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Ben Bernanke to Remain Fed Chief; Interview With U.S. Health and Human Services Secretary Kathleen Sebelius

Aired August 25, 2009 - 18:00   ET


SUZANNE MALVEAUX, CNN ANCHOR: Some homeowners say they are not getting the affordable mortgages they were promised. CNN's Jessica Yellin on alarming problems with an Obama administration program.

And what if half the country comes down with the swine flu? We will confront Health Secretary Kathleen Sebelius with the worst-case scenarios and separate the real health threat from the hype.

Wolf Blitzer is off today.

I'm Suzanne Malveaux in CNN's command center for breaking news, politics and extraordinary reports from around the world. You are in THE SITUATION ROOM.

Right now, three new arrows up for the economy. We are seeing increases today in stock prices, consumer confidence and home prices. And to hear President Obama tell it, it's the federal chairman, Ben Bernanke, who deserves a lot of the credit. The president announced today he is nominating Bernanke to a second term, praising him as a creative risk-taker. He did not bring up the fact that the recession began on Bernanke's watch as federal chairman for President Bush.

Our White House correspondent, Dan Lothian, is with the president on Martha's Vineyard.

Hey, Dan.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, hello, Suzanne. And this news, of course, this announcement came as the White House was releasing the stunning numbers on the deficit expected to hit around $9 trillion over the next 10 years.

And this really gave some Republicans a chance to pounce on the news. House Minority Leader Mitch McConnell saying -- quote -- "The alarm bills on our nation's fiscal condition have now become a siren," even though, as you pointed out today, the president was talking up some positive news on the economy as he announced that he wants to keep Ben Bernanke on the job.


LOTHIAN (voice-over): President Obama promised a news-free vacation, even urging the press to take a walk on the beach. But he threw on a blue blazer, brought Fed Chief Ben Bernanke to a hot school gym, broke the rules and made news. BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Ben approached a financial system on the verge of collapse with calm and wisdom, with bold action and out-of-the-box thinking that has helped put the brakes on our economic free-fall.

LOTHIAN: The White House says re-nominating Bernanke to another four-year term helps to maintain market stability, reduces any economic disruptions, and puts to rest speculation about who would get the job next. A vote of confidence for the Republican Fed chief, who, like the president, admitted big challenges remain.

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: Our objective remains constant: to restore a more stable financial and economic environment in which opportunity can again flourish.

LOTHIAN: The announcement came just minutes before the release of negative economic news. From the White House and Congressional Budget Office, projections of exploding deficits and mounting debt and unemployment over the next decade, and the prediction that the budget deficit this year will jump to a record nearly $1. 6 trillion, bigger than expected. It's ammunition for lawmakers who are concerned that this is not the climate to tackle health care reform.

SEN. JOSEPH LIEBERMAN (I), CONNECTICUT: I'm afraid we've got to think about putting a lot of that off until the economy is out of recession. There's no reason we have to do it all now.

LOTHIAN: In helping to right the economy, Bernanke must first be confirmed by the Senate. In a statement, Banking Committee Chairman Chris Dodd says he's "probably the right choice" and has "demonstrated leadership," but adds that Bernanke was "too slow to act during the early stages of the foreclosure crisis."


LOTHIAN: Now, Senator Dodd says he still has some serious concerns about the Fed's failure to protect consumers and he says that the confirmation hearings will be thorough and comprehensive -- Suzanne.

MALVEAUX: Now, Dan, as you know, the president, he is getting some criticism today for his choice of golf partners. He teed off yesterday with the president of UBS America, the Swiss-based bank. It's at the center of a U.S. investigation into illegal tax shelters.

Now, Robert Wolf, he was also a top donor for the Obama campaign. What is the White House saying about this?

LOTHIAN: Well, Suzanne, this first came up yesterday when we got word that he was playing with Robert Wolf. At the time, the White House said, listen, this is simply a friend that the president is getting together with on his vacation.

CNN though today pressed for further comment on this issue, and White House Deputy Spokesman Bill Burton said the following quote: "Robert is a member of the president's economic advisory team, as well as a friend. The president has led the way on financial reform and regulation. And I can assure you his feelings on the matter will remain the same regardless of whom he spends some of his well-earned vacation with "-- Suzanne.

MALVEAUX: OK. Thank you, Dan.

Well, now on to new swine flu warnings. It is hard not to get scared when you hear a scenario like this one. You imagine 90,000 people dead from the virus this fall. Health officials say it could happen under the worst possible circumstances. And half the country could be infected. Health and Human Services Secretary Kathleen Sebelius is about to join us.

But, first, I want to bring in our Tom Foreman. He is here to put the danger into perspective -- Tom.

TOM FOREMAN, CNN CORRESPONDENT: And it's a good thing to have perspective on this, Suzanne, because this virus really is quite a frightening thing if you look at it and you look for the worst-case scenario. But that's what we are trying to avoid.

This is a map from the World Health Organization showing week 31, which was a few weeks ago, of where we were in the process. You see there are some hot spots over there in Indonesia, up here in Europe. The biggest though are here in South America, Central America.

I want to bring this up full screen. So, this was we were just a few weeks ago. And now when I get rid of this, this is where we are more recently. Look at this, more danger area spreading out here, the warning areas, the serious warning areas, getting much higher. And now let's look at the United States proper, because in the United States, you can see the same effect. These are localized outbreaks of it here.

This is sort of sporadic in the brown area here. But you see the more serious affect here up in Maine, for example, and out here in Alaska. So you can see all over the country, we are being affected by swine flu right now.

The point is to what degree can they capture this, contain it and keep it from getting much more dangerous here, much more into the red zone as we saw as we looked at the world maps? This we do know right now. In the United States at this moment, we have about 8,000 cases that have reached the point where people had to be hospitalized.

That's what we have had so far this year. And we have had about 522 fatalities from this disease. That's much, much worse than what we were hearing about this spring when we heard all the warnings. A lot of us felt we dodged a bullet. Now, however, this is what health officials are looking at, Suzanne, as we head into the fall and trying to keep these numbers from getting much worse -- Suzanne.


MALVEAUX: Health and Human Services Secretary Kathleen Sebelius joining us here in THE SITUATION ROOM. Thank you very much.

Obviously, things are moving very, very quickly here. And with vaccinations not expected to be ready until months into the school year, how do we slow this thing down?

KATHLEEN SEBELIUS, U.S. HEALTH AND HUMAN SERVICES SECRETARY: Well, Suzanne, I think the first thing is to try and keep people from getting the virus.

And we know that hands transmit germs quickly. So, washing hands, covering coughs and sneezes with an elbow, not hands, is simple, but effective. And a second is stay home if you are sick. Keep your kids home if they are sick. Stay home until 24 hours after the fever leaves. And that is a great way to keep this virus from transmitting quickly from person to person.

MALVEAUX: How are you actually going to be able to get folks to get not just shot, but two shots, and weeks apart, to protect themselves from the swine flu? How difficult is that going to be?

SEBELIUS: Well, we think it is going to be a huge challenge.

Right now, the take-up rate for seasonal flu vaccine is still under 50 percent of the population. Health care workers are below 50 percent in terms of the health care workers who get their seasonal flu shots. So, we have a new vaccine, a new set of shots.

And I think getting people to understand that, while we don't want folks to panic, this is serious, people can get seriously ill. They can die. We have had deaths of pregnant women, of children with underlying health conditions, of some of the folks in our target populations.

We want to make sure that Americans take this seriously, so, when we have vaccine available, we actually get the priority populations, particularly, but others who want the vaccine. There will be plenty of vaccine. But people need to get ready to say being safe and secure is more important than the inconvenience of getting two shots in the arm during a couple weeks this fall.

And we think that is a message that we hope to work with you, Suzanne, and others in the media to get that message out to folks.


Thank you very much...


MALVEAUX: ... Secretary Sebelius, for joining us here in THE SITUATION ROOM, and getting that message out. Thank you.


CAFFERTY: Now we go to Jack Cafferty who is joining us this hour with "The Cafferty File."

Jack, what are you following?

JACK CAFFERTY, CNN ANCHOR: You going to get a flu shot?


CAFFERTY: I think I am, too.




CAFFERTY: Rhode Island plans to shut down the state government for 12 days without pay for the workers as a way of dealing with severe financial problems.

The plan laid out by Governor Donald Carcieri is expected to save $22 million in Rhode Island, struggling with a 12.7 percent unemployment rate and the loss of hundreds of millions of dollars in tax collections because of the recession.

The plan is for 81 percent of Rhode Island's work force to stay home without pay one day a month for the next 12 months. The first day is scheduled for next week. The governor said there is no other option. He said he would consider other ideas if they could also save $22 million.

He said the state can't lay off any more employees, because they did that last year. And he has ruled out raising taxes. Essential employees, prison guards, state police, that kind of thing, they will work on these days, but nobody else.

Rhode Island isn't the first state to make this kind of move either. Nineteen other states have furloughed employees or considered doing so in order to try to survive this current economic crisis.

In Maryland, state employees will be forced to take as many as 10 days without pay. And 200 employees are going to be fired, left to spend every day off until they find another job.

In California, state employees have been forced to take every other day off and a third Friday was added to that this summer. The workload presumably remains the same, as people are getting a day less pay. It probably doesn't do much for morale, don't you think?

Here is the question, though. Should periodic government shutdowns become a permanent way to save money? Go to and post a comment on my blog.

If you think about it, we could probably get by without a lot of these government services for maybe like one day every other week or whatever, don't you think? MALVEAUX: Well, you know, we saw the D.C. government shut -- the federal government shut down under Clinton. So, we will have to see.

CAFFERTY: Well, the federal government, they could shut down and leave it shut down.


CAFFERTY: What -- what was that noise?

MALVEAUX: Just a little bit of a bang here. I think we're OK, though, Jack. I think we're recovering.


CAFFERTY: Get under the desk and save yourself.


MALVEAUX: Got to let it go. All right, thank you, Jack.

Well, we now know minute by minute all the drugs that Michael Jackson took in his final hours. Could anyone have survived such a powerful cocktail of medication? We will call in CNN's Dr. Sanjay Gupta.

And he is not just any senior citizen at a health care town meeting. Why does the president's great uncle still have so many questions about reform? We will have an exclusive report.

And some homeowners are fuming about an Obama administration program that is not giving them the mortgage help they desperately need.


MALVEAUX: Want to go straight to Betty Nguyen, who has some new details, some information that is just developing.

Betty, what do you know?

BETTY NGUYEN, CNN CORRESPONDENT: Yes, we have learned that shuttle Discovery, that launch at 1:10 in the morning, well, that has been scrubbed.

NASA says there's been a bit of a mechanical issue specifically with a potentially broken drain valve. Now, NASA still has a little more time. They have until August 30. But there is no word on when the next launch might be. But, again, shuttle Discovery will not take off at 1:10 in the morning. That launch has been scrubbed -- Suzanne.

MALVEAUX: OK, thank you very much, Betty.

New insight into Michael Jackson's final restless hours. We have been going over court documents in the investigation of his death. And they describe in detail how the medication he got to help him sleep may have killed him.


MALVEAUX: Joining us, chief medical correspondent Dr. Sanjay Gupta.

Sanjay, thanks for joining us here.

When you take a look at what was administered through the IV to Michael Jackson on that evening, what do you make of this kind of treatment and the timeline leading up to his death?

SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Well, it is pretty remarkable to look at. And it's not just what drugs were given, but over what period of time. A relatively short period of time.

And lots of these drugs are administered quite often, but take a look at how often. Look at the timeline -- 1: 30 in the morning, 10 milligrams of Valium; just a half an hour later, two milligrams of Ativan. That's a medication often used for anxiety or as a sedative. Right after that, two milligrams of Versed, which is a very similar type of medication; two milligrams of Ativan again after that; and then two milligrams of Versed. And then, finally, this medication that we've been hearing so much about, 25 milligrams of Propofol.

These are medications that are used as sedatives often, except for that Propofol, which is often used as a general anesthetic. And as we've talked about, Suzanne, in the past, I have never heard of this being administered outside the hospital setting. So, that, in and of itself, is quite remarkable.

MALVEAUX: And Sanjay, would Propofol been as dangerous if he hadn't gotten this other cocktail of drugs that he had received before the Propofol?

GUPTA: Well, you know what's interesting? If you're taking these types of medications on a regular basis, you can start to develop some tolerance to the medication. So, what may be a dose that would absolutely knock one person out may not have the same effect on somebody else.

But the thing about Propofol, and the reason this is a medication typically only used in hospitals -- and I don't know if you can see some of this actual video of Propofol being used -- it is a medication that can cause almost instant respiratory depression, meaning it can make you -- your breathing just stop instantaneously. So, when you get it in a hospital, for example, you have to have a breathing tube just standing by, you have to have monitoring equipment. So, even if there had been no other medications given, Propofol alone can cause that sort of problem.

MALVEAUX: And Sanjay, seeing the list of medications that he received, there was one addiction expert who said that getting less than those drugs, it would have put an elephant out. What do you make of Michael Jackson's tolerance? What do you make of his body's condition to receive so many drugs in such a short period of time?

GUPTA: Well, you know, what -- what we're hearing -- and, you know, obviously, this is still sort of -- some of the investigation is still ongoing -- that some of these medications were given for sleep, and they were not quite putting him to sleep, which was why the -- the amounts of medication was sort of ramped up over this short period of time.

But you are right. I think that there is a -- there is sort of this concept of tolerance. But, at some point, when you're talking about so many drugs over such a short period of time, you know, it -- it would be -- it seems like it would put just about anybody out, just without the propofol even.

So, it's -- it is a little bit hard to say. I -- I have heard of some -- some cases where people are taking escalating doses of Valium, for example, you know, 50, 60 milligrams, even, of Valium. But, again, all these drugs in combination, it's not so much the interaction as the compounding effect of all of them.

MALVEAUX: OK. Thank you very much, Dr. Sanjay Gupta. Thanks, Sanjay.


MALVEAUX: Dick Cheney has a new reason to come out swinging against President Obama. A new investigation is adding fuel to a high-powered feud.

Plus, he is a relative of the president, but that does not necessarily mean that he is sold on health care reform. Stand by for a CNN exclusive.

And we will hear from a high school teacher credited with preventing a Columbine-style massacre.



MALVEAUX: Stand by for a SITUATION ROOM investigation. Is the president's plan to help homeowners get affordable loans working? We have evidence that banks are not living up to their part of the bailout bargain.

And why did the president interrupt his vacation to show his confidence in the Fed chairman? The timing in question right now.

And this clash of the titans keeps on going. Dick Cheney takes aim at the president over a new investigation over the Bush era.

(COMMERCIAL BREAK) MALVEAUX: Even with some improvement in the housing market, the foreclosure crisis still is very real for many Americans on the brink of losing their homes. And we are learning that an Obama administration program designed to help them is not living up to expectations.

Our national political correspondent, Jessica Yellin is here with a SITUATION ROOM investigation.

Jessica, what have you learned?

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Suzanne, the president sold this program as a lifeline for desperate homeowners. We met a family in Arizona that tried to take advantage of that lifeline, but they feel like they have been thrown overboard.


YELLIN (voice-over): With their income cut in half, Mark and Angela Kollar are trying to hold on to their house in economically battered Tucson. They drained their 401(k), switched careers. Nothing worked.

ANGELA BACCA-KOLLAR, HOMEOWNER: I don't wish this on anybody. And I know we are not the only ones.

YELLIN: They still have one shot left, the Obama administration's Making Home Affordable program.

MARK KOLLAR, HOMEOWNER: OK. So, you and I will be discussing Making Home Affordable plan?

YELLIN: Mark Kollar is talking to his bank about its latest loan offer.

KOLLAR: You are holding my feet to the flame? Who is your supervisor there today?

YELLIN: Doesn't sound good. More on the Kollars in a moment, but first some background on the program.

In return for taking all those bailout billions, the banks agreed to give a little bit back and cut mortgage payments for qualified homeowners to 31 percent of their before-tax income. Who are qualified homeowners? They have to have an income. They have live in the house, which can't be worth more than $730,000. And homeowners get three months to prove they can pay.

To help the banks, the Obama administration chips in incentives, including cash payments for every new loan. The program started in March. The mortgage industry's top lobbyist tells us lenders are making good progress.

JOHN COURSON, PRESIDENT, MORTGAGE BANKERS ASSOCIATION: This is a program where the interest of the homeowner and the interest of the lender are aligned, because everybody wants to avoid that foreclosure and keep that loan on the books and the borrower in the home.

YELLIN (on camera): And how well is the program working?

COURSON: The program is working very well.

YELLIN: Sounds promising, right? We decided to take a closer look.

Speaking to housing counselors, consumer advocates, and homeowners, we found endless complaints of banks rejecting apparently eligible homeowners or pressuring them into loans they can't afford. But, by far, the most common complaint is that lenders keep giving homeowners the runaround, dropping calls, losing paperwork, all while the foreclosure clock keeps ticking.

(voice-over): The industry says it takes a while for such a massive program to get up and running.

COURSON: The servicers out there now, as they are training more and more staff, as they are getting more and more people who are familiar with this program...

YELLIN: But Treasury Secretary Tim Geithner, who oversees the program, called in bank executives to tell them they weren't doing enough. According to the Treasury Department's July report, fewer than 6 percent -- only 230,000 of up to four million eligible homeowners -- have new mortgages under the program. Some banks, like JPMorgan Chase, have enrolled 20 percent of their eligible customers; Citibank, 15 percent.

But two banks that got the biggest bailouts have some of the lowest enrollment rates -- Wells Fargo, 6 percent; Bank of America, 4 percent. Both Bank of America and Wells Fargo tell CNN those numbers are misleading. They say they have many more offers in the pipeline and have increased staffing. Bank of America says it's much bigger than other banks so they have more applicants to process. Wells Fargo points out it has refinanced many hundreds of thousands of loans outside the program. All that is little solace for homeowners who are flooding Web sites like, with complaints.

ANGIE MORESCHI, CONSUMERWARNINGNETWORK.COM: What we're seeing is it comes down to money. And it does not appear to be in the banks' financial interests in the long run to actually do these loan modifications. And that's the sad reality that we are dealing with.

YELLIN (on camera): Some consumer advocates worry that there's not enough bank oversight. The Treasury Department says it is watching the banks. Officials visit lenders and review records. There's even a help line. Which brings up back to the Kollars. When they called, the representative told them, we can't strong-arm the bank for you and told them to talk to a housing counselor, which they had already been doing for months.

(voice-over): The Kollars now earn about $3,000 a month, which means according to the 31 percent formula, their new making home affordable loan should be less than $1,000 a month. The offer they got -- $2,892 -- about 98 percent of their income.

MARK KOLLAR, HOMEOWNER: Now, I feel like, you know, we've been -- what's the proper word? Screwed?

YELLIN: Bank of America declined our request for an interview. But after our inquiries, a bank representative contacted the Kollars and told them they're re-evaluating and might offer them a more affordable loan.


YELLIN: Now, the Treasury Department would not go on camera, but the official who's in charge of this program tells us in a statement he believes it's off to a strong start, even if performance has been uneven. He says the administration will hold lenders accountable by giving declined homeowners a look for a second chance, by issuing public reports detailing each bank's participation rates and giving banks incentives, Suzanne, for making successful loans.

MALVEAUX: It's an excellent report. And if our viewers are watching and they have similar concerns or similar mortgage problems, how do they contact you and tell you about it?

YELLIN: Fantastic question, Suzanne. We do want to hear your story. So if you have had a nightmare trying to get a mortgage modified under the president's plan, please send us your photos or video to Click on mortgage nightmares, listed under assignments. We will take the most compelling stories, put them on TV and keep asking the administration -- until we get answers -- about why so many people are hitting a brick wall.

MALVEAUX: That's excellent.

Thank you, Jessica.

Excellent report.

Now, something you don't see every day at those many health care town hall meetings -- or, rather, someone we haven't seen. It was a relative of the president who showed up at a forum in Virginia to get information about reform.

Well, our senior Congressional correspondent, Dana Bash, she caught up with him for this exclusive report -- great get, Dana.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, you know, Suzanne, about 2,000 people live here in this upscale retirement community in a swing district in Virginia. Many have questions about health care reform. But one may surprise you, because he still calls the president by his childhood nickname -- Barry.


BASH: (voice-over): Eighty-two-year-old Ralph Dunham boarded the shuttle bus at his retirement community to attend his congressman's health care town hall in search of information about the president's plan.

(on camera): Do you feel like you have a good grasp of what's in the plans for overhauling health care?

FRANK DUNHAM, PRESIDENT OBAMA'S GREAT-UNCLE: No, I don't, because the thing is over 1,000 pages long.

BASH: Do you feel confused by it?

DUNHAM: I don't really know very much about it. I don't know whether to be confused or not.

BASH: (voice-over): Dunham is like hundreds of other senior citizens here with questions. The difference is that Dunham is President Obama's great uncle.

DUNHAM: He's my brother's grandson. He's my...

BASH: (on camera): So he's your great nephew?

DUNHAM: Yes, he's a great-nephew.

BASH: (voice-over): Dunham says he has a good relationship with the president, who lives 11 miles away in the White House, but hasn't spoken to his nephew since he took office.

(on camera): He's a pretty good grassroots operator in you.


BASH: Do you think -- do you think maybe he should call you and say, help me get the word out, uncle?

DUNHAM: Well, I don't know about that. But he's been pretty busy lately.

BASH: (voice-over): Dunham came to this forum.

DUNHAM: I'm hoping to get some information, just like everyone else.

UNIDENTIFIED FEMALE: This generation is kind of afraid of what's coming next.

BASH: Unlike many of his friends here expressing fear that proposed cuts in Medicare to pay for reform jeopardizes their benefits, Dunham worries more about his uninsured son, the president's cousin.

DUNHAM: If something should happen to him, we could either let him die or go broke. That would be our choice.

BASH: That's why though Dunham is in the dark about details, he's fiercely supportive of his nephew's quest to expand health coverage.

UNIDENTIFIED FEMALE: Health care is a right, not a privilege.

BASH: Here, he learned a bit more about the proposal, but said this spirited meeting also taught him his nephew is must do a better job communicating.

DUNHAM: He's going to have to talk to the general public about it and reassure them about it.


BASH: Now, a White House spokesman said that not everybody in the president's family should be expected to know the details of his plan. But Dunham says he's confident he'll even -- eventually get more details. He also said he believes, ultimately, the president will be successful in what he calls a cause of life or death -- Suzanne.

MALVEAUX: OK. Thank you very much, Dana.

Well, the vacationer-in-chief throws reporters a curveball.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I apologize for interrupting the relaxing that I told all of you to do, but I have an important announcement to make concerning the Federal Reserve.


MALVEAUX: So what was the rush to renominate Ben Bernanke?

We'll toss out some ideas when we take a political time out.


MALVEAUX: Let's take a timeout from the political rhetoric.

Our CNN's Jessica Yellin is here to start things off -- Jessica.

YELLIN: Suzanne, everyone deserves a vacation, especially the president of the United States. And he does seem to be enjoying it. He's been playing golf, tennis, reading, spending time with his family -- oh, yes, and renominating Federal Reserve chief Ben Bernanke. Hmmm, curious timing, especially after the White House said not to expect any news this week.

So why did President Obama take time away from his family and friends to make the announcement?

Could it possibly be because of the other news of the day?

The White House officially announced today that the budget deficit will be $2 trillion higher than expected over the next decade and unemployment rates are expected to rise to 10 percent before getting better. Now, that's the type of bad news that could push Wall Street into a tailspin. So the question is, are we all distracted enough by the Bernanke news to forget about the bad deficit news or will that number haunt President Obama -- Suzanne?

MALVEAUX: Well, let's bring in our CNN senior analyst, Gloria Borger; former Bush speechwriter David Frum of the American Enterprise Institute; and Clarence Page of the "Chicago Tribune".

Obviously, some bad news needed to be mixed in with a little bit of good news -- Gloria, what do you make of the timing?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: I think Jessica Yellin is being way too cynical, don't you think?


BORGER: No, of course, she's right. There's -- there's so much diversion going on here. Clearly, the president knew he was going to get bad news on the deficit, wanted to announce Ben Bernanke to kind of reassure the financial markets that there is stability here. He also got some -- some good housing numbers. But I think that they'd -- that they'd like to talk about a little bit. So, yes, completely diversionary.


DAVID FRUM, FORMER BUSH SPEECHWRITER: Probably the most politically significant number in the projection is the one that's embedded in it, that the economist, Bruce Bartlett, has pointed out, which is that this -- this budget assumes that in the year 2012, the growth rate will be 4 percent. If that is true, that is the most important political fact in this whole thing -- bigger than any deficit number. It implies a very strong economy in the election year of 2012 -- bad news for Republicans, good news for Barack Obama.

MALVEAUX: Clarence?

CLARENCE PAGE, "CHICAGO TRIBUNE": Except he wasn't bragging about that today. That's why that would be a heck of a thing to promise. We certainly -- we certainly hope to see 4 percent growth, but -- all the way around.

But this has sort of reminded me of the day Ronald Reagan signed a bill that labor unions didn't like, but he spent a little time at a pub with some blue collar workers that day so that the -- the video really outshined the bad news that was involved with -- with the legislation.

This was one of those stories that I think the president has to be concerned about, along with, so far, the stock market has responded positively.

MALVEAUX: Is there any way that he can use this $2 trillion additional in the deficit here, this bad news, to his benefit, to -- to push forward in health care reform and say we really need to turn this around? BORGER: Well, you know, there are two sides to that coin.


BORGER: You know, there are two sides to that coin. You now, Peter Orszag, budget director, says this proves exactly why we need health care reform, because we can't go on spending on health care the way we're spending.

Now, the flip side of that is, is if you've got health care reform that's going to cost a trillion dollars, maybe this isn't the time to do all of it, which is what lots of Republicans and some moderate Democrats are suggesting.

So I think you can play that either way.

FRUM: Well, the deficit is a reality. The Orszag promise is a huge savings from their health care reform...


FRUM: a -- a wish or a projection or a guess or a fantasy but...

BORGER: Well, they're doing some things that are new...

FRUM: Right.

BORGER: you don't know how it's going to cause debt, right?

FRUM: But we have a pretty good idea from the events of the summer that the political class is going to shy away from the Medicare cuts. And that is the...

MALVEAUX: OK, we've got to wrap...

FRUM: That is the big source of savings.

MALVEAUX: We've got to wrap it there and then we'll take the next question on the other end of the break.

We'll continue our discussion ahead. And we will turn to Dick Cheney's defense of Bush era interrogation tactics -- does he have a point or just another bone to pick with the Obama administration?


MALVEAUX: Well, there's nothing quite like a good political feud.

Let's bring back Jessica Yellin with our Political Time Out -- Jessica.

YELLIN: Suzanne, in the history of arch enemies, there was Aaron Burr and Alexander Hamilton, Luke Skywalker and Darth Vader, and Dick Cheney and President Obama.

The former vice president certainly seems determined to earn a reputation as the president's most unrelenting, unflinching, unforgiving critic. His latest swipe was in response to word that the Obama Justice Department will investigate CIA interrogations.

The former vice president says the decision "serves as a reminder, if any were needed, of why so many Americans have doubts about this administration's ability to be responsible for our nation's security."


That comes after he's already trashed the president's national security policies as recklessness "cloaked in righteousness," saying they raise the risk of more terror attacks.

This from the president's own cousin. Remember, they claim to be related.


OBAMA: And when they do these genealogical surveys, you're -- you're hoping you're related to somebody cool, you know, like Abraham Lincoln or Willie Mays or somebody. But Dick Cheney, that's a letdown.


YELLIN: Now, the president has said he is cleaning up after the Bush-Cheney years and he called the Guantanamo Bay prison, in particular, "a mess, a misguided experiment."

So the question is, do Vice President Cheney's comments put President Obama on the defensive or should the White House welcome the distraction -- Suzanne?

MALVEAUX: All right. This is one heck of a family feud here.

Clarence, I want to start off with you.

PAGE: I think Vice President Cheney and President Obama are each defending their positions, which are consistent. And Cheney is trying to redeem his record to say you see, the torture wasn't so bad, it helped us save lives.

The problem is he can't point to any specific lives saved or any specific terrorist acts that were avoided. In general, they did get good information through these -- through these extraordinary techniques. But the debate goes on.

And so I think what President Obama wants to avoid now is to get bogged down in some big investigation or trials right now. But the attorney general is moving forward with an investigation.

MALVEAUX: David, you were shaking your head there. And I know President -- the president likes a good fight here.

Do you think that he -- that he welcomes this?

FRUM: Look, I don't know why we're calling the vice -- the former vice president unforgiving when it is this president's attorney general who is threatening to deploy the instrumentalities of U.S. justice against people who thought they were defending the country. I mean it is not Dick Cheney who has anything to lose with this. It's rank and file CIA people who thought they were working to defend the country. And maybe sometimes they were doing things that were a little unorthodox and maybe they bent the rules, but people get medals pinned on them for doing the unorthodox things in all the movies everybody watches. And these are the people who are now squarely targeted.

President -- here's what President Obama, I think, what he should do. If he wants to go ahead with these investigations, he should pledge, in advance, a pardon for every CIA agent who is investigated. He wants to know the truth, he wants to have a different policy, that's his prerogative as president. But there should be no question that any of these people, who thought they were defending the country, would be exposed to legal fees or legal jeopardy.



BORGER: I don't think that would make the CIA feel any happier about these investigations. I mean, you know, we still don't know whether the prosecutor is going to recommend any criminal investigation, but...

FRUM: It shouldn't be a question.

BORGER: But, getting back to Dick Cheney, I mean the president has a real political problem on his hands, as you just -- as you just pointed out. If he can turn this into a fight with Dick Cheney, that's fine with him, because any time he is going to have a fight with somebody who's 20 -- 28 percent or 30 percent in the polls, that's good for President Obama.

But as to the larger, more serious issue, I mean, I think, there's a real sense that the White House knows that this could ultimately backfire on them, because most of the American public agrees with you and doesn't want to go back there...


BORGER: ...for once, right -- and doesn't want to go back there and re-litigate the question of Bush administration interrogation policies, particularly as it pertains to the CIA agents, not to the folks who wrote the legal memorandum, but the CIA agents who were out there in the field actually believing and trying to save American lives.


PAGE: But the attorney general did say Monday he's not interested in prosecuting anybody who, in good faith, acted within the guidelines as they existed at that time.

BORGER: And that would be the agents.


PAGE: Right.

MALVEAUX: And should the president...


MALVEAUX: Should the president respond, Clarence?

Real quick.

PAGE: Well, should he -- should he respond?


PAGE: I think -- I think he should. I don't think he will.

MALVEAUX: OK. Great. We've got to leave it there. Thank you so much for joining us.

Jack Cafferty joining us again -- Jack.

CAFFERTY: The question this hour, should periodic government shutdowns become a permanent way to save money?

Jeff in Houston says: "Perhaps. Here's a better question, would anyone notice?"

Eric says: "Shutting down the government only fuels the recession. Some trimming should be done, like do we really need home mail delivery on Saturday? But shutting down the government only hurts the employees, who then hurt the economy by not having any money to spend."

Loni writes: "Jack, I'm a single parent. I work for our local water agency. I'm already paying $700 a month for health insurance and we're not getting a raised this year. We're now being forced to take the week between Christmas and New Year's off without pay. I can't find a second job to pay for all this. Contrary to what some say, we work our butts off."

Katiec in Pekin, Illinois: "The American people working for private industry have to tighten their belts while wondering daily if they're going to have a job. Why should government employees not have to sacrifice, as well? The perks, retirement, etc. That they receive put private industry to shame. So asking them to be part of the solution is a no-brainer." Sue in California: "How about starting with permanently getting rid of all those cushy, extra paid holidays that government workers get, such as Veterans Day and Martin Luther King Day, to save money? We taxpayers have to pay for them to get those extra holidays that we don't get for ourselves. It's unfair, discriminatory and a major inconvenience for the rest of us."

John in Pennsylvania: "If the state shuts down for 12 days, does that mean you get to deduct 12 days of state taxes?"

No, John, it doesn't mean that at all.

And Shawn writes: "Jack, I'm a Nevada state employee. I'm not working today, because today's my furlough day. I have another 22 more over the next two years. I wouldn't mind so much, but top management and the elected officials, governor and lieutenant governor, etc. Did not extend the same benefit to themselves."

What a surprise.

If you didn't see your e-mail here, you can go to my blog at and look for yours there, among hundreds of others.

You want to do this again tomorrow -- Suzanne?

MALVEAUX: Let's do it. Let's try it again tomorrow, Jack.

CAFFERTY: You're on.

MALVEAUX: I think we can.

CAFFERTY: I'm up for it.


CAFFERTY: I'm up for it if you are.


CAFFERTY: All right.


Well, watch for your purse and your pocket -- who knows, if you're lucky, you might find a little extra cash. CNN's Jeanne Moos checks out putpocketing and finds out it's not as easy as it looks.


JEANNE MOOS, CNN CORRESPONDENT: (voice-over): Oh, I'm sorry. Excuse me.

Did -- did you notice anything?


MALVEAUX: Here's a look at Hot Shots.

In Taiwan, special police forces showcase their fighting skills during a security exercise.

In Jerusalem, Greek Orthodox nuns walk with candles on their way to what's believed to be the tomb of Mary.

In South Korea, two men cheer for a rocket launch, although it failed to push a satellite into orbit.

And in England, a musician performs with his guitar form inside a litter bin.

Hot Shots -- pictures worth a thousand words.

Well, a rash of random acts of generosity has broken out in London. Former thieves are putting money into the pockets instead of taking out.

CNN's Jeanne Moos has more on this Moost Unusual phenomenon.


MOOS (voice-over): Question -- what do you call the opposite of a pickpocket?


UNIDENTIFIED MALE: The guy on the right distracts her. Then the guy on the left slips his hand into her bag and snags her wallet right there.


MOOS: This guy used to be a pickpocket.


UNIDENTIFIED MALE: Now, I'm a putpocket. This means that I'm putting money back into people's pockets.


MOOS: No, it's not charity, it's marketing. A British broadband company called Talk Talk hired 20 former pickpockets and magicians to roam around London. Their goal -- to slip notes ranging from five to 20 pounds into pockets and purses.

(on camera): A 20 pound note -- the equivalent of $32.

(voice-over): Along with the money comes a card saying "another brighter idea from Talk Talk."

ALEX WOOD, SPOKESMAN, TALK TALK: The London police are OK with it. There's nothing criminal about it whatsoever.

MOOS: It's sort of like that old Burger King commercial come to life.


UNIDENTIFIED MALE: I reached in my pocket and found all this extra money.


UNIDENTIFIED MALE: Hey! (INAUDIBLE). Hands on your crown! Hey, hey.


MOOS: So far, nothing like that has happened in London. And nothing like this, either.


UNIDENTIFIED MALE: Hey, hey, don't you dare put your (EXPLETIVE LANGUAGE) hand in my pocket.


MOOS: Not a single putpocketer has been smacked by someone mistaking him for a pickpocketer. Check out Chris Fitch's (ph) technique, practiced on a reporter.

UNIDENTIFIED MALE: I just played that I was overtaking you and stretch it over here to the paper.

MOOS: Putpocketers say it's far easier than pickpocketing.

(on camera): Easy enough for a total novice?

(voice-over): I found dropping a dollar bill into an open bag was easy enough, though most of my victims did detect my presence and turned around or searched their bag.

UNIDENTIFIED MALE: He knew something happened.

MOOS (on camera): Everyone knows something happened.

(voice-over): I got away with it six times and got nabbed twice.

(on camera): Caught. But I'm giving you money, I'm not taking it.

UNIDENTIFIED MALE: It's OK. It's OK. Thank you.

MOOS (voice-over): He even gave back the dollar.

UNIDENTIFIED MALE: I'll give it back.

MOOS (on camera): Ooh, I'm sorry. Excuse me.

(voice-over): For a second, I thought I got over on this guy. But he's a security officer.

UNIDENTIFIED MALE: I was looking through the -- the glass.

MOOS (on camera): Oh, you caught me in the glass?

UNIDENTIFIED MALE: You know, running right here.

MOOS: People next to glass houses shouldn't throw money.

Jeanne Moos, CNN, New York.


MALVEAUX: Well, we want you to check out our political podcast. To get the best political team to go, subscribe at

I'm Suzanne Malveaux in THE SITUATION ROOM.


Lisa Sylvester is in for Lou -- Lisa.