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Obama Chooses Attorney General?; Should Taxpayers Bail Out Automotive Industry?; Pirates Attack Ship Carrying Saudi Oil
Aired November 18, 2008 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEOTAPE)
RICK SANCHEZ, CNN ANCHOR (voice-over): Coming at you, a developing story: How will it end? Pirates have attacked and taken control of this ship with more than $100 million worth of Saudi oil. One more time in case you missed it, that is $100 million in oil.
(on camera): I am still somewhat taken aback -- I will be honest with you -- that the folks with Evo Morales have decided not to join us.
(voice-over): Evo, where are you, Evo? What were you afraid of?
Mark Cuban, feisty, colorful, media-attention-grabber, but guilty of insider trading? And why just him?
And it is the day of reckoning for the big three automakers. Within minutes, the big bosses go before the Senate to ask for your money. You will see it live.
A telling moment at the G-20 summit. Look who is the only one who is not shaking hands.
Lunchtime in L.A., 3:00 in Cleveland, and Buffalo. Your newscast on the Net and on the air, our national conversation, begins now.
(END VIDEOTAPE)
SANCHEZ: Just in, breaking news.
Hello, everybody. I'm Rick Sanchez here at the world headquarters of CNN.
As we begin this newscast, there is information that we're going to be sharing with you about the selection of the future attorney general of the United States. That is someone that it sounds like Barack Obama has tapped for this position, brand-new and obviously a very important part of this administration, if he is vetted.
So, who is breaking the story once again? There he is, by the way. It is Eric Holder Jr. You remember him during the Clinton administration. That is part of his bio now, partner with Covington & Burling, former deputy attorney general during the Clinton administration, former U.S. attorney District of Columbia, comes from Columbia University there in New York and Columbia Law School. Breaking the story is one of certainly the most known guests on this show. We have tapped him in the past whenever we needed information. He is the one who apparently has broken the news, and we're going to get him on the phone right now to take us through this.
He is Michael Isikoff for "Newsweek" magazine.
Michael, what are you learning?
MICHAEL ISIKOFF, INVESTIGATIVE REPORTER, "NEWSWEEK": Well, it seems like it is Eric Holder for attorney general. He has been on the short list from the beginning, former deputy attorney general under Bill Clinton, served the last two years at number two to Janet Reno, has been very close to the Obama camp, was co-chair of the Obama vice presidential selection process and campaigned actively for Obama.
They have spoken in the last couple of days. The only real issue regarding Eric Holder was going through a confirmation process in which criticism of his role in the Marc Rich pardon would inevitably come up. He had been in the middle of a very controversial process and was criticized for not stopping the Marc Rich pardon.
But the Obama people and Holder reviewed all of the evidence in that, determined it was not going to be a obstacle to his confirmation, especially now with greater Democratic control of the Senate. And so, it is all looks like a green light for Holder. There's still a formal vetting process that has to -- Holder has to undergo by the Obama transition team, fill out that questionnaire, answer all the questions, but he was the -- on the short list from the beginning, an obvious choice and also a very symbolic choice.
This will be the first -- he will be the first African-American to head the Justice Department. And that's a pretty big deal in its own right.
SANCHEZ: Well, is he sending a signal with someone like Eric Holder, I mean, given what has been going on over the last seven years during the Bush administration in that particular office, with Gonzales and others? Is this the type of guy who is going to be such a straight shooter that he's going to be very different from what is going on there before? Which is obviously what people are going to be asking for.
(CROSSTALK)
ISIKOFF: Yes, he is certainly going to be very different.
Look, Eric Holder comes out of the Justice Department. He lives and breathes the culture of the Justice Department. He served for years in the public integrity section of the Justice Department, prosecuting political corruption, Republicans and Democrats.
SANCHEZ: As opposed to Gonzales, who was a judge from Texas.
ISIKOFF: Right, right. And that is right. I mean, one big issue here is that he knows this Justice Department and how it works. And one of the big criticisms of the Bush team, both in the first term and the second term, is that they didn't. They weren't a part of the Justice Department. They didn't quite understand the very unique culture at Justice. Eric Holder does.
SANCHEZ: Nobody is better at breaking news like this particular story than Michael Isikoff over at "Newsweek" magazine.
Michael, thanks so much for being on the ready for us there to bring us that information. We certainly appreciate it.
ISIKOFF: Sure enough. Any time.
SANCHEZ: We have got a lot of stories that we're going to be getting to.
As a matter of fact, I'm going to almost take you through a triad of other news stories that we're going to be doing through this hour. First and foremost, look what is happening right now in the U.S. Senate. They are going to be talking to four individuals. There's Christopher Dodd. He is introducing these folks.
It is going to be Jeffrey Miron.
Pardon me. I misspoke. It is going to be Ron Gettelfinger from the UAW. It's going to be Alan Mulally -- or Mulally -- pardon me -- from Ford company, Robert Nardelli from Chrysler, and Rick Wagoner from GM. These are the four guys who are standing before the Senate and say, we need $25 billion in a loan or else our companies are going the go bankrupt.
I mean, this is taking place as we start this.
Let's go ahead, if we can, Dan, and just dip in for a little bit to hear Christopher Dodd's opening remarks, as he starts this hearing. Let's do that.
(JOINED IN PROGRESS)
SEN. CHRISTOPHER DODD (D), CONNECTICUT: ... 66 percent in 2001, to just 47 percent today.
The boardrooms and executive suites in my view have been famously devoid of vision. Certainly, there have been exceptions. Ford was arguably ahead of the market when in the early years of this decade, they saw a big future in the fuel-efficient and alternative energy of vehicles.
But, for the most part, the top echelons, in my view, of the big three turned a blind eye to such opportunities. They have been content in my view to not only satisfy, but in too many respects, drive demand for inefficient gas-powered vehicles that Americans have been going broke to gas up. They derided hybrid vehicles as making -- quote -- "no economic sense" -- unquote. They have dismissed the threat of global warming, the role played by their products in creating it, and the strong desire of the American people to do something to stop it.
The prices of GM and Ford shares have declined steadily and have now reached historic lows. In short, the automakers have failed to adapt to change in my view and the shareholders are rendering judgment for that fact. They have approached 21st century challenges with a decidedly 20th century mind-set, and we are all paying the price for it.
This is not the first time that the leaders of our automobile industry have presented Congress with a doomsday scenario in connection with a cry for help. It happened in the late 1970s a well. At that time, this committee under different leadership and the Congress responded with the Chrysler Loan Guarantee Act. The law provided $1.5 billion to Chrysler in loan guarantees to help it avoid bankruptcy, but it did so with several very tough conditions.
It created a federal oversight board to review and approve funding decisions. It required Chrysler to become more energy- efficient. It prohibited the company from paying dividends on its common or preferred stock. It required buyouts that resulted in the loss of thousands of jobs. And the company was required to come up with a nearly dollar-for-dollar match of private funds in order to qualify for federal guarantees.
Until 1979, however, today, the tools -- unlike 1979, however, the tools already exist to provide meaningful and appropriate assistance to the industry. I am referring to the Emergency Economic Stabilization Act, which was signed into law barely six weeks ago.
This legislation confers broad authority on the secretary of the treasury, including, in my view, the authority to purchase -- quote -- "any financial instrument" such as stock from any institution if necessary to promote financial market stability.
The secretary of the treasury has until now declined to use that authority -- and I regret that -- focussing the resources of the act on financial companies. It is hard to explain how you can provide massive assistance to AIG, manage to find no room at all, assistance for our three major automobile manufacturers.
Similarly, the Federal Reserve has declined to use its authority under Section 13-3 of the Federal Reserve Act to assist the auto industry. That provision allows the Fed to lend to any individual, partnership or corporation if, due to unusual or exigent circumstances, that person, partnership or company is unable to secure adequate credit.
SANCHEZ: How would you like to go before a committee asking for $25 billion, and have the chairman of the committee, somebody like Christopher Dodd, saying things like he has been saying?
I mean, essentially, if you listen to what Christopher Dodd is saying, it is almost like a hammering of the industry, saying, you have not done enough. You have messed up. You have messed up here. You have messed up there, and now you are coming to me asking for this.
And, boy, I will tell you, this is going to be a very heated congressional hearing, as far as we are able to tell at this point. That is why we are going to be taking you through this step by step. Obviously, at times, it is going to get a little boring and sometimes these guys like to listen to themselves speak.
So, we will be cutting in from time to time, but we want to hear from these big four guys. Again, this is Gettelfinger, Mulally -- Mulally, like Sally, I was told, Robert Nardelli and Rick Wagoner. That's GM, Chrysler, Ford, and the UAW.
As we watch that, let me tell you -- and, by the way, there's somebody here to my right who I want to introduce you to.
This is Ernest Jett, 83 years old. Is that right?
ERNEST JETT, GM RETIREE: Senior.
SANCHEZ: Ernest Jett Jr.
JETT: Right.
SANCHEZ: Thank you very much.
Started with GM in 1947.
JETT: Right, 83 years old.
SANCHEZ: This is someone who has been with the UAW. He can take us through the story of how the auto industry has developed and why guys like him, he will argue, need the American people to pass and support this $25 billion bridge loan. More on that in a minute.
Then the controversy that is taking place right now off of the coast of Mogadishu in Somalia. This is an amazing story. I have got two things I want to show you. Well, first of all, let me show you what it is. Pirates have seized this ship. Take a look at this thing. First time they have ever taken a tanker this big.
As a matter of fact, how big is this thing? It is the size of an aircraft carrier. Just to share some of the notes that come along with this, the Somali prime minister is now saying he wants the navies to attack and get this thing back and to stop paying these ransoms to all these pirates.
This is a Saudi Aramco-owned Sirius Star is what the name of the ship is. There you see it right there. Small skiffs came on board with pirates. They threw one of those grappling hooks overboard and then climbed on. In fact, we have got video of what these pirates look like. This is video that CNN acquired exclusively of pirates a couple of years ago. Let's go ahead and show that, just to take them through what we're doing. As you look for that video, let me show you how much this has been going on, this piracy on the high seas. There are some of these so-called pirates, or self-proclaimed pirates, and a story on exclusive video that we at CNN had shared with our viewers a couple of years ago.
As a matter of fact, our correspondent is going to be standing by on this story, David McKenzie. He is in Nairobi right now. He has been working on this story for the last 24 hours. And he's going to take us through it.
I'm also going to show you on a map exactly where this is happening and why it is that they have to go through that region. If you go through the Gulf and then you have to go through the Suez Canal, that is why this happens. So all this taking place.
Let's go to a break, so when we can come back we can take you back to the hearing as well and join our guests with more on this.
Stay with us. I'm Rick Sanchez. We will be right back.
(COMMERCIAL BREAK)
SANCHEZ: They are watching us in California. They are watching us in Kansas and they're sending our messages.
Let's do this. I'm going to keep reading -- you know what I will do? I will put these Twitter responses that we are getting on the screen while you watch now Richard Shelby, senator from Alabama, who is making some comments. Let's just dip in, get a sense of what he is saying and then we will come back.
(JOINED IN PROGRESS)
SEN. RICHARD SHELBY (R), ALABAMA: ... Or is this just life support?
I understand that each firm may use their entire share to pay preexisting claims to stay afloat. In other words, the money would be used just to keep the lights on. If that is the case, there would be nothing left to make changes that might actually help turn the firms around.
I believe this begs the question, are we here in the Senate being asked to facilitate a stronger, more competitive auto manufacturing sector, or to perpetuate a market failure? Today's witnesses need to assure this committee and the American people that they are able to do what they have failed to do in the last 10 years. I look forward to their answers.
DODD: Thank you very much, Senator.
Senator Johnson.
SEN. TIM JOHNSON, (D), SOUTH DAKOTA: Mr. Chairman, thank you for calling today's hearing to examine the condition of the domestic auto industry and the effects of industry turmoil on job creation and economic growth.
As you know, I did not support this $700 billion bailout, in part because I did not believe the conditions set for bailout moneys for Wall Street firms were strong enough. I expect that if help is extended to the auto industry, these companies and their executives will be held to very high standards of accountability, and that the taxpayer protection remains a top priority.
Going forward, Congress must focus on how to secure the hundreds of thousands of jobs connected to the auto industry and also ensure that this industry makes dramatic improvements to innovate and reflect consumers' changing tastes for fuel-efficient vehicles, including flex-fuel vehicles and alternative-fuel vehicles, cars and trucks.
The U.S. has the ability to lead the world...
SANCHEZ: Boy, you feel good listening to Tim Johnson after what he has gone through to be able to be there doing his job, Senator Tim Johnson.
Let's dip into this and bring some of the experts that we have got following this situation for you, because the questions here are paramount for the American people. We are talking about another bailout, though it is being called a bridge loan. And some people take offense to the use of bailout. That is an argument that we will probably get back into during this newscast.
Joining us now are Jeffrey Miron from Harvard. He is an economy professor. He has joined us before to take us through this. He will tell you that the bailout or so-called bailout is a bad idea. Here is David Welch. He's with "BusinessWeek." He will tell you that the bailout may be the only solution. Tom Brune is a UAW member. He wants you to know that he does not make $70 an hour and he thinks much -- many of the media reports on this have been exaggerated. And Ernest Jett, who we are good enough to have with us, 83 years young, World War II veteran, has been working at a GM plant since 1947. He is worried about his health benefits.
Jeffrey Miron, get us started.
Why should a company that seems to have had at least on the periphery had bad management, made bad decisions about what kind of cars they need to make and some would say have overpaid their employees why should they be helped, bailed out or given a bridge loan? Take it away.
JEFFREY MIRON, ECONOMICS PROFESSOR, HARVARD UNIVERSITY: I think they should not be given any kind of bailout or bridge loan. Basically, they are in a position where it is very difficult to compete because they have signed contacts with the UAW that promises levels of competition that are just not competitive with other aspects of the U.S. auto industry or auto industries around the world.
(CROSSTALK) SANCHEZ: OK, so they go under. They go into bankruptcy. How big a problem is that? And can we as a nation allow that to happen?
MIRON: We absolutely can. We absolutely have for many other industries, such as a number of airlines, the steel industry and countless others.
And if they go into bankruptcy, they continue to operate. They will shrink. There will certainly be bad effects for the members of their union. They will make lower wages. And then bad effects for the shareholders.
(CROSSTALK)
SANCHEZ: But what do you tell a guy like Ernest Jett here, who is 83 years old, and is worried about his health benefits if this was to happen?
MIRON: For people who already retired, the issue is not significant, because the Pension Benefit Guarantee Corporation will make good on the pension guarantees for people who are already retired.
We are talking about people who are much younger who will be affected, but the point is they have no other choice. And if we bail them out, we are taking taxpayer money that's coming from lots of people who are far less well off than the people who work for the United Auto Workers.
(CROSSTALK)
SANCHEZ: David Welch is going to give us his two cents on this as well. I think he would tend to disagree with you.
And we also want our viewers to know who are joining us now that there is a lot of breaking news going on. We told you at the beginning of the newscast it sounds like Barack Obama has chosen his future attorney general, and it is going to be Michael Holder -- Eric Holder -- pardon me -- so much information. That is according to Michael Isikoff of "Newsweek" magazine.
And we also have this piracy situation going on off of the coast of Somalia that we're going to be getting into.
But I want David Welch to respond now to Jeffrey Miron's comments.
Go ahead, David.
DAVID WELCH, "BUSINESSWEEK": Sure.
I have heard the let them fail argument before. And I don't buy it. I think the nation should try to keep this industry afloat, but it can't just be a blank check or a pure handout. I mean, let's face it. You know, it would be the cost for the UAW workers, they make more, they cost more in terms of pay and benefits than workers at Toyota plants in the U.S. doing the same job, and arguably doing it better.
In many cases, those Toyota plants have better productivity, better quality, not in all cases, but in many cases, better productivity, better quality, and the vehicles they make command better pricing in the market and get a better profit.
(CROSSTALK)
SANCHEZ: That is what some are calling Detroit north, as opposed to Detroit south, huh?
WELCH: Sure.
So, if the UAW workers are making vehicles that don't command the same price and don't produce the same profit in the market, then they should make at best the same. So, when this bailout happens, you can take a number of cuts to the current UAW costs and save a few billion dollars a year right there. Detroit has had a culture for a long time of trying to keep the party going, no matter how bad times are.
SANCHEZ: But Tom Brune is listening to you say that right now and his blood is probably boiling as he's listening to you say it, because he is very adamant about the fact, aren't you, Tom, that you are not making any more money or exaggerated wages as being reported than the guys down south are making and that you are being compared to. You can go for 10 seconds, because then I'm going to bring you back and we got to hit the brake.
But go ahead to make the top of your point and then we will come back to you.
TOM BRUNE, GM EMPLOYEE/UAW MEMBER: Well, that is exactly right. We aren't -- you know, me as an hourly worker today, I don't think my benefit and wage package is any higher than a Toyota worker in Georgetown, Kentucky.
SANCHEZ: What do you make? What do you make?
BRUNE: I make $29 and change an hour. My health benefits are virtually identical to those at Toyota's. And our holiday schedules are the same. You guys have seen the numbers, $28 an hour for compensation. We are at that same level, high level.
(CROSSTALK)
SANCHEZ: We're going to come back to you. That is why you are here. And that is why you are here, as well, Ernest. We appreciate you being here. We're going to be coming back and talking to you guys in just a little bit.
In the meantime, I just want to show you something, what is going on off the coast of Somalia. If we could go to the Telestrator real quick, Dan, I just want to show the area that we're talking about. This is where the ships come from. Are you seeing my line? There you go. There is my finger. I am explaining how it comes through. Remember, this is the Gulf over here, the Persian Gulf, where much of it comes through.
It has got to go all the way around here, then through here. Look where all the piracies are taking place and then it has got to work its way through to make its way back over to the United States where much of this oil goes. There's the problem, because, otherwise, it has got to go all the way around Africa. And that makes oil even more expensive and the price you pay for gas.
So, we're going to be taking you all through this at the same time while I straighten my tie, all of this going on as we speak. Your comments as well on MySpace, and Facebook and Twitter. So much news. We will be right back.
(COMMERCIAL BREAK)
SANCHEZ: So many comments about this pirate situation that we're going to be checking in on in just a little bit from you. I'm reading them over here as we were in that commercial.
All right, taking note now of what is out there on the blogs.
You may recall that we reported yesterday that a church sign in Kansas read the following: "America, we have a Muslim president. This is a sin against the lord. "
We got so many comments on this, so many blogs filling the Internet. Newswriter.com says she was -- quote -- "impressed to see that someone on one of the big bad media outlets" -- I guess that would be us -- "actually call this religious B.S. ignorance." Newswriter is a liberal blogger, by the way.
Pastor Mark Holick will be my guest tomorrow, the one who put up that sign. He's going to be here at 3:30 Eastern. So, I'm going to get a chance to ask him about his sign and what he meant, to be fair.
Then there is Evo Morales. His people are not even talking to us or even taking our calls right now. I told his chief of staff yesterday that I would ask the Bolivian government about the leftist tilt in Latin America and his own leftist leanings.
You see, I was born in country that moved so far to the left, the government ended up controlling just about everything, including the press. How could I as a journalist not ask Evo Morales, respectfully, but tough, questions about this? How could he not explain to Americans what his vision is, allay perhaps their fears? Or did he just confirm them by not doing the interview?
President Morales, your move, sir. The invitation remains open.
So much news going on. I will be right back.
(COMMERCIAL BREAK)
SANCHEZ: We got this information just a couple of seconds before I went on the air today, but let me report it to you one more time. For those of you who are just now getting home from work, it sounds like Barack Obama has a pretty good idea who he wants to be his attorney general -- the next attorney general of the United States. It's that man right there. There he is, Eric Holder.
He was a part of the Clinton administration, which I understand, according to some of you who are e-mailing right now or sending me messages on Twitter and also on MySpace and Facebook, are not extremely satisfied with. Nonetheless, it appears to be the decision he's made.
Now remember this, that doesn't mean he's got the job. It means he has to still be vetted. They have to look into his background. They have to do all kinds of checks before he's actually chosen for the position. But right now, he is what "Newsweek" is reporting numero uno -- at the very top of Barack Obama's list.
We'll continue to stay on that story. But now to the story that seems to be captivating the attention of so many Americans, because this may be the most brazen act of piracy that we've seen so far. And these acts of piracy have been taking place there in that area for quite some time. But this time, it's the biggest ship they've ever taken. It's the first time that they've ever taken a tanker. And this thing is the size of an aircraft carrier -- quite large.
Let's do this real quick. I've got a guest who's going to take us through this, because he's got as many years as a foreign correspondent as anybody here at CNN, although you wouldn't be able to tell by looking at him.
Let's go over to Twitter.com, if we can, Robert. Show them what people are saying. These are people who are talking to us right now as they're watching us develop these stories. "Special Forces to take back the ships that are seized and Navy torpedoes to spoil the booty, sinking the pirates."
Can you imagine?
But then this guy -- I'm sorry, this gal, Linda, who's watching us right now, says: "Why don't they just employ the pirates, since they pay them off all the time anyway?" -- which is right, they do -- "and just use it as a way of paying passage so they will stop doing this."
Two interesting perspectives. A lot of people are sounding off on this.
Bring us up to date. You've been watching this story at CNNI and you've been reporting on it for quite some time. Who are these people?
JIM CLANCY, CNN ANCHOR: Well, these people are your just -- they're Somalis. And they have learned how to make money. These people have minimal fishing skills. And they realize the way to get cash is to hijack ships. It's about the only thing we can do. Nobody else has anything else to do with us in the entire world, our government doesn't work and we hijack the aid ships. And that's not working anymore, either.
SANCHEZ: Well, why is it so easy?
It sounds like they take grappling hooks, they throw them over the ship, they're on a skiff. And then they have a mother boat somewhere out there that essentially they use as a feeder or as an overseer...
CLANCY: Sometimes.
SANCHEZ: This is...
CLANCY: Yes.
SANCHEZ: This is amazing.
CLANCY: It's amazing. They're well organized. And you've got to ask yourself, look, there was, what, about a dozen of these in 2006?
Last year, 2007, there was about 18 to 20 of these hijacking incidents. Today, there's 90 ships attacked in 2008 and 36 have been hijacked. Sixteen or 17 are still being held, anywhere from 250 to 350 crewmen still being held.
Rick, ask yourself, why are they doing this? Why are they doing this so much? You know why, Rick?
SANCHEZ: Money.
CLANCY: Because it works. It works. It's a scheme. They're getting $2.5 million -- anywhere from $1 million to $1.6 million, $1.2 million for each ship that they hijack. They're driving Mercedes Benz. They're living in million dollar homes.
SANCHEZ: Eighteen to $30 million in ransom money so far. Robert, show them that picture again that you see not on that -- not the Twitter board, the big board.
You see all those dots right there?
Producer Dave put together this map for us. Those are all the areas right there -- well, it happens all over the world. But look at how heavily it's concentrated right there in that one area, around the entrances there...
CLANCY: Somalia, yes.
SANCHEZ: ...there in Somalia. I mean this is amazing. And every time somebody -- this happens...
CLANCY: They're headed to the Suez Canal.
SANCHEZ: And they're being paid off to let the ship go. So there's a ransom.
So the obvious question that people who are watching this newscast right now, they want to know from you is, why not hire a security force or hire somebody with some kind of weapon to repel these guys so they're not able to do this?
CLANCY: Well, you know, that's what's under consideration now. You hear guys -- there's a real reluctance on the part of the ship owners, Rick, to say all right, let's put some armed guys on board this ship.
First of all, they may be carrying combustible cargo. And that's a recipe for disaster.
SANCHEZ: Yes, like all this oil. Imagine what an environmental...
CLANCY: Exactly.
SANCHEZ: ...disaster this would be...
CLANCY: Exactly.
SANCHEZ: ...if these guys decided to...
CLANCY: You know, you'd get a shootout with these guys.
SANCHEZ: ...hold this thing up.
CLANCY: Or liquid petroleum gas.
SANCHEZ: Right.
CLANCY: I mean, you know, you don't want to have -- get into a firefight with any of that. Other people are carrying other products that are also explosive. They're worried about the damage to the cargo and they say we don't want the fight. A lot of them are opting to go around the Horn of Africa rather than go through the Suez Canal. It adds anywhere from almost six days to two weeks to a trip here and thousands and thousands of -- tens of thousands of dollars.
SANCHEZ: Which means we pay more for gas?
CLANCY: We pay more for anything, any commodity that they're bringing around.
SANCHEZ: Yes. It's amazing. And at this point, it's really just a stalemate. It will probably be there for quite some time...
CLANCY: Well...
SANCHEZ: And then we learn today there's been another one -- another ship from Hong Kong was taken while we were reporting on this one.
CLANCY: It's not that hard. You know, this is a big ship that we're talking about.
SANCHEZ: Right.
CLANCY: Its displacement is three times that of an aircraft carrier. It's roughly the same length, overall, as an aircraft carrier. But it's not that hard to get on board -- grappling hooks.
When this -- when that tanker -- can we show a picture of that tanker?
SANCHEZ: Yes.
CLANCY: Can we?
SANCHEZ: Put that picture back up, could you (INAUDIBLE)?
CLANCY: We take a look at it and you'll see how it rests in the water empty. Now, see the red line there?
SANCHEZ: Yes?
CLANCY: Well, that's below the water line when it's fully loaded. Go around to that back of the ship, look how -- look how easy it is.
SANCHEZ: So they...
CLANCY: You throw some grappling hooks up there, you're on board. Aluminum ladders hook to those hooks.
SANCHEZ: They only have to climb up the dark part at the top, not the red part at the bottom.
CLANCY: Right. And they do it in the very back. They do it there at the back of the ship.
SANCHEZ: Yes.
CLANCY: Not at the -- at the front of the ship.
SANCHEZ: Wow! great information. We really get a sense, as a result of what you give us, from how this really goes down.
So many stories developing -- the situation with Eric Holder. We're watching the hearing in the Senate with these four individuals -- one from Ford, one from Chrysler, one also from the UAW and one from G.M. -- saying give us a loan of $25 billion.
Should the American people do that or support it?
We'll be right back.
(COMMERCIAL BREAK)
SANCHEZ: We welcome you back.
Part of the conversation over the last week -- and you've probably all heard it yourself -- the problem with these -- the big three automakers is that they've had bad management, they've made too many big cars, not enough smaller, fuel-efficient cars and they've paid their workers way too much money. Well, that has resounded all over the country with people who work for the automakers, one of them who's sitting right here to my right, who started in 1947. Another one who's joining us now because I happened to read his letter that he had sent. And I was moved by what he -- by what he had to say about this.
And, you know, it's interesting, Tom, to hear you say that it hurt you to listen to people constantly say that you guys were babied and cajoled and given way too much money and have had too much -- too many benefits.
Why have you decided to get on the air and give your side of the story like this?
BRUNE: Well, because, quite frankly, my company is in great peril and this misinformation is a big part of it.
SANCHEZ: What have we gotten wrong? Set it right.
BRUNE: Well, for one thing, as far as productivity goes, we have virtually caught Toyota in assembly hours per vehicle. So to say that we're lazy or that we don't work as hard as the Detroit South workers is just plain wrong.
SANCHEZ: Are you willing to give up some of what you have if that's what it takes to make this deal happen?
BRUNE: Well, that's -- you know, I don't deal in the negotiating. I'm just a member of the rank and file.
SANCHEZ: I know that. That's why I'm asking you that question. And I prefer that, you know, give me an answer from the gut. That's what the American people want to hear.
BRUNE: I know that's what they want to hear, but we -- you know, I can't comment on that until I see what kind of, you know, stipulations there are with this -- this loan guarantee, should we get it.
SANCHEZ: All right. Let's go to Ernest -- 1947 you started making cars.
JETT: Yes.
SANCHEZ: How much were you paid?
JETT: I was paid $1.09 an hour.
SANCHEZ: $1.09?
JETT: Right. $1.09.
SANCHEZ: That's not a lot of money.
JETT: Well, back in then, you could buy things. $1.09 was good money. SANCHEZ: Well, as you watched it transform, you went from being one of the founders...
JETT: Right.
SANCHEZ: I mean the rock bed of what this industry was at one time -- something the whole world, if not the United States, was proud of -- the place where cars were made.
Since then, we've had some stiff competition and some would say they've kind of kicked our behind.
As you've watched this develop, do you think that, as a result, we need to make changes now?
JETT: Well, the way things are now, I think that they should have more changes.
SANCHEZ: Changes to the point where maybe it would include bankruptcy of these three companies?
JETT: Oh, no. Not no bankruptcy.
SANCHEZ: Why?
JETT: If they bankrupt these companies, especially General Motors and Ford and Chrysler...
SANCHEZ: Right.
JETT: That's not only going to hurt the UAW members, it's going to hurt the whole United States.
SANCHEZ: But if they weren't doing their job and somebody can come along and do it better and make cars either more efficiently or make the types of cars that people can buy -- because last year it was 17 million. This year it was 12 million. People don't want to buy those cars. It's a business like any other business. And people will say, sorry, you didn't do well. Somebody else is going to take your place.
JETT: I'm going to tell this story out of my heart.
SANCHEZ: Go ahead.
JETT: We are not lazy peoples and we build the quality that the American people wanted. It's not the quality that they think that we -- it's not a lazy person that I worked with for 42 years. I know when I started working at G.M., I wasn't -- I wasn't lazy.
SANCHEZ: Are you hurt when you hear people say that?
JETT: It really hurts, especially -- especially in Washington. I want to say to all of the peoples in Washington, this is from my heart.
SANCHEZ: Go ahead, sir.
JETT: It makes me almost cry. Now when I was in the military, I didn't see no Democrat and I didn't see no Republican. I only seen peoples. And all of us was together.
Now can I say it, why in the Sam Hill can't we do it now?
If we was to get Congressmen peoples to realize and look and see, it's no little views and no big eyes. We all trying to make a living. And just like the professor said...
SANCHEZ: Yes.
JETT: ...he said why did I (INAUDIBLE) my benefit. It hurts me, too. I worked there. But my benefits are going to be hurt, too.
SANCHEZ: Sometimes we forget. And I'm watching you...
JETT: Right.
SANCHEZ: ...and I see your lips trembling and I see your eyes getting a little moist and I know this is very personal to you.
JETT: Right.
SANCHEZ: This is not -- these aren't just numbers being thrown around. This is your life.
JETT: Yes. What it -- I know it. That's what I'm trying to say. It is.
SANCHEZ: It's important.
JETT: The reason why I'm trembling, because it hurts me to see how they do, especially in Washington.
SANCHEZ: You know, it's interesting, as we listen to this, we can dip into this conversation that you're alluding to -- this Congressional hearing that's going on in Washington, where we're hearing senators look at these guys and say, you know, you haven't held up your end of the bargain.
But in the end, we're left with the millions of workers like yourselves.
Let's go ahead and dip into this just a little bit and see what they're saying. We'll contrast these two.
(JOINED IN PROGRESS)
SEN. SHERROD BROWN (D), OHIO: ... According to one economist, the market was doing just fine. We've seen the success of that approach. Before long, every state in the nation felt the impact and every sector of the economy was dragged down by the troubles in housing, it spread from Main Street to Wall Street. But that mistaken approach is exactly what some of my colleagues are suggesting we take in response to the crisis in the American automotive industry.
Sure, the biggest and the most immediate impact will be in places like Ohio, in places like Senator Stabenow's Michigan, places like Senator Bayh's Indiana.
But auto suppliers and dealers and related industry, from Chuck Eddy (ph) in Austintown, Ohio to suppliers in every corner of our nation will soon feel the impact. The industry is woven into the fabric of our economy every bit as Lehman Brothers and AIG or the three banks that testified before us in this committee last week.
Each one of these three banks that testified last week received $25 billion under the Emergency Economic Stabilization Act. If it makes sense to give one bank $25 billion, we can certainly invest the same amount to save the entire domestic automobile industry.
As we heard last week, the banks may or may not lend the money any time soon. They may or may not use it to buy other banks. They may or may not use it for executive bonuses or dividends. I don't know what those companies are going to do with the funds they receive from taxpayers and we don't know what impact it will have.
But I do know what the American auto industry will do with the loans it seeks. They will build cars using parts from every state in the nation, they will provide good jobs to hundreds of thousands of middle class families in places like Lawrencetown and Toledo and Sharonville. And it will support a decent retirement for a million senior citizens in every corner of this nation.
Nobody wants to write this industry or any industry a blank check. And if Detroit were indifferent to the challenges they face, then I don't think we'd have a very good case to make.
But if you need evidence that Detroit gets it, look at last year's labor agreement. Labor and management made unprecedented changes to bring their costs in line with competition. They didn't anticipate the current economic environment anymore than did Secretary Paulson or Alan Greenspan. SANCHEZ: Let's bring Congressman Sander Levin into this discussion.
No one has been better at articulating the needs of the auto industry and the effect that it could have -- the ripple effect it could have all over the country -- than Congressman -- he was good enough to join us just the other day.
As you listen to this discussion, I'll tell you what, these guys came on real strong at the top. I mean Christopher Dodd was hammering these guys.
What were you thinking?
REP. SANDER LEVIN (D), MICHIGAN: Well, I think they Senator Brown -- you just had him on -- states it very clearly, that the automobile industry is a national industry. It employs a million people, if you include everybody. And if there were a bankruptcy, many, many millions would be unemployed and would be displaced.
SANCHEZ: Well, what do you say to the professor we had on just a moment ago from Harvard who said that you know what, tough. Bankruptcies happen. They've happened before, even to some of the biggest companies, like airlines in the United States. You get through them, you change, and, in the end, you're better for it.
LEVIN: Well, in this case, the professor is wrong. When United went into bankruptcy, people continued to fly their airplanes. But if an auto company goes into bankruptcy, people aren't going to buy their cars. So essentially it would extinguish a domestic auto industry. And, as I said, there's a study that shows if there's a 50 percent reduction in auto production -- domestic auto production -- two-and-a- half million people, over two years, would be laid off.
SANCHEZ: Why do you think that if we went into bankruptcy -- I mean take the viewer through it. You said it, but I think you need to explain it a little better.
If we go into bankruptcy, you say people will stop buying cars.
Why would they stop buying cars?
Now, tomorrow...
LEVIN: Well, because...
SANCHEZ: If tomorrow Starbucks went bankrupt, people would still get their coffee the next day.
LEVIN: I know. But they buy one cup of coffee and they drink it.
SANCHEZ: Right.
LEVIN: When you buy a car, you want the service. You want the warranties to be good. That's the big difference. When you buy your second most important, most expensive thing -- an automobile -- next to your home, you want to be sure that the company will stand behind it, that the company will still be there to service, to provide parts, that the parts will be available, and, also, that the warranty will be good.
When customers are asked -- when consumers are asked, will you buy a car from a bankrupt auto company, 75 percent say no.
So it's totally different than United Airlines. Plus, the fact that the pensions would probably be thrown into what is called a pension benefit guarantee fund.
SANCHEZ: Yes.
LEVIN: Millions of bucks. And it would be taxpayers who would have to pick up the tab. It's totally different. Bankruptcy means, I think, the diminution and perhaps the decline and the end of the domestic auto industry. And that means research and development, $10 billion a year.
SANCHEZ: Yes.
LEVIN: It means so much to this country.
SANCHEZ: Congressman...
LEVIN: This is not a state issue, it's a national issue.
SANCHEZ: We understand that, sir. And you make your case very well.
Can you stay with us for just a little bit?
Because we do want to talk about the effect on some of union workers and the union situation.
Can you do that?
LEVIN: I'm not sure. We're -- we may have a vote in our House caucus. Let me just check. I'll stay here if I can. When you come back, I'll still be here. I'll try.
SANCHEZ: That's fine.
We appreciate you trying, anyway.
Let's take a quick break. When we come back, we'll continue the discussion. This is the part where we're going to be hearing on some of the folks who are actually there at the Congressional hearing, as well, and your comments, as well.
Stay with us.
We'll be right back.
(COMMERCIAL BREAK)
SANCHEZ: You know, we like to call this a national conversation because it really is an interactive show. We get your reaction as you're watching what we're reporting as we're reporting it.
And this comment came in just a little while ago from Facebook and it made us think. It's one of, really, the hundreds of comments that we've been getting in on this throughout the day. James Blake is watching. And he says: "I think the big three shouldn't get a dime of the bailout money. But then you think about the union workers, because the big top execs for Ford, G.M. and Chrysler are holding these poor, hardworking people hostage."
You know, it's interesting. Let's bring Congressman Levin back into the equation. I want to ask you directly about this -- this -- well, I guess it's not really what you would call a request. But it certainly is something that they're asking for officially. These four guys today at this hour are saying, look, we just need you to give us enough money to get us the through the year 2010. Why 2010?
LEVIN: Well, because there's a short-term crisis here that's a national and international credit crisis. People can't get auto loans, the dealers can't get loans in order to buy cars and so cars aren't being made. Production has been reduced, originally from 17, then to 14 million on an annualized basis. And now it's down close to 10.
And, by the way, one other person who is there today at the hearing is Ron Gettelfinger, head of the UAW.
SANCHEZ: Right.
LEVIN: And our legislation will say no bonuses for executives making over a certain amount of money. We're not going to let the executives go free and the workers get hurt. Everybody has a future at stake -- the workers as well as the companies, as well as research and development of advanced technology here.
Are we going to give the battery development in this country of the future to people outside this country or are we going to continue to have people in the auto industry that are -- that are putting together these advanced technologies?
That's the issue.
SANCHEZ: I know -- look, it must be difficult for guys like you to go around and try to convince the American people of something they don't want to do.
LEVIN: No, that's not true, though...
SANCHEZ: Look, but what...
LEVIN: This...
SANCHEZ: Well, I'll tell you what is true. There seems to be -- and I see it every day when I read these e-mails. There's bailout fatigue going on in this country.
LEVIN: I know, but the autoworkers and the auto companies are, as President-Elect Obama said, the backbone of this country's manufacturing base.
And are we going to let the manufacturing base of this country disappear?
That would be terrible all around, including for national security. We can't let that happen. The banks, $700 billion?
And this $25 billion for the auto companies and their workers to have a bridge to the future?
That's 4 percent of the $700 billion.
SANCHEZ: What about... LEVIN: So I know there is fatigue...
SANCHEZ: Yes.
LEVIN: But let that fatigue not totally sink the auto companies of this country.
SANCHEZ: What about the argument that pure capitalists would make, which is, you know what, you've got a company, Levin, that's not doing well, let somebody else come in that knows how to do it better and compete. It's that competition that will make the industry better, but you can't come in and compete if someone's being subsidized by the government, because they're going to lose.
LEVIN: Now, listen...
SANCHEZ: So it's an unfair advantage.
LEVIN: Listen. Subsidizing -- I've got to go. The chairman and the other Europeans are subsidizing. They're subsidizing. They're asking for more than $25 billion -- $50 billion plus from their governments.
SANCHEZ: Yes.
LEVIN: The Japanese have been subsidizing their auto companies forever. All we're talking here about is a bridge loan with requirements for warrants and stocks so we taxpayers get our money back.
Thanks very much.
I'll go. I now have to vote in the caucus.
SANCHEZ: Congressman Levin, we appreciate that.
LEVIN: It's my pleasure.
SANCHEZ: You're a real character. We appreciate you being honest and open with us about this conversation.
LEVIN: Thank you.
SANCHEZ: We'll get you next time. Go ahead.
LEVIN: Thank you.
SANCHEZ: Let's do this. Let's go over to MySpace real quick. We've got a comment coming in now: "Rick, thanks for talking to blue collar workers. The suits in charge of the big three are the ones who let things get this bad. But like so many others in the U.S. right now, the average worker is left hurting."
Well, speaking of that, lets talk to these guys once again.
And, you know, we've got Tom Brune, who's standing by. He's a UAW member. He's hurt by some of the things that he's been hearing. And he's going to tell you that it's important.
Now, there's something that he missed -- and I think you would explain this to us. The year 2010 is crucial from your standpoint.
Why is 2010 crucial?
BRUNE: Well, that's when the -- the VEBA kicks in, the retirement benefits responsibility for health care switching over to the UAW, which is going to be a huge savings to General Motors. They actually booked a fairly significant savings, accounting wise, this last quarter because of it.
SANCHEZ: Yes.
So what actually happens to workers' pensions in 2010?
BRUNE: It's not the pension...
SANCHEZ: Or health benefits...
BRUNE: It's the...
SANCHEZ: Health benefits. Pardon me. I misspoke.
BRUNE: The health care -- there will be a fund set up. But VEBA is the acronym for it. And the UAW will administer it. And it will provide health care benefits for all the retirees.
SANCHEZ: So in other words, that's the time set aside when the companies no longer have to be paying for those health care benefits. The union will pay for it itself.
BRUNE: That's correct. And then, in the agreement that we had last year, we settled it on basically about 60 cents on the dollar there. So, I consider that to be a major concession. And like I...
SANCHEZ: So it -- so let me just -- let me just take viewers through this. And I don't mean to interrupt, but I want to make sure people understand this.
So if you're -- if you're sitting at home and you're wondering why you're giving the $25 billion, some would argue that what you're doing is, you're going to be supporting people like Ernest and like you, Mr. Brune, as well, for the next couple of years, just until the company can finish paying that off and then the UAW takes over.
Correct?
BRUNE: Well, I suppose that's correct. Yes. But once again, we're asking for a loan. This money will be paid back. You know, when Chrysler got their loan in '79, the money was paid back the first year that it was due, with interest and with stock options. The taxpayer realized the return on $1.5 billion of over $300 million.
I'm not saying that deal is going to be quite so good this time, but I fully expect that the taxpayer will not be stuck holding the bag on this.
SANCHEZ: Mr. Jett, are you worried about your health benefits?
JETT: Well, yes, I am.
SANCHEZ: Are you worried that if this thing doesn't go through, you may not be able to have somebody who's taking care of this for you?
JETT: That's right, especially at my age.
SANCHEZ: Yes. Eighty-three years old.
JETT: Eighty-three.
SANCHEZ: But you look good, sir.
You look great.
JETT: And what I'm really worried about is the young people.
See, I really living day by day, you know?
See, I don't know when I might go. But I think about the young generation (INAUDIBLE).
SANCHEZ: You're a good man, sir.
JETT: Well...
SANCHEZ: I appreciate you coming here and talking to us.
JETT: And thank you.
SANCHEZ: And a lot of nice comments from people. You seem to have changed some people's minds, actually, just with your very plain- spoken words.
All right. Let's check on the market now.
Obviously, the big board has been following this with investors.
(STOCK MARKET REPORT)
SANCHEZ: Let me take you over to Wolf Blitzer now, my colleague, with "THE SITUATION ROOM."
