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Feds Say Bailout Working; Auto Makers to Ask Congress for Help; Does Bill Pose Problems for Hillary's Secretary Chances?; Is This a Good Time to Buy a U.S. Car?; Protestors Push Police for Answers to Dragging Death

Aired November 18, 2008 - 13:00   ET

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

(BEGIN VIDEO CLIP)
ALAN MULALLY, CEO, FORD MOTOR COMPANY: The automobile industry is just absolutely essential to the United States economy.

PHILLIPS (voice-over): A sales pitch from the big three. GM, Ford and Chrysler say the road to profitability runs through Capitol Hill. Critics say they're on a dead-end street, with unions in the driver's seat.

If you want to hire Hillary, do you have to vet Bill? Team Obama tries to steer clear of diplomatic minefields as it looks for a secretary of state.

UNIDENTIFIED FEMALE: We pulled up to the window, and when we get to the window, the girl in the window says, "There's no charge today."

PHILLIPS: Pay it backwards? When times get tough, the tough practice drive-through generosity. Pass it on.

(END VIDEOTAPE)

PHILLIPS: And hello, everyone. I'm Kyra Phillips live at the CNN world headquarters in Atlanta. You're live in the CNN NEWSROOM. We want to get right to it this hour.

How's that $700 billion bailout working out? Well, different lawmakers are putting that question in many different ways to the Bush administration's point men on the economic meltdown. Their answer: not too bad.

CNN's Susan Lisovicz watching from her post on Wall Street.

And Susan, I gather "not too bad" is a matter of opinion?

SUSAN LISOVICZ, CNN CORRESPONDENT: It's a matter of opinion, and it's also a heck of a lot better than catastrophic. And that's basically what were you hearing from the treasury secretary among the big three. And we're not talking about Detroit automakers here. We're talking about the treasury secretary, the chairman of the Federal Reserve and the chair of the FDIC. And basically, they're saying, yes, that the U.S. has turned a corner in avoiding a financial crisis, but more needs to be done. It was a contentious hearing. A lot of lawmakers wanted to know why, just last week, this whole toxic asset relief program changed course, and that there was a decision to buy money, for buying bank shares instead of these mortgage assets.

Basically, Secretary Paulson saw it he say it as a faster and more effective way to stabilize the financial system. It would have just required a massive commitment of bailout money.

And you know, another thing that basically Paulson was saying, Kyra, is that this hasn't ever been seen before. There's no playbook for responding to this is kind of crisis that is faced. So that the lawmakers also need to be nimble.

But we also saw a difference of opinion also coming from the FDIC chair, Sheila Bair. She's pressing to use some of that money to help homeowners avoid foreclosure. And that's something Paulson says, this is not a stimulus package. This is to shore up the financial system.

We also heard from the Fed chair, Bernanke, who said that credit conditions are certainly far from being normal but that they have improved in recent weeks.

Now, finally, where's the money going? It's a whole heck of a lot of money. Well, we've seen a lot of it, of course, go to banks: $33.5 billion to 21 banks. That was the most recent infusion. A hundred twenty-five billion to United Nations biggest banks.

But Kyra, when you're looking at the list of recipients, they are banks and institution we all know. Everyone from Goldman Sachs, Merrill Lynch, Morgan Stanley, Bank of America. You name it.

There is $40 billion that was given to a non-bank, AIG. Another $90 billion left in the program. And then one thing that was said this morning is that -- is that the remaining $350 billion of that massive $700 billion will be left for the Obama administration to figure out how best to -- to distribute it and where it goes.

So a lot of questions. Some answers -- Kyra.

PHILLIPS: Yes. There's a lot of people that have answers for where all that money should go.

LISOVICZ: Exactly.

PHILLIPS: We're actually going to hear from the head of Ford coming up in just a little bit. All right. Susan Lisovicz, thank you so much.

LISOVICZ: You're welcome.

PHILLIPS: Spend now, oversee later? Love it or hate it, the bailout is well underway. And while Bernanke and Paulson are calling the shots, no one is following the dollars, but that's about to change. CNN's Jim Acosta introduces the prospective accountant in chief. (BEGIN VIDEOTAPE)

JIM ACOSTA, CNN CORRESPONDENT (voice-over): The bailout is one month old. Billions of dollars have flowed to the nation's biggest banks. But the government is just now getting around to naming someone to oversee the program full time. That someone is this man, federal prosecutor Neil Barofsky.

NEIL BAROFSKY, INSPECTOR GENERAL NOMINEE: I fully intend to keep you fully and promptly apprised of significant findings and concerns.

ACOSTA: At his confirmation hearing, one Senator compared oversight of the bailout to the wild west.

SEN. RON WYDEN (D-OR), FINANCE COMMITTEE: I would characterize the operation of this program now in terms it of oversight as like Dodge City before the marshal showed up.

ACOSTA: The Treasury Department's inspector general, who was unofficially keeping an eye on the bailout, told "The Washington Post," "I don't think anyone understands right now how we're going to do proper oversight of this thing."

The nonprofit watchdog group, Taxpayers for Common Sense, points to the application for bailout funds, the form the banks must fill out to receive some of the money. It's just two pages, the group notes, shorter than the typical application for a mortgage.

RYAN ALEXANDER, TAXPAYERS FOR COMMON SENSE: When anybody thinks about the amount of credit they've applied for their in their life, be it a student loan, a car loan, a house, anything, a line of credit for a small business, you know, it's more than two pages.

ACOSTA: A Treasury Department spokeswoman counters that banks must sign off on other supporting documents, as well. "It's entirely inaccurate," the spokeswoman says, "to imply this operation doesn't have oversight."

Oklahoma Senator Jim Inhofe says he believes lawmakers were not told the truth about the bailout, adding Congress "doesn't know how much money Treasury Secretary Henry Paulson has given away to anyone. It could be to his friends. It could be to anybody else. We don't know."

Of the $700 billion in the bailout, only half has been authorized by Congress. Some key lawmakers say they're not quite ready to hand over the other half.

REP. ELIJAH CUMMINGS (D-MD), OVERSIGHT & GOVERNMENT REFORM COMMITTEE: We have learned now from what we've already seen that we -- we have to have some pretty strict oversight. Mr. Paulson has disappointed a number of us.

ACOSTA (on camera): The Congress may be falling behind in its own oversight duties. It has just started making appointments to its own panel to oversee the bailout, and it's already missed a deadline to file a report on the program's progress.

Jim Acosta, CNN, Washington.

(END VIDEOTAPE)

PHILLIPS: Well, they prefer the term bridge loan to bailout, but when the CEOs of the big three U.S. automakers show up on Capitol Hill two hours from now, along with the heads of the United Auto Workers, well, they'll take whatever help they get, and it may not be much. A $25 billion low-interest loan from the $700 billion bank bailout is looking more and more like a non-starter.

Well, the White House and most Republicans say that tapping the bailout for car makers starts the government down a very slippery slope and may not accomplish anything.

CNN's Dana Bash is on the Hill.

Dana, are the CEOs and lawmakers, I guess, on a collision course, shall we say?

DANA BASH, CNN CORRESPONDENT: You know, at this point, Kyra, it certainly looks that way. They are pretty far apart. Not in the sort of overall concept or theme that perhaps there does need to be something to -- done to help the big three, but definitely on where this money should come from. And there is definitely a log jam, stalemate, really, on that issue.

I just passed Senator Carl Levin in the hallway. He's a Democrat from the state of Michigan. He is working extremely hard to lobby some of the senators. I watched him lobbying one of his colleagues on this issue.

But even people like him, others who are trying to push this idea of using $25 billion of the $700 billion financial bailout, that rescue plan, using part of that to help the auto industries, they admit that it is going to be very tough to do.

And part of the reason is because that the White House is very much against this. And in fact, that came up in a very contentious exchange this morning over on the House side between a lawmaker, a Democratic lawmaker, and the treasury secretary. Listen to what happened.

(BEGIN VIDEO CLIP)

REP. PAUL KANJORSKI (D-PA), FINANCIAL SERVICES COMMITTEE: Do you consider the loss of the American auto industry a significant and systemic risk, or don't you? If we lose three million jobs what would it cost to make it up? What would be the loss of revenue? And would it be worth spending $25 billion initially to stop that from occurring?

HENRY PAULSON, TREASURY SECRETARY: I believe that any solution be a solution that leads to long-term viability, sustainable viability here. And so, again, I don't see this as the purpose of the TARP. Congress passed legislation that dealt with the financial system's stability. And, again, you know, there are other ways.

And you know, you also appropriated money for the auto industry in the Department of Energy Bill, you know, 136, and you want another alternative, maybe to modify that.

(END VIDEO CLIP)

BASH: So there you heard it. It's a little bit of Washingtonesse (ph) there, perhaps, Kyra. But the point that he was trying to make is, he was trying to make the argument that we're hearing from most Republicans, even some Democrats, which is, you know what? If want to help out the auto companies, then the best way to do that is to use money that Congress already passed, that the president already signed into law specifically for them.

The problem, say many Democrats is, wait a minute. That money was to try to help with research for fuel-efficient cars, and that's not what the purpose is.

So what does this all mean at this point? We haven't found very much evidence at all of compromise talks going on behind the scene. So right now they're headed for a vote, probably on Thursday. That, again, most people think will fail. But in the next two hours, actually two hours from now, we are definitely going to hear some pleas for help from the CEOs of those big three auto companies -- Kyra.

PHILLIPS: Well, I'm just seeing now that Democrats have voted to allow Joe Lieberman to keep his committee chairmanship. Can you tell us anything about that?

BASH: Really fascinating. This all happened behind closed doors in secret ballot. But both Joe Lieberman and the Senate majority leader, you see there, came out and talked to senior reporters and said, look, they decided at the end of the day to take what they said was Barack Obama's lead, and they wanted to let bygones be bygones. And they said that they agreed to allow Joe Lieberman to keep his committee chairmanship. He is the chairman of a very powerful, very important committee in the Senate, the homeland security committee.

And instead, the punishment, if you want to call it that, was to strip him, actually to take him off another committee that he's done a lot of work on, and that's the environmental committee. So that is what they have done.

But Senator Reid said, "Look, there was probably nobody more angry than I was" about the things that -- not just the fact Joe Lieberman campaigned aggressively for John McCain but the things he said specifically about Barack Obama. But they all agreed by a vote, a secret vote, but we know at least the tally, 42-13, to move on and move forward. That was kind of the scene that we heard from all these Democrats. A little bit surprising given the real anger that we heard over the last, at least at the end the campaign, Kyra.

PHILLIPS: All right. Dana Bash from the Hill, thanks so much. Well, don't tell the CEO of Ford that a government loan would only postpone not prevent the industry's collapse. Ahead of his appearance in Congress he appeared on CNN's "AMERICAN MORNING."

(BEGIN VIDEO CLIP)

MULALLY: The automobile industry is just absolutely essential to the United States economy. We're in an economic situation now, with the credit crisis and the financial and the banking issues, that we really, more than ever, the automobile industry, needs to be part of the solution.

And the only thing that we're asking for is to set up a bridge loan mechanism that, if the economy continues to deteriorate in the near term, that we could access that so we can continue to invest in the products that people really do want and value and help be part of this economic recovery.

(END VIDEO CLIP)

PHILLIPS: And Mulally says that Ford's future won't be hitched to the gas guzzling SUVs and pickup trucks that, until this summer, had cushioned its bottom line.

(BEGIN VIDEO CLIP)

MULALLY: Consumers love and need that vehicle, they absolutely loved the 150, but we are complementing that now, just like you mentioned, with small and medium-sized cars and utilities, all of which will be best in class on fuel efficiency. So we want to be there with a full portfolio that consumers really do want.

(END VIDEO CLIP)

PHILLIPS: Well, if you can't sell your products, you sometimes have to sell your assets. Ford says that it will raise hundreds of millions of sorely-needed dollars by selling most of its stake in the Japanese car maker Mazda. Today Ford owns just over a third of that company. Tomorrow it will own 13 percent. Yesterday GM announced it was selling off its stake in Suzuki.

And the United Auto Workers union is big and it's powerful, but it's the reason for Detroit's trouble? Well, we're going to hear what the union and its critics have to say about that.

As Barack Obama's transition team considers Hillary Clinton for secretary of state, the job could hinge on one big factor: Bill Clinton. The transition team is vetting not only the New York senator but the former president, as well, focusing primarily on his financial and post-presidential dealings.

CNN's Ed Henry joining us now from Chicago.

Ed, how serious a candidate is Hillary Clinton? What are your source -- sources telling you? ED HENRY, CNN CORRESPONDENT: Well, very senior Democrats back in Washington and here in Chicago are saying she's a very serious candidate, because they're reading the tea leaves and they're looking at the fact that what you just mentioned. The fact that Obama transition officials are telling us privately that they are going through and vetting Bill Clinton, the former president, in addition to the senator.

And the thinking in Democratic circles is that Barack Obama, as one of his first moves right out of the box, would not go through this long, tortuous process of considering Hillary Clinton and getting her supporters' hopes up after not picking her as VP, and then in the end not picking her as secretary of state. A lot of senior Democrats think that's highly unlikely, and they think this is a sign pointing towards her eventually getting this nomination.

The second thing they're doing as they read the tea leaves, is noting what we've been reporting over the last few days, that Greg Craig, the former impeachment lawyer, is now going to be Barack Obama's chief counsel in the White House. He is widely believed to be somebody who is supportive of Senator John Kerry being secretary of state. He had worked in the Clinton State Department himself. And a lot of Democrats expected that, if Kerry became secretary of state, Greg Craig would be in a very senior role at the State Department.

Now that Greg Craig instead has said, "Look, I'm going to be the chief counsel in the White House," a lot of senior Democrats are reading the tea leaves and saying, "Wait, he realizes it's unlikely to be John Kerry, and he doesn't necessarily get along much with Hillary Clinton lately," because Greg Craig supported Obama over Clinton in the Democratic primaries. And him taking that White House job has a lot of people thinking that he believes Hillary Clinton will wind up at the State Department -- Kyra.

PHILLIPS: Well, should be interesting to see who he appoints in all those key positions. Ed Henry, thanks so much.

The nation's big three automakers scramble to stay afloat. So is now the time to go ahead and buy that new car? We're going to find out from our personal finance editor, Gerri Willis.

And in these tough times the kindness of strangers really adds up. We're going to tell you about some Starbucks customers are learning that lesson when they get to the cash register.

(COMMERCIAL BREAK)

PHILLIPS: Well, looking to buy a new car? Here's an offer that might be hard to refuse. Buy a Chrysler Pacifica and a Chicago dealer will throw in a used PT Cruiser for $1.

But with the big three U.S. automakers crying for a bailout and possibly looking at bankruptcy protection, is now even a good time to buy one of those cars?

Joining us with advice on that, CNN personal finance editor, Gerri Willis.

Well, Gerri, is this a good time to buy an American car or not?

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Well, it is a good time to buy a car. Look, there are more incentives than ever out there. You know, total industry sales we've been talking about for weeks here, they're down, down dramatically. Lowest rates in 25 years.

In fact, today to combat this problem, Ford announced it will announce employee pricing, zero percent financing and cash incentives on a variety of vehicles. But you may be wondering if the car brand you're thinking about buying today will be around tomorrow. That is the big down side -- Kyra.

PHILLIPS: All right. Let's talk more about those down sides.

WILLIS: Well, look, if your goal here is to get the best deal, the cheapest car possible, you'll find it from these companies that are really struggling.

Now, if the company is taken over, your warranty should still be valid. That's because the new car company would just take it over.

However, if your car manufacturer goes out of business, your warranty may be at risk.

And if you have to bay car because yours is just biting the dust, realize that all car manufacturers out there are struggling, and there are incentives across the board, especially on really popular vehicles, like hybrids or compact cars.

The more cash bring to the table, the better off you'll be. The best way to negotiate, find out what the dealership paid for the car that you want to buy at ConsumerReports.com. They call it their new car price service. Take that number in to negotiate.

The question becomes what a reasonable amount of profit is for the dealership. Usually, 2 to 4 percent rather than how much you should get off the sticker price.

PHILLIPS: All right. Well, would you buy an American car right now?

WILLIS: Well, I talked -- I talked to the "Consumer Reports" people. You know, they test drive these cars. And they say they'd stay away from Chrysler products for two reasons. Most importantly, their products simply aren't rated highly, but also because the company is in severe financial difficulty.

However, when it comes to GM, which is what we've been talking a lot about lately, they say many of this products rate well and now is a good time to get a deal on a GM car.

Now, regardless of what happens to the parent company, there will be a large network of people servicing GM cars. My source told me it's not like you get a deal on a box of eight-track tapes and the players go away. So this is -- this is the kind of analysis you're going to have to do right now out there in the marketplace -- Kyra.

PHILLIPS: All right. What was your favorite eight track?

WILLIS: I wish I could remember.

PHILLIPS: Come on. Throw it out there. Can you remember?

WILLIS: I'm trying to remember. Alice Cooper?

PHILLIPS: Ooh! That's pretty good. All right. I have to admit, John Denver.

WILLIS: John Denver? I love that.

PHILLIPS: All right. Thanks, Gerri.

WILLIS: All right. You, too.

PHILLIPS: Well, back to the big question. How did the big three get in the mess that they're in? Is it lousy products? Well, that's a big myth. According to a "Detroit Free Press" columnist, Mark Phelan, he cites six myths about big three products and what he says are the real facts.

Here you go. Myth one, nobody buys their vehicles. In fact, the big three sold 8.5 million vehicles in the U.S. last year.

Here's myth two, they build junk. The reality: creaky, leaky vehicles of the '80s and '90s are gone.

They build gas guzzlers, wrong. All these build mid-size sedans the EPA rates at 29 to 33 miles per gallon on the highway.

So we're going to bring you the other three myths a little later in the hour.

Well, police first said that the death was a hit-and-run. They called it a murder. Now some people are calling it a hate crime. Ugly memoirs stirred -- or memory, rather, stirred up in a Texas town.

And critics of the battered American auto industry are pointing fingers at who's responsible for the big three's troubles, and they're pointing at the United Auto Workers union. We're going to examine their complaints.

(COMMERCIAL BREAK)

PHILLIPS: A dragging death in Texas stirring up a lot of bad memories. Protesters rallied twice yesterday outside an east Texas courthouse to speak out against the justice system. That case has stirred memories of the Texas murder of James Byrd, who was dragged behind a pickup truck ten years ago.

J.D. Miles of our affiliate, KTXA, has the story. (BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Justice!

UNIDENTIFIED MALE: Justice!

UNIDENTIFIED MALE: Justice!

UNIDENTIFIED MALE: When do we want it?

UNIDENTIFIED MALE: Now!

UNIDENTIFIED MALE: Now!

UNIDENTIFIED MALE: Now!

UNIDENTIFIED MALE: What do we want?

UNIDENTIFIED MALE: Justice!

UNIDENTIFIED MALE: Justice!

UNIDENTIFIED MALE: Justice!

J.D. MILES, KTXA REPORTER: In the shadow of the Lamar County courthouse...

UNIDENTIFIED MALE: Come on over here and join us!

MILES: The effort to shine a light on a murder case continues.

UNIDENTIFIED FEMALE: We don't want special treatment. We want equal rights.

MILES: Two months since Brandon McClelland was found dead on the side of a road outside Paris, the demands to classify his killing as a hate crime grow louder.

UNIDENTIFIED FEMALE: That I'm fighting that justice be served right for my child.

MILES: All eyes in this town were focused on Monday afternoon's rally, organized by local civil rights groups and the Dallas chapter of the New Black Panthers...

UNIDENTIFIED MALE: Free Lamar County.

MILES: ... who some citizens made clear were unwelcome.

UNIDENTIFIED MALE: I personally don't think that the New Black Panthers have any business being up here. The ADL has labeled them a racist and extremist group.

MILES: But protestors say racism is behind the 24-year-old's murder, even though he knew the two men charged with the crime. UNIDENTIFIED MALE: This man was run over. Possibly multiple times, and just because he knew his attackers don't -- doesn't mean it wasn't a hate crime. James Byrd also knew his attackers. He sat down and had a couple of beers with him.

MILES: Brandon's death was initially classified as a hit-and- run. The subsequent murder arrest and the revelation that Brandon was dragged up to 60 feet underneath a pickup truck led his mother and some in the black community to demand more answers, which they say they aren't getting.

UNIDENTIFIED FEMALE: I feel pissed that I feel there might be some cover-up.

(END VIDEOTAPE)

PHILLIPS: Well, authorities say they don't think racism was the motive, because McClelland had been friends with the suspects for years.

A teenage girl allegedly kept as a modern-day Cinderella by her aunt, but now the woman is accused of raping and beating the 16-year- old. She's pleaded not guilty.

Massachusetts police say the girl lived in a bare room and was forced to do housework while the suspect's daughters lived down the hall in luxury. The girl told social workers the abuse had been going on since 2003. It's not clear why she was living with that aunt and not a parent.

Picking up charred photo albums or any keepsake they can find, returning evacuees to ground zero of the California wildfires are searching the rubble for their belongings but more and more are leaving with only the clothes on their backs.

The three wildfires in Southern California have destroyed nearly 1,000 homes, apartments or trailers, charring 65 square miles. Causes of all three are under investigation. At least one of the fires, a massive blaze in Santa Barbara County, is suspected to have been arson.

And snow is socking Northwestern Indiana today, two to three inches an hour in some places. It made for a really slick morning commute. That's for sure. And police were called to several dozen crashes and slide-offs.

Things are due to taper off, leaving the southern shore of Lake Michigan under a foot of snow.

Chad Myers keeping an eye on all of it for us, and the rest of the forecast.

Hey, Chad.

CHAD MYERS, CNN METEOROLOGIST: It's always good to remember that four-wheel drive makes you go faster, but it doesn't make you slow down any faster. Does it there, Kyra?

(WEATHER REPORT)

MYERS: And still very cool all the way down in Montgomery, even Jacksonville. Not a day at the beach. But I guess if you're playing golf at Amelia Island, at 54, wouldn't be too bad, as long as you're playing golf.

PHILLIPS: All right. Ooh. Amelia Island and golf? That's a dream day for me. Thanks, Chad.

MYERS: You bet.

PHILLIPS: Well, they survived Hurricane Ike. Now two months later scores of people still living in tent cities like this one in the small Texas Gulf Coast town of Oak Island. And with cold weather approaching, many of them are upset with FEMA, saying it's been slow to bring in those mobile homes.

FEMA says housing is its No. 1 priority, but finding places to put the mobile homes remains a problem.

Wayne Dearman, a World War II vet, explains life after Ike roared through.

(BEGIN VIDEO CLIP)

WAYNE DEARMAN, OAK ISLAND RESIDENT: I've seen shelled-out buildings and bombed-out towns and God knows, you name it, but I have never seen anything like this.

(END VIDEO CLIP)

PHILLIPS: Well, Dearman is one of those lucky ones at Oak Island. He's now living in a FEMA-provided mobile home.

Customers at one Starbucks store, getting coffee extra sweet. Strangers treating strangers, paying it forward even in these tough times.

(COMMERCIAL BREAK)

PHILLIPS: Hello, everyone. I'm Kyra Phillips, live at CNN world headquarters in Atlanta, and you're live in the CNN NEWSROOM.

1:33 eastern time. Here's some of the top stories we're working on in the CNN NEWSROOM. A vexing question. Should Congress dip into the bailout fund to help America's Big Three automakers? Auto execs make their case at a Senate hearing in about 90 minutes.

And could Bill Clinton be an obstacle for his wife's appointment as secretary of state? The Obama transition team is vetting not only her, but the former president's financial dealings to avoid conflicts of interest.

As President Bush hopes to ease air traffic congestion this Thanksgiving holiday, he's temporarily opened Military airspace corridors for commercial flights.

(BUSINESS HEADLINES)

PHILLIPS: America's automakers teetering on the edge of bankruptcy. So, whose false is it? Well, a lot of critics are pointing fingers at union members.

Here's CNN's Randi Kaye.

(BEGIN VIDEOTAPE)

RANDI KAYE, CNN CORRESPONDENT (voice-over): It is the engine that's supposed to keep automakers running. But some say the United Auto Workers Union has helped bring the Big Three to a grinding halt.

UAW workers earn as much as $75 an hour, including pension and future health care. James Sherk, from the Heritage Foundation, a conservative think tank, calls the contract greedy.

JAMES SHERK, THE HERITAGE FOUNDATION: Every so often management will try to insist on more competitive contracts and then you'll have the unions go on strike. Rather than take billions and billions of dollars in losses, management caves.

UNIDENTIFIED MALE; We called a strike at 11:00 a.m.

KAYE: That was last year where 73,000 GM workers walked off the job, shutting down operations in 30 states. The union did make concessions in the contract negotiated during that strike. It let the company buy out about 20 percent of the work force and replace them with lower paid workers.

Senior research economist Don Grimes.

DON GRIMES, ECONOMIST, UNIV. OF MICHIGAN: You know, the concessions that they negotiated in last year's contract really were too little, too late.

KAYE (on camera): Keeping in mind, as we checked, the union's health care coverage costs GM about $1,600 per vehicle, compared to about $200 per vehicle over at nonunionized Toyota. That, some economists say, is killing the Big Three.

(voice-over): That, plus the U.S. company's reputation for producing interior vehicles. Grimes believes the industry may be doomed.

(on camera): Doomed because of deals like the jobs bank, set up back in the 1980s. It's an unprecedented agreement that continues to pay workers 96 percent of their salary after they've been laid off. It cost GM $900 million a year.

SHERK: It's one of the reasons General Motors is on the verge of bankruptcy. You can't pay work to do nothing. To sit in one of these rubber rooms and fill out crossword puzzles. KAYE: In last year's contract, the union did agree to put a two year limit on the length of time a laid off worker can stay in the jobs bank. UAW president, Ron Gettlefinger.

RON GETTLEFINGER, PRES., UNION AUTO WORKERS: We're willing to put our wages and all of our benefits out on the table. Let our (INAUDIBLE) put theirs out there. We have assisted these corporations and will continue to work with them. Our job is to develop quality product.

KAYE: Gettlefinger says, the contracts are fair.

GETTLEFINGER: I don't think that auto workers have been greedy. I think we've corrected a lot of the things in the past.

KAYE: Grimes calls the contracts unsustainable.

GRIMES: When the foreign producers came into the country, the great benefits that the UAW had achieved, the gig was up. They could no longer sustain those benefits.

KAYE: The days of the fat contracts are over. Union members are lobbying Congress, along with the automakers for a bailout.

GETTLEFINGER: This wasn't brought on by the industry and it's not a bailout. It's a low-interest loan and that's simply what we're looking at. The industry needs it. I think it's fair to say that they're in a crisis.

KAYE: At stake for union members, not just jobs but health care for retirees. That could leave as many 250,000 employees and their families without a job and without any health care.

Randi Kaye, CNN, New York.

(END VIDEOTAPE)

PHILLIPS: OK. Now back to what Detroit "Free Press" columnist Mark Phelan calls the six myths of the Big Three automakers. Earlier, we told you about the first three. Well, here's the others.

The Big Three already got a 25 million bailout. Well, that's true. Only as far as it goes. In fact, none of that money has been loaned out and may not be for more a year. The next myth, the big three are nothing more than idiots for investing in pickups and SUVs. True, up to a point they did it for one huge reason. Trucks and SUVS are a profitable part of the industry and the Japanese and Germans have been doing the sail thing.

The big three, don't build hybrids. Wrong. Ford and GM both offer more hybrid molds than Honda or Nissan.

Well, they're called the glue of the medical system. But, with family doctors fading from view and closing up show, what does that for your health? And when disaster strikes, this CNN Hero here to help. Next hour, find out why Tad Agoglia decided to pour his life savings into helping complete strangers pick up the pieces.

(COMMERCIAL BREAK)

PHILLIPS: WELL, for medical news for would-be moms and dads considering fertility treatments, the Centers for Disease Control says, babies use assist reproductive technology, are more likely to have birth defects.

According to the study, the infants are twice as likely to suffer from certain heart problems, or cleft lip or pallet. And they're four times as likely to have certain gastrointestinal defects than babies conceived naturally. It's important to remember that even with the increased risks such defects are rare.

He or she to be an endangered breed. More and more family doctors are thinking about ditching their practices and some say the insurance paperwork is just too much of a headache.

Our chief medical correspondent Dr. Sanjay Gupta explains.

(BEGIN VIDEOTAPE)

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT (on camera): Well, there''s no question it's going to be a huge change in the landscape when it comes to primary care doctors overall. Some of these numbers come from the Physicians Foundation. That's a foundation dedicated to the safety and education of physicians. What they found after evaluating 12,000 of their members, pretty startling.

Take a look.

(voice-over): It's a typical Friday at Dr. Alan Pocinki's medical practice. Filled with forms, files and phones. But fewer and fewer patients.

DR. ALAN POCINKI, PRIMARY CARE PHYSICIAN: I probably work 60 hours in a typical week, and I only see patients for 30 of those hours.

GUPTA: For 17 years, Pocinki has practiced medicine in Washington, D.C. He began his career at the same time insurance companies were turning into PPO's and HMO's. So he was a little shocked when he began spending more time on paperwork than patients. And found he was running a business instead of a practice.

POCINKI: I had no business training as far as how to run a business, how to evaluate different plans. It was a whole brave new world and I had to sort of learn on the fly.

GUPTA: In order to manage his day and give his patients the care they need, Pocinki made some changes. He no longer takes new patients on Medicare. And he honors only one insurance company. It's the best way, he says, to keep up with his practice, without giving it up altogether.

UNIDENTIFIED FEMALE: What about the prior authorization --

GUPTA: According to a new survey by the Physicians Foundation, Pocinki is not alone. Thousands of primary care physicians are starting to rethink their careers. The survey, which questioned almost 12,000 doctors, found half of them are looking to cut their patient load and/or close their clinics over the next three years.

DR. WALKER RAY, V.P., PHYSICIANS FOUNDATION: We couldn't survive that. We are only producing in this country now 1,000 to 2,000 primary care doctors to replace them. Medical students are not choosing primary care.

GUPTA: With poor reimbursement from insurance companies and the cost of malpractice insurance skyrocketing, many primary care doctors say it's not worth running a practice any longer.

Others say they're going into boutique medicine where they charge patients a fee up front to cake care of them on a yearly basis and they don't insurance. And some like Pocinki, are limiting the type of insurance they will take. That can leave a lot of patients looking for a doctor.

RAY: This is your family doctor. What if your family doctor wasn't there?

GUPTA: For the moment, Pocinki says things are manageable. But he's looking to the new administration when it comes to health care legislation. One of President-elect Obama health care promises is provide all Americans with a primary care physician. Pocinki is skeptical.

POCINKI: People who have insurance, can't find a doctor. So, suddenly we're going to give insurance or give access to health care to a whole bunch of people that haven't had it. Without increasing the number of physicians, it's going to be a problem.

GUPTA (on camera): So, the bottom line, as you can see there, about half the physicians that currently practice in the United States, said over the next three years they may greatly reduce or eliminate their practices altogether if things stay the way they are now.

We're going to have much more on this on CNN.con/health.

Back to you for now.

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PHILLIPS: Well, it's a nasty, potentially deadly bacteria often found in hospitals. But, now apparently showing up in the meats that you buy at the grocery store. According to a study by an Arizona University scientist, the bacteria commonly known as C Diff, was found in more than 40 percent of meat samples of ground beef, pork and turkey. But, the CDC says that no link has been established between the presence of the bacteria in meats and infections in humans.

Well, too much of a good thing? Barack Obama's swimming in campaign funds but he can't spend a dime of it on his transition. We'll tell about possible options.

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PHILLIPS: So what is the guy going to do? With unmatched Internet savvy, Barack Obama raised millions of dollars in winning the White House. Now he is faced with paying for the transition. All he's got to do is dip into his campaign war chest? Well, if only it is that easy.

CNN's Christine Romans reports.

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CHRISTINE ROMANS, CNN CORRESPONDENT: Kyra, the Obama transition team tells me we can expect an announcement on how they will pay for the inauguration some time next week. Good government watchdogs are hoping the president-elect will ban corporate cash.

(voice-over): He raised a stunning amount of money for the general election, more than $639 million in campaign contributions. Now the president-elect's challenge is to raise more cash for his transition and inauguration.

CRAIG HOLMAN, "PUBLIC CITIZEN": I really do hope Obama sticks by his principles and does not accept corporate money, does not accept money from lobbyists and places a very, very low ceiling on the amount of money he'd accept from individuals to pay for his inauguration.

ROMANS: "Public Citizen" says companies spend that cash to buy influence.

There is about $10 million of taxpayer funds to pay for the transition, but experts say that's not enough. Presidents tap private money and corporate cash to cover the difference. President-elect Obama taking pains to keep lobbyists out of his transition and forgo corporate cash, but he hasn't explicitly outlined his intentions for the inauguration.

George Bush raised a record $42.8 million, mostly from corporate donors for his second inauguration. To address potential conflicts of interest, Bush limited corporate donations to a quarter million dollars each.

Obama could decide to accept corporate donations for the inauguration, but impose tighter limits.

DAVID LEWIS, VANDERBILT UNIVERSITY: I think past presidents have had to raise lots of private money to do these things, and I think he's actually got a good resource base of donors that are willing and probably will give money for both the transition effort, but also the inaugural campaign as well. ROMANS: Make no mistake, even without corporate cash, the Obama fundraising machine has been a force. After a record haul and a win on Election Day, Team Obama was quickly soliciting more money. Here, raising money for the DNC.

(on camera): Any money leftover from the general election campaign funds can't be used for the transition. But many say the Obama fundraising machine will have no trouble raising more money -- Kyra.

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PHILLIPS: Christine Romans, thank you so much.

And we know what the Obamas will be doing come January 20th. For Al Franken, it is a whole different ball game. Minnesota State Canvassing Board meets today to officially order the recount of the Senate race between Democrat Franken and incumbent Republican senator Norm Coleman. Right now, Coleman has a 215-vote edge, but that won't matter once the recount states (sic).

Also up for grabs, the Senate race in Alaska between incumbent Republican Ted Stevens and Democrat Mark Begich. Begich now has a narrow lead of just over 1,000 votes right now because of that. Senate Republicans -- they decided to delay a vote on a resolution to kick Stevens out of the GOP conference and strip him of his committee assignments. That move is prompted by Stevens' corruption conviction last month.

Doing good at the drive-thru. They are helping strangers out at this Colorado Starbucks, paying it forward as they get their caffeine fix.

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PHILLIPS: Remembering the troops this holiday season. Volunteers around the country are getting the trees trimmed. About 16,000 donated Christmas trees will be shipped to troops overseas and to 40 military bases in the U.S. The trees you see here are headed to Iraq and Afghanistan.

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DOUGLAS DUNCAN, PRES. AND CEO, FEDEX FREIGHT: Not only will we be sending trees, but holiday greetings, Christmas cards, banners, poems, essays -- just letting the troops know that we still remember them, we are proud of them and we hope they come back to us very soon.

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PHILLIPS: Well, this is the fourth year of the Trees for the Troops campaign. And if you want to find out how you can help, just logon on to treesfortroops.org to find out what is being done in your area.

There is a trend brewing at a Colorado Starbucks. Drinks for free at the drive-thru, and it all depends upon the kindness of strangers.

More now from Adam Chodak our affiliate of KUSA.

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ADAM CHODAK, KUSA REPORTER: You might think only in a place called Loveland --

UNIDENTIFIED FEMALE: May I have a single venti --

CHODAK: -- could generosity pour out in the form of a venti cafe latte.

UNIDENTIFIED MALE: There you are. You have a great day. Thank you so much.

CHODAK: It is in this drive-thru, at this Starbucks in Loveland, where more and more people are picking up a story like the one Lingo Green (ph) now tells.

UNIDENTIFIED MALE: We pulled up to the window, and when we get to the window, the girl in the window says, there is no charge today.

CHODAK: The woman in front of him had already paid his bill.

UNIDENTIFIED MALE: It almost kind of took my breath away for a minute. It was such a wonderful surprise out of the blue.

CHODAK: Green then decided to pay for the person behind him.

UNIDENTIFIED MALE: Well, I jokingly said, well, this is paying it backwards.

JULIA DOMASCIENO, STARBUCKS EMPLOYEE: Anything else for you today?

CHODAK: Julia Domascieno says she used to see this kind of gesture only once in a while. But now she says, for reasons she can't explain, it is becoming darn near common.

DOMASCIENO: I have seen a woman cry. I have seen 15 cars at one time, like, it goes through 15 cars.

CHODAK (on camera): Now, The Black Cup here in town has seen similar random acts of kindness, so it is not only happening at Starbucks. And it is not only happening in Loveland either. Over the weekend a woman was in the checkout line in Wal-mart in Greeley, and when she went to pay, the cashier told her that man ahead of her put $20 toward her bill.

UNIDENTIFIED MALE: The way that our economic world is kind of in the pits right now, I think something like this just shows how many good people are out there.

CHODAK (voice-over): It also shows that when it comes to the ultimate pick me up, coffee can't hold a candle to the human heart. UNIDENTIFIED MALE: I hope it turns into an epidemic.

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PHILLIPS: Well, he has been around for generations, but still manages to keep the kiddies entertained. Mickey Mouse is 80 today. The Disney icon debuted in the movie "Steamboat Willie" on November 18th, 1928. It was the first cartoon with a soundtrack (INAUDIBLE) to the action. One reason Mickey might look so good, well he's had a couple facelifts over the years. His eyes, nose, ears, even his pants have changed. But even at 80, he is still a working mouse featured in a Disney channel show for one of preschoolers.

The next hour of CNN NEWSROOM starts right now.