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Global Financial Frenzy; Presidential Debate: Round Two; Ahead in the Race; Obama Stumps in Indianapolis
Aired October 08, 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 let's get straight to the worldwide money crisis.
Hello again, everyone. I'm Tony Harris, and here are the headlines for this Wednesday, October 8th.
We learned just a short time ago from White House Press Secretary Dana Perino that Treasury Secretary Henry Paulson will be holding a 3:00 p.m. news conference. We will of course bring that to you live right here in the NEWSROOM.
Central banks around the world cut key interest rates. The goal of the tandem action, boost confidence, thaw the credit freeze.
U.S. stocks sputter even with cheaper money available. Global markets see a sizable sell-off.
A financial fix dominates the second presidential debate. Pundits said John McCain needed to shake things up. We will see.
So what do we have? At this hour, stocks trading in negative territory right now, despite this morning's drop in interest rates.
(STOCK MARKET REPORT)
HARRIS: You know, the fact of the matter is, forget what you may have heard elsewhere. No one can break this complex story down for you better than the CNN money team. Senior Business Correspondent Ali Velshi, "YOUR $$$$" co-host Christine Romans, and Personal Finance Editor Gerri Willis are with us right now.
I have to ask, Ali, a question that goes back to the last panel just a few minutes ago. I'm wondering, are we asking too much of these candidates for president to have answers to all of the financial problems facing not just the United States, but the world right now? Look, the smartest minds on the planet are working on this thing, and they are pulling arrow after arrow after arrow out of the quiver.
ALI VELSHI, CNN SR. BUSINESS CORRESPONDENT: Yes.
HARRIS: And I don't know where we're going.
VELSHI: Well, it's asking a lot of everybody involved in this. I mean, we've given -- I think the nation's got itself an economics course in the last three weeks that we wouldn't have expected.
HARRIS: Yes.
VELSHI: And we're digging deep into our own memories and repertoire.
Christine and Gerri are both with me here.
We really have had to ask them because we're looking for some leadership. This is a confused market, and that's what you're seeing in the Dow. You're seeing confusion.
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Absolute confusion. But I just have to say, you know, we've seen these bear markets before, we've been through them before. And in fact, most of us have been through the dot-com crash. It was worse. The market was down 50 percent. Right now we're down 32 and change. That's awful...
VELSHI: Yes. Let's take a look at this graphic you've got that indicates sort of how bad they've been.
WILLIS: Yes, exactly.
Let me tell you, we looked back at bear markets over time. And what you see is that the average bear markets lasts about 15 months. Stocks go down about 33.5 percent. And you've been through this before -- 2007, 2000, 1990, 1987. If you've been saving your money for any time at all, using the stock market, mutual funds, you have been through this.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: We've all covered some major crises. The peso crisis, remember? The Asian contagion. Then we worried about Y2K and then the dot-com bust, and long term capital. And every time it felt really horrible, horrible, and retail investors started jumping out...
(CROSSTALK)
VELSHI: Retail investors means average people who jump out.
ROMANS: Mom and dad started jumping out after, you know, 20 percent or 30 percent. Well, then you booked that paper loss. And look what happened after one of those crises. Stocks were higher five years on.
WILLIS: Right.
VELSHI: Tony's question is the one that you've been getting, Gerri, because you've been taking questions from our viewers all the time: What am I supposed to do now? This market is down 30-some percent since the beginning of the year. Is it too late to bail out at this point anyway?
ROMANS: It doesn't feel good.
WILLIS: You know, quit operating on fear. You know, people are making decisions based on emotion. And that's exactly the wrong thing to do. You have to sit back. Take a look what you own. You probably don't even know what you own.
You need to look at the mutual funds, understand what they are, and make decisions based on, am I invested in the right thing? Selling now, you are locking in these losses.
VELSHI: What do I look at? Where do I learn this?
WILLIS: You need to get your 401(k) statement. You can typically you can get these online and look at all the details, not just the total, how much am I down for the year, but what is each and every fund in my 401(k) doing? And selling now, you are locking in those losses. You're saying, hey, I'm happy with a 30 percent haircut.
ROMANS: And I want to bring it back to politics, because there is no doubt whatsoever that the next president of the United States, the first term, the first year of the first term, is going to be spent fixing this, or if not fixing it, reacting, playing defense, trying...
VELSHI: But we want better answers as to what they are going to do to fix this problem.
ROMANS: We want better answers about what they are going to do to fix this problem. No sniping. No -- you know, all that stuff doesn't help.
We have to know what -- who is their team going to be? What's it going to look like? What's their philosophy for how they're going to respond to this? You know, what is the Treasury and Fed role going to be next year?
VELSHI: All right.
And Tony, it does come down to how many jobs we lose.
HARRIS: Yes.
VELSHI: Gerri Willis was showing you those bear markets. Well, in 2000, in that bear market, in that recession, we lost three million jobs. We're down 750,000 so far.
HARRIS: Boy.
VELSHI: If we start stemming those losses, we could get out of this. But if we keep losing jobs, even the housing crisis and energy matters less if you don't have any income at all.
HARRIS: What can you buy? What can you pay for if you don't have a job?
VELSHI: Right.
HARRIS: Ali, many thanks to you, and obviously pass along our thanks to that terrific team. VELSHI: Absolutely will. And keep asking us those very basic questions that need to be asked.
HARRIS: I have to.
VELSHI: Because you're getting them from your viewers. We'll do the same thing. We just want to get everybody the answers that they want.
HARRIS: Great. Ali, appreciate it. Thank you.
You know the economy and the financial crisis front and center. In the second presidential debate, John McCain and Barack Obama get back to campaigning today after trading jabs last night in Nashville.
CNN's Ed Henry has the highlights from debate night, round two.
(BEGIN VIDEOTAPE)
HENRY (voice-over): On a day the Dow dropped 508 points, the financial crisis dominated round two. And the frontrunner, Barack Obama, spent most of the night in control after immediately tying John McCain to the status quo.
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: I believe this is a final verdict on the failed economic policies of the last eight years, strongly promoted by President Bush and supported by Senator McCain that essentially said that we should strip away regulations, consumer protections, let the market run wild.
HENRY: McCain moved just as quickly to break from the White House, touting a plan for the government to buy mortgages homeowners can no longer afford.
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: And it's my proposal, it's not Senator Obama's proposal, it's not President Bush's proposal. But I know how to get America working again, restore our economy and take care of working Americans.
OBAMA: We...
HENRY: After barely looking at Obama in the first debate, McCain, again, could not hide his disdain, especially over a 2005 energy bill.
MCCAIN: Loaded down with goodies, billions for the oil companies, and it was sponsored by Bush and Cheney. You know who voted for it? You might never know. That one.
HENRY: They also offered deep differences on foreign policy.
MCCAIN: And in his short career, he does not understand our national security challenges. We don't have time for on-the-job training, my friend.
OBAMA: It's true. There are some things I don't understand. I don't understand how we ended up invading a country that had nothing to do with 9/11.
HENRY: And a sharp contrast in the closing statements. Dramatic change versus steady leadership.
OBAMA: But we're going to have to have the courage and the sacrifice, the nerve to move in a new direction.
MCCAIN: And I'll rest on my record but I'll also tell you, times are tough. We need steady hand at the tiller.
HENRY (on camera): Bottom line, John McCain is falling behind in key battleground states, needed a game-change and didn't get it. That means he needs to come up even bigger in next week's third and final debate.
Time is running out, fast.
Ed Henry, CNN, Nashville.
(END VIDEOTAPE)
HARRIS: Twenty-seven days to go. Where do the campaigns go from here?
The best political team on television keeping you updated on the race for the White House. Dana Bash covering the McCain campaign. She is in New York. And Jessica Yellin covering the Obama campaign, live from Nashville.
All right, Ladies, as two people who have spent so much of your recent life following every move of this election cycle -- and Dana, I asked you this question last hour. I want to get to Jessica on this first. Did last night's debate break any new ground for either of you?
Jessica, you first.
JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Not in terms of a lot of new message or policy. John McCain did propose that mortgage policy change Ed talked about.
What struck me is that, Tony, I think I break with conventional wisdom in thinking that this debate was a little nastier than the one we saw before. I do think John McCain connected more. He hit Barack Obama a lot more, and Obama fought back.
Remember, that first debate, we heard him say, "You're absolutely right, John." "I agree with you, John." Trying to sort of rise above it. This time it was a real fight.
DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Yes, and I think, Tony, one thing that's interesting, Jessica mentioned this idea that John McCain talked about at the very beginning of the debate, this idea that the government, he would direct the Treasury secretary to buy back mortgages, bad mortgages directly from homeowners. I mean, obviously I cover John McCain and I have been pretty up on the policies that he pushed, and it was really unclear from the way he presented it at the beginning there whether or not it was really new, and really what it was.
In fact, I'm still sitting here going through some notes from some of his economic advisers trying to figure out what it is. I think that really speaks to the trouble and the challenge that John McCain has with regard to this issue of the economy.
He is trying to push a new idea. He is trying to sort of get ahead of the game and say things that even some of his conservatives -- conservative backers don't like. That, you know, he wants to spend a lot of money to do this, but it's really unclear if it's specific enough and he communicated it enough to break through to voters.
HARRIS: Dana, can you tell me why John McCain didn't -- didn't revisit this sort of guilt by association turf his running mate has spent time talking about in recent days?
BASH: You know, I talked to his advisers before the debate, Tony, and they said he had no intention of doing that. In fact, he hasn't talked about that on the campaign trail. He has allowed Sarah Palin, his running mate, to be the one to try to link Barack Obama to William Ayers, somebody who in the 1960s was a radical and...
HARRIS: Wait a minute. Whose campaign -- isn't he running -- it's his campaign.
BASH: It is his campaign, but this is classic, Tony. This is absolutely classic, that the running mate really tries to stick to issues with regard to the same theme. The same theme is being pushed by both Sarah Palin and John McCain here, which is, do you really know this guy? Can you really trust this guy?
John McCain is trying to do it with regard to, do you really trust that he can reach across the aisle, like he says he's going to? Because he hasn't done it before.
HARRIS: Yes.
BASH: Sarah Palin is playing the traditional role of the vice president, which is to get a little down, to get a little dirtier. And that's what she's doing.
HARRIS: Boy, Jessica. Let me bring you in. Go ahead.
YELLIN: Yes. Today, the McCain campaign has been sending out e- mails to reporter, and saying that, you know, a number of people are upset about this Bill Ayers connection with Obama. So they have not dropped that message at all.
And one of the things I see being carried forward in the coming days is this undercurrent of attacking one another's character. You know, we focus a lot on how the McCain campaign wants to accuse Obama of being not ready for the job, risky, can we trust him. The undercurrent we hear from the Obama campaign is that John McCain is testy, he is peevish, or, you know, irritable. Dangerous in his own way, is the suggestion, because he can't keep his temperament under control.
HARRIS: Yes.
YELLIN: Sometimes aides will suggest that. Sometimes they just use indirect words to sort of nod in that direction. Clearly, they're both going at this message of, who has the character to steer this ship through rough waters?
HARRIS: Can I get to one other point as quickly as I can? And Dana, let me start with you.
The, "That one" line from last night.
BASH: It was one of those moments, Tony, I really can't explain it. It kind of came flying out of John McCain's mouth. It seems to be -- look, in following John McCain, I almost feel like the McCain whisperer, where I hear him say things that maybe other people don't understand what he's saying, but...
HARRIS: OK. That is crazy funny to hear you say that. You know that. OK.
BASH: But I kind of get it. That one, I don't get. I really don't. I mean, he was trying to sort of be a little bit casual, not use his name, and not saying "Senator Obama," but it certainly came out in a quite curious way.
HARRIS: Jessica, any thoughts on that?
YELLIN: Yes. Well, the Obama campaign has seized on that, saying, look, we believe we can disagree without being disagreeable, a common line we hear from the Obama campaign over and over.
His aides think it was John McCain has not enough respect for Barack Obama and was being overtly dismissive. They call it surprising, but they'll suggest quietly that they really think it was offensive, and they did e-mail out to reporters, notice that McCain said it. They wanted to make sure everybody saw that.
HARRIS: Jessica, appreciate it.
Dana, as always, great to talk to both of you.
Thank you both so much.
And again, just another reminder to check out our Political Ticker for all of the latest campaign news. Just log on to CNNPolitics.com, your source for all things political.
And as the most serious crisis in decades rocks your finances, CNNMoney.com has some advice and some answers for you. Check out our special report, "America's Money Crisis." That's at CNNMoney.com.
Did either McCain or Obama close the deal with you at last night's debate? We will take a look at their arguments.
(COMMERCIAL BREAK)
HARRIS: And here we go, 17 minutes after the hour now.
Senators McCain and Obama in the hot seat last night, getting hit hard with questions from the audience in the second presidential debate of the season. Who hit back the best?
Politico.com's Jeanne Cummings and CNN's special correspondent, Frank Sesno, join me to judge.
Good to see you both again.
You know, let's start, and with the economy. Come on, everyone's talking about it. Let's start there.
Right where the debate began, Jeanne, the candidates were asked to -- asked the questions we all really want to know the answer to, what is the fastest solution to bail out the struggling economy right now, and Americans who are being hit so hard by it?
Let's take a listen to a bit of the back and forth, and then we'll talk about it.
(BEGIN VIDEO CLIP)
OBAMA: Step one was a rescue package that was passed last week. We've got to make sure that works properly. And that means strong oversight, making sure that investors, taxpayers are getting their money back and treated as investors.
It means that we are cracking down on CEOs and making sure that they're not getting bonuses or golden parachutes as a consequence of this package. And in fact, we just found out that AIG, a company that got a bailout, just a week after they got help went on a $400,000 junket. And I tell you what, the Treasury should demand that money back, and those executives should be fired.
But that's only step one. The middle class need a rescue package.
And that means tax cuts for the middle class. It means help for homeowners so they can stay in their homes. It means that we are helping state and local governments set up road projects and bridge projects that keep people in their jobs. And then long term, we've got to fix our health care system, we've got to fix our energy system that is putting such an enormous burden on families.
(END VIDEO CLIP)
(BEGIN VIDEO CLIP)
MCCAIN: I have a plan to fix this problem, and it's got to do with energy independence. We've got to stop sending $700 billion a year to countries that don't like us very much.
We have to keep Americans' taxes low. All Americans' taxes low. Let's not raise taxes on anybody today.
We obviously have to stop the spending spree that's going on in Washington. Do you know that we've laid a $10 trillion debt on these young Americans who are here with us tonight, $500 billion of it we owe to China?
We've got have a package of reforms, and it's got to lead to reform prosperity and peace in the world. And I think that this problem has become so severe, as you know, that we're going to have to do something about home values.
You know that home values of retirees continues to decline, and people are no longer able to afford their mortgage payments. As president of the United States, Alan (ph), I would order the secretary of the Treasury to immediately buy up the bad home loan mortgages in America and renegotiate at the new value of those homes, and the diminished value of those homes, and let people make those -- be able to make those payments and stay in their homes.
(END VIDEO CLIP)
HARRIS: All right.
Jeanne and Frank, a nice long chunk there on the economy. We just didn't want to pick a quick little sound bite here and there. We wanted folks to get a bit of the flavor of the discussion.
But -- and Jeanne, let me start with you. Let me have you discuss what you thought of the positions on this issue by the candidates, who scored the best here. And as always, you know how I like to do this. Feel free to talk amongst yourselves there.
JEANNE CUMMINGS, POLITICO.COM: OK.
I thought that both candidates did a pretty good job in explaining what they wanted to do. It was a rare debate in that if were you looking for substance, you got it.
In this particular exchange, Senator McCain rolled out his idea of buying up mortgages. It sounded like a big, bold new idea.
It's not a new idea. In fact, a smaller version of what he talks about was included in the rescue package that passed Congress recently. However, I think for most voters, it probably did sound like a new idea. And so in that case, I think that McCain probably did better in that particular exchange.
FRANK SESNO, CNN SPECIAL CORRESPONDENT: I probably agree with that, because it sounded very bold and it sounded very specific. They both were using the opportunity, Tony, to kind of to do boilerplate.
HARRIS: Yes.
SESNO: But there's a big, big problem with what John McCain said. If you take him at his word, and you take his word literally -- and you heard Dana Bash just a few minutes ago saying, I'm still going through the notes of his advisers trying to figure out what that all meant. Think about what he said -- I'm going to instruct the secretary of the Treasury to buy up bad mortgages.
Well, you know, I mean, if the moderator could have, should have, would have, there are a whole bunch of follow-up questions. Which mortgages? At what level of trouble?
HARRIS: Another point.
SESNO: Whose mortgages? Are these going to be the speculative mortgages in Miami and Las Vegas? What's the price tag you're going to put on this? Who gets bailed out, who doesn't?
HARRIS: Yes.
SESNO: And by the way, for a guy who's not big on government intervention, haven't you just leapt into the abyss?
So I give it to McCain, but with a big incomplete for the rest of the answer we didn't hear.
CUMMINGS: Absolutely.
HARRIS: And Jeanne, who scored best on the economy?
CUMMINGS: Overall, I think that Barack Obama probably did a better job of explaining his programs. It was one of his more coherent debates.
HARRIS: Yes.
CUMMINGS: I thought he connected well.
I've got to give John McCain credit, though. He did much better than he did the week before.
HARRIS: Got you.
CUMMINGS: And so I think he did himself some good, but he spent an awful lot of time attacking Obama. I think he would have benefited by spending a little more time explaining his own programs.
HARRIS: Nice.
All right. Let's do a quick pivot to foreign policy now.
The question was, how will all the economic stress affect America's ability to act as a peacemaker in the world? Let's listen to a bit of the exchange.
(BEGIN VIDEO CLIP)
MCCAIN: The challenge is, is to know when the United States of America can beneficially effect the outcome of a crisis. When to go in, and when not. When American military power is worth the expenditure of our most precious treasure. And that question has -- can only be answered with someone with the knowledge and the experience and the judgment, the judgment to know when our national security is not only at risk, but where the United States of America can make a difference in preventing genocide, in preventing the spread of terrorism, in doing the things that the United States has done. Not always well, but we've done because we're a nation of good.
And I am convinced that my record, going back to my opposition from sending the Marines to Lebanon, to supporting our efforts in Kosovo and Bosnia and the first Gulf War. And my judgment, I think, is something that I'm a record that I'm willing to stand on.
Senator Obama was wrong about Iraq and the surge. He was wrong about Russia when they committed aggression against Georgia. And in his short career, he does not understand our national security challenges. We don't have time for on-the-job training, my friends.
(END VIDEO CLIP)
(BEGIN VIDEO CLIP)
OBANA: You know, Senator McCain, in the last debate, and today again, suggested that I don't understand. It's true, there is some things I don't understand.
I don't understand how we ended up invading a country that had nothing to do with 9/11 while Osama bin Laden and al Qaeda are setting up base camps and safe havens to train terrorists to attack us. That was Senator McCain's judgment, and it was the wrong judgment.
When Senator McCain was cheerleading the president to go into Iraq, he suggested it was going to be quick and easy. We'd be greeted as liberators. That was the wrong judgment, and it's been costly to us.
We're spending $10 billion a month in Iraq at a time when the Iraqis have a $79 billion surplus -- $79 billion. And we need that $10 billion a month here in the United States to put people back to work, to do all these wonderful things that Senator McCain suggested we should be doing but has not yet explained how he would pay for it.
(END VIDEO CLIP)
HARRIS: OK. And Frank, jump in here. Who scored best in this area?
SESNO: Neither one of them. I think this was one of the most important, the most cogent, the most insightful questions that we have heard. And it was, and I want to read it.
"How will all the recent economic stress affect our country's ability to act as a peacemaker in the world?"
HARRIS: Yes.
SESNO: To act as a peacemaker.
Now, recently, the secretary of defense said that what Afghanistan and Iraq have taught us is we can't make peace or we can't accomplish a lot of our goals just by fighting militarily. This was question about -- I think this was a question about diplomatic development, other kinds of assistance, cultural exchanges. They call it soft power, or smart power.
Neither candidate answered the question. In fact, McCain only talked about military power. They totally obliterated the question that was asked, and they need to come back to that one, because it's one of the most important questions, I think, that this election and this country now face.
HARRIS: Jump in, Jeanne.
CUMMINGS: Well, they answered what they did. So in measuring what they actually said...
SESNO: So you're going to give it to them, you're going to be nice.
CUMMINGS: Yes. Well, no, I agree with you, Frank. They didn't go there.
SESNO: They didn't get close to the question.
CUMMINGS: They didn't. But they did provide answers, and when you look at those two answers, I do think in this case that Barack Obama did something I hadn't seen him do before in the debates, and that is, you know, really make that very clear link between the cost of the war and the cost to home. And to say we need that $10 billion back here, I think, really resonates at this particular moment.
SESNO: Well, it resonates. But Jeanne, they didn't say -- how is America going to win hearts and minds? How with all this economic mess is America going to afford the stuff?
You know, when we had that secretaries of state debate that's been referenced so many times, all five of them said America needs to engage the world. Secretary Baker, a Republican, said there are more people on an aircraft carrier than there are in America's foreign service on the ground.
They didn't talk about that. Somebody needs to address that.
HARRIS: Yes. And Frank, I'm going to give you the last word there. Great to see you.
Jeanne, as always, great to have you on the program.
CUMMINGS: Thank you for having me.
HARRIS: Thank you, both.
SESNO: Thanks, Tony. HARRIS: Hey, what are you talking about at the dinner table these days? I had a chance to share a meal with a family has had a lot of concerns.
(COMMERCIAL BREAK)
HARRIS: You know, I want you to take a real good look at the big board here. The New York Stock Exchange. And do you understand that we are flirting with Dow 9,000? Look at the industrial average right now, down 229 points. The Nasdaq down 37. S&P down 22. Seriously, we are flirting with Dow 9,000.
Will any of these fixes work? As you can see there, Treasury Secretary Henry Paulson holding a news conference at 3:00 p.m. Eastern. We will, of course, bring it to you right here in the NEWSROOM.
So, you know, we have heard the official numbers about the economy. What about average American families who are struggling with money? I sat down for dinner last night with a family just outside of Atlanta to talk kitchen table issues. Here's what they had to say about their mortgage woes. It is a story you may find familiar.
(BEGIN VIDEOTAPE)
HARRIS: Are you behind in your bills right now?
WAYNE JOHNSON, STRUGGLING WITH BILLS: Yes.
SANDY JOHNSON, STRUGGLING WITH BILLS: Yes. Uh-huh.
W. JOHNSON: Yes.
HARRIS: In a major way or something that maybe clears up in a month or so? Are we talking about behind in the mortgage? Are we talking about behind in the car payments?
S. JOHNSON: The car payments. And because our -- we decided that the house was more important because we need to have somewhere to stay. Can't stay in the car. So I told my husband, I would be willing to let my truck go back because we've got to continue to pay the mortgage to make sure it's paid on time. And we actually got caught up in an adjustable rate issue.
HARRIS: No, you have one of those ARMs?
S. JOHNSON: Uh-huh.
W. JOHNSON: Yes.
HARRIS: That inflated.
W. JOHNSON: Yes.
S. JOHNSON: Yes.
HARRIS: Reset to a higher rate?
S. JOHNSON: Yes, and it ...
HARRIS: What did it reset from and how much of an increase in the reset?
S. JOHNSON: Well, when we first got our house in 2005, it was -- the percentage was 7.5. Now the -- because we have an 80/20. We have two mortgages. The 80 is -- now is at -- it went up to 11.5.
HARRIS: Eleven point -- excuse me, geez, 11.5?
S. JOHNSON: Uh-huh. Yes.
HARRIS: Which is a difference of how much a month?
S. JOHNSON: We were paying at first $700-something. So now it's like up to -- the first mortgage was to 80. It at ...
W. JOHNSON: $982.
S. JOHNSON: Yes.
HARRIS: Really?
S. JOHNSON: We just modified it.
W. JOHNSON: But we modified it.
S. JOHNSON: Last month.
HARRIS: Were you able to get into -- ultimately into a 30-year fix?
S. JOHNSON: Just to modify they say for 30 years. But it's still not fix.
HARRIS: Now what is this? Is this a case of you not getting good information? Now who do you blame in this situation for entering into a loan that ends up being much more than you really can pay right now?
W. JOHNSON: I blame the lender, because when I went in, I went in on the good faith base that I would be able to pay at the 7 point.
S. JOHNSON: Right.
W. JOHNSON: Yes. And I'm making $60,000 a year. I went in thinking that I would be able to pay at that rate. That's why we went after a year or two and purchased the car, because we could handle it. But once it started adjusting, everything just kind of went out of control.
HARRIS: To what extent do you fault yourselves for not ultimately making the right call on that?
W. JOHNSON: Well, like I say, I was . . .
S JOHNSON: Did you put any money down?
S. JOHNSON: No.
W. JOHNSON: No.
HARRIS: Whoo, so here (ph) we go now (ph).
S. JOHNSON: But can I answer -- can I answer, honey? I think because we were excited, and it was our first home. He had just got married. So we were excited. We were excited!
W. JOHNSON: But even with being excited, I'm not going to enter into a loan that I can't pay for.
S. JOHNSON: I know.
W. JOHNSON: We're talking about something you're going to be paying on the next 30 years of our life.
HARRIS: Right.
W. JOHNSON: So you want to make sure that that is right. OK. What they told us that we were in a fixed rate. But they did not tell us, and they did not make it clear, that it would start adjusting s after two years. Because I would have stopped it at that point and said, hold up, we need to do something else.
(END VIDEOTAPE)
HARRIS: I was a little hungry last night apparently.
You can hear the rest of my interview with the Johnson family on Friday at 11:00 Eastern. They talked to us about their struggling businesses and trying to put two lovely daughters through college. That's Friday, 11:00 a.m. Eastern Time right here in the CNN NEWSROOM..
Veronica De La Cruz has been watching this economic crisis unfold on the web.
Veronica, great to see you. What have you found, nice lady?
VERONICA DE LA CRUZ, CNN CORRESPONDENT: Well, a couple of stories that we do want to spotlight this morning, Tony, starting with this one.
A nationwide report says that if you are stressed out about the economy, then you are in the majority. The American Psychological Association says eight out of 10 Americans report feeling stressed out when it comes to the current financial climate. About half of those surveyed say they are stressed out about job stability and providing for their families. More than half say it is keeping them awake at night, Tony. Sixty percent say they are angry and irritable. Fifty- three percent report feeling fatigued. And these troubled economic times, Tony, are luring a new breed of customer to thrift stores, the middle class. Salvation Army and Goodwill say they've seen an increase in sales of as much as 15 percent. The CEO of Savers, Tony, which is another secondhand store, says more than 30 percent of its clientele make six-figure salaries, they're turning to thrift stores.
And the executive director of the National Association of Resale and Thrift Shop, Tony, has this to say. "Consumer's can't change the price of gas. They can't change the price of food. They can't make the stock market go up again. But they can control the price of clothes and furniture by being a savvy shopper."
HARRIS: There you go.
DE LA CRUZ: Also want to tell you about a special report, Tony, that you might find useful. It's at CNN.com. It's called "Right on Your Money." There you'll find tips when it comes to personal finance, handling your debt, using credit counselors and, worse case scenario, filing for bankruptcy. And then, on a lighter note, Tony, before I let you go, another article that I wanted to share with you. It is called 23 things that you can get for free. From phone service, to gym membership, even ice cream.
HARRIS: I like that.
DE LA CRUZ: You can find it all online at CNN.com/rightonyourmoney. Right? I mean, in times like this, doesn't ice cream sound good?
HARRIS: No, it does. I've got to tell you something. We were visiting with the Johnson family last night. And I actually took some ice cream over because I wanted to make myself a little float. You know, and I forgot to make the float for myself because I was so busy eating everything else in sight. That was bad form eating on camera that way, wasn't it? I've got to . . .
DE LA CRUZ: It was bad. Shame on you. Shame on you.
HARRIS: It was bad forum. What the heck was I thinking?
All right, Veronica, thank you. Thanks for piling on. See you tomorrow.
You know, lots of smaller communities are finding themselves in a real fix and it is all represented to energy costs.
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HARRIS: Let's gets you to Indianapolis right now. Democratic Presidential Candidate Barack Obama is in Indianapolis today. His first campaign stop after his second debate with Republican John McCain. Obama at the Indiana state fairground.
(JOINED IN PROGRESS) OBAMA: ... Action together with other nations to stem what is now a full blown global financial crisis. I support and encourage this kind of global coordination because, as I said before, this is a global problem and needs to be solved through a global effort. And I hope that this global response continues as leaders of major financial institutions and representatives from nations around the world gather in Washington soon.
But we are facing -- we are facing a serious challenge, Indiana. We're facing a serious challenge.
What's going on out there? Don't worry -- hey. Hold on a second. Hold on. Oh, no, no. We're OK. We're OK. We're OK. You know, we -- this has been -- one of the great things about this election is democracy. Everybody's got an opinion. And that is outstanding. That's what we're supposed to be doing during election time. Now, where was I?
We are facing a very serious challenge. And I think everybody knows it. All of us have a stake in its solutions. And I know that there are a lot of folks who are still upset about the situation. And rightfully so.
And last night at the debate, one young man asked, what does this rescue package have to do with me? Because I've done what I'm supposed to do. A lot of you people who are out here today, you've been paying your bills. You've been looking after your families. You've been living within your means. And so it's a little frustrating when you start reading about quote/unquote bailouts on Wall Street.
But I do think it's important for everybody to understand the gravity of the situation. And how it could end up affecting all of you. Because the credit markets right now have been frozen. And that create as ripple effect throughout our economy.
Let me explain what I mean when I say the credit markets are frozen. Businesses, large and small, rely every day on credit lines to get inventory, to make payroll, to do what they need to do to keep their business going. And usually it's pretty easy to be able to get a loan from a bank, get a loan in the credit markets. But what's happened is, people are so suspicious right now of whether somebody can pay them back, even companies with great credit, companies that have been paying their bills, suddenly they're finding it impossible to get a loan.
And what that means is, they can't buy new equipment. They can't open up a new plant. They can't make payroll. If you're a small business, maybe you've got a clothing store. Now suddenly you are carrying all this inventory, you start getting worried about it. You may have to lay off some workers. Auto plants that have been around for decades are closing doors because people can't get car loans to buy a car. Businesses start laying workers off who've never known another job in their entire life. And, look, we've already lost 750,000 jobs just this year. So this is a serious time. Here in Indianapolis and all across America, you're seeing your hours getting cut or realizing you can't pay every bill that's sitting on the kitchen counter. It's harder to make the mortgage or fill up your gas tank. And some people don't even know whether they're going to be able to keep their electricity on at the end of the month. We just saw a report today that says that home heating prices may go up 10 percent, 15 percent, 20 percent, 30 percent.
The money you've been putting away for your retirement, for your child's college education, is disappearing faster than you can count. The dream that so many generations have fought for feels like it's slowly slipping away. You know, back in 1980, Ronald Reagan asked the electorate whether you were better off than you were four years ago. At the pace things are going right now, you're going to have to ask whether you're better off than you were four weeks ago.
Now -- but listen here, Indiana. I'm here today to tell you that there are better days ahead. I know these times are tough, and I know that many of you are anxious about the future, but this isn't the time for fear or for panic. This is a time for resolve and steady leadership.
I know -- I know that we can steer ourselves out of this crisis, because that's who we are. This is the United States of America. This is a nation that's faced down war and depression, great challenges and great threats. And at each and every moment, we have risen to meet these challenges, not as Democrats, not as Republicans, but as Americans. With resolve, with confidence, with that fundamental belief that here in America our destiny is not written for us, it is written by us.
We make the decision about how we are going to move forward. Indiana, that's who we are, and that's the country we need to be right now, and that's why I'm running for president of the United States of America.
CROWD: Obama! Obama! Obama!
OBAMA: America -- thank you. Thank you.
America still has the most talented, the most productive workers of any country on earth. Workers who are willing to work two jobs, work overtime, to take the last bus home at night because they want something more for their children. We're still the home of innovation and technology, of colleges and universities that are the envy of the world. Some of the biggest ideas in history have come from our small businesses, our research facilities.
So it won't be easy. It won't happen overnight. But there is no reason that we can't steer ourselves out of this crisis and make this century another American century.
I know we can, but I'm going to need you to make it happen. I'm going to need your help. I'm going to need your help.
CROW: Yes, we can! Yes, we can!
OBAMA: Because -- because, understand, in order to bring about change, we are going to have to take a new direction. It's going to require new leadership in Washington. It will take a real change in the policies and the politics of the last eight year. And that's why the decision you make in 27 days is so important. That's why this is no ordinary election, because this is no ordinary moment for America.
In last night's debate, John McCain and I -- in last night's debate, John McCain and I each had the chance to make the case for change. To talk about what we would do differently from the last eight years when it comes to lifting our middle class, and growing our economy, and restoring our prosperity. But all we heard from Senator McCain was more of the same Bush economics that led us into this mess in the first place.
Take health care. Take health care. We were both asked whether we believed that health care should finally be the right of every American. I believe it should. But Senator McCain -- Senator McCain didn't say that. And when you look at his radical health care plan, you can see why. He talks about giving every family a $5,000 credit to buy healthcare, but he didn't mention last night that he'll also tax your benefits for the first time in history.
It's an old Washington game -- it's an old Washington game. They call it the bait and switch. He gives you a tax credit with one hand, he raises your taxes with the other. And he didn't mention that the average health care plan costs $12,000, not $5,000.
Senator McCain didn't tell us about the studies that say his plan would cost 20 million Americans to lose their health insurance from their employer. Or how the U.S. Chamber of Commerce, which is generally not a big supporter of Democratic candidates, said it would be a disaster for business.
He didn't mention how it would deregulate the insurance industry so they don't have to cover things like mammograms or vaccinations or maternity care. He thinks we wouldn't notice these things. Well, I've got news for John McCain, we notice. We know better.
We notice. We know better. We're not going to be hoodwinked. We're not going to it be bamboozled. We're not going to let him get away with it.
You know, this issue is personal for me. My mother died of ovarian cancer when she was 53. I'll never forget how she spent the final months of her life. I spoke about this last night. Lying in a hospital bed fight with her insurance company because they claimed her cancer was a pre-existing condition and didn't want to pay for her treatment. If I'm president, that will not happen. If I'm president, I will make sure those insurance companies can never do that to anybody again. Pre-existing conditions are going to be covered under every insurance plan.
My health care plan will ensure that insurance companies can't discriminate against those who are sick and need care the most. If you have health insurance, the only thing that will change under my plan is the amount you pay in premiums. They're going to go down. If you don't have health insurance, you'll be able to get the same kind of health insurance that members of Congress give themselves.
You heard Senator McCain say, well, we don't need any government involvement in health care. What he didn't mention is, he's got health care from the government.
You know, let me tell you, that is something that always burns me up. When I hear folks who are getting paid by the government, have health insurance from the government, are happy with it, wouldn't trade it in for anybody, but some then (ph) say, no, no, you, the American people, the folks who are paying our salaries, who don't have health insurance or are paying too much for health insurance, that somehow you don't want government involvement. Come on.
So we're going to bring down costs. But you know how we're going to do it? We're going to -- not by cutting benefits on Medicare. We're going to bring down costs by investing in preventive care and new technologies so that the costs are lower for families and businesses and the entire economy. That's the change we need. That's the choice that you will face in this election.
Even if so many Americans now -- let me say this also. Even if so many of you are worried about their medical bills, you're worried about keeping your jobs or staying in your homes, Senator McCain's campaign announced last week that they plan to turn the page on the discussion about our economy and spend the final weeks of this election attacking me instead. He and Governor Palin are out there saying all kinds of stuff. And his campaign, McCain's campaign actually said, and I quote, I'm quoting here, if we keep talking about the economy, we're going to lose.
Well, I've got news for John McCain. This isn't about losing a campaign. It's about Americans who are losing their jobs. Americans who are losing their homes. Americans who are losing their life savings. I can take four more weeks of John McCain's attacks, but the American people can't take four more years of John McCain's Bush policies!
Indiana can't afford four more years of the economic theory that says we should give more and more to those with the most and hope that prosperity trickles down on everybody else. We can't afford four more years of no regulation on Wall Street, where Washington isn't paying attention and CEOs are getting golden parachutes, and multimillion dollar bonuses while the workers are suffering and their investor are getting the shaft. We've seen enough of where that leads us. We're not going back.
Enough. It is time to turn the page on eight years of economic policies that put Wall Street before main street, but ended up hurting both.
We need policies that grow our economy from the bottom up so that every American everywhere has the chance to get ahead. Not just corporate CEOs, but their secretaries, too. Not just the person who owns the factory, but the men and women who work on the factory floor. Because if we've learned anything from this economic crisis, it's that we're all connected. We're all in this together. We will rise or fall as one nation. As one people.
So the rescue plan that passed Congress last week, that's not the end of what we need to do to strengthen our economy. It's only the beginning. Now we need a plan to rescue the middle class. We need a plan that will provide every family immediate relief to cope with rising food and gas price. Save 1 million jobs by rebuilding our schools and our roads. Help states and cities avoid budget cuts and tax increases. We should extend expiring unemployment benefits to those Americans who are trying hard to find a job but haven't been able to find one yet.
I've been fighting for this plan for months. My opponent's said nothing. That's the choice that you have in this election.
You've heard a lot about taxes in this campaign. Well, here's the truth. John McCain and I are both offering tax cuts. The difference is, he wants to give the average Fortune 500 CEO a $700,000 tax cut -- but nothing at all for over 100 million Americans.
I'll give a middle class tax cut to 95 percent of all workers. If you make less than $250,000 a year -- let me see a show of hands. How many people make less than a quarter million dollar as year?
All right. That seems to be most of you. You will not see a dime of increased taxes. Not one dime. Not your payroll tax, not your income tax, not your capital gains tax, because in an economy like this, the last thing we should do is raise taxes on the middle class. And if you make less than $200,000, you're going to get a tax cut. More money in your pockets.
My opponent wants to give $200 million in tax cuts to the biggest corporations in America, including companies like Exxon Mobil. The oil companies will get $4 billion in additional tax cuts. Here's what I'm going to do. I'm going eliminate capital gains taxes for small businesses and the start-ups that will create the high-wage, high-tech jobs tomorrow.
John McCain wants to give tax breaks to the corporations that ship our jobs overseas. If I'm president, I will end those tax breaks and give them to companies that creates good jobs right here in Indiana, right here in the United States of America. That's the choice you have in this election.
Senator McCain's first reaction to this economic crisis was to say that, I quote, the fundamentals of our economy are strong. Well, I don't know about you, but where I come from, there's nothing more fundamental than a job. Because a job doesn't just provide a paycheck, it provides a sense of dignity. It provides a sense of self worth. And if we want to turn this economy around and lead the world in the 21st century, we have to create the highway jobs of tomorrow right here in America. So if I'm president -- no, no, no, no, no, no. No, no, no, no. All right. I'm -- I'm -- I'm superstitious. If I'm president, I will invest $15 billion a year in renewable sources of energy. We will create 5 million new clean energy jobs over the next decade. Jobs that pay well. Jobs that pay well and can't be outsourced. We're going to open up those closed factories. Those factories that used to make steel, they're going to make wind turbines. Other factories, they're going to make solar panels. We are going to build the hyper fuel-efficient cars of the future, not in Japan, not in South Korea, but right here in Indiana. Right here in the United States of America.
AUDIENCE: USA! USA! USA!
OBAMA: USA. And those jobs -- those jobs are going to not only create prosperity for American families, but they will help us end our dependence on oil from Middle East dictators.
We're going to put 2 million more Americans back to work rebuilding our crumbling roads and schools and bridges, because it's time to build an American infrastructure for the 21st century. And if somebody tells you that we can't do it, you just remind them that we are -- you just remind them that we are spending $10 billion a month in Iraq, rebuilding Baghdad. If we can spend $10 billion a month in Iraq when they've got a $79 billion surplus and we've got deficits, we can spend some money right here in America, rebuilding America.
AUDIENCE: Yes, we can! Yes, we can! Yes, we can!
OBAMA: And we will give -- we will give every child, whatever the skills everywhere in this country, the skills and the knowledge that they need to compete with any worker anywhere in the world. I will not allow countries to out-teach us today so they can out-compete us in -- in the future.
It is time to provide every American with a world-class education, and that means investing in early childhood education. It means recruiting an army of new teachers. It means paying our teachers more and giving them more support in exchange for higher standards.
And it means making a deal -- it means making a deal with every young American who has the drive and the will, but not the money to go to college. If you commit -- if you commit to serving your country, after you graduate, if you're willing to serve in the military, like these two outstanding members of our armed services, if you -- if you are willing to serve in Americorps or work in your local community, if you're willing to be involved in a faith-based organization or an organization that's working with veterans, we will make sure that you are able to afford your tuition. You invest in America, America will invest in you. Together we are going to move this country forward.
Finally, Indiana, I will take on the corruption in Washington and on Wall Street, to make sure that a crisis like this never, ever happens again. I'll put in place the common-sense regulations, the rules of the road, that I've been calling for since March: rules that will keep our markets free and fair and honest; rules that will restore accountability and responsibility in our corporate board rooms.
And just as we demand accountability on Wall Street, I will demand it in Washington. That's why I'm not going to simply stand here and tell you what I'm going to spend. I'm going to tell you how we're going to save when I'm president. I'll do what do you in your own family budget and make sure we're spending taxpayer money wisely.
We will go through the entire federal budget, page by page, line by line. We will eliminate programs that don't work and aren't needed, and we will improve programs that do work but are maybe a little too expensive. And we will start by ending a war in Iraq that should have never been authorized and should have never been waged.
We'll save billions more by cutting waste, improving management, strengthening oversight. These are the changes and reforms that we need. A new era of responsibility, accountability on Wall Street, and in Washington. Common-sense regulations to prevent a crisis like this from ever happening again. The end of a lobby-driven agenda coming out of the White House. See, I don't take money from lobbyists. I don't take money from PACs. They have not funded my campaign. They will not run my White House. They will not drown out the voices of the American people when I'm president of the United States of America.
We will make investments in technology and innovation that will restore prosperity and lead to new jobs and a new economy for the 21st century. Bottom-up economic growth that gives every American a fair shot at the American dream.
I won't pretend that any of this is going to be easy. It won't come without a cost. We will all need to sacrifice. We're all going to need to work a little harder. We're all going to need to work a little smarter. Parents, we're going to have to turn off the TV sets, put away the video games and make sure our kids are doing their homework.
We will all need to pull our weight. All of us will need to pull our weight. All of us will have to redouble our sense of commitment. We're going to have to regain our nerve, our vision, our courage, because now more than ever we're all in this together.
What this crisis has taught us is that at the end of the day, there's no real separation between Main Street and Wall Street. There's only the road we're traveling on together as Americans. We will rise or fall on that journey as one nation, and one people.
This country and the dream it represents are being tested in a way we haven't seen in literally a century. The future generations will judge us by how we respond to this test. Will they say that this was the time when America lost its way, when it lost its purpose, when we allowed our petty differences, our broken politics to plunge this country into a dark and painful recession? Or will they say this was another one of those moments when America overcame, when we battled back from adversity, when we recognized the common stake we have in each other's success? This is one of those moments, Indiana. I realize you're cynical. I realize some of you are Fed up with politics. I realize you're disappointed and even angry with your leaders, and you have every right to be. But despite all of this, I ask of you what's been asked of the American people in times of trial and turmoil throughout our history. I ask you to believe. Believe in yourselves. Believe in each other. Believe in the future we can build together. Because together we cannot fail.
Look at this crowd here today: black, white, Hispanic, Asian, Native American, young, old, rich, poor. We cannot fail. Not now! Not when we have a crisis to solve, not when we have an economy to save, not when there's so many Americans without jobs and without homes. Not when there are families who can't afford to see doctor or send their child to college, or pay their bills at the end of the month. Not when there's a generation that's counting on us to give them the same opportunities, the same chances for success that we had for ourselves. We can do this, because America's done it before.
You know, some of us had parents or grandparents who, maybe they didn't have some of the same chances we did. Some of us had parents who said, you know, "I'll never go college. But I'll tell you what. My child will go to college."
Some of us had grandparents who said, "You know what? I'm working here on the factory floor, and it's hard and dirty work, but some day I can picture my child owning this business."
Some of us had grandparents who said, "You know what? I -- I may not be able to vote, but some day my child will be able to vote."
Some of us had grandmothers or mother who said, "You know, I may not get equal pay for equal work, but I'm going to work hard to make sure my daughters get equal pay for equal work."
Some of us have great-grandparents who lived in countries without free speech or freedom of religion, and they looked across the oceans and they said, "You know what? There's a place called America. And if we go there, no matter how hard it might be, our children, our grandchildren, they'll have a better inheritance."
Some of us had parents or grandparents who said, "You know what? I may never go into politics, but maybe my son or grandson might become a United States senator, might run for the United States presidency."
That's the story of America. That's who we are. That's what this election's all about, and Indiana, if you will stand with me, if you will work with me, if you will vote for me in 27 days, I promise you, we not just win Indiana. We will win this general election and you and I together, we're going to change the country and change the world. Thank you.
God bless you, and God bless the United States of America.
KYRA PHILLIPS, CNN ANCHOR: Cue the music. Barack Obama there in Indianapolis riling up all his supporters.
