Return to Transcripts main page
Lou Dobbs Tonight
President Obama Launches Health Care Plan; President Obama's Program for Homeowners; Prop 8; Anger over "Octomom"; Cross Border Trucking Project
Aired March 05, 2009 - 19:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KITTY PILGRIM, CNN CORRESPONDENT: Thanks, Wolf.
Tonight President Obama launches a bold plan for are a sweeping overhaul of our health care system. Well, it's an overhaul that critics say will lead to socialized medicine in this country.
Also tonight, new questions about whether President Obama's program to help homeowners will work. We'll have a special report on that.
And tonight, rising outrage over California's octomom and the nation's fertility clinics, now some state lawmakers are demanding action to curb the fertility industry, we'll have all of that, all the day's news and much more straight ahead here tonight.
ANNOUNCER: This is LOU DOBBS TONIGHT: news, debate, and opinion for Thursday, March 5th. Live from New York, sitting in for Lou Dobbs, Kitty Pilgrim.
PILGRIM: Good evening, everybody.
President Obama today declared he will introduce comprehensive health care reform by the end of this year. He said the nation cannot wait. But opponents say those reforms will lead to socialized medicine and waiting lists for urgent health care. Now, there are also concerns that lobbyists and special interest groups will take control of the president's reforms. Representatives of many of those special interests were at the president's health summit at the White House today -- Dan Lothian reports.
(BEGIN VIDEOTAPE)
DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT (voice-over): An emotional jolt as the soon to be knighted Senator Ted Kennedy, a health care reform champion arrives at the summit.
(APPLAUSE)
LOTHIAN: Then moments later, the senator battling brain cancer vows to be a foot soldier in the fight for reform.
UNIDENTIFIED MALE: This time, we will not fail.
LOTHIAN: Republicans seem willing to work with Democrats and the president, but they aren't laying down. REP. DAVE CAMP (R), MICHIGAN: We are going to have to figure out, you know, just how much of our economy is devoted to health care. That's going to be a big issue we have to face.
UNIDENTIFIED MALE: Right.
CAMP: And this cost shifting that goes on between public and private health care dimensions and those are challenging things.
LOTHIAN: President Obama says the high cost of health care is bankrupting American families, so he's pushing for reform and signaling that his ideas aren't set in stone.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: In this effort, every voice has to be heard. Every idea must be considered, every option must be on the table, there should be no sacred cows.
LOTHIAN: The White House says this summit is the beginning of a conversation, the ultimate goal helping nearly 46 million uninsured Americans and others who have insurance, but can barely afford it. People like optometrist Jim Matthews whose health problems forced him to sell a successful practice.
JIM MATTHEWS, OPTOMETRIST: I've entered into the perfect storm, I've hit the 55-year-old mark, I'm self-employed, and I have health issues. And if you find that you know you're in that -- those categories, health insurance is just incredibly expensive.
LOTHIAN: The Clinton administration pushed hard for health care reform 15 years ago, but it failed. John Podesta was an adviser in that White House and now has the ear of this administration on health strategy.
JOHN PODESTA, FORMER CLINTON W.H. CHIEF OF STAFF: I think things are different today because I think business is under so much more pressure because of increasing health care costs, number of uninsured has gone up in the last eight years.
(END VIDEOTAPE)
LOTHIAN: And the sales pitch is different this time around, as well. Administration officials saying that they plan to hold regional summits across the country from Vermont to California, a chance to get the public involved in the process. Now this plan, at least so far, is lacking in details. And some critics are concerned that it could end up putting a heavy burden, a tax and financial burden on some Americans -- Kitty.
PILGRIM: It's very worrisome. Thanks very much. Dan Lothian.
Well President Obama today declared that special interests and lobbyists have blocked health care reform for decades. And he said those groups will not prevail this time around. But the president has still asked those very same special interests and lobbyists to help shape his reforms and his health czar has close ties to the health care industry -- Louise Schiavone reports. (BEGIN VIDEOTAPE)
LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): President Obama kicked off a health care summit involving hundreds of billions of dollars worth of possible reforms with this lament.
OBAMA: Our inability to reform health care in the past is just one example of how special interests have had their way and the public interest has fallen by the wayside.
SCHIAVONE: But on the inside track of Mr. Obama's health reform team is a newly appointed health czar with extensive industry connections, Nancy Ann Deparle (ph) seen here to the left of the president. Among her corporate achievements, she's been a top executive of CCMP Capital, a private equity firm with significant health care holdings and a board member of Boston Scientific, Medco Health Solutions, and Cerner (ph), a company in the forefront of electronic medical record advancements. Could there be a conflict of interest?
REP. DARRELL ISSA (R), OVERSIGHT COMMITTEE: There's no question that there will be a large presidential earmark for integrating a data system to try to reduce costs to try to put people's health records all into a single data base. A lot of these efficiencies, although merited are going to lead to picking very large multibillion dollar winners, and she's going to be at the center of it all.
SCHIAVONE: The White House has promised that Deparle (ph) is severing all ties with the companies and will recuse herself from participating in matters related to former clients or employers.
ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: The White House has confidence in her and her abilities as part of the health care reform effort here.
SCHIAVONE: And as a Clinton administration veteran, her accomplishments in both the public and private sector have earned her high praise.
LARRY OTTINGER, CTR. FOR LOBBYING IN PUBLIC INT.: It's critical that everybody have a seat at the table. That all sectors of our society be represented.
SCHIAVONE: Meanwhile Senator Robert Byrd has expressed concern about the Obama administration's czar system in general, telling the president in a letter quote, "as presidential assistants and advisers, these White House staffers are not accountable for their actions to the Congress, to cabinet officials, and to virtually anyone but the president", end quote.
(END VIDEOTAPE)
SCHIAVONE: Kitty, Senator Byrd's communication to the president preceded the appointment of health czar Nancy Deparle (ph), but she like others with similar positions at the White House doesn't need Senate confirmation, which means she will not have to take questions from Congress about her past associations -- Kitty.
PILGRIM: All right, thanks very much. Louise Schiavone.
We'd like to know what you think and here's tonight's poll. Now are you outraged President Obama is looking for advice on health care reform from the same Washington lobbyists he promised to curb? Yes or no, cast your vote at loudobbs.com and we'll bring you the results later in the broadcast.
Rising evidence tonight that President Obama's stimulus package could discourage unemployed people from seeking work. So let's take a look at what is happening in the state of New York. Now, the maximum unemployment benefit in food stamps an individual can receive in one year now is just over $12,000. But on April 1st, that annual total will rise to more than $24,000 with an increase in unemployment payments and an extension in time those benefits are available.
That compares to an annual wage of almost $15,000 for someone on minimum wage in New York who is working 40 hours a week. So if that same person works 60 hours a week, they would earn just over $22,000 a year. That is well below what they would receive in unemployment benefits after April 1st. And those unemployment benefits exclude other programs, such as energy assistance and reduced COBRA health insurance premiums and housing help.
Well there are new concerns that many more people could become unemployed if General Motors goes bankrupt. And this after GM's own auditor said there's quote, "substantial doubt" that the company will survive. The White House said it's no surprise the auto industry is in crisis.
(BEGIN VIDEO CLIP)
GIBBS: The task force on autos has been meeting around the clock to come up with and with a solution to this crisis. They continue to meet and are working towards what's likely to be a restructured and retooled auto industry in this country.
(END VIDEO CLIP)
PILGRIM: Now, those concerns about General Motors helped drag the stock market even lower today; the Dow closing at a new 12-year low.
Still to come, protests in San Francisco as the legal battle over gay marriage escalates. Also the outrage over the California octomom, it sends shock waves through the nation's fertility industry.
Also pop singer Chris Brown is charged tonight after his highly publicized fight with his girlfriend Rihanna. We'll tell you all about that.
(COMMERCIAL BREAK)
PILGRIM: Former first lady Barbara Bush tonight is recovering from heart surgery. Mrs. Bush underwent two and a half hours of surgery on Wednesday to repair her aortic valve. Now former President Bush talked to reporters after his wife's surgery.
(BEGIN VIDEO CLIP)
GEORGE H.W. BUSH, FORMER PRESIDENT OF THE UNITED STATES: It went so well and I've been a nervous wreck about it. Today, we heard from four presidents of the United States -- Obama, Clinton, Jimmy Carter and George Bush -- George W. Bush and me. And I think there's a lot of interest because of who she is.
(END VIDEO CLIP)
PILGRIM: Doctors expect the former first lady to remain hospitalized for about a week. We wish her a very speedy recovery.
In California tonight the Supreme Court began hearing arguments on the measure banning same sex marriage. Hundreds of protestors demonstrated outside the courthouse in San Francisco this morning. Proposition 8 passed in November with 52 percent of the vote. And now it's up to the Supreme Court to decide if it will overturn this ban. Dan Simon is in San Francisco with the latest.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: The equal protection clause...
DAN SIMON, CNN CORRESPONDENT (voice-over): Starting off for those against Prop 8 or for same sex marriage was attorney Shannon Minter (ph), who lived his first 35 years as a female.
SHANNON MINTER, AGAINST PROP 8: Our government is based on the principle not just majority rule, but equally so on the limit that majorities must always respect minority rights.
SIMON: Minter told justices that Prop 8 relegates gays and lesbians to second class citizens and it's the court's job to fix an injustice.
MINTER: To have an official recognition of one's family relationship that is of equal stature and dignity to the recognition given to opposite sex couples.
SIMON: Attorney Michael Maoko argued that if the court upholds the ban on same sex marriages it sends a mixed and fundamentally unfair message.
MICHAEL MAOKO, AGAINST PROP 8: If you're in the marriage business, do it equally. If the state obviously stuck its finger in the marriage business, they should the stick it there equally. And if they're not going to be equally, then get out of the marriage business, that's our position on this.
SIMON: Later for the pro Prop 8 side, a figure from the past, Kenneth Starr, the man famously known for leading an inquiry into President Clinton's relationship with Monica Lewinsky. He's now the dean of Pepperdine (ph) University's Law School and an advocate for many conservative causes. UNIDENTIFIED MALE: We want to restore the traditional definition that has been in place since this state was founded. And almost every other court in the country has agreed with the rationality of that. You may think it's bad policy. You may think it's unenlightened.
SIMON: Starr argued that rightly or wrongly, rights in this country and here in California are ultimately defined by the people, which prompted this hypothetical question by the chief justice.
UNIDENTIFIED MALE: Right to marriage, right to free speech, whatever that can be removed by the simple amendment process.
UNIDENTIFIED MALE: We may govern ourselves very unwisely, but happily because we're in a federal republic. There are fail safe mechanisms under the federal Constitution.
(END VIDEOTAPE)
SIMON: So Kenneth Starr saying when it comes to this issue of same sex marriage, the people ultimately have the right to decide. So the question confronting the court, Kitty, is can the will of the majority take away a right away from a minority? A ruling is expected within 90 days -- Kitty, back to you.
PILGRIM: A very important question, thanks very much, Dan Simon.
Now there is rising outrage over California's octomom, that's prompting new legislation to limit the implants of embryos. Proponents say the measures not only protect women and their children, but taxpayers as well -- Ines Ferre has our report.
(BEGIN VIDEOTAPE)
INES FERRE, CNN CORRESPONDENT (voice-over): The arrival of Nadya Suleman's octuplets is prompting some lawmakers to give birth to bills on the industry of fertility and raising questions about industry regulation. The 33-year-old Suleman says she was implanted with six embryos, two split, giving her eight babies. In Georgia, this state senator wants to limit the number of embryos transferred. Two for those under age 40 and three for those over.
RALPH HUDGENS, GEORGIA STATE SENATE: I'm outraged at what happened in California that we have an unemployed, unmarried woman with six children already having eight more children, and really putting them on the backs of the taxpayers in the state of California.
FERRE: Another bill in Missouri would limit the number of embryos to those recommended by the American Society for Reproductive Medicine or ASRM. Those guidelines include no more than two embryos for women under 35; those over 40 can receive up to five depending on the stage of the embryo. ASRM said it supported Missouri's bill and quote, "urge other states to adopt it". Georgia's bill the organization said was unworkable. Some fertility doctors say Suleman's case is exceptional and don't see a need for legislation.
DR. ANDREW SILVERMAN, FERTILITY DOCTOR: Because reproductive matters are a private issue, I don't think it's the government's business.
FERRE: But one effaces (ph) points out that existing guidelines are voluntary and a federal law is needed.
MARCY DARNOVSKY, CENTER FOR GENETICS & SOCIETY: The United States is known as the wild west of the assisted reproduction industry. We're not trying to regulate women's bodies here by any means, but we do need scrutiny, regulation, and oversight of the assisted reproduction industry.
FERRE: CDC figures show that fewer than 20 percent of U.S. clinics follow professional guidelines on how many embryos should be transferred into a woman.
(END VIDEOTAPE)
FERRE: And fertility experts say there are several reasons why a clinic might skirt the guidelines. Sometimes patients pressure their doctors, especially if they're paying out of pocket, also clinics feel an increasing competition to claim high success rates -- Kitty.
PILGRIM: Ines, as you point out, this is really an exceptional case, the octomom case. But it raises a lot of issues about this industry, which is quite large, isn't it?
FERRE: Yes and ASRM is not a regulatory board. I mean it's not a government agency and it's -- this industry is worth estimated $3 billion.
PILGRIM: Astonishing, thanks very much. Ines Ferre, thank you.
New York Suffolk County could be the first community in the country to ban a controversial plastic which is used in baby bottles. Now the legislator approved a ban on Bisphenol A (ph) or BPA. The county executive needs to sign the legislation before it can be enacted. Supporters of the ban say BPA accumulation in infants could lead to developmental problems. Many major retailers around the country have already pulled products containing BPA from the stores.
Craigslist (ph) is a popular classified ad Web site is facing a federal lawsuit tonight accused of promoting prostitution. A Cook (ph) County Illinois sheriff filed the suit demanding that Craigslist shut down erotic services, that section. Now Sheriff Tom Dart (ph) says that despite attempts by Craigslist to block illegal activity, the site has become a massive outlet for illegal sex traffickers.
And tonight, some parents are saying Barbie has gone too far. There's a new so-called totally styling Barbie which comes with tattoos. Now tattoo stickers for the doll, also a washable stamp for the kids. Some parents say the ink is inappropriate. Toy Company Mattel says it allows for creative expression. And meanwhile a West Virginia lawmaker wants Barbie banned in his state along with other dolls like her. The bill claims that the dolls make children too concerned about physical beauty at the expense of intellect.
Coming up, the president's housing plan may be too limited to help most homeowners in need. We'll talk about that and also felony charges in a high profile celebrity assault case. We'll have the story. And the "King of Pop" is back, a major announcement from Michael Jackson next.
(COMMERCIAL BREAK)
PILGRIM: This just in to CNN. Pop singer Chris Brown was in the Los Angeles County Court moments ago. The 19-year-old is facing felony assault charges. He's accused of attacking his girlfriend, singer Rihanna in a heated argument early last month. Now he allegedly choked, punched, bit, and threatened to kill Rihanna. In court today, Brown did not enter a plea. His arraignment was postponed until April 6th.
And tonight, another pop star, the reclusive "King of Pop" is back. Michael Jackson gave an elaborate news conference in London today and he announced performances this summer in the city's 02 (ph) arena. He says that this is his final curtain call.
(BEGIN VIDEO CLIP)
MICHAEL JACKSON, ENTERTAINER: These will be my final show performances in London. This will be it. This is it. And when I say this is it, it really means this is it.
(END VIDEO CLIP)
PILGRIM: Now 50-year-old Michael Jackson is expected to be paid $140 million for the concerts and it will be his first live performance in 12 years.
Well, we have time now for some of your thoughts. And Bob in New York wrote, "how come whenever I try to contact my representatives, all I get is an invitation to donate money? I feel like I'm talking to an ATM."
And George in Colorado wrote "I keep hearing that voters wanted change, but if things keep going the way they are, we'll all be begging for spare change soon."
We love hearing from you. Send us your thoughts, go to loudobbs.com.
Now, Congress tonight may be finally succeeding in ending a controversial Bush administration program. The cross border trucking project allows some Mexican trucks to travel anywhere in the United States and critics say the project is a threat to American jobs and national security -- Casey Wian reports.
(BEGIN VIDEOTAPE)
CASEY WIAN, CNN CORRESPONDENT (voice-over): Since 2007, some Mexican trucks have been allowed to carry cargo throughout the United States. Previously, they were restricted to transit zones near the Mexican border. The Bush administration vigorously defended the pilot program as a necessary component of the North American Free Trade Agreement. But opponents maintain that Mexican long haul trucks were a safety threat and a U.S. job killer. Now they have the upper hand in the White House and in Congress, which is preparing to end funding for the Mexican truck program.
REP. PETER DEFAZIO (D), OREGON: I mean this whole thing from day one was ridiculous. And what it's really designed to do ultimately is drive yet another class of American workers on to unemployment to access cheap foreign labor.
WIAN: Last month, a Transportation Department report revealed several flaws with the cross border truck program. For example, only 29 Mexican trucking companies signed up for the program, 100 were expected. Too little participation to quote, "reliably predict the safety behaviors of future Mexican long haul carriers."
Authorities also quote, "did not have assurance that every Mexican truck and driver participating in the project had been checked when they crossed the border into the United States." And GPS monitors that were supposed to track the movements of Mexican trucks were not installed for 61 days on average after the trucks were operating in the United States. America's largest trucking union has been fighting this program.
BRET CALDWELL, TEAMSTERS: Even with only 1,443 trucks, they weren't able to inspect every one of them. They couldn't tell you which trucks were in the country and which ones had gone back into Mexico. It really is just a complete mess.
WIAN: Supporters of the Mexican truck program counter that the safety record of those companies participating was actually better than their American counterparts. Texas Congressman John Cornyn (ph) said quote, "it's very disappointing that my colleagues have chosen protectionism over job creation by eliminating the NAFTA trucking pilot program."
(END VIDEOTAPE)
WIAN: The Mexican government is threatening a trade war. Ambassador Arturo Saracen (ph) says if the program is finally de- funded by Congress, Mexico will keep open all its options, including retaliation -- Kitty.
PILGRIM: Casey, you've been reporting on these verification issues for years now, haven't you?
WIAN: Yes, and this report that came out from the Transportation Department was really stunning. I mean, the fact that they didn't install the GPS devices on these trucks that were supposed to track them for two months after they were already crossing the border is certainly troubling. And it just was full of holes and Congress has finally decided that they've had enough.
PILGRIM: Thanks very much. Casey Wian.
Well authorities in Houston today are investigating just who abandoned a truck filled with two tons of marijuana. The marijuana valued at almost $2 million was found in a truck bearing a logo of a Texas grocery chain. Now officials say the logos were fake. The truck didn't belong to the grocery company. Officials declined to release any specific details about the investigation.
Coming up, rising outrage at the thousands of earmarks in the massive government spending bill, now we call those earmarks pork.
Also, unanswered questions about President Obama's rescue plan for homeowners, two leading mortgage experts will join us to tell you what you need to know, so stay with us.
(COMMERCIAL BREAK)
PILGRIM: Another down day for the markets today with Citigroup trading below $1 for the first time ever. Two years ago Citigroup was the biggest bank in the country by market capitalization, its shares once trading for more than $55 a share.
Well, Citigroup is just one of a series of venerable companies that have taken a beating in recent months. Stocks of some of the country's most famous firms have plummeted as financial and the economic crisis has deepened. Now those companies include former giants in the media and manufacturing and financial services sectors.
The crisis in the banking sector is threatening to undermine the work of the Federal Deposit Insurance Corporation. The head of the FDIC, Sheila Blair (ph) warned that the fund to protect bank deposits is in danger of running out of money. Blair (ph) wants to raise fees on banks so the fund has enough money to continue insuring deposits.
There are new questions tonight about President Obama's $75 billion mortgage rescue plan. Now this program is intended to help millions of struggling Americans, including low-income homeowners and homeowners who receive more than -- who owe more than their houses are worth. Many wonder if the program will work at all.
(BEGIN VIDEOTAPE)
PILGRIM (voice-over): The Obama mortgage rescue plan projects some nine million homeowners will qualify, even those whose houses lost value, which is one out of every five mortgages in the country. The hemorrhage of foreclosures in this country has been unrelenting; 2.2 million foreclosures in 2008. Two and a half million expected this year and another two and a half million more expected in 2010. Even the White House admits its plan won't help everyone.
GIBBS: This isn't for somebody who, again, may have some means but bought a house far larger than one they could ever hope to afford. The plan rewards people that played by the rules and ensures that the system can't continue to be gamed by people.
PILGRIM: The program like previous government mortgage rescue plans is voluntary. Few banks were willing to do mortgage workouts in the past, but this time around, there are incentives. Banks will earn fees by offering loan modification. John Taylor of the National Community Reinvestment Coalition says the program will not be able to help everyone at once especially those who have a loan through a smaller bank.
JOHN TAYLOR, NATL. COMM. REINVESTMENT COAL.: You talk about, you know, folks like Wells and Bank of America, these are big institutions that are already shifting staff, that have already built up staff capacity who could really hit the ground running on modifying a lot of these loans. Some of the smaller guys, going to take some time to get up to speed.
PILGRIM: Sharon Price of the National Housing Conference says oversight of the program will be another hurdle.
SHARON PRICE, NATIONAL HOUSING CONF.: There's going to be a flood of families trying to get help through this program. The government is going to have to play a major role in overseeing this program and making sure the funds are being spent correctly.
PILGRIM: The plan is also limited to Fannie Mae and Freddie Mac held loans. Those loans account for 60 percent of mortgages. But millions of homeowners will not qualify for the president's plan and will remain in dire straights.
(END VIDEOTAPE)
PILGRIM: Now President Obama's plan does have the advantage of learning from past mistakes. Former President Bush's hope for homeowners was an absolute disaster, confusing, severely restrictive, barely accessible.
Joining me now for more on President Obama's mortgage plan, we're joined in Dallas by Richard Bitner, associate publisher of "Housing Wire" magazine. And Richard is also the author of the book "Confessions of a Subprime Lender." In our D.C. bureau, Kathleen Day of the Center for Responsible Lending joins us.
And thank you both for being with us.
Richard, I'd like to get your assessment of this. The critics say it's not broad enough, and yet, there are -- there are many points about the way this is structured that seem very good. What's your assessment?
RICHARD BITNER, AUTHOR, "CONFESSIONS OF SUBPRIME LENDER": Well, I think it is a mixed bag. And it's a great point, Kitty. I mean one of the things that I really do like is that the administration kind of went in with its eyes wide open, meaning, it understood that it had to compensate servicers, simply because -- not because the servicers haven't wanted to get involved in making modifications, it's simply been a practicality of the business.
You know the average servicing operation you've got 500 loans to every servicing agent simply isn't built for mass modifications. The problem is, and this is the exact same thing, you know, I said when the Hope for Homeowners program was created back in late July when I came on this network.
You know it is still largely a voluntary program. It is still largely a program that I don't know if it necessarily has the kind of meat into it that's going to necessarily be able to make the significant impacts. I think the administration hopes it will make.
PILGRIM: Kathleen, you know, this is -- the question of oversight is a serious one. Do you think it -- that there can be enough oversight in this entire process, which, you know, everyone says it's just going to be massively overloaded with everyone applying?
KATHLEEN DAY, CENTER. FOR RESPONSIBLE LENDING: Yes, it will be, and that will be a tough standard and goal. But I think it's doable. I have to disagree a little bit with my colleague. I do think there are many features of this plan which really do give real incentives that make it not quite a voluntary program.
For example, any lender who participates in this TARP program and gets taxpayer money as part of the bailout has to participate. And now there are actual financial incentives for servicers of loans to do more modifications. There's a variety of those. So I -- while it is still a voluntary program, it's a voluntary program with lots of carrots that weren't there before, and an important stick if we turn to what the House just voted on and passed this evening. And that will be the Senate's turn.
It will give bankruptcy judges the ability to modify the mortgage on a person's primary residence. A judge can now modify every other contract in bankruptcy, a yacht, second home, vacation home, but not a person's primary residence.
With that kind of a stick there, we believe -- my organization believes that it will focus industry's attention along with those carrots. Those are all things that will focus industry's attention.
Plus, everybody now knows, to get to the root of this crisis and start to get to a healthy path again in the economy, we've got to make a significant dent in the number of foreclosures. The Obama administration gets this. And this plan is the first comprehensive one to really try to do that.
PILGRIM: Richard, you know, I'd like to get your thoughts on the House passing the legislation that would allow bankruptcy judges to modify the terms of the home. Also, and also do you believe that this would basically fix the problem of so many of these neighborhoods being devastated by these foreclosures?
BITNER: Great question. Well, it is a bit of a double-edged sword. And what I mean by that is this. In many respects the passing this legislation as it did today, and of course it's not done, it still needs to go through the Senate and get signed by the White House, is a pretty critical piece because it -- it really puts in the motivation that, I think, is missing in the initial part. And largely why I made the comments that I did. This is, if you will, something that will ultimately get held over the lender's head and create hopefully that additional motivation to get involved and make these modifications. Now there is something that is a bit of a concern. And I think what I really call this as sort of an unintended consequence that will come from the passage of this bankruptcy cram down.
And that is this. I don't want to get into the weeds of it, but largely, if you understand how securitization works, mortgage-backed securitization, it's about taking thousands of loans, putting them together, splicing them into the different levels of risk so that investors can buy bonds. There are safer bonds, there are riskier bonds.
When there are losses in the security, they always start with the people at the bottom. So essentially, it's kind of like a game of chess. The folks at the top, the AAA piece of the king, everyone else are the ponds, they get wiped out first before the king does.
Well, what happened to the bankruptcy cram down situation is when a judge signs that order, that particular amount of loss is going to get spread equally amongst all the holders within that security. That's completely contrary to the way that things work.
What we really don't know is if we start seeing this in mass, and I'm not saying that we shouldn't pass this legislation. There is a real concern about what's going to happen relative to the financial institution sitting at the top of the food chain who thought they bought the very safest of investments, AAA, not for subprime mortgages...
PILGRIM: Right.
BITNER: ... just for A paper mortgages.
PILGRIM: Kathleen, this has been -- the securitization has been the big problem. We have just a few seconds left. Some thoughts on this.
DAY: Well, we've looked at that. And the fact is, the losses are so severe that that argument really is not pertinent anymore. The losses, there's a trigger. The bottom trenches. If they lose a certain amount, then the losses start going up the food chain, and we're way past that point.
So I think industry uses that a little bit as a scare tactic. But there is a safe harbor in the provision that the House did pass tonight and again the Senate needs to act on quickly that would give some servicers some comfort -- some protection against getting sued and again would remove one of those hurdles that has impeded the voluntary efforts of the last two years.
(CROSSTALK)
PILGRIM: I'm sorry, big topic.
DAY: Right.
PILGRIM: We really can't -- but anyway, thank you very much for your insights into this, Richard Bitner, Kathleen Day.
DAY: Thank you.
PILGRIM: Still ahead, the U.S. Postal Service says it is strapped for cash. So how is it buying million dollar mansions? We'll have a special investigation into that.
Plus the federal spending bill full of porky pet projects? Well, I'll talk to one senator who says it should be flat out rejected. Next.
(COMMERCIAL BREAK)
PILGRIM: Tonight, the Senate votes on the $410 billion federal spending bill with more than 8,000 pet projects. It seems the Obama administration's promise to end pork barrel spending is broken.
Bill Schneider reports.
(BEGIN VIDEOTAPE)
WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST (voice-over): Last year, John McCain vowed to end earmarks for special interest projects that members of Congress add to spending bills often at the request of lobbyists or contributors.
SEN. JOHN MCCAIN (R), ARIZONA: This is a bipartisan disease.
OBAMA: I want earmarks reform just like John McCain does.
SCHNEIDER: Congress is now voting on this year's budget. What's in it?
REP. PAUL RYAN (R), WISCONSIN: We've got 9,000 earmarks the House passed last week, $7.7 billion, 4,000 of those earmarks are from Republicans.
SCHNEIDER: It's old business, the White House says. We'll be good from now on.
GIBBS: And we'll change the rules going forward, understanding that we have to deal with last year's business.
SCHNEIDER: We're making progress, congressional leaders say.
REP. NANCY PELOSI (D-CA), HOUSE SPEAKER: It's now but just around 50 percent of what the -- of what the earmarks were before.
SCHNEIDER: House Democratic leader Steny Hoyer defended the prerogatives of Congress, saying, quote, "I philosophically believe it would be an undermining of the Article One responsibilities given to the Congress of the United States if it were to abandon its right to add items that it believes are priorities for our country and for communities we represent as members of Congress."
The Senate majority leader sees a hidden agenda.
SEN. HARRY REID (D-NV), MAJORITY LEADER: They've made a decision that they want President Obama to fail. And this smoke that they've thrown up for this bill is only an effort to kill a bill, not to improve the bill.
SCHNEIDER: Are Republicans trying to drive a wedge between the White House and Congress? The White House says it won't let that happen.
(END VIDEOTAPE)
SCHNEIDER: Who says there's no life after death? Some of the earmarks in the current bill were added last year by lawmakers who have since died or retired, or lost the election, or gotten indicted for corruption, but the earmarks live on. Kitty?
PILGRIM: Thanks very much, Bill Schneider.
Well, one senator who promised to vote against the federal spending bill is Senator Evan Bayh of Indiana.
Good evening, Senator.
SEN. EVAN BAYH (D), INDIANA: Good evening, Kitty.
PILGRIM: It's a tough stance. I mean, you know, there's a lot -- you're going to lose a lot of friends over this. We went to the list of the top 10, it's about half Democrats and half Republicans. And you rank way down on this list. You only have four earmarks in this totaling $1 million. But it really is a bipartisan problem, isn't it?
BAYH: It really is, Kitty. And it's just a manifestation of business as usual in Washington as Bill Schneider was pointing out. And these are extraordinary times. And we can't afford that kind of business as usual. We've got an exploding deficit, as you know.
There are about $7.7 billion worth of earmarks in this bill. We've got to take that out until the economy starts recovering. And my major concern is your viewers, many of them are having to tighten their belts, go without, and yet government seems to be indifferent to all that. Increasing spending in this bill by several times the rate of inflation for things that really aren't focused on job creation and that sort of thing.
So I just think this is an extraordinary time, we can't afford it, and we ought to cut them out.
PILGRIM: Yes, you know, we went through, we have a bunch, $24,000 for the, a, for abstinence, it's sponsored by Republican senator Arlen Specter, $950,000 for the Myrtle Beach International Trading Convention Center. It's Lindsey Graham. $143,000 for education programs in Las Vegas Natural History Museum, Harry Reid. I mean some of these things, but then what about Article One? What about the congressmen -- the representatives of important job of representing his district?
BAYH: Well, Congress may have the power, but that's different than whether it makes sense at this moment in time. You know, look, we've got a huge deficit, it's unsustainable, it threatens our children's future. We have to show some self-restraint. The American people are having to exercise that in their daily lives, Congress and the federal government should not be immune.
Things that affect jobs that cost of health care, absolutely. But just general government, we've got to economize and cut back a little bit and with these projects, surely we have a moratorium for a year or two until the economy turns around, that doesn't undermine Congress's power. That just shows we have good sense. And going forward with this kind of thing, I think, just undermines our reputation with the American people.
PILGRIM: Yes, and internationally, too, sir. I'd like to quote from an editorial who wrote for the "Wall Street Journal" about the dangers of national debt. And it's very well said. "The amount of U.S. debt held by countries such as China and Japan is at a historic high, with foreign investors holding half of America's publicly held debt.
"This dependence raises the specter that other nations will be able to influence our policies in ways antithetical to America's interests."
And you know, this -- is this a danger that is not really apparent to your colleagues?
BAYH: Well, Kitty, it's a danger, but it's not one they focused on. You know, beggars can't be choosers and we're in a position now of going with tin cup in hand to the rest of the world to borrow enormous sums of money that will have to be paid back with interest by our children and it will lead to higher taxes, lower growth, and a lower standard of living.
And that's just not right. So I'm deeply concerned about the imbalances that we're running and the debt that we're running up but to other countries and I literally, Kitty, have heard some of my colleagues say when an issue will come up, no, we can't do that because that might offend country x and you know how much money we have to borrow from them.
That's not -- we lose a little bit of our sovereignty as a country when we put ourselves in this position.
PILGRIM: Yes, it certainly does. You know, this bill, just to bring another point out, this bill increases funding for quite a few things, the Securities and Exchange Commission, Consumer Product Safety Commission, IRS tax enforcement, the FBI. All of these things are very important.
How do you basically balance your concerns with this with the need to fund some of these very important functions of government?
BAYH: Kitty, it's like making a decision between muscle and fat, distinguishing between those two things. There are good things in this bill, and I'm not for doing away with the whole thing. I personally would favor, you know, a spending freeze for a year. Just, you know, until we come out the other side of this economy.
There's hardly a federal department that in terms of their general operations couldn't save a percentage point or two. So it's eliminating the earmarks, having sensible, economizing, those sorts of things, and keeping the priorities like the ones that you mentioned or anything related to job creation or getting the cost of health care down.
Those kind of things that matter to people in their daily lives. We should keep things that could be deferred for a year or two, you know, in these difficult times, that's what we need to do.
PILGRIM: Well, hopefully everyone's listening.
Senator Evan Bayh, thank you very much for being on the program, sir.
BAYH: Thank you.
PILGRIM: Coming up, the U.S. Postal Service buying up millions of dollars and mansions with your money. We'll have a special report.
(COMMERCIAL BREAK)
PILGRIM: Millions of Americans cannot sell their homes, but if you work for the post office, that's a different story. In a time when the government agency is reporting a huge deficit and may have to cut back mail service and raise fees, we discovered it can still afford a million-dollar mansion.
CNN Special Investigations Unit correspondent Abbie Boudreau reports.
(BEGIN VIDEOTAPE)
ABBIE BOUDREAU, CNN SPECIAL INVESTIGATIONS UNIT CORRESPONDENT (on camera): So where are you showing me?
BILLIE BIERER, NEIGHBOR: This is the house that the post office took over as a relocation package for an employee that transferred to Texas.
BOUDREAU: Oh, wow. It's huge.
BIERER: It is huge.
BOUDREAU: Look at this.
(voice-over): It's an 8,400-square foot home in rural South Carolina. One of the largest on this lake. Six bedrooms, four bathrooms, two more half baths.
BIERER: It has an indoor swimming pool.
BOUDREAU (On camera): I saw those pictures online.
BIERER: Yes.
BOUDREAU: It's pretty gorgeous.
BIERER: Quite a house.
BOUDREAU (voice-over): Here's the listing online. A huge living room, gourmet kitchen, hardwood floors, and here's that indoor swimming pool and spa.
A CNN investigation found the U.S. Postal Service bought this estate for $1.2 million from an employee who was being relocated. In fact, the post office has purchased more than 1,000 employee homes in just two years. The average cost of those homes, $257,000.
Billy Bierer owns the lot next door.
BIERER: This should not be allowed in any company in this economy. Things need to change.
BOUDREAU: Bierer wonders how the Postal Service can afford to buy a house like this. Considering Postmaster General John Potter recently told Congress that times were so bad they'd already cut travel and frozen executive salaries.
JOHN POTTER, POSTMASTER GENERAL: If volume continues to decline beyond what our expectations are, we might be forced to, you know, reduce the number of days that we deliver.
BOUDREAU: And just last month, the Postal Service told CNN it also made changes to its relocation policy, to cut back costs and reduce the risks of not reselling the homes it buys. A spokesperson says it will pay no more than $1 million to purchase an employee's home.
But prior to that, the Postal Service had no limit on how much it would pay. The most expensive home it purchased cost $2.8 million.
PETE SEPP, NATIONAL TAXPAYERS UNION: At a time when the Postal Service is considering cutting back on delivery, raising stamp prices, perhaps even going to the federal government for a taxpayer bailout, this sends the wrong signal.
BOUDREAU: The Postal Service declined our request for an on- camera interview. But in an e-mail, the spokesperson said, "When qualified employees relocate, the Postal Service can purchase their home through a company called Cartus relocation," a government contractor. He wrote that only 15 of the 1,022 homes bought in the last two years remain on the market.
All the houses that cost $1 million or more have sold, except for this one, which it just bought last month.
SEN. CHUCK GRASSLEY (R), IOWA: When you talk about $1 million, that sounds outrageous.
BOUDREAU: We showed Senator Chuck Grassley, a long-time critic of the relocation policy, what the $1.2 million house looks like.
GRASSLEY: I'm going to write a letter to the inspector general. We're going to get this policy nailed down. We need to know that the Postal Service, for the patrons of the Postal Service, the people that are buying stamps, the people that are supporting it, that they're getting their money's worth.
(END VIDEOTAPE)
BOUDREAU: Senator Grassley's office tells us that the inspector general is now reviewing the overall relocation policy.
Kitty, the Postal Service says the goal is to sell all the houses purchased without losing money but that doesn't always happen. It costs the Postal Service an average of $58,000 for each home bought and sold. And that adds up.
So if there's anyone out there who wants to buy this particular house, I'm sure the post office would love to sell it. It's beautiful, Kitty, as you saw.
PILGRIM: It is gorgeous.
Abbie, did you have a chance to talk to the former owner of that house?
BOUDREAU: I did. I briefly talked to him over the phone and he made it clear that the post office did not make him relocate. He said he wanted to move to Carrollton, Texas to become the new customer service manager there. But he will not give us any more details about that house.
PILGRIM: All right. Thanks very much, Abbie Boudreau. Thanks, Abbie.
Coming up at the top of the hour, "CAMPBELL BROWN: NO BIAS, NO BULL."
Campbell, what are you working on?
CAMPBELL BROWN, CNN ANCHOR: Hey there, Kitty.
Tonight we are keeping a close eye on action in the Senate. We could see a final vote on the controversial spending bill that so many critics from both parties say is loaded up with pork projects. We're going to let you know what happens on that front.
Plus, President Obama taking on health care even as he wrestles with the economy and all the other things on his to do list right now. But is this really the time to confront such a massive issue? We're going to look at that.
Also, if you're looking for a job, we'll tell you where you've got the best shot of finding one. We've got a special panel to take your calls about jobs, mortgages, and the economy. Your questions answered at the top of the hour. Kitty?
PILGRIM: Thanks very much, Campbell Brown.
Still ahead, tonight's poll results and some more of your thoughts so stay with us.
(COMMERCIAL BREAK)
PILGRIM: Ten co-workers from New Jersey won the mega million lottery and prize is over $200 million. Now the big question, how to split all that money? Well, some say that's not as big a problem as you might think.
(BEGIN VIDEO CLIP)
DAVID LETTERMAN, HOST, THE LATE SHOW WITH DAVID LETTERMAN: The great story in New Jersey. Somebody bought a lottery ticket. $212 million. $212 million. Now under the new Obama plan, after taxes...
(LAUGHTER)
LETTERMAN: ... that person will have enough money left over to buy another lottery ticket.
(LAUGHTER)
(END VIDEO CLIP)
PILGRIM: Congratulations to the winners. Good luck with that new ticket.
And tonight's poll results, 88 percent of you are outraged President Obama is looking for advice on health care reform from the same Washington lobbyists he promised to curb.
Time now for some of your e-mail. And Richard in West Virginia wrote to us: "Dear Lou, our problems in this country is politicians of mass destruction, the amount of debt and the current and the previous administration are drowning us with is ridiculous."
And Silas in Indiana: "Every night I watch your show, every night I take notes, and every day I write the government. I either praise them or scold them. Keep bringing the ammo, Lou, and I'll keep firing."
Now send us your thoughts or go to LouDobbs.com.
Thanks for being with us tonight. For all of us here, good night from New York, "CAMPBELL BROWN: NO BIAS, NO BULL" starts right now.
Campbell? BROWN: Thanks, Kitty.
Hi there, everybody, President Obama takes on health care and critics who have been taking him on. Bullet point number one tonight, the president brought all sides in the health care debate to the White House today and he showed little patience for those who think now is not the time.
