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Your Money, Your Vote: Candidates and the Money Crisis; Bailout Outrage; Homecoming Nightmare: Ike Evacuees Face Destruction

Aired September 25, 2008 - 12:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

TONY HARRIS, CNN ANCHOR: And hello, everyone. I'm Tony Harris. Here are the headlines for Thursday, September 25th.
Stocks shoot up on bailout news. Congress may be near a compromise and rescue for Wall Street and the financial sector.

Putin on point. Are the Russians look past President Bush and ways to deal with the next American leader?

A no-named storm churning up the seas off the East Coast and maybe throwing a kink in your weekend travel plans.

You're in the CNN NEWSROOM.

The nation's money crisis, developments unfolding today from the White House to Capitol Hill to the campaign trail. At the White House, President Bush meets in just a few hours with congressional leaders, and presidential candidates Barack Obama and John McCain.

It is a summit on the crisis or Capitol Hill. Lawmakers say they're close a deal on the $700 billion bailout.

We will get an update on their progress. And in Oxford, Mississippi, we expect about update this hour on whether tomorrow night's presidential debate will go on. McCain has called for it to be postponed.

The White House says today's bailout summit is not about the politics, but finding a solution to the crisis. Here's White House Press Secretary Dana Perino just moments ago.

(BEGIN VIDEO CLIP)

DANA PERINO, WHITE HOUSE PRESS SECRETARY: What we'll do at the 5:00 meeting is have -- I'm sorry, 4:00 meeting -- have everybody get together and hopefully start driving to a conclusion. I can't tell you if we would have a final deal by then or if it would emerge right after that. We'll have to see. But we think that the participation of the two candidates could help us in resolving this situation.

(END VIDEO CLIP)

HARRIS: John McCain putting his presidential campaign on hold to focus on the financial crisis. He is due to arrive on Capitol Hill this hour. Our Dana Bash is there. And Dana, I guess the question is, what is it that John McCain believes he can do, can either of these candidates do as we get close to some kind of a deal here?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, I can answer that, first of all, by telling you what he says he's going to do, Tony. In fact, I can also tell you that the campaign trail is literally on its way here to the Capitol right now.

John McCain is expected to be here where I am, in the Russell Senate Building, where his office is, in just a matter of moments. And basically what he is hoping to do is plant himself here, at least for the next four hours, until the White House meeting, and see if he can at all have any conversations with leaders, even with potentially members of the committee who are involved in this.

And you can listen to actually what McCain himself said this morning in New York before heading back to Washington.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Well, I'm an old Navy pilot, and I know when a crisis calls for all hands on deck. That's the situation in Washington at this very hour, when the whole future of the American economy is in danger. I cannot carry on a campaign as though this dangerous situation had not occurred, or as though a solution were at hand, which it clearly is not.

(END VIDEO CLIP)

BASH: Now, that is McCain's rhetoric, if you will. That is the message that he's putting out there as he's heading back to Washington. But I'll tell you a little about the reality of how things are working here on the Hill.

There are negotiations going on as we speak inside the Senate Banking Committee. John McCain is not a member of that committee, Tony, so he doesn't have staff in that room, so he can't technically be involved in those talks.

So what his aides are saying is that he's going to try to talk to leaders, try to sort of figure what's going on in and around those talks. And, you know, it seems as though it would be hard for this committee to let John McCain to come into these intense negotiations without Barack Obama here, and he's not here.

HARRIS: Boy. All right. Dana Bash on Capitol Hill for us.

Dana, thank you.

Barack Obama heading to Washington for the White House summit. He is also calling for prompt action to deal with the financial crisis.

Jessica Yellin live from Washington with more on Barack Obama's thoughts as he moves forward to participate in this summit today -- Jessica.

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Hi, Tony.

Well, Barack Obama is saying that the current economic situation, the fact that America is facing this crisis, is outrageous. He's blaming greedy Wall Street players and irresponsible politicians who have favored deregulation for getting the U.S. into this position. And he is in fact calling on Washington to act.

Now, the Obama campaign is, in broad terms, also suggesting that John McCain himself is using this issue to his political advantage, essentially a Johnny-Come-Lately to this issue. As recently as last week, saying the fundamentals of the economy were strong, and why is this suddenly a crisis? And suggesting that really there is no reason to cancel a debate tomorrow night.

Barack Obama says this time, more than any other, is when Americans need to hear from the people who might be their future leaders. Let's listen.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: Our election is in 40 days. Our economy's in crisis. Our nation is fighting two wars abroad.

The American people, I believe, deserve to hear directly from myself and Senator McCain about how we intend to lead our country. The times are too serious to put our campaign on hold or ignore the full range of issues that the next president will face.

(END VIDEO CLIP)

YELLIN: So Barack Obama is going to head to Washington, D.C., and then he's ready to go back to debate prep. He is hoping to face John McCain on that debate stage tomorrow night -- Tony.

HARRIS: OK. Jessica Yellin for us.

Jessica, thank you.

The new bosses at Fannie Mae and Freddie Mac on Capitol Hill this hour, sure to face some tough questions. They will explain their strategy to right the mortgage giants.

The government seized Fannie and Freddie 18 days ago and fired the top brass. The move put $5 trillion in mortgages on the backs of the taxpayers. The goal, make Fannie and Freddie smaller and less of a risk to the overall economy.

Two former Fannie execs are denying allegations of favoritism. "The Wall Street Journal" reports today that at least one of them got a special deal on a refinance. The paper says the mortgage went through a program for influential figures and friends of Countrywide's chief executive. You know, some sort of bailout bill is coming together on Capitol Hill right now, not exactly the fine print the president or the treasury secretary wanted to see.

CNN's Brianna Keilar joining me at the Capitol.

And Brianna, maybe you can give us a bit of an update on where things stand.

BRIANNA KEILAR, CNN CORRESPONDENT: Tony, as we speak, Democrats and Republicans in the House and Senate are meeting, and they're hammering out some of the final details. And actually, this could yield ultimately the bipartisan final bill that we're going to see. But just how close exactly is Congress with the Bush administration on an agreement here? Well, it kind of depends on who you're listening to.

Here's what House Speaker Nancy Pelosi, obviously a Democrat, is saying.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D), HOUSE SPEAKER: Everybody knows that we must intervene. And so we will act, and we will act deliberately and in a bipartisan way, and soon.

(END VIDEO CLIP)

KEILAR: So privately, there is a concern from Democrats that John McCain could kind of come into the scene here in Washington and take some credit for what they feel, or they say, was already in the works. And so you're hearing this language from them, basically saying we're on the cusp of an agreement.

But if you listen to Republicans, although they are saying there is progress being made -- for instance, we heard House Minority Leader John Boehner saying, emphasizing basically, that there is no deal yet. We heard from a Senate Republican leadership aide who said that if Republicans get some of the things they want in these negotiations that are going on right now, that I mentioned before, he said he's optimistic there will be broad Republican support. A big "if" there.

There has been some lacking broad Republican support. Much more support from Democrats, it seem. But the sense, Tony, is that while some of these major Republican critics may not jump on the bandwagon, they also may not get in front of it.

HARRIS: All right. CNN's Brianna Keilar on Capitol Hill for us.

Brianna, thank you.

The proposed bailout and it's $700 billion price tag, it has got a lot of taxpayers angry and taking action. In fact, protesters scheduled at about 130 U.S. cities and towns today. Many of the events are clustered in California and Florida, as you can see here. The events coordinated by a coalition of groups across America. Reaction to this massive bailout plan appeared less than enthusiastic. John King, our chief national correspondent, checked on the mood in Montana.

(BEGIN VIDEOTAPE)

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT (voice-over): Montana is a long way from Wall Street and Washington, geographically and culturally. The talk of a big bailout there is the source of outrage here.

GOV. BRIAN SCHWEITZER (D), MONTANA: I say, my God, this looks like a condition where the powerful are going give money to the rich. What's new?

KING: Democratic Governor Brian Schweitzer calls it a classic case of Washington disconnect from the real world.

SCHWEITZER: People say, "Now wait a minute. My stock portfolio has gone down. I lost 15, 20 percent. My value is down to zero, and they're going to bail out the big banks. What gives here?"

KING: Out here what gives is a sudden and dramatic shift in public opinion. The more people hear about the $700 billion plan, the more they're trying to block it.

SUZANNE STUDER, CONGRESSIONAL STAFFER: You're calling to protest. Well, you know, I've heard a lot of those. So let me just get this written down.

KING: At the Helena office of Republican Congressman Denny Rehberg...

STUDER: Against the bailout.

KING: ... Suzanne Studer says she's never seen anything like it. A flood of calls and ample evidence of why consensus in Congress is so hard to come by.

STUDER: What are you saying, basically hit the bottom and then start again?

KING: Dozens the past two days, and not one in favor of the bailout.

STUDER: I've gotten one, "Think about it."

KING: Montana senators give similar accounts of overwhelming opposition and concern Congress is in too much of a rush.

You're a governor. You understand sometimes you've got to make decisions that drive you crazy, but you've got to do it. Is this something you think they have to do, despite that feeling on the street? Or is this something where they need to say, "Whoa, time out. Let's think a little more"? SCHWEITZER: Ask a few questions. If we're going to bail these coyotes out, well then how about if we have an equity position? Why wouldn't the taxpayer make a little money if they do turn around? Instead of just shoveling that money out the door and have them pay themselves now big golden parachutes again?

KING: All this in the closing weeks of a fiercely- contested presidential campaign, and it's a pointed reminder most members of Congress face the voters, too.

And at a time of profound economic anxiety, it's apparent here that the politicians promising to fix things are held in considerably less than high esteem.

John King, CNN, Helena, Montana.

(END VIDEOTAPE)

HARRIS: Very quickly, we want to you to Oxford, Mississippi, right now, where a news conference is under way, a discussion on tomorrow night's scheduled debate.

Let's listen in, and there's Mississippi's governor, Haley Barbour, speaking.

(JOINED IN PROGRESS)

GOV. HALEY BARBOUR (R), MISSISSIPPI: ... welcome you to Oxford.

This is a great day for the University of Mississippi, for the community of Oxford and this part north of the Mississippi, but it's really a great day for all of Mississippi. And we're very glad that you're here.

We want you to enjoy yourselves, but I also want to bring to your attention as we welcome you to our state that there's a lot here for you to see and become aware of between now and tomorrow night. If you're kind of a high-tech guy or lady, you might want to go to our Web site, msdebate08.org. And there you can find information about Mississippi's economy, about the new Toyota plant being built -- it's about 40 miles from here, which last year was the most sought-after economic development project in the United States, where Toyota will make the Prius starting in 2010, the first time it's ever been manufactured outside of Japan.

Or go 20 miles to the east, where General Electric next month will cut the ribbon at a facility where they will manufacture composite jet engine fan blades and assemblies. I mention that because, when they announced the plant two years ago, the vice chairman of GE said this is the most sophisticated manufacturing General Electric does anywhere in the world. And they're choosing to do it in Batesville, Mississippi, which may not be the first thing your viewers, listeners or readers might think.

If you're interested, we are very proud of how Mississippians responded when we bore the brunt of the worst natural disaster in American history three years ago, Katrina. It's a long way from the coast, but you should know we had hurricane-force winds 240 miles inland after Katrina.

So this is going to about great debate tomorrow night. We're excited about it. We're excited our state and the University of Mississippi gets to host it. But I do want you to know while you're here in Mississippi, there's a whole lot more to cover, particularly as we run up to tomorrow night's debate.

Welcome. And then the chancellor and I would both be glad to take any questions that somebody might have.

Yes, sir?

HARRIS: Well, OK, if you listen to the governor of Mississippi, and I suspect others who have assembled there, what you hear is that the debate for Oxford, Mississippi, is still on. We're still waiting for further clarification on that, but for the latest campaign news, we invite you to check out our Political Ticker. Just log on to CNN.com/politics, your source for all things political.

Stormy weather along the East Coast, and we're keeping an eye on where it is headed.

(COMMERCIAL BREAK)

HARRIS: Wrecked homes, rats and mosquitoes. No sewer service, no power. Just some of what Hurricane Ike evacuees are facing right now as they make their way back home to Galveston.

KHOU reporter Brad Woodard with some of their stories.

(BEGIN VIDEOTAPE)

BRAD WOODARD, KHOU REPORTER (voice-over): What's left in the wake of Hurricane Ike that has been at the forefront of everyone's thoughts since they evacuated nearly two weeks ago -- what's left, and what's not.

GEORGE ESTRADA, GALVESTON, TEXAS: Our bed was over here at one time.

WOODARD: George and Donna Estrada have lived on English Bayou for 30-plus years. They raised two children here.

G. ESTRADA: Not much left.

WOODARD: And what Mrs. Estrada wants more than anything in the world she simply can't have.

DONNA ESTRADA, GALVESTON, TEXAS: Like it was. That's what I want it to be. Like it was.

WOODARD: As a steady stream of cars trickled on to the island, they were greeted by Gail Meades and her dog. She didn't evacuate and knows what await so many of those who did. GAIL MEADES, GALVESTON, TEXAS: It's great to see them smile. I mean, some people are crying. They had their mouths open. They're going like this. And they see the dogs and they go, "Welcome home!"

It's like Dorothy and the wizard. You know?

WOODARD: But opening her door for the first time, Clara Garcia wasn't only at a loss for smiles, but words.

CLARA GARCIA, GALVESTON, TEXAS: This is a total shock for me. You know what I mean? We lost everything.

WOODARD: Everything, except the plaque commemorating her mother's U.S. citizenship. Even Hurricane Ike couldn't strip them of that.

(END VIDEOTAPE)

HARRIS: And you know, not exactly beach weather along the Atlantic Coast today, and don't expect it to clear up anytime soon. A big storm is heading straight for the Carolinas. If you live there, brace yourself.

(WEATHER REPORT)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Can't find gas anywhere. This is the only place I could find gas.

KORY PRYOR, ATLANTA GEORGIA: How long you been looking for gas?

UNIDENTIFIED MALE: Two days, actually.

PRYOR: Really?

UNIDENTIFIED MALE: I haven't gotten real serious about it, though I'm almost empty now. So I think everybody's going crazy.

UNIDENTIFIED FEMALE: Oh, probably about a half an hour.

UNIDENTIFIED MALE: About 45 minutes already.

UNIDENTIFIED MALE: Really?

UNIDENTIFIED MALE: Yes.

PRYOR: OK.

UNIDENTIFIED MALE: About 45 minutes.

PRYOR: (INAUDIBLE) today?

UNIDENTIFIED FEMALE: Not too bad. Maybe -- I just looked up here at Cheshire (ph) and it's just near out.

PRYOR: How long you been driving around looking for a place?

UNIDENTIFIED FEMALE: Like 40 minutes.

PRYOR: Forty minutes? Pretty long time.

(END VIDEO CLIP)

HARRIS: Nice job, Kory. Those comments submitted by iReporter Kory Pryor in Atlanta.

One of the areas in the Southeast hit by gas shortages. Drivers are frustrated by long lines and empty gas pumps.

So, 10 states are teaming up to put a price on pollution and improving the environment in the process. Analysts say it could be history in the making, but others look at it and see higher utility bills.

CNNMoney.com's Poppy Harlow examines whether this could be a potential "Energy Fix."

Hi, Poppy.

POPPY HARLOW, CNNMONEY.COM: Good morning, Tony.

Well, you know, it's a controversial topic. It took five years to get here.

The nation's first mandatory carbon auction is taking place today. It's called the Regional Greenhouse Gas Initiative. It's designed to limit carbon dioxide emissions by making power plants from Maine to Maryland by what are called carbon credits.

The way it works, if a company emits more CO2 than it has credits for, it has to buy more credits. On the other hand, if a company reduces emissions, it can sell its leftover credits.

The kicker is, there's only a certain number of credits even available to everyone. Basically, it's a pay-to-pollute program. That's what some people are saying. The goal, really, is to give utilities financial incentives to burn less coal and less fuel, Tony. It's pretty interesting what's going on.

HARRIS: Yes.

HARLOW: It's taken a while to get here certainly.

HARRIS: Well, if the power companies are going to have higher costs, what's going to be the impact on utility prices, Poppy?

HARLOW: Right. Is that going to trickle down to you and me?

HARRIS: Yes.

HARLOW: That's the big question right now.

Power rates are likely to go up initially. That's what the experts are saying. But supporters say in the long run, consumers will actually save money because a lot of the proceeds from these auctions will be invested in solar and wind power and alternative energy programs.

Opponents, though, they have a point, too. They say electricity prices in the Northeast, where we are right now, are already above average. So any increase, no matter how small, Tony, is just going to make things worse. And remember, we're heading into the winter months when people are going to pay a lot more than they did last year.

HARRIS: Is there a precedent for this?

HARLOW: There is. It happened before. The carbon auction of this kind, it's the first time ever in the U.S.

We saw something kind of similar in the '80s. That was to reduce acid rain.

HARRIS: Oh, OK.

HARLOW: Also, here in the United States, and in Europe, Tony, there are things called climate exchanges. They're kind of confusing, but they're like stock exchanges. They trade carbon credits on a voluntary basis.

Supporters say today's carbon auction though could set the stage for a national initiative. It's very, very cool.

But we want to hear what all of you out there think.

HARRIS: OK.

HARLOW: Are you for this? Are you against it?

Let us know on ireport.com/energyfix -- Tony.

HARRIS: There she is, CNNMoney.com's Poppy Harlow for us. And there's the Web page.

All right, Poppy. Thank you.

HARLOW: You're welcome.

HARRIS: You know, we're hearing a lot about bailouts for companies on Wall Street. How does that impact those of you who are losing your homes to foreclosure?

(COMMERCIAL BREAK)

HARRIS: Let's take you to the New York Stock Exchange right now and take a look at this full on bull run. The markets here, the Dow, as you can see, up 238 points. The Dow's been in positive territory all day long from the opening bell. Let me get the latest Nasdaq number for you. The Nasdaq, tech heavy. Nasdaq is up -- is that 41 points or 11? I can't read that. And the S&P up 27 points. We're following the markets. What is that, Joe? Was that -- is that 40? Yes, 41 points for the Nasdaq. We're following the markets with Susan Lisovicz, of course, for you throughout the day right here in the NEWSROOM.

The president and his Treasury secretary say credit will dry up without a financial bailout, push the economy into deep recession. Reality or hyperbole?

Here's CNN's senior correspondent Allan Chernoff.

(BEGIN VIDEOTAPE)

ALLAN CHERNOFF, CNN SR. CORRESPONDENT (voice over): Can $700 billion buy good health for the economy? Unlikely, say some economists, who are we're headed for trouble even with a bailout.

DONALD STRASZHEIM, ROTH CAPITAL PARTNERS: This is going to be a difficult, ugly time. The difference is whether it's going to be a difficult, ugly time with this rescue package, or whether it becomes dramatically worse without a package like this.

CHERNOFF: The point of bailing out banks is to restore confidence. A trust bankers and investors need to lend money. They lost it last week. Lending activity froze, virtually stopping the wheels of capitalism.

STRASZHEIM: The risk is that you and I go to the ATM machine at our local bank and instead of getting our $100 out of the bank, it gives us a notice that says, "temporarily unavailable."

CHERNOFF: Even if Congress were to approve a bailout today, it will take time to get the program going and rebuild confidence. Banks that sell their bad mortgage investments to the Treasury will have to take losses, which could make them even more cautious to lend new money.

And the bailout doesn't directly address what Treasury Secretary Henry Paulson says is the root cause of our crisis. The housing market collapse.

NARIMAN BEHRAVESH, GLOBAL INSIGHT: The housing recession is the worst since the great depression. There's no debate about that part of it. So it's a horrible housing recession.

HENRY PAULSON, TREASURY SECRETARY: We must address this underlying problem and restore confidence in our financial markets and financial institutions so that they can perform their mission of supporting future prosperity and growth.

CHERNOFF: The best-case scenario, Secretary Paulson says, is that housing bottoms out in a matter of months, but he needs bank lending to recover much more quickly.

Allan Chernoff, CNN, New York.

(END VIDEOTAPE)

HARRIS: While the government works to bailout corporate America, many people are angry that the average American is being overlooked.

Our Chris Lawrence looks at how you can lose if your bank goes belly up.

(BEGIN VIDEOTAPE)

CHRIS LAWRENCE, CNN CORRESPONDENT (voice over): Debbie Ingham is out $20,000 after her bank went belly up.

DEBBIE INGHAM, LOST SAVINGS: But it's OK to bail out these corporations that made bad business decisions? For billions of dollars?

LAWRENCE: Nevada's Silver State was the eleventh bank to fail this year.

INGHAM: I was like, oh, my God. I have everything there.

LAWRENCE: Everything minus that $20,000.

INGHAM: I don't even -- I barely make that in a year in my job. I mean, that's how important that money is to me.

LAWRENCE: Debbie's a school bus aide and it's taken 27 years of marriage to save $120,000. When her husband had his identity stolen, she put their money in her name, divided into two accounts. When the bank failed, the FDIC added those accounts and chopped off everything over $100,000.

Where do you put your money now?

INGHAM: The more I feel like taking the money out and putting it under the mattress. You know, I don't think anything's safe anymore.

LAWRENCE: Financial planners say couples should open a joint account or keep individual accounts at several banks.

LEONARD GOODALL, CERTIFIED FINANCIAL PLANNER: You can go down the street and have another bank, or a third bank. Each of those would be separate. If you had accounts in each of them, up to $100,000, each of them would be guaranteed.

LAWRENCE: The FDIC told Debbie she could get a percentage if Silver State's assets are sold.

INGHAM: And that's if. That's if they sell anything. When? Could take years.

LAWRENCE: Debbie's money is part of $20 billion in uninsured deposits. But it could have been worse. Customers withdrew a quarter of a billion dollars in the two months before Silver State failed. The bank did have somewhat famous ties. Senator John McCain's son served on the board of directors for Silver State Bank. He was part of the auditing committee has would oversee the book. But Andrew McCain resigned from that position for personal reasons just two months before the bank collapsed.

Chris Lawrence, CNN, Las Vegas.

(END VIDEOTAPE)

HARRIS: You can follow the crisis on Wall Street, the buyouts, the bailouts, falling oil prices, rising gas prices, all of it at CNN.com. And get all of the day's market news and numbers plus expert analysis. You can log on right now.

You know, shareholders of Northwest Airlines today saying yes to a merger with Delta Airlines. Delta shareholders meet this afternoon to vote. A merger of the two airlines would still need anti-trust approval from the Justice Department.

The next president should be able to deal with more than one thing at once. Words from Barack Obama who says he will show up at tomorrow's debate with or without John McCain. McCain has said he is suspending his campaign to focus on the economy. What do you think about all of this? Our Veronica De La Cruz has been looking at your I-Reports this morning.

And, Veronica, I spent some time in the food court in the atrium of a huge, sprawling CNN Center, and I must have talked to seven or eight people. And everyone I spoke with believed to their core that the debate should move forward.

VERONICA DE LA CRUZ, CNN CORRESPONDENT: Yes. Yes.

Well, you know, some people support McCain's decision, actually, Tony. But you're right, other people definitely support Barack Obama. They think that these debates should continue as planned.

But let's go ahead and start with a McCain supporters, Tony. Geoff Calver had this to say. He says, "real leadership requires making an intelligence decision, and while it's great that Obama can say that he is going to do two things at once, I believe the economic crisis requires a full dedication of his time. One cannot stump on the campaign trail, fly all over the country, make speeches and television appearances and also help solve this issue."

But you're right, Tony, other I-Reporters disagree with what Geoff has to say. Dereck Blackburn calls McCain's move predictable and also a political stunt.

(BEGIN VIDEO CLIP)

DERECK BLACKBURN, IREPORTER: He is not on the Joint Economic Commission. And there's very little that he himself can do as an Arizona senator. Canceling probably the most important debate so far of the entire campaign process is disrespectful to the American people. And as an American, I feel that it's incredibly disrespectful to the entire process.

(END VIDEO CLIP)

DE LA CRUZ: And Len Parks, Stockbridge, Georgia, agrees with what he has to say. He says that McCain's actions actually cost him a vote.

(BEGIN VIDEO CLIP)

LEN PARKS, IREPORTER: I'm an independent. I did not know who I was going to vote for until yesterday. This is the nail in the coffin for me. No way I'm going with McCain now.

(END VIDEO CLIP)

DE LA CRUZ: But John Woodlock thinking that he has the solution to this problem. He says, why not just send a surrogate?

(BEGIN VIDEO CLIP)

JOHN WOODLOCK, IREPORTER: Isn't Sarah Palin available for the debate to go against Barack Obama? Isn't that what a vice president is supposed to be for, is to fill in when the president is other wise engaged. How about it, Sarah? Are you ready to go up into the big leagues?

(END VIDEO CLIP)

DE LA CRUZ: So we're asking you out there, what do you think about this issue? Go ahead, put yourself on camera, send an I-Report. Also send us your thoughts on the financial crisis because I'm going to continue going through those I-Reports and we're going to get those on the air throughout the day.

And, Tony, you're going to make it back out into the atrium? And you're going to continue your discussion, right?

HARRIS: Yes, yes. Well, you know, what was interesting about this morning -- yes, what was interesting about this morning is that there were a lot of folks and there were McCain supporters and Barack Obama supporters and all of them had the same opinion. That, yes, this is a serious time, but that the nation needs to hear this debate. They need to see these two men talk about this issue before the American public. So I'm very curious to hear what you continue to get from our I-Reporters.

Thank you, Miss Veronica. Good to see you. Thanks.

You know, the next man to occupy the Oval Office may have a new cold war to deal with. What does Russia want?

(COMMERCIAL BREAK)

HARRIS: The economy is not the only thorny issue a new American president will have to deal with. There's also, oh, yes, Russia. Relations between Washington and Moscow strained by Russia's invasion of Georgia this summer. And there is also that business with NATO membership and missile placements by former Soviet republics. Big challenges looming for the next president. And joining me now, Jill Dougherty, longtime CNN Moscow bureau chief.

Jill, great to see you.

JILL DOUGHERTY, CNN CORRESPONDENT: Hey, Tony.

HARRIS: It was great to see you yesterday when we began this conversation. And I think that the place to start with this is, you had an opportunity recently to engage in a wonderful discussion in which you hosted of people, really smart people, who are really concerned about this issue of Russian/U.S. relations at, let me get this right, the Carnegie Endowment for International Peace.

DOUGHERTY: Correct.

HARRIS: What did you hear there? What was the sentiment? And I guess the real question is, how did things go so bad so fast in this relationship?

DOUGHERTY: Boy, that's a great question, Tony. But, you know, there were six people, six former ambassadors, U.S. ambassadors, Russian ambassadors, and these are people who had been in this business now since 1981. So back in the battle of Soviet, you know, Cold War days. And to a man, they were all men, they are very concerned.

HARRIS: What's the principle concern? What is really worrying them?

DOUGHERTY: I think what they feel is that the relationship has not really been communicating with each other. It's been kind of yelling at each other. Especially over the situation of Georgia. There was a lot of heated rhetoric. And what they're saying is, if we don't fix this very soon, the new U.S. president and a relatively new Russian president are going to get off to a very bad start and it could be, as they put it, protracted period of real confrontation.

HARRIS: So moving forward, and we talk about the challenges for -- of the next president. Where does it all begin for the next president? And what kind of channels of communication need to be set up or need to be repaired at this point?

DOUGHERTY: Yes. Almost more repair. But I think what they're talking about is, you know, the presidents do talk. You sometimes have meetings. You know, you have the secretary of state who goes to Russia, and they talk from time to time.

But, you know, there's a whole group of people who work in the government, work in the State Department, who deal, who really know these areas. Who work on the communication, on a regular basis. And if that's broken, and part of it is, they're just not communicating very well.

HARRIS: Is there a sense that both of these men, who would be president, is it a sense among the people that you've talked to on this issue, of relationship, this relationship between Russia and the United States, that these two men have a temperament, a capability, a willingness to work to repair that relationship?

DOUGHERTY: I think they hope they do.

HARRIS: Yes.

DOUGHERTY: But I think one of the problems is, there's no real sitting down and defining where we go from here because things are very different. This is not the Russia even from two years ago.

HARRIS: Yes.

DOUGHERTY: It's a very different world. And there are all sorts of other players out there. You know, China, Brazil, India. The world is very different. Look at the economic situation. That, too. So what they're saying is, these two countries have to get together right now, and very quickly, and define the rules of the road for the relationship, and stop the yelling, and start really communicating.

HARRIS: That's terrific. Thanks, Jill. And thanks for your reporting. You were such a great asset to us this summer. Thank you.

DOUGHERTY: Thanks so much.

HARRIS: Jill Dougherty.

Trying to keep toxic Chinese milk products out of the United States. The FDA now expanding its inspections. Authorities are looking at a variety of foods containing milk, including candies, cakes and beverages.

Our Hugh Riminton reports the scare is growing.

(BEGIN VIDEOTAPE)

HUGH RIMINTON, CNN CORRESPONDENT (voice over): The Chinese milk scandal now goes beyond China and it goes beyond milk. In Taiwan, soup and canned coffee are coming off the shelves. In Japan, five cake products have been dumped. In Singapore it's candy that tested positive for melamine from the Chinese milk used in an ingredient. The Swiss giant Nestle says it is confident in its milk products, despite Hong Kong authorities reporting that one of its products tested positive for small amounts of melamine.

In Hong Kong, extra clinics are being made available after free health check centers were swamped. More children were found to be sick on Tuesday. Mainland Chinese critics are also crowning. Eighty percent of people sickened so far are aged under two.

The World Health Organization has alerted all 167 countries in its network to increase their monitoring of Chinese food products. A number of countries have already banned imports. Twenty-two Chinese companies stand accused of selling dairy products contaminated with toxic melamine as a method of boosting apparent protein levels. Chinese state-run media report at least one of the companies knew for months, if not years, of irregularities. The WHO says the apparent delay in exposing the cases is a lie.

HANS TROEDSSON, WORLD HEALTH ORGANIZATION: Even a suspicion should have raised a concern and should have been reported upwards for action to be taken.

RIMINTON: After previous scandals, lead contaminated toys, exports of deadly melamine tainted pet foods to the U.S. and Canada, images of suffering children could leave lasting scars on China's export reputation. According to one Hong Kong-based crisis communication specialist, international inspections will be need to reverse the damage.

DAMIAN COORY, COORY & ASSOCIATES: It's an enormous blot on China's record as a quality manufacturer of food and a quality manufacturer in general. The government needs to take it very, very seriously.

RIMINTON: But the parents of sick children care nothing right now about the reputational damage this is doing to China. Are their children safe? What can they be safely fed tomorrow? These are the pressing questions.

China's prime minister, Wen Jiabao, has promised to reform the dairy industry and to improve its regulation. The World Health Organization says the Chinese government believes what is arriving on the shelves now should be safe. People might take a while to be convinced.

Hugh Riminton, CNN, Hong Kong.

(END VIDEOTAPE)

HARRIS: Just getting word that Republican vice presidential candidate Sarah Palin, as you know, is in New York for U.N. week. And we understand that just a short time ago she took a bit of a tour of Ground Zero and took a moment to speak to reporters. We will turn that tape around and bring it to you in just a moment.

(COMMERCIAL BREAK)

HARRIS: Hey, we promised you Sarah Palin, visiting Ground Zero. And here are those pictures. The Republican vice presidential candidate in New York, as you know, for U.N. week. And a short time ago visiting Ground Zero and specifically the World Trade Center Visitors' Center. I believe we're going to get an opportunity, probably in Kyra's hours, to hear from Sarah Palin. She actually took a moment to talk to reporters. And we'll get that to you as soon as we can.

I think all that translates into a picture-perfect blastoff. I think that's what that means.

KYRA PHILLIPS, CNN ANCHOR: Holy smokes, that's what it translates to. HARRIS: Yes, yes, yes. China successfully launching its most challenging space mission sending three men into orbit. One of the astronauts set to carry out the country's first space walk. The mission is expected to last three to four days.

(COMMERCIAL BREAK)

HARRIS: The gas shortage in the southeast is blamed on disruptions from Hurricanes Ike and Gustav. I don't believe anything about this. Some drivers from Tennessee are traveling miles away to Kentucky to fill their tanks. Are you kidding me?

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I drove, well, my house is 21 miles from the Kentucky line, Robertson County.

UNIDENTIFIED FEMALE: About eight to 10.

UNIDENTIFIED MALE: Eighty or 90 miles.

UNIDENTIFIED MALE: I'm just glad I can find gas in Kentucky, because I'd be down there sitting at home watching the TV if I couldn't.

UNIDENTIFIED MALE: Those folks been out of gas in Nashville and they're coming here. So they very easily could run our supply out.

(END VIDEO CLIP)

HARRIS: Hurricane Ike, Gustav. I'm having a hard time these days believing anything.

PHILLIPS: Keeping all the (INAUDIBLE).

HARRIS: Yes, yes, you OK with the gas supply in your neighborhood?

PHILLIPS: I haven't had an issue. I skateboard to work. Back and forth.

HARRIS: Do you really?

PHILLIPS: Yes.

HARRIS: You skateboard, I segway. We should meet somewhere.

PHILLIPS: We'll do lunch.

HARRIS: We'll do lunch.

PHILLIPS: Let's do a newscast.

HARRIS: There you go.