try and see if we can get the banks rolling again, see if that works?

And then if that doesn't work, then we'll go to digging ditches.

KING: More of our discussion just ahead.

Stay with us.

And, again, if you have any questions for us, send them into and put them on the blog. We'll get to them ahead in the program.

Stay with us.


KING: Back now to our conversation.

Paul Begala is here with me in Washington.

Ben Stein out in Los Angeles.

Ben Stein, when you hear the president say go to, do you think the American people, are they paying close enough attention to where all this money -- again, more than $800 billion in stimulus, more than $700 billion going to financial it's those -- do you think the average American has any idea where this money is going?

STEIN: I don't think that the secretary of the Treasury does. I mean, I saw the secretary of the Treasury in the last administration grilled about it in great detail, as was his assistant, Mr. Kashkari, grilled about it in great detail. They didn't have any clue where the money was going.

It turns out, upon an investigation by the government of the government, that they have no idea where billions of it went or what was done with it.

I am a stockholder of a bank in a small town in North Idaho that -- they got money. That's a very wonderful, healthy bank.

How did they get money?

What are they going to do with that money, go fishing with it?

I mean I don't understand how this whole thing is going to work.

And this bill is 680 pages.

How could anybody keep track of all the spending under that?

The budget is millions of lines long.

How is anyone going keep track of that?

KING: What's more of a worry to a President Obama, Paul, the Republicans in the House just all voting no or Democrats in the House saying, you know, we're in charge, we won the election and we're going put in these things that many Americans would think are not stimulative?

They might be worthy goals -- investigating climate change, money to fight sexually transmitted diseases, in the Senate, anti-smoking money -- worth goals, perhaps, but not something that's going to create a job over two to six months, in the minds of many.

BEGALA: Well, I think -- I think it's a transparency. This is going to be the big difference. And I encourage Ben and everybody else to go and take a look at the Web site that the president steered us to.

With Secretary Paulson under President Bush, we -- it's true. We had no idea. They wouldn't tell us which institutions had applied for funding. We still don't know where the money went. There's got to be greater transparency.

But there is. When Congress spends this money, they're going to have to tell us. Some of it will come out, like this family planning money. Some of it will stay in. But at least we'll know where the heck it's going.

I think the Republicans are making an enormous political mistake here because I think we're in a crisis. And they're not acting like it. They're acting like politics as usual.


STEIN: Sir, with all due respect, it's the Democrats who are acting like politics as usual -- pay off your friends, pay off the Service Employees International, pay off the government unions -- the government workers unions. That's fine. That's what politics is.

You know, Barney Frank's comments about how politics works in the last segment were brilliant. They should be sent out to every high school and college kid studying political science.

But the truth is, it's just politics as usual. The Republicans would have done it a different way.

Will it work?

I don't know.

Will getting the banks on their feet work?

For sure.

KING: All right. We'll send sent a transcript to every civics class across America of the program tonight.

Ben Stein in Los Angeles.

Paul Begala here with me in D.C.

Thank you very much.

When we come back, your questions and your calls.

We have a great panel to address just where is all this money going and will it help you. Keep the questions coming. Go to and send them in that way or get to the phone.

We'll be back in a minute.


KING: Your questions, concerns and phone calls on the economy in just a minute. First though, we want to go over the White House. Our CNN White House correspondent Ed Henry -- Update us, Ed, on a rather unique event happening behind you at the moment.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: That's right. Just wrapped up in the last few minutes, John. The president hosted bipartisan Congressional leadership here for a cocktail reception, is how it's billed. Not something we saw very many times in the Bush years. The first lady was there as well.

What's interesting is it happened right after this vote in the House, where the president had an early victory. As you have been noting, it was a difficult victory, because he had 11 fellow Democrats reject him and he had not a single Republican get on board for this stimulus, even though he spent some three hours on the Hill yesterday lobbying him.

But what they are basically saying behind closed doors here at the White House tonight is that look, we are moving the process forward. This is a marathon. It is not a sprint. This bill is going to change. They think and hope it will get better in the Senate. Some of the egregious spending projects you mentioned may come out. Some of the tax cuts may be tweaked to make Republicans more happy.

They are hoping that in the weeks ahead, there will be more votes in the Senate. It will go back to the House. It will be more bipartisan. And that the president, in the end, can claim not just a victory on paper, but can also have more Republicans on board.

That's why he is hosting them here. He realizes this is not just about this one vote. He is going to need Republicans on a whole range of issues in the days ahead.

KING: All right, Ed Henry at the White House. Ed, thank you very much. It's good to know in Barack Obama's America, you can vote no and still get a drink at the White House.

Let's get to your questions and concerns on where all this money is going and what it means for you. In New York, Jean Chatzky. She's a personal finance expert, contributor to the "Oprah Winfrey Show, the best selling author. Her next book, "The Difference," due out in March. You see it right there. With me here in Washington, DC, David Gardner. He's the co-fonder and co-chairman of the Motley Fool. And Tom Gardner, the CEO and co-chairman of Motley Fool. The latest Motley Fool book is "Million Dollar Portfolio, How to Build and Grow a Panic Proof Investment Portfolio." Everybody watching would like to know how to do that.

Gentlemen, thank you for joining me. Jean, let me start with you, in New York. You watch all this money being thrown -- 819 billion is the price tag on the House bill. The Senate version is 900 plus billion dollars, 700 billion already going to banks. There a lot of people out there watching right now, raising their hands saying, I got laid off last week or my neighbor got laid off, or bank won't lend me any money. How come this money is not coming to me?

JEAN CHATZKY, PERSONAL FINANCE EXPERT: That's right. Everybody wants to know where's my bailout. The way the plan is written now, some of the money will very likely come your way, but not all that much. We are looking at 500 to 1000 dollars for people who earn 75,000 dollars a year, up to 150,000 dollars a year. For families who earn significantly less, but have a few kids, they may get more money than that, a couple thousand dollars. And for those unemployed people, there are some significant health care benefits in the plan, the way it's written now. If you are on unemployment, it looks like, as long as it goes through the Senate in its current form -- it looks like you'll be able to qualify for Medicaid or maintain your Cobra for a longer period of time. And that is significant.

But I agree with you. I think there are a lot of people out there wondering what is this going do for me. And the answer is probably not all that much, at least tomorrow, which means that you have to continue doing what you can for yourself.

KING: Do you agree with that, David? In the sense that if you were struggling ten days ago when George W. Bush -- 12 days ago, when George W. Bush was still president, and you are in that same financial plight today -- maybe you're about to be foreclosed or maybe you lost your job or you know you are about to lose your job -- is there anything you would be doing differently now, based on what you think might change in the Obama administration?

DAVID GARDNER, "THE MOTLEY FOOL": I do agree with that. I think that things haven't changed that much and won't for most of us. That means what we really have to do, John, is we have to start looking at our fixed costs and ask, are those really fixed? Or is it time that I really reassess how I approach life? I think for a lot of us debt has become endemic to our culture. It starts from the top with our government, goes right down through to each of us as individuals. We have to change that.

KING: We have to, maybe, as the government runs up more and more debt, because all these spending proposals, at least in the short term, are going to run up more debt. Tom, usually the advice is don't do it. Is the simple advice, don't do what the politicians are doing?

TOM GARDNER, "THE MOTLEY FOOL": I think there is a lot to learn from what is going on in Washington at the banks. Our banking system went on an incredible reckless leverage campaign, to just run up very substantial compensation for people working in investment banks. And those investment banks went under. I think what we can learn from it ourselves is that there isn't going to be a significant bail out for us. We have to look at our financial plan. We have got to go through and see where we are spending our money, from one week to the next, and be much more disciplined than the people we though were smart with money, the people on Wall Street.

KING: Jean, help me clear up a bit of a debate, if you will. If you look at all the layoffs announced, 20,000 just at Caterpillar this week. I think there have been more than 100,000 layoffs announced in the past two weeks. Ben Stein was on early in the program. He says he is starting to see a little bit of hope out there. Do you see that hope?

CHATZKY: I see what he's talking about. Ben was referring to the fact that home sales have actually started to move, that the markets look like they have hit a bit of a bottom, at least over the last couple of days. The markets are reacting to the fact that there is some talk of a bad bank out there, where all of the banks that are facing trouble right now could move those sorry assets off their balance sheets and, once again, start to do business and lend as they were in years past.

But I actually think that David and Tom are on to something really significant. The key for you and me and everybody else at home is this idea that we have to spend less than we make, not more, as we have been doing for so many years, living on borrowed money. If we can start spending less than we make -- and it looks like consumers are definitely moving in that direction -- then we will be taking care of ourselves and we'll start having the confidence that we will be able to do those things in the future, like retire, like pay for health care, that everybody is so worried about today.

KING: I got take a quick break. More of our discussion, more advice and more help for you on the other side of this break. Stay with LARRY KING LIVE. We'll be right back.


KING: Right back to our discussion about the economy, all the money being spent here in Washington and what it means for you. Tom Gardner, there is money in this stimulus bill for highways. There's money in this bill for the hospitals. There's also money in this bill for education. If you could get your hands on a chunk of it and say spend it this way to help, what would you do?

T. GARDNER: I think it's great that meaningful money going to education. There is no financial education in our school system, at the high school level. We are graduating 18 year olds from high school who don't understand an interest rate on a credit card. That's just a very bad idea. I'd ask you to raise your hand at home if you think it's a good idea to make sure that every high school student is getting a basic module, even a week long in math class -- that's really the spirit of the "Motley Fool," is to make sure everybody gets that education. We have a great opportunity in this portion of the plan to do so. KING: Some day we'll have the technology -- maybe we can put it in the stimulus plan -- we can watch the people at home raise their hands. We're not quite there yet. David, it's a crisis, but many people playing the markets would say a crisis is an opportunity. If you are somebody at home, and they're heading your advice about not going into debt -- let's say they have a little bit of money. What would they do with it right now?

D. GARDNER: I think for a lot of us, it involves saving every two weeks, putting five percent of your salary, if you can, John, right to work in the market. You know, the market has been a very painful place. I am fully invested. Tom is too. So we have watched the market go down with everyone else. If you look at the S&P 500 dividend yield today, that's the interest rate for holding the biggest companies in America, just holding their stocks. It exceeds the ten- year Treasury.

So what we're really saying at this point is the stock market is very cheap. That has not been the case since 1958. If you are like us -- we're fool. We invest through Republican administrations. Democratic administration administrations, we don't change based on the wind of this year of that year. It's every year for decades.

KING: For anybody, Jean, would you say, if you have a modest amount of money, for anybody get in, or only if you are in certain financial circumstances?

CHATZKY: Not for anybody. If you need the money, if you need to use it to live on in the next three to five years, it does not belong in the stock market. It never belongs in the stock market. It belongs somewhere safer, where you knew that you were not going to lose principle.

But for everybody else, I agree. I think you have to decide how much of your assets, what percentage of your assets you want in stock, as opposed to bonds or cash, which are traditionally safer places for that money. But we are all living so much longer. I spent much of the day today in North Carolina with 1,500 women at the governors conference, and everybody was talking about how am I going to make sure that my money lasts as long as I do, particularly a concern for women, because we are going outlast all of you guys.

And so we need the market and the sort of growth that it has promised historically in order to get us there.

KING: You are all optimistic, but, Tom, help someone who is out there saying -- watching this saying, I lost 40 percent last year. And I'm not sure I am going take that risk again.

T. GARDNER: I think you need to understand your temperament and your time line. Somebody who is saying that who is 25, I would really argue with you to stick with your savings and investment plan, to continue to put money in your 401K and your IRA, particularly a Roth IRA.

If you are in retirement or nearing retirement, you have got to be putting bonds -- higher percentage in your portfolio with bonds. You have got to recognize that you don't want any money in the stock market if you have less than three years to invest. That's just speculating and turning the stock market into a roulette wheel. So, it's your time horizon and your temperament.

Warren Buffett said it, the smartest thing that I was able to do as an investor is master my temperament. Not learn how to read financial statements, manage my emotions.

KING: Master temperament. I am still working on that one 45 years in. We'll be right back after a quick break. Remember, Put your question up on the blog. We'll get to it on the other side of the break. Stay right there.


KING: Let's get straight to your comments and questions. David Theall is standing by at the Larry King blog. David,, tell us what do we have tonight.

DAVID THEALL, LARRY KING LIVE PRODUCER: Listen, John, I am taking notes here. I'm listening to the financial experts and trying to take notes fast and furiously. Listen, we are talking the economic stimulus package and we're personal finances on the blog. We asked a very simple question on the blog, which, by the way, is at Our question of the day was: "Do you support the 819 billion dollar economic stimulus package?"

We have a pretty good debate going on. Christine is one of those who chimed in. She supports it. She says, "Yes, I support the recovery plan." She goes on to say, "Our economy is sick. Obama and his views won. The public spoke and voted for change. So let's get some."

Erin, however, is somebody who does not support the package. He says, "no, this thing stinks with unnecessary projects disguised as stimulus proposals."

We also heard from Don, who is definitely 100 percent against the stimulus package. He says, "Frankly, the only thing that seems to be stimulating is the greed and ridiculousness as Congress as they try to get their hands on taxpayer money to buy votes."

Now, we are also taking questions for the financial experts that you have there as your panel. And we heard from Daniel just a little while ago and he asked this question. He addressed to Jean, but perhaps the others can help us. Daniel asks, "Jean, please, in the simplest of terms, tell me how I know if a home refinance is worth the trouble and won't cost me nearly the same over the long run."

CHATZKY: It's actually pretty easy to do the math on this one. You take a look at how much the refinance will cost you, going from the interest rate you are at now to hopefully something in or around the five percent range. How much will that cost you? And then, ask yourself how many months will I continue to live in this house? And will I make up enough in savings in order to recoup the money that I laid out?

If you come out ahead, knowing that you will be in the house three years, or five years, or seven years, then you go ahead and you do the deal. I know that interest rates have been falling and I know that people out there speculate on the fact that they may fall further. I think once you get to an interest rate where it makes financial sense for you to do the deal, you do the deal, because trying to time interest rates is as much of a fool's game as trying to time the market.

KING: Let's sneak in one more quick break here. We'll be back with our panel in just a minute. Keep your questions coming. Get to the phones if you want. LARRY KING LIVE advice for you. We'll be right back.



KING: We want to get your to your questions now out there. From Capital Heights, Maryland, we have a caller. Please go ahead for our panel. What's your question?

CALLER: My question is, I currently hold a mortgage with Bank of America. And with the mortgage bailout, how does that personally affect me? Because my mortgage payment isn't changing. My student loans aren't changing. So how does the bailout help me?

KING: David?

D. GARDNER: Well, it doesn't necessarily help you directly. It helps Bank of America. And to the extent that Bank of America gets bailed out or helped out, it makes it more likely that they can make good on their relationship with you. But part of the criticism of the bailout plan is that it doesn't necessarily come directly to us.

I, on the other hand, don't object to that, John. I think the American spirit is about pulling ourselves up by our own boot straps, again, saving and investing. So I wouldn't look for anything special there.

KING: American spirit pulling yourself up by your own boot strap. But there's resentment about this. And does that affect personal psychology, when you are resentful that money is going to these big institutions. You don't think it's coming to you.

T. GARDNER: Let's start with this: if you're the CEO of an investment bank or a bank that went under, like Washington Mutual, and you are Kerry Killinger, and you made 80 million dollars over the last seven years while your bank went under, you should pay that money back into the system. You really need to demonstrate to America that we shouldn't be bitter about the way you mis-ran your company and over- compensated yourself in the process.

There is anger about it. But ultimately, there's not going to be a bailout for us individually. The bailout for Bank of America is to make sure that they don't fail to deal with their customer deposits. So there is anger, but there is hope, as Dave said. And entrepreneurship is going to be what gets us out of this.

KING: And Jean, to what degree, though, does the mistrust that many every day Americans have about the system, whether it's the political system, the financial system -- to what degree does that affect their own psychology about the economy, maybe their willingness to spend, maybe their willingness to invest.

CHATZKY: We can't let it affect us. That's the whole point. There are so many things that we have learned over the last six to 12 months that we cannot control. We can't control stock prices or gas prices or milk prices or whether Kerry Killinger pays that money back. That is not in my control.

But I can control how much I spend. I can control how much money I am saving and putting away. I can control whether or not I put my best foot forward every day when I go to work, so that if somebody in my company has to get laid off, I can do everything in my power to prevent it from being me.

We have to push all of those other thoughts out of our mind, the resentment out of our mind and focus on the many things that we can control, because that's the only way that we are going to be able to help ourselves.

KING: Upbeat message there. More from our panel on the other side of the break. We're talking about the economy, all of the money being spent here in Washington and whether or not it will trickle down to you and what you can do to help yourself. Stay with us, LARRY KING LIVE will be right back.


KING: A few remaining minutes with our great panel. Let's get in another one of your phone calls. Atlanta, Georgia, what's your question?

CALLER: Yes, I was wondering about all of the unemployment, if there's any new long-term extension for unemployment benefits in the package?

D. GARDNER: Well, that one's probably best for Jean, because she's a specialist on that. But we talked earlier in the program about how Cobra benefits will be extended for some people under the package, and certainly it's a very sympathetic package to those who are losing their jobs. It's totally appropriate with I think what President Obama promised ahead of time. And it's certainly there partly in the package. Jean, what's your take on it?

CHATZKY: I think he said it very well. It looks like people -- and again, we have to remember that this is just one version of the bill. It has to go through the Senate. It will change. But it does looks like people who are unemployed will be able to -- who are receiving unemployment will be able to qualify for Medicaid. And that is a huge, huge benefit, because for anybody who has ever been on Cobra, you know it can be hugely expensive, hundreds to thousands of dollars a month for a family plan. So this is a big deal.

KING: Let me ask all of you. I'll start with you, Tom. When you listen to the political debate about the economy, the ideological differences, partisan fighting that's not always ideological -- it's a little different -- if you're an every day American, like the gentleman who just wanted to know about unemployment benefits, or like the woman who wanted to know about whether or not it's a good time to refinance; does this make any sense to you? Is it helpful or does it only confuse you more when you listen to the politicians debating?

T. GARDNER: I think it can get confusing when we get into finger pointing. And I think there's a temptation to do that, to look backwards. But if we look forward and try to figure out why we're doing what we're doing -- the infrastructures spending in the stimulus plan is to lower unemployment. That's definitive. It's proven historically. And I think that's a very good move.

But ultimately, it comes down to the entrepreneurship of people who start businesses, can get the loans to start those businesses, and have the creative ideas, that Ted Turner, who started this network and built a great business up over decades.

So I think there's a lot of confusing stuff going on. And I would encourage politicians to snipe less and teach and educate a little bit more. But overall, I think this is a good plan. It's painful for us to have to do it. And the threat of inflation on the other side is very real. So we have to have merit spending. In this package, we have to really -- it's not just about creating jobs. It's about creating jobs that create value. And that's a key part of the stimulus package.

KING: And David, if you're out there and you're an entrepreneur, and you see these hundreds of billions of dollars of federal spending coming, and you think, I have a good idea; I'm going to start a new business that will address one of the things they are going to fund in this program. Is the bank going to lend you money today? Or is the credit crunch still on?

D. GARDNER: Banks are not lending money, John. That's the big problem. And what's happening is that the velocity of money has slowed greatly. That means you and I are spending it less. That means banks are lending it less. And that's the real problem. And that's why so much money is being printed.

What we have to worry habit from these stimulus packages is what happens to inflation not this year, but a year or two down the road. John, I think more than anything, we need to not be doom and gloom. The American spirit is a totally positive one. There have been some good stocks over the last year. Wal-Mart's stock has done OK. My Netflix is up 60 percent over the last year.

Let's remember, partly it's about stock selection, if you're a stock market investor. I've had my losers too, but not everything goes down. There are some great ideas and some great entrepreneurs out there. KING: So Jean, should an investor out there now, who is willing to take some risk, should they be looking at individual stocks like Netflix, as he just mentioned? Or should they be thinking, you know, the market gone way down; I'm going to get into one of the broad based funds and hope it comes up?

CHATZKY: For my money, diversification is where it's at. I'm personally not a good enough stock picker, and nor do I have the time to devote to doing it every day, as David and Tom do. But I do think that you don't want to miss the opportunity to invest in this market. And if you're one of the people who that is just aching to start some sort of a business, now may be a very good time. But try to do it on the side for a little while. Don't quit the job that you have. Hold on to that security and do a little creative moon-lighting.

KING: Let's everybody take about six to eight seconds in closing. A piece of advice for someone out there watching who is a bit nervous.

T. GARDNER: I think you have to be a net saver, pay down that credit card debt. You don't want to have any credit card debt at the end of the month.

D. GARDNER: Henry Ford said it well, whether you think you can or whether you think you can't, you're right.

CHATZKY: And track your spending. You will be surprised to see where your money is going.

KING: Jean gets the final word. Tom and David, thank you very much. And keep watching this program throughout the rest of the week. Thursday night, Ted Haggard, the one time Evangelical super star talks about battling his own sexuality. And Friday night, a big get for Larry, Joe Torre, the infamous baseball manager of the Yankees, A-Rod, Derek Jeter, and lots, lots more to go.

Go to E-mail our upcoming guests your questions. And remember, you can also download our podcast, find show transcripts, or check out our blog. Great to sit in for Larry tonight. Anderson Cooper starts right now.