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Republican Lawmaker Under Fire; Health Care Reform Fact and Faction

Aired September 10, 2009 - 20:00   ET



CAMPBELL BROWN, CNN ANCHOR (voice-over): Tonight, here are the questions that we want answered.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The reforms -- the reforms I'm proposing would not apply to those who are here illegally.



OBAMA: It's not true.

BROWN: And check out the reaction from House Speaker Nancy Pelosi. How could a congressman call out the president of the United States in the middle of a speech to a joint session of Congress? Who is he and how much support does he have and will Americans stand for outbursts and anger in place of a real debate on health care?

OBAMA: They are turned off when they see people using wild accusations, false claims, name-calling.

Plus, how easy is it for crooks to pull a fast one on government regulators?

BERNARD MADOFF, CONVICTED FELON: Obviously, first of all, this conversation never took place.

BROWN: New tonight, Bernie Madoff caught on tape, the master scammer who stole $65 billion. How did he dupe the FCC?

MADOFF: You know, you don't have to be too brilliant with these guys.

BROWN: New research found six-month-old babies judged others based on the color of their skin. What can parents do? I will ask expert Po Bronson.


ANNOUNCER: This is your only source for news. CNN prime time begins now. Here's Campbell Brown.

BROWN: Hey, everybody. Those are our big questions tonight, but we're going to start, as always, with the "Mash-Up," our look at the stories making an impact right now, the moments you have missed today. We're watching it all, so you don't have to.

And we do begin with breaking news, news that gets us just a step closer to a vaccine for the H1N1 viruses, new research just out showing that a low dose of the vaccine may be enough to protect you from the virus. Listen.


DR. ANTHONY FAUCI, DIRECTOR, NATIONAL INSTITUTE OF ALLERGY AND INFECTIOUS DISEASE: There was concern that you would need two doses of the standard type of vaccine, which would have implications for supply, as well as implications for whether or not you would even capable of inducing a response. A single dose of the vaccine that we have been testing in a very short time after the immunization, in our case, eight to 10 days, in some other cases, 21, induces a response that's quite a good, powerful immune response.


BROWN: Again, Doctor Anthony Fauci there from NIH.

Swine flu vaccine expected to be available in the middle of October.

We're going to turn now to politics and the fallout tonight from the president's big health care address. Taking most of the flak, no, no, no, no, not the president, but the congressman who dared to scream at him right in the middle of the speech. Let's relive that moment.


OBAMA: The reforms I'm proposing would not apply to those who are here illegally.

WILSON: You lie.


OBAMA: It's not true.


BROWN: And that congressman yelling, "You lie," Republican Joe Wilson of South Carolina. You see him right here in mid-shout. He apologized to the White House last night and to reporters again this morning. The president accepted his apology. Listen.


WILSON: Last night, I heard from the leadership that they wanted me to contact the White House and state that my statements were inappropriate. I did. I'm very grateful that the White House, in talking with them, they indicated that they appreciated the call and that we needed to have a civil discussion about the health care issues. And I certainly agree with that.

OBAMA: I'm a big believer that we all make mistakes. He apologized quickly and without equivocation. And I'm appreciative of that.


BROWN: Now, Congressman Wilson said he is grateful to the president for accepting his apology. But that is not all he said today.

We just found out he's trying to raise some money off of the incident. Stick around, because you are going to want to see that tape. We should note the congressman's Democratic challenger also experiencing a big fund-raising windfall today as well.

The Wilson episode sent Republican leaders on Capitol Hill scrambling to try to strike the right tone here. The gist of their response, that their colleague was way out of line, but that they do understand his frustration. Here they are on message.


REP. JOHN BOEHNER (R-OH), HOUSE MINORITY LEADER: As Mr. Wilson said last night, his behavior was inappropriate. I think all of us know there's a lot of emotion around this issue of the government involvement in our health care.

REP. DAN LUNGREN (R), CALIFORNIA: I would expect more civility on the floor, but I understand his frustration.

UNIDENTIFIED MALE: There has been such a level of frustration with what has been going on.

MICHAEL STEELE, CHAIRMAN, REPUBLICAN NATIONAL COMMITTEE: I know a lot of my friends in the DNC and on the left want to make this the brouhaha, so yet again we're not talking about the president's speech and what he said. We're talking about personalities and how feelings are hurt and all of that.


BROWN: So Republicans were treading gingerly, or Republican leaders, I guess we should say.

But the conservative base, they are fired up. Stay with us tonight. You're going to hear what they are saying about the congressman's outburst. We will also drill down on the details of the president's speech, a fact check of Congressman Wilson's claim that the administration wants to provide health care for illegal immigrants. This is a pivotal point in this debate. We're all over it tonight. Another quieter, though, message to President Obama today and this one about the war in Afghanistan. Democratic leaders signaled that they see little support for more troops, a request the president is expected to make very soon. There are currently about 62,000 U.S. troops in Afghanistan.

CNN's Anderson Cooper is with some of them this week on the front lines, where temperatures can reach 120 degrees.


ANDERSON COOPER, HOST, "ANDERSON COOPER 360": The first thing you notice when you get into Camp Jaker is this dust. The Marines call it moon dust. It's a fine powder that coats everything and gets everywhere, into weapons, in clothing, even food. There's nothing you can do about it.

There is food, of course. But it's all prepackaged, meals ready to eat.

As for leisure activities, a few old weights and a sledgehammer is the gym.

There is no privacy here, no place to simply take a break.

The bathroom facilities here are primitive to say the least. There are pipes in the ground which are -- well, it's obvious what the pipes are for. And then the toilets, there's four of them. They're communal.


BROWN: Anderson Cooper in Helmand Province in southern Afghanistan. The 360 team, including Michael Ware, Dr. Sanjay Gupta, they are going to be live at 10:00 Eastern tonight.

A brand-new controversy for ACORN. Remember ACORN, the nonprofit housing group? Two ACORN employees just got fired. They were caught on tape in Baltimore allegedly giving advice on how to avoid taxes to a couple posing as a pimp and a prostitute. The tape was actually made by an independent filmmaker.

On the tape, the ACORN employee tells the pretend prostitute to list her occupation as a performance artist.


UNIDENTIFIED FEMALE: Your business is a performing artist.

UNIDENTIFIED FEMALE: A performing artist?

UNIDENTIFIED FEMALE: Which you are. OK, so you're not lying.


UNIDENTIFIED FEMALE: A little play on words. But it's under a performing artist, OK? So, stop saying prostitute.


BROWN: An ACORN board member says in a statement that the employees did not meet ACORN's standards of professionalism.

We're going to take you to Germany now, where a very racy commercial is causing an uproar, not because it is sexy, but because it is pretty out of line. Take a look.


UNIDENTIFIED FEMALE: It's a fairly standard sex scene like you see in the movies, live bodies in the throes of erotic passion, sexy stuff, until you see who the leading man in this particular love scene is, Adolf Hitler. The tag to this ad, AIDS is a mass murderer. The clip is designed for a German AIDS lobby group called Rainbow to remind people to use protection. Joseph Stalin and Saddam Hussein also feature.

But some other AIDS awareness groups say the campaign is sensationalist and counterproductive.


BROWN: The commercial has had over 50,000 hits on YouTube. It was created to raise awareness of World AIDS Day in December.

"American Idol"'s former judge just released a statement wishing "American Idol"'s newest judge the best of luck. Paula Abdul says Ellen DeGeneres is wildly funny and wildly talented. And here is what Ellen had to say today.


ELLEN DEGENERES, "AMERICAN IDOL" JUDGE: I am going to be the new judge on "American Idol."


DEGENERES: I'm not leaving here. Don't worry about that. I'm going to have a day job and a night job. It's the time for a living and we're all doing that.

So, I'm the people's point of view, because I'm just like you. I sit at home and I watch it. And I don't have that technical -- I'm not looking at it in a critical way. I'm looking at it as a person who is going to buy the music.


BROWN: DeGeneres did sign a multiyear contract. Congratulations to her.

And that brings us right to tonight's "Punchline." This is courtesy of Conan O'Brien. (BEGIN VIDEO CLIP)

CONAN O'BRIEN, HOST, "LATE NIGHT WITH CONAN O'BRIEN": Sources close to Paula Abdul say that her dream is to create a new show that would compete directly with "American Idol" and get better ratings. Yes, in other words, Paula is still drinking.



BROWN: And that is tonight's "Mash-Up."

Tonight's big question, can politicians in this country actually stick to the facts in the health care debate? We have seen lies, distortion, not to mention just plain rudeness on both sides, frankly. So, we're going to cut through the noise tonight and try to get you some answers.

Plus, how easy is it to get away with a $50 billion scam? We have Bernie Madoff on tape explaining it all.


MADOFF: You know, you don't have to be too brilliant with these guys.

The best thing to do is to not get involved with, as you said, written instructions, if possible, because any time you say you have something in writing, they ask for it.



BROWN: I want to go back right now to the shout heard around the world, the president of the United States heckled by a member of Congress. That's the congressman, there he is right there, Republican Joe Wilson of South Carolina, someone who is more than entitled certainly to disagree with the president, but is certainly expected at least to respect the office of the presidency. And that is not what he did last night.

Let us watch it once again.


OBAMA: The reforms I'm proposing would not apply to those who are here illegally.

WILSON: You lie.


OBAMA: It's not true.


BROWN: Now, again, this is a presidential address to a joint session of Congress, one of the most formal and sacred gatherings of our government. Hard to overstate the shock of Congressman Wilson's outburst. But Nancy Pelosi's face said it all. Take a look.


OBAMA: The reforms I'm proposing would not apply to those who are here illegally.

WILSON: You lie.


OBAMA: It's not true.


BROWN: Her jaw literally dropping there. Congressman Wilson, of course, apologized, as we mentioned, immediately after the speech.

This morning, the president accepted his apology. Capitol Hill Republicans trying to move on here, but the grassroots fired up. Listen to Rush Limbaugh. This was this morning.


RUSH LIMBAUGH, RADIO TALK SHOW HOST: He is lying, President Obama is, from the moment he opens his mouth until he ends the speech. I was shouting you're lying throughout the speech at the television. You're lying. That's a lie. Joe Wilson simply articulated what millions of Americans were saying.


BROWN: So, can't you almost feel the congressman morphing into a folk hero of the right wing?

Conservative blog has already started raising money for him, urging activists to give generously -- this as Democrats are sounding downright giddy on Capitol Hill.

Our Dana Bash caught up with Massachusetts Congressman Jim McGovern, who is beginning to see the end of a long road.


REP. JIM MCGOVERN (D), MASSACHUSETTS: All the stars are aligned. I mean, if we can't do this now, then when the hell are we going to be able to do it? I want to help this president make history.

We need meaningful health care reform. And it may not be everything I want. I mean, I'm a single-payer person. But at the end of the day, if it moves the ball forward, then I think it's going to be worth supporting. (END VIDEO CLIP)

BROWN: So, the question, whether the Wilson episode will give Democrats even more of a boost right now or whether it will reignite passions in the conservative base of the Republican Party or do both.

Joining me right now, our political panel, senior political analyst Gloria Borger, Republican Party strategist and CNN contributor Alex Castellanos, and Democratic strategist James Carville, also CNN contributor.

Welcome to everybody.

Alex, let me play this for you. This is some tape we just got in of Congressman Wilson. This is a video he posted on his Twitter site just a little while ago trying to raise money off this episode. He says liberals turning him into a scapegoat. Watch this.


WILSON: They want to silence anyone who speaks out against it. They made it clear they want to defeat me, and pass the plan. I need your help now. If you agree with me that the government-run health plan is bad medicine for America, then I ask for your support.

Please go to and contribute to my effort to defeat the proponents of government-run health care.


BROWN: Alex, what's up with this guy? He's talking out of both sides of his mouth, apologizing for the outburst and then trying to make a buck out of it. What do you make of this?

ALEX CASTELLANOS, CNN POLITICAL CONTRIBUTOR: Well, he better raise a buck out of it. His opponent has raised half-a-million bucks out of it since it happened. So, I don't think there's anything wrong with that.


BROWN: Seriously?


CASTELLANOS: Oh, of course not. His opponent is doing it.


BROWN: On the same day that he calls the president or the White House and apologizes, and then, like, what, less than 24 hours later, he's having a fund-raiser?

CASTELLANOS: He's having a fund-raiser, but he's disagreeing on policy, not on the politics. It's a mistake -- let's agree that I think the congressman wishes he could find another way to gain worldwide attention. He probably won't be doing this again.

And he made a mistake politically. And this helps the Democrats in the sense that Obama has got one job, get his Democrats together. He has got enough votes to get what he wants if he can hold his Democrats. He can't do it on policy. They are flaking off. They don't want to go for his big-government plan, enough of them.

So, but on the politics, Wilson has helped coalesce the Democrats. So, that's the good news for them. The bad news for President Obama here is that there are questions about his credibility on this, on the health care plan.

He's saying -- I guess the man who is being the most flexible with the truth in this debate is President Obama. Americans are having trouble believing that this is not going to interfere with the doctor-patient relationship or that this is going to cost less.


BROWN: All right. Well, hold off on that angle, because we are getting into that. In our next segment, we're going to do a truth test of many of the things he said last night.

But let's stick with this, James. Give me your take on what is going on more broadly. Do you think -- do agree with Alex that you are going to see Democrats coalescing?

JAMES CARVILLE, CNN POLITICAL ANALYST: Yes. Well, I think Democrats were going to coalesce anyway. And this helps on the margins.

But I think this guy is the mainstream of the Republican Party. And he really -- he said the leadership asked him to apologized. He called the chief of staff. He never called the president.

I don't think he's sorry at all. And he's now bragging -- also, in addition to raising money, he's bragging about all the support he has back in his home district.

Again, this is a party that is dominated by its talk radio Southern wing and this guy is emblematic of that, and he fits right in to what most of them think. He's right there. You're looking at the Republican Party of the United States circa 2009.

BROWN: Well, Gloria, I want to go back for a second to the look of horror on Nancy Pelosi's face.


BROWN: ... which was -- which said it all. Throw up that picture again, if we can. I mean, this is a watershed moment, the president heckled in front of a joint session of Congress.


BROWN: How bad, Gloria, have things gotten up there?

BORGER: It's bad. It's really bad.

And if looks could kill, Nancy Pelosi's look would kill. And it was interesting to me that she decided not to gavel him to order, because she had the right to do that, Campbell, in the middle of this address. But she clearly made a decision that she didn't want to interrupt the president, that he was handling himself just fine.

But it really shows you how tense things have gotten over this health care reform debate in the Congress. And I think the problem for the Republicans, quite honestly, is that Joe Wilson's anger became their message last night.

And the president today could look very gracious and say that, yes, they had accepted the apology. And in his speech, he talked about bipartisanship.

Now, Alex will probably say he's not being bipartisan in health care reform, but he spoke about it last night.


BORGER: And what we heard from Joe Wilson was the anger of the Republicans.

BROWN: So, but is there a divide in your party here, Alex? You've got some casting this guy as a truth-teller? But leadership of the party, you know, picking up the phone and urging him to call Obama and apologize, saying this was an embarrassing moment.

Who is speaking for this party? Is he going to be the new conservative icon or Joe the plumber, if you will?

CASTELLANOS: James, by the way, is misinformed. Wilson did call the president. He ended up speaking to the chief of staff. But he apologized.

And he was right to do. And every Republican thinks, you don't invite someone to your house, to the U.S. Congress, to speak to you, and be uncivil this way. So, the mainstream of the Republican Party all thinks this was not the right thing to do.

However, there is an issue here of the president's credibility. This president is saying things that are hard to justify. You know, he's -- for example, James and I, we are in the spin business in political campaigns. And the president last night said, well, there's nothing in this plan that requires you to dump your doctor or your insurance plan.

Well, that's not the question. The question is, will your employer dump you if the government throws out there some beta cheaper government plan. So, there are a lot of sneaky words there.

BROWN: Alex, that's a fair point. The wording was carefully chosen.


BROWN: I think anybody would concede that.

James, I'm going to give you the last word.

CARVILLE: Well, first of all, he issued a written statement. I think the president wasn't in his office right after the speech. And he's not a very brave man, because he didn't try to talk to the president. He issued a written statement. That's been vetted and people have talked about that.

But, again, you're looking at a guy that represents the mainstream of the modern Republican Party. That's what politics are in America today.

CASTELLANOS: Then Barney Frank must represent the Democrats, and Charlie Rangel probably represents...


BROWN: You guys can continue this debate later.

BORGER: There is no mainstream in any party anymore.


BROWN: A fair point.

OK. We're going to end it there. We're out of time.

Gloria, Alex, James, always good to see you. Thank you, guys.


BROWN: When we come back, the big question, why do powerful men tend to say incriminating things on tape? We have seen it over and over again. Tonight, it's a double dose. We have got Bernie Madoff explaining how to scam government regulators and the married Republican bragging openly about his sexual escapades with two lobbyists. When will they ever learn?



BROWN: Tonight, we want to drill them on the president's speech. There is so much noise out there. We're going to cut through it all, get the facts to you, what is true, what is false. Bill Adair joining us with the bottom line on all of this when we come back.


BROWN: So much shouting today about Congressman Joe Wilson's shouting last night, but probably the biggest question, was there even an inkling of truth in the congressman's claim?

Here to put some health care claims, many of the health care claims from last night to the truth test, Bill Adair, editor of the Pulitzer Prize-winning

Hey, Bill. Good to see you.

BILL ADAIR, EDITOR, POLITIFACT.COM: Thanks for having me back, Campbell.

BROWN: Well, let's go with that first question. The heckler, the Truth-O-Meter -- we're going to put him to the Truth-O-Meter, Congressman Joe Wilson during last night's speech. Let's listen.


OBAMA: The reforms I'm proposing would not apply to those who are here illegally.

WILSON: You lie.


OBAMA: It's not true.


BROWN: All right, Bill, so give us the lowdown here. What do you think?

ADAIR: Yes, Congressman Wilson gets a false on the Truth-O- Meter.

We specifically were checking whether he indeed was right that President Obama was lying about whether illegal immigrants would get insurance coverage under his plan. And we found that Wilson was wrong.

Indeed, if you look at the bill, for the first thing, when you look at all of the bill, it really doesn't say much about illegal immigrants, but it does specify that they are not eligible for the -- the credits, what are called affordability credits. That would be the government subsidy helping them be covered.

So, he gets a false. And I think it's interesting. This is the first time we have fact-checked a heckler.


ADAIR: But, I think, as you were discussing in the last segment, I think that's what has happened in American politics. You know, the -- the facts are coming out from hecklers now.

BROWN: Well, not the facts, as it turns out, but a fair point there, Bill. Republicans also making this, I think, more sedate claim about the coverage of illegal immigrants. So to look at this more specifically, House Republican Caucus says, "Nothing in any of the Democratic bills would require individuals to verify their citizenship or identity prior to receiving taxpayer-subsidized benefits." Is that true?

ADAIR: We gave that a half true on our truth-o-meter. The truth part is they're right that there's nothing specifically in the bill. There's no language that requires that kind of verification. But there are some mechanisms in the bill that would presumably make that happen.

One is, to the extent that the credits might be enforced through tax credits and the IRS, that would be an enforcement mechanism. But probably the biggest one would be the health care choices administrator, the person who runs the health care exchange would presumably enact some sort of regulations to enforce the rule that said that illegal immigrants were not eligible. So we gave that one a half true on our truth-o-meter.

BROWN: All right, Bill. And finally, the president said in his speech last night that this plan is a model of cooperation. Take a listen.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: It's a plan that incorporates ideas from senators and Congress, from Democrats and Republicans.


BROWN: He says it is bipartisan. Is it?

ADAIR: We gave that a barely true on our truth-o-meter. I think that's kind of wishful thinking on the president's part. I think he would really like it to be very bipartisan, of course. But when you look as we did at the actual amendments that have passed and there are a lot of amendments that have passed that have been proposed by Republicans, but those are primarily technical amendments, not substantive ones and not the key ones that are important for Republicans to support this plan. There are really only a couple along those lines. And so, he's technically right that there are a lot of Republican amendments, but they're not substantial ones. So he got a barely true on that one.

BROWN: All right. Bill Adair for us once again, tonight. Bill, as always, thank you. We will be seeing you back here again before this debate is over, I am quite sure.

ADAIR: You bet. Thanks for having me.

BROWN: All right.

There are about 50 billion reasons why Bernie Madoff is behind bars right now. That is how many dollars his investors lost. But here is one more. Listen to the confessed Ponzi schemer coaching a witness in how to deal with the SEC.


BERNARD MADOFF, PONZI SCHEMER: These guys they work for five years at the commission then they become a compliance manager at a hedge fund now. Or they go to work for proprietary trading debt. Nobody wants to stay there forever. So nobody wants to give them that information. And, you know, it's none of their business.



BROWN: If there is ever a scammer's hall of fame, Bernie Madoff will be front and center. The confessed swindler committed what prosecutors say was the largest investor fraud ever by a single person more than 50 billion in losses. But late last year, his house of cards started to crumble. Here's how it all began.


UNIDENTIFIED FEMALE: Early December, Bernard Madoff and his sons, both executives for the firm, huddled in his New York City penthouse. He reportedly confesses to them he'd be running a Ponzi scheme that his business was a lie.

JACOB ZAMANSKY, ATTORNEY: It's hard to believe that somebody so successful, who people trusted for years was so greedy and so corrupt to steal their money.

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT (voice-over): The alleged mastermind will keep living a life of luxury inside his Manhattan penthouse apartment.

UNIDENTIFIED FEMALE: I think it's a miscarriage of justice.

UNIDENTIFIED FEMALE: The names of thousands of Madoff's customers are made public, some well known. Actor Kevin Bacon and his wife, actress Kyra Sedgwick, and Holocaust survivor Elie Wiesel. Wiesel lost his life savings.

VOICE OF ELIE WIESEL, NOBEL LAUREATE: He's a psychopath. It's too nice a word for him. I would simply call him a thief, scoundrel, criminal.

UNIDENTIFIED MALE: Bernie Madoff entered a federal court in Manhattan today and pleaded guilty to the greatest investor fraud in U.S. history. The 70-year-old former Nasdaq chairman confessed to stealing $64.8 billion from at least 4,800 investors around the world.

ANDERSON COOPER, CNN ANCHOR: Bernie Madoff sentenced to 150 years in prison today. That's the maximum for his crime. Madoff also said he will live with the shame of what he did until he dies. UNIDENTIFIED MALE: The SEC never conducted a competent a competent and thorough examination or investigation of Madoff for operating a Ponzi scheme.

UNIDENTIFIED FEMALE: I think he should rot in hell. He's evil. He's evil. He's way up there with all the evil people in the world.


BROWN: And today, there is more. Madoff caught on tape coaching a witness and how to do dupe the SEC, a subject he apparently knew quite a bit about. Listen.


BERNARD MADOFF, CONVICTED SCAMMER: Obviously, first of all, this conversation never took place, Mark, OK? You know, you don't have to be too brilliant with these guys because you don't have to be. You're not supposed to have that knowledge and, you know, you wind up saying something which is either wrong or, you know, it's just not something you have to do."


BROWN: Harvey, let me start with you here. The SEC missed so many red flags. And listening to him, listening to Madoff, he makes the agency, the agency that you ran sound like a bunch of idiots. How did that happen? How did the SEC bungle this?

HARVEY PITT, SEC CHAIRMAN 2001-2003: Well, I think it's clearly heartbreaking. The SEC has always been a lawyer's agency, and I think the problem is it needs far more skill sets than just legal talents. It needs people who have traded in the markets, who understand how markets operate, economists and so on. And the SEC has always attracted young people right out of college for the examination function and they are no match for anyone who is sophisticated and who's also intending to commit a fraud.

BROWN: But -- but --

PITT: But it really is a tragedy.

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Yes, look, here's the thing. It maybe that there's a mismatched of talent, but here's the thing. And, Harvey, you're an example of this. You spent a great deal of your career at the front end at the SEC, then you went into private practice and they're certainly no match for the salaries that can be had in private practice versus the government.

Is there a culture problem where the people at the SEC want those jobs in private practice so they're just not as hard on people who are delinquent as they should be?

PITT: Well, I don't think so. The SEC throughout its history has been an incredibly tough agency. In fact, many people complained all throughout its history that it's been too tough. This is obviously not part of that, but that is the reputation that the SEC has always enjoyed.

What I think it really amounts to is that this cannot be done on a government compliance or examination program. And when I was chairman at the commission, I recommended that we adopt a new approach in which every portfolio manager, like a Madoff, would have to be examined, either yearly or every other year by.

BROWN: All right. So, Harvey, let me stop you. Why wasn't that adopted under your watch?

PITT: I left when I had -- after proposing it, I put it out for comment and then I left, but it was not pursued. And now Chairman Schapiro said that she is going to pursue it and adopt it.

BROWN: OK. Well, let me also go back to your original point, you know, about the SEC at times being too tough. How can you even say that given what's happened here, given this -- I mean, this is embarrassing as it gets for a federal agency.

PITT: I think it is as embarrassing as it gets and they weren't tough in this instance, but what I am saying is the agency has had a 75-year history. This is a tremendous problem for the commission. They are addressing it now, but it by no means defines the agency's totality of existence.

BROWN: Ali, let me go to you on this. Do you see, I mean, there are attempts now given this embarrassment to try it to make some of these changes. But given what you just said, the fact that you have these, you know, underpaid government employees investigating, you know, millionaires, billionaires, is it inherently not going to work?

VELSHI: This isn't about being tough. This isn't about new proposals and legislations. This is about people dropping evidence at the SEC's lap that someone was doing something wrong. Research evidence, not an anonymous tip, research evidence and the SEC didn't look into this.

I'm not sure about the 75-year history. A lot of companies failed. A lot of companies cheated a lot of people in that time. This is basic. This isn't complicated.

BROWN: All right. We're going to leave it end it there. Harvey Pitt, Ali Velshi, thanks to both of you for joining us. Appreciate it.

Former SEC Chair Harvey Pitt there along with Ali Velshi, as you just heard.

We all know in the TV business, know it all too well, watch what you say, you never know if there's a microphone on. But one married Republican just didn't learn the lesson and talks in great detail about his sexual liaison with two lobbyists. That is tonight's "Breakout."

(COMMERCIAL BREAK) BROWN: Eliot Spitzer, Jim McGreevey, Mark Sanford -- just when you think you have seen it all and heard it all when it comes to politicians and sex scandals, well, along comes a California state assemblyman who got too close to a live microphone when he started bragging. And you will not believe what came out of his mouth or his explanation for that matter. Thelma Gutierrez has both in tonight's "Breakout."


THELMA GUTIERREZ, CNN CORRESPONDENT (voice-over): This is Mike Duvall, a conservative Republican and self-described family values politician caught here making sexually explicit remarks at the California state assembly.

MIKE DUVALL (R-CA), STATE ASSEMBLY REPUBLICAN MEMBER: She wears little eye patch underwear.

GUTIERREZ: The lawmaker was unaware he was being recorded on an in-house channel at the state capital, repeatedly boasting about sexual exploits with a married woman to a fellow committee member before a meeting.

DUVALL: So I've been getting into spanking her.


DUVALL: Yes, I like it.

GUTIERREZ: The 54-year-old married two-term legislator from Orange County was talking about a liaison with a lobbyist who works through a firm that represents a utility company. Duvall served as vice chairman of a committee on utilities and commerce.

DUVALL: So, the other day she came here with her underwear, Thursday. And so we had, so we had made love Wednesday a lot.

GUTIERREZ: In 2000, Duvall was awarded the Ethics in America award by Chapman University. He received a 100 percent grade from a family values group, and he's an outspoken foe of gay marriage. He's also heard bragging about a second woman.

DUVALL: She's hot. I talked to her yesterday. And she goes, so are we finished? No, we are not finished. I go, you know about the other one, but the other one doesn't know about you.

GUTIERREZ: When the recording was made public, Duvall issued an apology. But after legislative leaders removed him from two committees and launched an ethics probe into his actions, Duvall decided to resign.

KAREN BASS (D), CALIFORNIA ASSEMBLY SPEAKER: We have such huge issues before the legislature. And to have this become a distraction he felt his responsibility was to step aside and to resign and to go home. GUTIERREZ: Duvall released a statement on his Web site saying, "I want to make it clear that my decision to resign is in no way an admission that I had an affair or affairs."

PROFESSOR DAN SCHNUR, UNIVERSITY OF SOUTHERN CALIFORNIA: Mike Duvall's career is not the fact that he's unfaithful to his spouse. Plenty of politicians of both parties have survived that. What killed Duvall's political career is that he talked about it in front of an open microphone.

GUTIERREZ: An episode that closed the door on his service in the California assembly.


BROWN: That was CNN's Thelma Gutierrez reporting.

Some shocking new research or interesting new research, I should say, on babies and race. The biggest question here is, is racism in our DNA? We're going to talk to one of the writers who did some of this research or looked at some of this research when we come back.


PO BRONSON, AUTHOR, "NURTURESHOCK": Many parents do find it uncomfortable to talk about race with their kids. But it's not just because they're afraid of race. It's more that they have decided. And I certainly was one of them. I had decided that it was hypocritical.



BROWN: A provocative new book is raising all sort of new questions about when parents need to start talking to their kids about race, and it's a lot earlier than you think.

In his book "NurtureShock," our newsmaker tonight, Po Bronson says it's important for parents to confront their kids with some of these issues at a very young age. He says the science shows us that young children are often noticing skin color a lot younger than you think. Listen.


PO BRONSON, AUTHOR, "NURTURESHOCK": Even at 6 months old, children will stare longer at photographs of people of a different race than their parents. Their young brains are trying to make sense of what this skin color difference means and it's taking longer to process it. It's not that there's any racial or ethnic meaning to it, per se. But it does come on pretty quickly.

BROWN: And you also found that toddlers notice it even more so than differences in gender, right? BRONSON: Three-year-olds have handed a deck of cards with a bunch of kids' faces on them. And if you ask those 3-year-olds pick out which ones will be your friends or you would like as friends, a vast majority of kids actually pick out friends only of their own race. And by the time they're 5 years old, if you hand them the same deck of cards and you ask them to sort it into two piles any way that they want and mention not race at all, the 5-year-olds -- 16 percent will use gender to sort the piles, but 68 percent will use skin color to sort the pile.

BROWN: So why? What's behind this, or what do we think is behind this?

BRONSON: Kids' brains are trying to categorize the world, Campbell, and they're trying to make sense of things. And in it, by essentialism, they make this categorical mistake. They assume that people who look like them share the same things and like the same things that they like and, therefore, are more similar to them.

And what this hints at is that we shouldn't avoid talking about race to our kids, especially avoid talking about skin color. Kids need to hear about skin color the same way they hear about gender. That boys and girls can grow up to do anything, that people have different skin color are all our friends. And it's a very neutral and safe way to talk about it without passing on old racial attitudes.

BROWN: But it's funny. I know there was also a lot of research you looked at that shows these conversations are very difficult for parents to have.

BRONSON: Many parents do find it uncomfortable to talk about race with their kids, but it's not just because they're afraid of race. It's more that they -- they have decided -- and I certainly was one of them. I had decided that it was hypocritical. I didn't want to point out to my daughter, well, people have different skin colors, and then point out that skin color doesn't matter. No matter your skin color, you can be our friend.

It seemed, look, why point it out if it doesn't matter? And so parents who want to embrace diversity are making the choice to avoid talking about race thinking that is the very best way to raise their children. But the science is saying something different. It's saying that in the absence of communication from parents, young kids' brains prone to categorization will make errors and will make some of the wrong judgments and it's very helpful. It's really good for kids to hear that people of all skin colors are equal and that nobody is inferior.

BROWN: So what about older children who go to diverse schools? Does that change attitudes?

BRONSON: Unfortunately, what goes on is self-segregation in schools, and it turns out that self-segregation by skin color goes up as school diversity goes up. And the result is you can go to quite diverse schools and not necessarily be learning to embrace people of every race. (END VIDEOTAPE)

BROWN: Up next, or Po Bronson, rather, the author there. When we come back, up next we all know there is a mortgage crisis, and there's actually help out there for many homeowners. So why aren't more of them taking advantage of President Obama's mortgage relief program? Ali Velshi talking to folks on Main Street about that just ahead.

And top of the hour on "LARRY KING LIVE," Dr. Andrew Weil on health care reform.


BROWN: More people who need help paying their mortgages are getting it, but -- and it's a big but -- many more are not, even though the help is out there.

Let's bring in now chief business correspondent Ali Velshi for tonight's "Money and Main Street."

And, Ali, the government is offering a hand to homeowners in dire straits, and it is helping some people stay in their homes. Why aren't more jumping at the chance to get involved in this program?

VELSHI: Well, Campbell, you and I talked about this back in March when the government brought this program in. They put $75 billion aside, and the idea was that it was going to help some people modify their mortgages and some people refinance.

Now, they thought that about four million people would benefit from the modification of their loan. In other words, basically renegotiating the terms of your loan.

What we've got right now is about 360,000 people that have gone through the system and modified their loan. A far cry away from the four million that they have expected. So good news for those that had but a lot less than what the government had anticipated would have happened. They say over the next few months they're hoping to double that number.

BROWN: So again, Ali, why so few people? You said, what, 360,000 out of the four million eligible?


BROWN: Why are so few getting the help?

VELSHI: A couple of problems. One is that there are a lot more people who have applied for it who haven't got it. When we've been out on the street, we've been talking to people who say the system is cumbersome.

Now, look, it's a mortgage, so it's going to be cumbersome. It's not that you get to fill out one form and get a change. A lot of proof you have to show of things that have happened to you. Here's what has to happen.

You have to either suffered some loss of income. Not a job loss, but a lowering of your income. But you have to be able to show that you're in hardship and that you can actually pay that mortgage if they reduce your payment. That takes a long time to do, and a lot of people don't actually know whether they qualify.

The banks are doing a little bit better job at trying to get people through the system, but it's still cumbersome. It's still taking a long time, and that's why more people haven't actually qualified and gone through the entire process of a loan modification. Hopefully that will change in the coming months -- Campbell.

BROWN: All right. Ali Velshi with us tonight for "Money and Main Street." And we should let you know, go to to figure out how much house you can afford.

That's going to do it for us tonight. "LARRY KING LIVE" starts right now. See you tomorrow night.