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Downplaying the Dow; GOP's Battle Within

Aired March 3, 2009 - 20:00   ET


CAMPBELL BROWN, CNN ANCHOR: Hey there, everybody.

Under siege from Wall Street, from conservatives, from talking heads, President Obama an his team today said, bring it on.

Bullet point number one: the stimulus, the new budget, and the bailout. There is no bias and no bull in asking the same question all of you are: Why don't the government's latest actions seem to be doing anything to turn around our faltering economy?

Well, now the president has a new tactic to restore confidence. He says we shouldn't bank all of our hopes on the markets, and he insists things will get better eventually.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: My main message to the American people is to just recognize that we dug a very deep hole for ourselves. There were a lot of bad decisions that were made. We are cleaning up that mess.

It's going to be sort of full of fits and starts, in terms of getting the mess cleaned up, but it's going to get cleaned up. And we are going to recovery, and we are going to emerge more prosperous, more unified, and I think more protected from systemic risk having learned these lessons than we were before.


BROWN: And you will hear why the president says jobs and credit are coming back, why he doesn't consider Wall Street to be end-all/be- all barometer of how we are doing.

And bullet point two: It took President Obama's promise of transparency to finally learn just how far the Bush administration might have taken the war on terror.

"Cutting Through The Bull" tonight, we think these are pretty serious policy questions that we as Americans should have been told about years ago.

And bullet point three tonight: another showdown among Republicans. They just can't decide if it is more important to take on the president or each other. And, once again, Rush Limbaugh is the last man standing, after Republican Party Chairman Michael Steele apologizes for questioning Limbaugh's influence over conservatives. Now, we want to know if Republicans are really banking their future on a man who has never expressed the slightest bit of interest in running for public office.

And bullet point four tonight, we start tonight. We are going to follow the money. Where are those billions in stimulus dollars really going and how many jobs will they create? Tonight, we follow the very first project to use stimulus money. And we got some pretty serious question about what some are calling another bridge to nowhere.

We will tell you about that.

But, first, the president and your money. With the Dow industrials at their lowest point since 1997, the commander in chief today tried to take command of perception vs. reality and gave his assessment of Wall Street's lack of confidence. Listen.


OBAMA: I'm absolutely confident that they will work, and I'm absolutely confident that credit's going to be flowing again, that businesses are going to start seeing opportunities for investment, they're going to start hiring again. People are going to be put back to work.

What I'm looking at is not the day-to-day gyrations of the stock market, but the long-term ability for the United States and the entire world economy to regain its footing.

And, you know, the stock market is sort of like a tracking poll in politics. You know, it bobs up and down day to day. And if you spend all your time worrying about that, then you're probably going to get the long-term strategy wrong.


BROWN: So, is that all it takes, looking at the long-term? And long-term or short, when are we going to see this turn around?

Chief business correspondent Ali Velshi here to explain all of this to us.

Ali, I mean, is the president right? He said -- he compared it, the market, to a tracking poll bobbing up and down. But the truth is, if you look, overall, since his election, it has mostly been going down.

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: There hasn't been a lot of bobbing up.

I will tell you, I like the president's point a lot. I have been hammering away at this, that you need a long--term strategy. The difference is, a tracking poll bobbing up and down doesn't affect how long until you retire. It doesn't affect your future.

Let's talk a little about this. We talk about the Dow a great deal. What are we talking about? The Dow is the Dow Jones industrial average. And it has for over 100 years been sort of the biggest measure of how the stock market is doing. But, really, these are the logos of the companies in the Dow.

There are 30 companies in the Dow. These are 30 of America's most influential businesses. And the idea is, it was invented so that people could track the broader market based on what these big companies have been doing.

Now, when you talk about the Dow going up or down, we are talking about these 30 companies. But, generally speaking, it reflects your holdings. If you have a 401(k) or an IRA that is broadly diversified, you probably own some of these companies.

The broader index that we often should be looking at is the S&P 500. That's 500 stocks vs. the Dow's 30. But, lately, they have been going up and down the same way and mostly down. So, I think the president has a point. You really -- our viewers should be looking at a long-term strategy. We're seriously -- clearly closer to a bottom now than we were when the Dow was at 9000 or 8000.

You should have a strategy and you should have a long-term plan, Campbell.

BROWN: Ali, so much of this is about building confidence. And you have heard a lot of people express concern that the president isn't paying enough attention specifically to the banking crisis, to the financial crisis, maybe too much emphasis on the stimulus package.

So, what is it ultimately going to take to get people confident again?

VELSHI: Well, you know, we have had a stimulus plan. We have got a housing plan.

A few weeks ago, we were supposed to hear about a banking plan from Treasury Secretary Tim Geithner. He sort of told us a bit about it, but it wasn't what we expected it to be. So, I think half of the economic recovery that we're looking at is going to come from these economic plans that the government has laid down.

A very big part of it, maybe half of it, is about confidence, because we know this economy runs on business and consumer confidence. That's what we use to decide to invest money. Today, we saw something very interesting. We -- we listened to Ben Bernanke, the Federal Reserve chairman, Peter Orszag, the budget chief, and Treasury Secretary Tim Geithner.

I thought we heard some confidence that we haven't heard up until now. Listen to something that he said.


TIMOTHY GEITHNER, U.S. TREASURY SECRETARY: The alternative path for us, which is to sit back, hope this crisis burns itself out, would mean a much deeper recession with much greater damage to American businesses and families, with much greater fiscal damage to our economy, leaving us with much greater deficits in the future.

And the judgment we are making -- and it is absolutely the right judgment -- is that, as a country, given where we started, we have no choice but to move aggressively in these fronts. And we are trying to do so in a way that is as fiscally carefully and responsible and as is going to leave our economy stronger, not weaker, in the future.


VELSHI: That was one part of a couple hours of testimony. But you and I have talked and you talked with other guests about Tim Geithner coming out with guns a'blazing. We haven't seen that.

I think today we saw a shift in tone, a real turnaround in this administration's script. It sounded scripted. It sounded confident. It sounded organized. I'm hopeful that we are now back on the right track.

BROWN: All right, Ali, stick around, because you are going to be joining us again.

And, in a moment, we have got our team of money experts. Our question for them tonight, has the president gone too far or not far enough to try to rescue the economy?

We will be right back.


BROWN: President Obama is fighting back today, as Wall Street wonders whether his economic fix is actually making the problem worse.

So, what is really going on with the markets and, more importantly, with your money?

We're going to break it down with two top economists and our very own Ali Velshi.

But, first, we are "Cutting Through The Bull."

As we continue to call for more transparency in government, cheers to the White House for starting to cut through the veil of secrecy left by its last occupant, former President Bush. The Obama administration has made good, at least partially, on its promise to release confidential Justice Department memos spelling out how much leeway the Oval Office might have in prosecuting the war on terror.

These are memos dealing with the use of torture on terror suspects, memos dealing with the partial suspension of constitutional protections in this country in the name of rooting out those who wish to kill us.

Now, we can and we should continue the debate on what rights our government should or shouldn't have in dealing with terror suspects. But we should all be part of that debate. We have a right to know how far it could go and why it was necessary. Keeping the American people in the dark showed a tremendous lack of respect for a country that values honest government.

Less than a week before leaving office in January, the Bush Justice Department wrote that those memos had long since been superseded or withdrawn. But we are only finding that out now.

We hope the new administration won't stop its current effort to shed some light in dark places and will remember the mistakes of the past in keeping its own promise of transparency.

And here right now to help me cut through the bull, we have got senior legal and political analyst Jeffrey Toobin joining us on this.

And, Jeff, I know you have some strong views on this. What do you make of the powers that the Bush administration was claiming, and all in secret?

JEFFREY TOOBIN, CNN SENIOR ANALYST: Well this was really some of the most extraordinary documents that I think have ever been put out by the Justice Department.

When you look at the breadth of power that the Justice Department said the government had after 9/11, to have soldiers conduct searches, and, most amazingly, I think we have a quote to show from one of the memos here: "First Amendment speech and press rights may also be subordinated to the overriding need to wage war successfully."

This was -- basically, they were saying they could close newspapers, turn off TV stations, without court orders, without congressional approval. It's pretty amazing.

BROWN: So, was it unconstitutional?

TOOBIN: Well, most of these were not tested, because to this day we don't know exactly how the Bush administration used this power. Did they ever try to use soldiers in the United States for the purposes they described? We still don't know that. So, the courts didn't act.

Remember, the Supreme Court repeatedly rejected what the Bush administration did in Guantanamo, so I think it is very safe to say that many of the claims here, as the Bush administration itself later acknowledged, were simply wrong.

BROWN: OK. Let me ask you about motivations, though, on both sides. You have got the Bush administration saying this is post-9/11 world. Keeping people safe is our top priority and that's our only motivation.

Do you agree with that? And also what do you think about the Obama administration's motives in terms of releasing them now? Is it all transparency or are there politics involved here?

TOOBIN: Well, you know, I think it is clear the Bush administration was sincere in trying to protect the American people. There is no doubt about that. But they also, particularly Vice President Cheney, had a longstanding interest in expanding executive power. So, I think several motivations were at work.

Same thing with the Justice Department now. Sure, they want to establish a different set of rules, but they also want to stick it to their predecessors, and that's what they have done.

BROWN: All right, Jeff Toobin for us tonight -- Jeff, as always, thanks.

So, on another subject, wouldn't you think they would stop? With our tremendous economic challenges, wouldn't you think that, for once, Congress might restrain itself on pricey pork barrel spending projects?


JOE JOHNS, CNN SENIOR CORRESPONDENT: And you probably remember this, like $1.7 million for pig odor research.

SEN. JOHN MCCAIN (R), ARIZONA: That's one of my personal favorites.


JOHNS: You really like that one, huh?


BROWN: Well, when Senator McCain says, "one of my favorites," he means favorite examples of wasteful spending. And, yes, Congress is doing it again. Hang on. We're naming names when we come back.


BROWN: After weeks of preaching doom and gloom, President Obama turned on the sunshine today, pushing back against dire economic forecasts from Wall Street. The president's message, the roller coaster we have seen in the markets doesn't mean his plans aren't working or that the country is sinking into a deeper recession. Listen to this.


OBAMA: As people absorb the depths of the problem that existed in the banking system, as well as the international ramifications of it, that, you know, there's going to be a natural reaction.

On the other hand, what you're now seeing is -- is profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal if you've got a long-term perspective on it. I think that consumer confidence, as they see the American Recovery and Reinvestment Act taking root, businesses are starting to see opportunities for investment and potential hiring.


BROWN: And, yet, for all the president's best efforts, the market has fallen lower than many of us thought it could. So, what is really going on?

For that, I want to bring in some of the best money minds in the country. We have got Peter Morici, economist and professor at the Smith School of Business at the University of Maryland, Joseph Stiglitz, economist and professor of economy at Columbia University, and here again, of course, CNN chief business correspondent Ali Velshi joining us.

Peter, let me start with you and try to get you sort of bottom- line this, I guess. The market down more than 1,200 points since Inauguration Day, how much do you believe that is -- that the drop is a reflection on the president's policies?

PETER MORICI, ECONOMIST, UNIVERSITY OF MARYLAND: Well, certainly, the market doesn't have confidence in the president's policies.

It began falling significantly when Geithner announced his very vague and hauntingly familiar to Paulson recovery program for financial markets. It went down further and continued to go down when the stimulus package was passed. It went down even further when the president tabled its budget. And then there was AIG.

You know, he hasn't done enough in financial markets at all to inspire much confidence. And the scope of his spending and the structure of it is causing a lot of nervousness. It looks more like he is trying to build out the frontiers of the state than create private sector jobs. And that's got Wall Street rattled.

BROWN: But, Joseph, I know you believe that the markets would have plunged regardless

JOSEPH STIGLITZ, PROFESSOR OF ECONOMICS, COLUMBIA UNIVERSITY: That's right. I don't think you should blame President Obama's plan.

Basically, he inherited a mess. The news about the depth of what he inherited has been coming out slowly. And, as that news comes out, people get depressed. So, I feel very strongly that what he has put into place, particularly with the stimulus, was a very strong move in the right direction, not as much as I think was needed, and not as designed as I would have had it, but absolutely no doubt it was a clear move in the right direction.

The same thing about the housing initiative, a clear move in the right direction, again, not as much as I would have done. But I don't think there's any grounds for complaint on those two phases, that -- that these are marked departures in the positive direction from what was going on before.

What Peter is right is, there is a lot of concern about the financial sector restructuring. BROWN: Before we get into that, because I do want to talk about that, Ali, give me your sense, because for the average person, the Dow has lost more than 50 percent of its value.


BROWN: So, how long are we talking about before -- before -- before people, regular people, recover that?

VELSHI: You know, Campbell, normally when I am between Stiglitz and Morici, I'm going to be the positive one here. But I can't be about this.

We can't -- we can't sugarcoat this. The bottom line is, as you said, the Dow, the S&P 500 are down so much, you could have lost 50 percent of your value. Now, in order to get back 50 percent of your value, if you had lost it, you have to make 100 percent, right? You have to double your money.

Now, let's just talk about how. Let me take you to the wall for a second and show you how you would do that. It sounds daunting and it's going to depress people, but you need to know this. You need to not bury your head in the sand and say, you have got to make that money back. Let's say you get a 7 percent average annual return.

That is not a very robust return in the market. But let's assume, for the next several years, you can invest. And you have to have a strategy. You invest in the market and you get 7 percent average annual return. With that, it is going to take you 10 years -- it's going to take you 10 years to double your money.

So, if you have lost 50 percent, you need to make 100 percent to make up for it. At 7 percent, it's going to take you 10 years to do that. Now, here's -- that's the depressing part for people listening to us. It doesn't mean you can't make more than that over time. But you have got to be reasonable about what your expectations can be. And you have got to start doing it.

So, more than ever before, this is the time to have an investment strategy. I think the president is right. There are many stocks that can be considered on sale. With a good strategy, you can start to build back.

BROWN: All right, let me go back to the other point, because the next question, I guess, is, what do you do? And you said a lot of people talk, making the point that Peter made, not enough attention paid to the financial sector. What would you do? What could turn this around faster?

STIGLITZ: Well, the problem is that we have been having the financial sector on an I.V. drip, a little bit of money, and, you know, on and on and on.

I think we need to, to use a cliche, bite the bullet. The fact is that the banks are underwater. And we have been putting money in without control. And, not surprisingly, as we poured money in, they poured money out.

BROWN: Right.

STIGLITZ: And we haven't gotten -- what we have done is, we have gotten our deficit and our debt higher, but we haven't done -- gotten any lending going.

So, what you need to do is -- I mean, one way of putting it, if we had taken $700 billion, created a new institution with a 10-1 leverage, that would have allowed, facilitated $7 trillion of lending capacity. Now, that's a forward-looking strategy, as opposed to trying to repair all the mess and hope that as we throw all this money at it, some of it sticks where we want it.

BROWN: Right.

STIGLITZ: And that strategy is a flawed and failed strategy.

BROWN: Peter, do you agree with this? And, ultimately, is what we are talking about here nationalizing the banks?

MORICI: Well, that's what is happening in slow motion.

Because of the slow drip, as they have continued to lose money, we continue to put money in, so we own more and more of the banks. I'm all in favor of a bad bank, which Geithner had backed away from, not a bunch of small public-private partnerships, like he's described, that are going to try to create markets for these things.

These assets are already valued. The banks just don't like the value that they have. They're mark-to-market on their books. Create a bad bank. Use the TARP funds to do that and gear it up at 10-1. It is possible to do. And you can sweep off many, many, many assets off their books.

At that point, they become viable, and you can start to sell shares in them again to refinance them. At the same time, I think Ben Bernanke is making a mistake loaning money to hedge funds to try to recreate a securitization market. He should get together the nation's largest fixed-income investors with our big regional banks -- forget about those Wall Street banks -- and define what it is they want in securitized loans, what do they want in securitized mortgages, and go back to the good old days five, six years ago, when we created good securities out of good mortgages to give to these fixed-income investors, Metropolitan Life...


BROWN: Right.

MORICI: ... and so forth. And then we could make loans again at the regional level, where the shortage is.

BROWN: And, gentlemen, it's a much longer conversation, but two different viewpoints there. We have got to end it. We're out of time. But, Peter Morici, Joseph Stiglitz, and, Ali Velshi, as always, thank you very much for your time. Appreciate it.

And our Drew Griffin, out on the road tonight following the money for us, he's tracking $800 billion of stimulus cash and looking at how many jobs it creates. Tonight, the first project to use the president's stimulus money, we're going to put it to the test, NO BIAS, NO BULL -- when we come back.


BROWN: Today, President Obama acknowledged, the economy is in a very deep hole, but help is on the way, nearly $800 billion worth of help in the new stimulus bill.

And, tonight, we pledge to follow the money, to tell you exactly where it is going and exactly how it is digging us out of this mess, NO BIAS, NO BULL. We are already seeing results.

You may remember, in December, about 200 workers at a Chicago window and door factory staged a sit-in when their company laid them off with only a few days notice. Well, now they have been rehired. Their plant has been bought by a California company that expects an uptick in the window business,because the new stimulus bill has money to help people weather-proof their homes.

And take a look at this. Today, in Maryland, work crews paid for with stimulus money started to repair a one-mile stretch of highway. President Obama went to the Department of Transportation this morning to mark the release of almost $27 billion for projects just like this one.

And he says Vice President Joe Biden, among others, will make sure that all of those billions won't be wasted. Listen.


OBAMA: Joe will keep an eye on how precious tax dollars are being spent.

To you, he's Mr. Vice President, but around the White House we call him the sheriff...


OBAMA: ... because if you're misusing taxpayer money, you'll have to answer to him.

And to help him, I have appointed a proven and aggressive inspector general to root out waste and fraud. And I'm also deputizing every single American to visit a new Web site called, so you can see where your tax dollars are going and hold us accountable for results.


BROWN: All right. So, once again, that Web site the president mentioned is

He also unveiled this specially designed logo. You are going to be seeing a whole lot more of that slapped on to signs and onto projects.

We here at NO BIAS, NO BULL are taking up the president's challenge to keep track of these projects. And we have discovered some of them aren't as clear-cut as they seem, like one bridge in Missouri.

Drew Griffin of CNN's Special Investigations Unit follows the money.


DREW GRIFFIN, CNN INVESTIGATIVE CORRESPONDENT (voice-over): We are headed to the nation's first project paid for by the nearly $800 billion stimulus bill. It's a bridge across the Osage River in Missouri. Where is that? Fair to say, that's part of the story.

(on camera): All right, show me where we are going now. We're here, right?

(voice-over): Drive 40 miles south of Jefferson City. Then take a left 10 miles on a two-lane rural road, and we find your stimulus dollars at work, a handful of truck drivers, a bulldozer and a crumbling 75-year-old bridge near the tiny town of Tuscumbia, Missouri.

It is about three hours from Missouri's second largest city, St. Louis, where the mayor is not happy about the bridge. He says stimulus money in his state is going to rural far-flung projects almost forgotten until stimulus money started flowing from Washington.

FRANCIS SLAY (D), MAYOR OF ST. LOUIS, MISSOURI: This is an insult to the people of St. Louis. It's a violation of federal law. And I think that they're doing -- they're spending this money contrary to the intent of Congress.

GRIFFIN (on camera): Of more than $4 billion in stimulus money coming to the state of Missouri, $600 million will be spent on transportation projects. And the mayor of St. Louis says most of the money should be spent in high unemployment areas, like St. Louis, putting people back to work.

But the Department of Transportation in this state will spend just $2 million in this city, only enough, says the mayor, to repave a road.

(voice-over): The Missouri Department of Transportation says $200 million will be spent around St. Louis and says the projects are on a worst is first priority. The Osage River bridge tops that list even though it's difficult to find on a map.

David Cochran (ph), the project manager here, says there is no doubt it needs replacing. UNIDENTIFIED MALE: There's a perfect example.

This is the stuff that will come down.

GRIFFIN (on camera): That?

UNIDENTIFIED MALE: That came down off air.

GRIFFIN (voice-over): Up the road at the Red Oak Inn, owner Wes Horton says Missouri has been promising a bridge for years. It's only the federal money, the Obama money he says that suddenly got things going.

WES HORTON, OWNER, RED OAK INN: I think they ought to spend all the money on things like this instead of buying the bankers out.

GRIFFIN: There will be 30 jobs here directly connected to this $8.5 million project. But like the Obama administration, Cochran (ph) says this one project will be a jobs multiplier. Steel workers, concrete haulers, even a gas station supplying fuel. An estimated 245 jobs created or saved from this one rural bridge.

Bunk says University of Missouri economist, Michael Sykuta.

MICHAEL SYKUTA, UNIV. OF MISSOURI ECONOMIST: There has been a lot of research done on the Great Depression and the public work projects of that era. And most of that research now and the general consensus among economic historians is it didn't work. That there were a lot of people employed, but it didn't create a net long-term growth in the economy.

GRIFFIN: St. Louis Mayor Francis Slay says the Osage River bridge project is just plain wrong in the middle of nowhere and nowhere on the road to recovery.

MAYOR FRANCIS SLAY (D), ST. LOUIS: This money is to be used for a specific purpose and that purpose is to stimulate the economy and to benefit economically distressed areas. And that money is not going towards that.


BROWN: And Drew is joining us live right now from St. Louis. And, Drew, I know the mayor of St. Louis said that the bridge project is illegal. Why?

GRIFFIN: He says it's illegal, Campbell, because if you read the American Recovery and Reinvestment Act, and go to a clause in it, which he highlighted and handed to me, it says the project money should be going to economically distressed areas which he says St. Louis is, and these rural areas aren't. So it violates the intent of the law according to the mayor and the letter of the law.

BROWN: All right. Drew Griffin for us tonight. Drew, thanks.

President Obama made a campaign promise to put Washington on a pork-free diet. No more spending on earmark projects he vowed. But they just can't help themselves. We're going to tell you who's spending how much of your money on their pet projects.

And tonight on "LARRY KING LIVE," Tavis Smiley live from his town hall in Philadelphia.


BROWN: President Obama keeps saying he is an anti-earmark crusader. But watch out, a monster spending bill working its way through Congress contains some 8,500 earmarks worth more than $7 billion. And guess who is leading the fight against them? No, not the president but rather, Senator John McCain. When it comes to the top earmark offenders, McCain's more than happy to get specific and he did just that when senior correspondent Joe Johns caught up with him today on Capitol Hill -- Joe.

JOE JOHNS, CNN NATIONAL CORRESPONDENT: Campbell, from the unsavory to the sublime to the ridiculous, the gigantic spending bill which could pass the Senate this week is loaded up with billions of dollars worth of pork barrel spending, which means John McCain, the one guy on the Hill who just lost the race for the White House, is back in the hunt to root out congressional earmarks. And now, he's got a new trick up his sleeve.


JOHNS (voice-over): They're back. Earmarks and who better to trash spending on earmarks than long-time earmark archenemy Senator John McCain.

Here's a few that make the senator crazy: $238,000 of your money for the Polynesian Voyaging Society in Hawaii; $300,000 for a World Trade Center in Montana; $24,000 to support abstinence in Pennsylvania.

Come on? Didn't anyone notice we're in a deep economic crisis here?

SEN. JOHN MCCAIN (R), ARIZONA: It's outrageous. And it just shows that inside the beltway, here at the Capitol, we don't get it.

JOHNS: McCain just lost a battle in the Senate to strip billions for earmarks out, but the House has already approved the monster spending bill that's really just supposed to keep the government running. How much of your tax money for these 8,500 pricey little projects? Taxpayers for Common Sense says $7.7 billion.

As for John McCain? He's found a new weapon to shine a bright light on them. The Internet. The senator is now on Twitter.

MCCAIN: Good thing about Twitter is you don't have to say too much.

JOHNS (on camera): No. Right. One sentence. (Voice-over): Here's one McCain twittered. "$2.1 million for the Center for Grape Genetics in New York. Quick, peel me a grape." Or this one, "$100,000 for the regional robotics training center in Union, South Carolina. Does R2D2 or C3PO know about this?"

(on camera): You probably remember there's like $1.7 million for pig odor research?

MCCAIN: It's one of my personal favorites.

JOHNS: You really like that one, huh? I mean, what are they going to do with pig odor research, I mean, in Iowa? I mean, you're going to stop pigs from smelling I guess?

MCCAIN: I guess that's what it is. You know, I don't know how the pigs feel about that.

JOHNS: Right. Sure.

(voice-over): But if you ask who's throwing all these extra projects into your shopping basket, you find the usual suspects, members of Congress who sit on spending committees.

(on camera): Who are the big earmarkers?

UNIDENTIFIED FEMALE: As usual, the big earmarkers are appropriators.

JOHNS (voice-over): Taxpayers for Common Sense says these are the top ten earmarkers in the Senate in the just passed spending bill.

(on camera): No, no. You and the president both said you're going to try to get rid of earmarks and all that. You think he's gone back on that?

MCCAIN: Well, the president committed to earmark elimination in the campaign and in the debate. I hope that he will -- I hope that he will change his mind. Hope that he will veto this bill. He should veto this bill and tell Congress to send him back one without a single earmark pork barrel project.


JOHNS: There are also earmarks placed in the spending bill by people who are no longer even in Congress. Vice president and former senator Joe Biden got $52 million for various projects. The president's chief of staff and former Illinois congressman, Rahm Emanuel, got more than $4 million in earmarks. We could go on. And yet, well, their boss, the president, has railed against earmarks.

So, what's going on? The White House and congressional Democrats say this big spending bill was a leftover from the last Congress. It had to be passed to keep the government running. And that while the president doesn't like the earmarks in it, he's choosing his battles and will still oppose them down the road -- Campbell.

BROWN: All right, Joe Johns for us tonight. Joe, thanks.

And we go from earmarks to an ear full from Rush Limbaugh today aimed at the president. Republicans are following his lead. What does it mean for Democrats? All that when we come back.


BROWN: We want to take one more look at some interesting earmarks in that big spending bill, we think you ought to know about, by members of Congress who have moved on to bigger and better things. Then Senator Joe Biden asked for a total of $52 million in earmarks including $4 million for repairs and upgrades on Delaware's stretch of Interstate 95, and $750,000 for a program at the University of Delaware.

Illinois Congressman Rahm Emanuel, now the president's chief of staff, put in at least $3.5 million for street repairs in his old Chicago district, and a $900,000 earmark for a planetarium.

Other political news now -- Rush Limbaugh launched another broadside against President Obama today and made it very clear he is not backing down one bit. Listen to this.


RUSH LIMBAUGH, CONSERVATIVE RADIO HOST: Some of you are hoping that the words from Obama's mouth will magically bring you back. It ain't going to happen.

I do not want economic collapse. This is it for me. This is enough. It's got to stop. The problem is this administration has no interest in it stopping right now.


BROWN: So, this weekend, Republican Party Chairman Michael Steele took on Limbaugh calling his rhetoric ugly and insisting he, Steele, runs the party now. Of course, by Monday night, Steele had apologized calling Limbaugh a "national conservative leader." So what is going on here?

Here to talk about it all, CNN political analyst Roland Martin, senior political analyst Gloria Borger, and Tony Blankley, author of "American Grit: What It Will Take to Survive and Win in the 21st Century."

So, Tony, let me start with you. How does it look when the chairman of your party and some of your rising stars are essentially groveling before a radio host begging for his forgiveness and approval?

TONY BLANKLEY, AUTHOR, "AMERICAN GRIT": Oh, that doesn't look so good. But I am on Rush's side because Rush is leading the argument against Obama's policies.

Now, we have -- the Congress has not resolved most of the major issues. We have a big policy fight that's going to go on all year and there's no one better at explaining why Obama's policies are wrong than Rush Limbaugh. So, he's got a tremendous role to play in educating the public.

I also don't mind seeing the party fight a little bit because a party that's been smacked down the way the Republicans have, have been dispirited, the first thing you want to do is energize your base. And Obama and Rush together are energizing the Republican and conservative base.

BROWN: Do you agree with that, Roland? Is this a good thing for Republicans ultimately?

ROLAND MARTIN, CNN POLITICAL ANALYST: This is hilarious. First, we all talked about all of these corporate fat cats flying around in their corporate jets. You know, Rush just got him a new jet after getting $400 million contract.

So, you know, look, he's fitting right along with all of these guys. The bottom line is this here, the Republicans, they have no leadership right now.

BLANKLEY: Except it was his money.

MARTIN: Well, I got you but here's the point. They have no leadership.


MARTIN: Rush's standpoint --

BROWN: But that's a fair point, Roland.

MARTIN: No, no, no, no. But here's the deal. Here's the deal, though. He's driving his personal people meters up, his ratings up. There's no leadership.

And so what Rush is doing is using his platform to drive this thing home because you have no party elders stepping up to say, hey, let's take a hold of this. Stop all this (INAUDIBLE). Let's focus on our agenda.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: But, Campbell, here's -- but here's the problem for Rush Limbaugh. He started off looking like he was making a personal attack on Barack Obama when he said "I want him to fail." Then he backed off of that a little bit saying he doesn't agree with his policies and he wants his policies to fail.

And I think, Tony, you will remember this because you worked for Newt Gingrich. Newt Gingrich got into real trouble when he took on Bill Clinton personally during impeachment. Remember that? And it was very, very difficult for Newt to recover from that.

BLANKLEY: Well -- BORGER: So that's a problem that Rush has created for Republicans who want to oppose the president on policy, but they don't want to appear to be taking him on personally.

BLANKLEY: No, I think -- I think there's a difference between an elected official who may have to be more careful than a commentator. But the fact is that by 2010 and 2012, there is going to be an argument about who is leading the country better. And I think that Rush is making the strongest possible argument.

BROWN: But let me ask you that, Tony, because you say Rush is in your party making the strongest argument, but he is a radio talk show host. I mean, don't you need leaders within the party, whether it's Michael Steele or somebody else who can ultimately turn all that into policy?

BLANKLEY: And ultimately -- well, ultimately we're going to have a standard bearer in 2012, and it won't be Rush. He's not going to run for president. I have not a clue who it's going to be. But the role of commentators, whether they're very big people like Rush or somewhat smaller people like most of the rest of us, is to try to set the ground whereby politicians that you agree with feel confident to go out and fight for your issues.

BORGER: But --

BLANKLEY: And I think -- I think Rush is making a tremendous case for conservative free market principles and every day he undercuts, by the smartness of his argument and the funniness of his argument, Obama's positions. I think that's going to be useful for the party.

BORGER: But remember --

BLANKLEY: And a bunch (ph) of Republican candidates will come up and be able to take advantage of the arguments.

BORGER: But Tony --

BROWN: Go ahead, Gloria.

BORGER: Remember in this last election, Rush Limbaugh was not exactly a huge supporter of John McCain. And John McCain --

BLANKLEY: And McCain lost.

BORGER: Well, but John McCain ended up being the nominee of the party.


BORGER: And he -- so the question is, who was Rush Limbaugh speaking for?

BLANKLEY: Well, look, a lot of us. I supported McCain. He was not my first or second or fourth choice, he was my last choice because he wasn't a conservative. I supported him. But yes, there was a lot of enthusiasm lost.

Ten percent of conservatives did vote for, voted for Obama. That's about three percent of the electorate.

MARTIN: You know what, Campbell?

BROWN: Go ahead, Roland.

BLANKLEY: Obama won by 52.6 percent. So if we had kept all the conservatives, he might have won.

BROWN: I'll give you the last word, Roland.

MARTIN: Yes, it truly amazes me. You know, Tony can talk about how McCain wasn't a conservative. You look at the social ethics (ph) of Rush Limbaugh. Trust me, he sounds like a liberal. He's always dogging.

The bottom line is this, he's a radio talk show host. The only way the Republican Party, the only way they're going to move ahead if you have policymakers and elected officials who are advancing the agenda. He's throwing fireballs. He has nothing else to lose as the previous congressman who kowtowed to him saying you don't have to make the tough choices that we do. That's the reality.

BLANKLEY: Well, I appreciate your good advice.

BORGER: They need an agenda.

BLANKLEY: Roland and I have our own judgment.

BORGER: Totally, agree.

BROWN: All right, guys. We're going to end it there.

MARTIN: OK. I say, Tony, you can rely on everybody you want to. But if Rush is your guy, you can forget 2012.

BROWN: We will see about that. Roland Martin, Tony Blankley and Gloria Borger, thanks guys. Appreciate it as always.

As British Prime Minister Gordon Brown met President Obama today at the White House, some grumbling going on behind the scenes. Did the president diss the PM as some Brits are saying? We're going to have the lowdown in our "Political Daily Briefing" when we come back.


BROWN: In just a few moments, we turn it over to "LARRY KING LIVE." He's looking at party politics and a whole lot more tonight.

Larry, what's coming up?

LARRY KING, HOST, "LARRY KING LIVE": Well, what else. Is Rush Limbaugh crashing the party or is he trying to control it? More tonight on the battle within the GOP. Rush ain't going away. Does Republican Chairman Michael Steele have a chance to succeed?

Plus, Tavis Smiley and Bob Woodward together, here to talk about what's wrong with America and can somebody fix it? It's next on "LARRY KING LIVE," Campbell.

BROWN: All right. Larry, we'll see you in a few.

And a lot of other news to tell you about tonight including an ominous new development in the search for a pair of NFL players lost in the Gulf of Mexico. That when we come back.


BROWN: Joe Johns here right now with "The Briefing" -- Joe.

JOHNS: Campbell, the search for two pro football players lost at sea has been called off tonight. The Coast Guard says it searched more than 24,000 square miles of water off Florida's gulf coast and no sign of former Detroit Lion Corey Smith, Oakland Raiders linebacker Marquis Cooper, and William Bleakley. Yesterday, the fourth man on the weekend fishing trip, Nick Schuyler, was found clinging to the capsized boat.

Rescuers in Cologne, Germany, are still searching for three people after a building collapsed today. The six-story city archives' building became a pile of rubble as people inside ran for their lives. No word yet on the cause.

You may not have known it but the earth had a close call yesterday. An asteroid measuring about 40 yards across, passed within 38,000 miles of earth. In space terms, that's very close. "National Geographic" caught the big rock in these images taken last week.

You can relax now. The asteroid is not expected to get that close to earth again for about 100 years.

And there's just enough time to get in on tonight's multi-state mega millions lottery. A $212 million jackpot is up for grabs in Massachusetts, California, Georgia, Illinois, Maryland, Michigan, New Jersey, New York, Ohio, Texas, Virginia and Washington.

$212 million -- that will put a dent in your economic problems.

BROWN: You did say New York right?

JOHNS: I think I did.

BROWN: All right. Joe Johns tonight. Joe, thanks.

So pity poor Megan McCain, her dad nearly became president, her mom is an heiress. So what does John McCain's daughter got to complain about? Well, her love life.

We're going to let her explain. That's coming up in our "Political Daily Briefing."


BROWN: President Obama and British Prime Minister Gordon Brown met today. That is in our "Political Daily Briefing" tonight. And Erica Hill, as we understand it, some Brits feeling a little bit slighted.

ERICA HILL, CNN CORRESPONDENT: Yes, a few are. Some members of the British press writing about this. Some bloggers as well saying that the prime minister's aides don't feel like the U.S. is really rolling out the welcome mat with as much gusto as former president George W. Bush did for former PM, Tony Blair.

Things like those grand press conferences the two used to have. There you go. Or perhaps lining the White House with British flags. There were, of course, trips to Camp David.

As for Prime Minister Brown's visit with President Obama, well, it was part of a 90-minute working lunch. President Obama was asked about the potential downsizing earlier today. Here's what he had to say.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I think this notion that somehow, there is any lessening of that special relationship is misguided. Great Britain is one of our closest, strongest allies, and there's a link, a bond there that will not break.


HILL: So there you go. The bond is still there, but it doesn't mean there's going to be a big shindig necessarily tonight, Campbell. Of course, we're also in recession.

BROWN: A fair point. So a quiet night at home, but tell us what the first lady was up to?

HILL: Well, she did meet with the prime minister's wife today. That was obviously part of her official duties. But her meeting with the most attention today didn't happen at the White House.

The first lady was across town this afternoon at the women's military service memorial at Arlington National Cemetery there to commemorate Women's History Month. She toured the site and pledged to bring her daughters back with her. The first lady also used this stop as an opportunity to reach out to military families something she has, of course, pledged to do since her days on the campaign trail.


MICHELLE OBAMA, FIRST LADY OF THE UNITED STATES: Military families have done their duty and we as a grateful nation must do ours. We must do everything in our power to honor them by supporting them. Not just by word, but by deed.


HILL: Now there were a number of female veterans in the audience today including, Campbell, some who served in World War II.

BROWN: Wow. So, finally, we're shifting gears a bit. Senator John McCain's daughter, Megan, she was a fixture on the campaign trail. A lot of people tracked her on her blog.

HILL: Yes.

BROWN: Very personal revelation from her today.

HILL: Very personal today on the old blog. She is still blogging now about life after the campaign this time. Life, love and politics. And it turns out, they don't always go together.

In a post titled "Finding Mr. Far Right," the Arizona senator's daughter writes, "Nothing kills my libido quite like discussing politics. Here's the biggest surprise. I am not only turned off by people who voted for Barack Obama, but I am also turned off by people that voted for my dad -- or more so, obsessive supporters of my dad. At this point, my biggest aphrodisiac is an apathetic attitude toward politics.

So there you go. Her dad, not the way to Megan McCain's heart.

BROWN: I know. And on that note, we're ending it there.

Erica Hill, good to see you. Thanks.

That's it for us. "LARRY KING LIVE" right now.