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Another Plea to Congress by the Big Three; How to Fix Failing U.S. Economy; Your Sweet Tooth Changes as You Age
Aired December 04, 2008 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
HEIDI COLLINS, CNN ANCHOR: Well, it is all about the auto bailout this morning. Big three executives go back to Capitol Hill looking for a lifeline. Will Congress loosen your purse strings?
Live this hour we'll hear from the CEOs and live next hour the hearings begin.
It is Thursday, December 4th. Hi, everybody. I'm Heidi Collins. You are in the CNN NEWSROOM.
The nation's financial crisis. New worries and new efforts to shore up a troubled economy. One sweeping measure now being considered, the treasury buys up mortgages and drives down mortgage rates.
The goal? More people could buy homes and existing homeowners could refinance at lower rate. That could allow them to pump that extra cash right back into the economy.
The jobless rate stirs more concerns, though. Minutes ago we learned last week's rates dropped a bit but continuing claims are now at a 26- year high.
Also this morning, a tug of war for your money on Capitol Hill. The big three automakers are again asking for billions of dollars in taxpayer loans. This time they come offering concessions.
CNN's money team is, of course, covering all of these stories that are impacting your wallet. Let's go ahead and begin now on Capitol Hill with CNN's Brianna Keilar.
Brianna, good morning to you.
BRIANNA KEILAR, CNN CORRESPONDENT: The automakers are coming here to Capitol Hill to plead their case again. And it's kind of starting out with a bit of a dog and pony show. I just kind of want to give you a show.
As you can see, all of the media is here waiting for these GMs to arrive. And part of that is because they're coming in a very different way than they came last time when they caught a lot of flack for coming separately in private jets.
This behind me is Chevy Bolt, an electric vehicle that GM CEO Rick Wagoner should be pulling up in any time. This, of course, is just another one they have here. He's going to be pulling up in a separate one. And this is really an effort by the automakers to say that they're willing to do things differently, and part of that being because it caused so much flack last time because of the jet fiasco.
They have so much to make up for today. It may be impossible for them to make up for it. Among other things, what some people considered to be a really poor performance here on Capitol Hill as they tried to make their case a couple weeks ago. But they're going to be making a hard sell today, pushing those plans they released on Tuesday, really talked about reducing CEO pay to $1 a year, cutting some of their less productive lines, making more fuel efficient vehicles.
The question, of course, is it going to be enough? And some people say it very well may not be, Heidi.
COLLINS: Yes. And obviously this is, you know, the second go around. We've really been waiting to see what type of concessions, in particular, have been made, Brianna, so we will all be watching very closely come 10:00 when these hearings begin.
Brianna, stay right there. We will talk with you again shortly. Thanks so much for that.
Meanwhile, the big three bosses now trying to avoid the pothole of their last trip to Capitol Hill. You may remember lawmakers scolded them, as Brianna was mentioning, for flying private jets to issue their pleas for loans, didn't sit very well with anybody.
This time all three CEOs drove to the hearing using their company's hybrid vehicles. This is General Motors CEO Rick Wagoner. Go a little picture of him on the road there.
So bailout or bust. The automakers say their very survival depends on taxpayer loans. It is one of many blows to the nation's sputtering economy.
CNN's Christine Romans is in New York now with the very latest on all of this.
So what do you think, Christine, is driving their own car even going to put a dent in what needs to happen here today?
CHRISTINE ROMANS, CNN CORRESPONDENT: Well, driving their own cars is certainly a better public relations move...
COLLINS: Yes.
ROMANS: ... than last time that they went up on the hill. And that was really a disaster. It took, it took the -- focus away from what they were trying to say to Congress and instead put it right on the fact that people don't like bailouts in general.
What is a bailout? Well, in this case it is a loan package, a low- interest loan package, could be $34 billion. The CEOs will appear today and tomorrow to try to make their case again for viability to try to get these loans. Originally, they'd asked for more like $25 billion. GM is asking for up to $18 billion it. It needs $4 billion almost immediately to avoid a -- completely running out of cash...
COLLINS: Right.
ROMANS: ... by the end of the year. Chrysler wants $7 billion. It, too, has warned about cash. Ford seems to be in the best position.
COLLINS: Yes.
ROMANS: It wants a $9 billion low-interest loan as a backstop there. So this is what they're going to make their case for. I can assure you, you are going to see members of Congress who want to get on the record with their constituents for how they feel about this bailout, this loan package.
And -- it's not popular, 61...
COLLINS: Sure.
ROMANS: 61 percent of people said that they didn't back a lifeline for the big three.
COLLINS: Yes, and I think probably part of that reason is because a lot of people are asking the question, where does it stop and what industries and what companies do we stop going to the federal government for money that, obviously, ends upcoming from taxpayers, my money, your money.
ROMANS: And we know everyone is hurting. We saw this morning the jobless claims, still more than -- 509,000 people lining up for jobless benefits for the first time in the most recent weeks. And that's including a day that was Thanksgiving when people couldn't line up for them, remember?
COLLINS: Sure.
ROMANS: A job -- continuing claims are 4 million. AT&T is laying off people. Credit Suisse is laying off people. Dupont is laying off people. Every day we're getting more and more companies that are laying off, more and more industries that are in trouble.
Now when I talk to my sources I say it's a question that you just asked, where does it stop, what industry stops, when are we going to stop having to give low-interest loans to everybody...
COLLINS: Yes.
ROMANS: ... to try to get this economy. And you know what my sources say?
COLLINS: No.
ROMANS: My sources say, Christine, it's not where does it stop, this is just beginning. Next year is going to be an ugly year and there are going to be a lot of industries that could, could really be in trouble that we have just begun to see government intervention in the economy.
COLLINS: Yes. Boy, that is a frightening thought. But I...
ROMANS: It really is.
COLLINS: I think everybody is kind of keyed in on that suspicion. Definitely.
All right. Christine, we want you to stick around because we got a lot more talk about.
ROMANS: Sure.
COLLINS: Of course, coming up again, those hearings begin at 10:00.
CNN's Christine Romans in New York, thanks.
We are going to have live coverage of the hearing next hour as it begins. We will closely watch the proceedings and bring you the critical moments right here in the CNN NEWSROOM.
Now for a moment to another story. Pakistan where Secretary of State Condoleezza Rice has been meeting with the president and prime minister. Rice says she's satisfied with Pakistan's commitment to fight terrorism in the wake of last week's terror attacks in India that killed 179 people.
And joining us now from Islamabad, CNN correspondent Reza Sayah.
Reza, the latest?
REZA SAYAH, CNN CORRESPONDENT: Heidi, tensions are high between Pakistan and India after the Mumbai attacks. Secretary Rice's task was to come into this region, calm everyone down, get them to work together and aggressively go after the groups who were behind these horrible attacks.
She tried to do that in New Delhi yesterday. Today it was Islamabad's turn. Secretary Rice arriving in the federal capital early Thursday morning, meeting with Pakistan's president and prime minister.
In her press conference she tried to strike a balance between reassuring the region and also applying a little bit of pressure on Pakistan. Rice saying that Pakistan understands its responsibility, understands that there may be groups linked to the Mumbai attacks, and they're going to go after them.
How important is this matter to Washington? 24 hours earlier, you had the top U.S. military official here. Both say they're confident Pakistan is committed.
(BEGIN VIDEO CLIP)
CONDOLEEZZA RICE, SECRETARY OF STATE: Obviously the best thing is that these two countries do what they can through their own capacity to fully investigate and to bring people to justice who perpetrated that.
And what I heard was a commitment that that is going to be the course that's taken.
(END VIDEO CLIP)
SAYAH: Despite those reassuring words by Secretary Rice, the press conference lacked some details of the Pakistani people want, most notably the evidence handed over by the Indian government.
There's been a lot of accusations, Heidi, but the Pakistani government says they have yet to see the evidence. So a lot of unanswered questions remain. Heidi?
COLLINS: Reza, any idea -- because you're absolutely right, a lot of people are really wondering about that, and the course of the investigation and what happens next.
When are we likely to hear any more from the Pakistani government?
SAYAH: Well, the big question is the evidence, when it comes to the Pakistani government. It seems like the Indian government has revealed what they call evidence to the media and to some CNN correspondents, but Pakistani government says they have yet to see it. They say they will investigate but only when they see that evidence. And that has yet to happen.
COLLINS: Very interesting. All right. CNN's Reza Sayah, we sure do appreciate it. Live from Islamabad this morning.
Coming up next now, she knows autos, so what's Lauren Fix's fix on the bailout for the big three? We're going to talk with the car coach coming up.
(COMMERCIAL BREAK)
ANNOUNCER: ... the angles, uncovering the details, see for yourself in the CNN NEWSROOM.
COLLINS: Now the view of the big three from under the hood if you will. Lauren Fix is an expert on all matters automotive. Fixing, buying, selling, you name it, she's the gal. Her latest book is "Lauren's Guide to Loving Your Car." She's joining us now from Buffalo, New York.
Glad to have you this morning, Lauren.
LAUREN FIX, CAR EXPERT, AUTHOR, "LAUREN FIX'S GUIDE TO LOVING YOUR CAR": Thank you.
COLLINS: Give us your overall insight on what we are going to see happen today and the bigger picture of the possibility of the auto industry going to caput if you will. FIX: Well, obviously, they've all handed in their plans. Some are much more needy than the others. But they're really going to have to show that we are willing to cut back. We have to make change. We have to cut back our dealers which hurts local communities, and they're going to have to make some serious changes in bringing down the quantity of vehicles that are out there.
When you're looking at General Motors, they're going to have to sell off some of their branches, just close some of them down, maybe consolidate to niche markets with another brand.
But cross platforms has always saved them money. Now they're going to have to find a different way because the old way isn't just doing it. And we have to see if Congress on the other side is willing to say, you know what, if I lose that little dealer in my little town that got me where I am today, am I willing to potentially lose those voters.
COLLINS: Yes, and I want to talk to you about quality as well as quantity in all this in just a moment. But first, maybe run down if you would for us the placement of each one of these companies and their plan. I mean who sits the best?
We've been hearing, you know, that Ford seems to be in the best position if you will.
FIX: Ford is absolutely in the best position. They've been very smart. When they did their sort of internal restructuring a few years ago, financially they came out with a new Ford Flex and the Ford Edge. They've had their hybrid Escapes.
So they've really done really well. They even -- I've driven their hydrogen cars so I know that Ford is really changing things. They're bringing some of the European vehicles that have been very successful.
So for them they just want a line of credit available to them. That's very smart. And they're only looking at possibly the use of $9 billion. I wish it was $9 million but it's $9 billion.
COLLINS: Yes, so -- now, the others do not have that line of credit available to them.
FIX: No, the other ones do not have their line of credit. For example, in second place show we call is General Motors, where they're going to have to make some serious concessions by either selling or closing down Saab. Most likely they'll sell it off. The same thing as they're doing with their Hummer line.
And then furthermore, they're going to have to either niche market their finance line and potentially sell or close down Saturn. That's a lot of dealerships and a lot of jobs. Right now they're going to need somewhere around $9 billion or more just to stay alive.
Now after 2010 when things change, they'll be in a better position. But they have to be able to repay that loan and they have to show that. And that means cutting back dealers, cutting down product lines, learning to cross platform and do some partnerships with some other companies.
COLLINS: Is any of that going to happen?
FIX: I think they're definitely going to have to cut back on product line. They don't have a choice. There's going to be very unhappy dealers out there. There's going to be some very unhappy communities that survive off of these dealerships as well as some unhappy voters.
So it's going to be very interesting to see what they end up doing. It won't be a gift. It will not be a bailout. I think that is a big mistake. The best thing to do is to do a bridge loan as if you or I needed a loan.
What you do is have to prove that you can pay it back, prove that you're viable enough that the money that you're earning is going to pay back this loan in a certain window of time that you three will agree on.
COLLINS: Probably a really simplistic question, Lauren, but obviously this is your area. You've been following it for a very long time. Whose fault is this?
FIX: Well, I think -- I hate to say it's anyone's specific fault. But the truth is when every -- we the financial collapse -- we hit that "R" word, that recession, it affects everyone. And they were -- the manufacturers -- we're hearing the U.S. is still producing about 17 billion cars a year.
COLLINS: Yes.
FIX: That's more than we could -- we want. Remember the dealers sell car one car at a time. Not like you buy widgets and you buy pallet loads. So when you're selling one car at a time and 6 billion -- 6 million cars aren't being sold, I mean that's a lot of cars.
COLLINS: Very...
FIX: So they have to cut back on their quantity of vehicles. There's a lot of competition, a lot of great products out there.
COLLINS: OK, very quickly before we let you go and we are going to talk with you throughout the morning here, Lauren. What about the quality of these vehicles? Are we talking about changing their mode as far as their competitiveness?
FIX: Well, I -- know for a fact and I've been to the plants, there are quality vehicles. I've had dinner with the General Motors global quality control guy. And I said you need to tell consumer what you just told me. That is a selling point. And I told him that.
I said, what you guys are doing, GM, Ford, Chrysler, is great. But people don't know that. So they have a negative appearance on their quality. The fact is that it's costing them more per hour. And that's what's hurting them more than anything else.
They're just not making money. And in any business, if you're not making money, get rid of that product line and build something else.
COLLINS: Sure. Got it. All right. Lauren Fix, thanks so much. We appreciate it so much. And we know you're going to stick around.
FIX: Thank you.
COLLINS: We will talk with you again before these hearings begin about 45 minutes away or so.
The big three are saying their very survival may depend on taxpayer loans. To win the support of skeptical lawmakers, though, the automakers are offering some concessions. And now union workers are offering to make sacrifices as well.
So joining us by telephone is Mike Green. He's the president of UAW Local 652 in Lansing.
Mike, thanks for being with us this morning. What are your thoughts on this day as the big three are going to Washington for a second time around?
MIKE GREEN, PRES., UAW LOCAL 652: Well, I think the -- what Congress is asked to do by putting a plan together to show, you know, what their plan is to try to get out of these hard times and -- about the loan, and that's what they're about.
And there's a lot of things that's put into place, you know, through the '07 agreement that never had a chance to take hold because of the economy caught up with them beforehand.
COLLINS: OK. What do you mean specifically, Mike?
GREEN: Well...
COLLINS: Because there may be people out there who are not familiar.
GREEN: OK, like the wages. The wages have been cut in half. You know, the two-tier thing is $14 an hour. You know, there's no more $30 and out. You don't have healthcare unless you pay into a healthcare plan.
You don't have a pension unless you pay into the plan, you know, while you're working there. So there's not too many places that can say they've cut the wage in half that I know of. And all those things were done, you know, collectively, at contract time, but they just -- we have two-tier people working there, but the economy caught up with everybody in the meantime.
COLLINS: OK. So it sounds a little bit to me like -- and ironically we're sitting here looking at video of people, you know, on picket lines, Ft. Wayne, Indiana. And I just wonder what the feeling among workers is.
Are you really working closely and well with management at this point?
GREEN: Well, yes, you know, it's a partnership. You have to. And one isn't there without the other. So, I mean, you have to, you have to, I guess, feed off each other at these times.
You know I think that our international bargaining teams did a great job in trying to come up with things that are both good for our members first and with the company so they can be competitive in the market out there.
But with the economy the way it is, it's just -- it's kind of struck everybody. I guess what would best be said is the devastation across the nation, if the auto industry goes away because of all the things that are tied to it.
You know you've got all your parts plants that are tied to it, those go down. You have, you know, everyday mainstream America is what you're talking about, you know, the barbers, the guy that works at the gas station, the delivery guy.
If GM, let's say, was to pull out of Lansing, you know, not just Lansing, but all the little communities around it, it's just -- they're gone, there's no work.
COLLINS: Yes. Well, nobody wants to see anybody lose their jobs, obviously. But we're a long way from all of that happening, and certainly today on a day that they get another chance in front of Congress today.
We sure do appreciate it.
Mike Green, again, he is the president of UAW Local 652. Thank you, Mike.
COLLINS: We are going to be having live coverage of the hearing next hour. As it gets under way, we're going to watch very closely the proceedings and bring you the critical moments right here in the CNN NEWSROOM.
Well, the future of health care in America. Our Dr. Sanjay Gupta sends a memo to the president-elect.
(COMMERCIAL BREAK)
COLLINS: Quick reminder now. We are awaiting a press conference with CEOs from the big three automakers. At the top of the hour is when it is going to begin. They're going to be making their case for an auto industry bailout on Capitol Hill. So, again, we will have live coverage coming up for you.
The uninsured health insurance costs. Stem cell research, President- elect Barack Obama faces critical health care decisions as he enters the White House.
Here in the CNN NEWSROOM we are going in-depth now looking at issues facing the Obama administration in a segment we call "Memo to the President." Today we're focusing on healthcare.
Here now is CNN's Dr. Sanjay Gupta.
(BEGIN VIDEOTAPE)
DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT (voice over): Mr. President, as a doctor and a parent, I'm more worried than ever about healthcare in America. Nearly 46 million Americans are uninsured. And even those with insurance often can't get quality care. So a tough diagnosis means even tougher choices.
DAN SMITH, PRES., AMERICAN CANCER SOCIETY: Nearly 100,000 American families this year will end up in bankruptcy because of a cancer diagnosis. That's just not right.
When you get cancer, it's hard enough to fight the disease without having to fight for the care you need.
SEN. BARACK OBAMA (D), PRESIDENT-ELECT: The question isn't how we can afford to focus on healthcare. The question is how can we afford not to.
GUPTA: You campaigned on the promise of change. But with a failing economy and a healthcare plan estimated to cost more than a trillion dollars over the next decade, how do you plan to pay for it all? And what about your promise to pursue embryonic stem cell research?
OBAMA: If we are going to discard those embryos and we know that there's potential research that could lead to curing debilitating diseases, Alzheimer's, Lou Gehrig's disease -- if that possibility presents itself, then I think that we should, in a careful way, go ahead and pursue that research.
GUPTA: More research has been promised by politicians for years. Will you put other projects aside to add federal funding for stem cells? How will you convince the critics?
Finally, Mr. President, we can no longer ignore the obesity problem in America.
(END VIDEOTAPE)
COLLINS: Quickly, we've been telling you that we are watching out for the beginning of what will be the big three on Capitol Hill this morning. Let's go ahead and listen in for just a moment to Rick Wagoner with GM as he answers some questions here from the press.
RICK WAGONER, CEO, GENERAL MOTORS: And certainly hope that we'll get the support we're asking for.
(CROSSTALK)
UNIDENTIFIED MALE: There's been a lot of skepticism here on Capitol Hill and what has been done (INAUDIBLE), plan that is any different than what happened two weeks ago?
WAGONER: Well, I think the plan is extremely comprehensive and responds to broad-based issues, both operating and financial structure issues. And so we think it's a very convincing plan that we have a lot of confidence in. (CROSSTALK)
UNIDENTIFIED MALE: Is repackaged bankruptcy an end game for you if you can't get the money?
WAGONER: It's not our plan. We think by far best for consumers, best for the economy, best for all parties involved would be to go through the structure we proposed in our plan.
UNIDENTIFIED MALE: Have you...
UNIDENTIFIED FEMALE: Mr. Wagoner, what do you think of the American people, many of them look at this and say no matter if you come in a corporate jet or a hybrid vehicle, it is not the role of the taxpayer to bail out any company? It -- it just should be decided by the market.
WAGONER: Well, the auto industry is an important one for the economy and obviously it's under tremendous pressure in part because of the global financial crisis. So we put forth plan which we think adjusts our business to a smaller market, but I think it's very important for the U.S. to have a home team in this global auto industry.
We're going to be changing technologies like the one you see here and it would be a shame for the U.S. to fall out of that race because, basically, the technology development is almost all cases done in the markets where the company is domiciled.
And so I think having a company like GM which has tremendous technical depth is the one that's going to be an important, huge job creation opportunities, goes really across the entire country.
So we're sorry to be asking for this support. We wish the market conditions were better. They are not. So this is what we need to do.
(CROSSTALK)
UNIDENTIFIED MALE: If you survive these low sales level, $10 million annual rate, even if you get $8? Can you survive even with these sales levels?
WAGONER: Yes, I mean, our plan has been built on -- we were asked in the letter from the speaker and the House majority -- Senate majority leader to come back with a plan that not only considered what we thought was a reasonable industry but a smaller one, and we took pretty conservative set of assumptions and showed with the funding that we asked that we could make it through. So yes.
UNIDENTIFIED MALE: So you could survive with the $10 million annual rate?
WAGONER: Our -- annual rate for next year in the low scenario was $10.5.
(CROSSTALK)
UNIDENTIFIED MALE: What happens if you come away, what happens if you come away empty handed?
WAGONER: Well, today we're here talking -- really trying to talk about why it makes sense to do what we're asking. So that's what we're going to be focusing on in our testimony.
UNIDENTIFIED MALE: What do you need to do differently this time?
WAGONER: Well, we were, I think, benefited this time from a very clear direction as to what kind of comments should be covered in the plan, what kind of issues. And I think that helped us to make sure that, if you will, everyone's on the same wavelength, what issues do they want addressed. We tried to address them all in a very comprehensive way.
UNIDENTIFIED MALE: Is there a plan "B"?
WAGONER: We want to focus on plan "A" today.
UNIDENTIFIED MALE: Rick, how quickly do you need this funding? In other others, if you don't get funding or an approval within two weeks, is it, is it too late?
WAGONER: We indicated that we need financing availability at the end of December. And so that's the timeframe that we're working on.
UNIDENTIFIED MALE: How was the drive?
UNIDENTIFIED MALE: (INAUDIBLE)
WAGONER: I'm sorry?
UNIDENTIFIED MALE: You're not going to get some of the TARP money according to the vote totals right now. Do you think that that slows your momentum going into the hearings today?
WAGONER: Well, I -- we're going to leave it up to the Congress, the administration to decide if they decide to proceed with the funding, where it comes from.
Look, thank you very much. I need to go in for the hearing now.
COLLINS: Again, there you have General Motors CEO Rick Wagoner taking some questions. I think we're a little bit surprised by that before going in. But then again, by looking at that microphone set up there, maybe we weren't.
So, again, those hearings beginning in about 30 minutes from now. And CNN's Brianna Keilar is there. She's been following this story for us this mooring and will continue to throughout the day here.
So Brianna, we heard the CEO from GM say, you know, that they needed this money now and that they really hope that they're going to be getting it. But that they were sorry that they had to ask for it. I found that to be kind of interesting.
KAYE: (INAUDIBLE) COLLINS: I think we're having a little bit of trouble as you can tell with Brianna's microphone.
Brianna, can you hear me now? OK, unfortunately not. Let's go ahead and move on. Again, we will be continuing to take any of those impromptu press conferences before these hearings begin. And perhaps we will see other leaders of those big three walking in there to those proceedings. For now, though, let's go ahead and move on.
The opening bell just about to take place. CNN's Susan Lisovicz is there at the New York Stock Exchange with more.
So what do you think? Is there going to be an effect from these hearings today across the markets, Susan?
SUSAN LISOVICZ, CNN CORRESPONDENT: Well, you know, I mean, the market volatility of a couple weeks ago when the big three CEOs appeared in Washington, it was blamed on the selloff, Heidi.
COLLINS: Yes.
LISOVICZ: No question about it because of the impact it would have on the broader economy. Whether it's right or wrong is another story. It would have a huge impact on the economy if one or more of these automakers failed.
And talking about, you know, job losses -- here's the opening bell. We have more of them today. Every day we seem to have a report of job cuts at a major company. Today we have several. AT&T, Credit Suisse, Dupont, State Street and Viacom, all reducing their headcount. The cuts total more than 20,000.
The number of people filing for new unemployment claims dipped last week, meanwhile. But the trend remains a problem.
More than 4 million people continue to receive benefits. That's a 26- year high. When people don't have jobs or fearful of losing theirs, they certainly don't shop. Retailers reporting dismal sales for November. Wholesaler Costco posted to decline. That was twice as big as anticipated. JCPenney, Target, Kohl's, all posting double digit declined.
Overall, industry-wide, fails expected to be bad, but Wal-Mart bucks the downtrend, reporting a 3.5 percent increase. Consumers certainly aren't buying big ticket items like cars, which of course puts more pressure on the big three automakers as you've been talking about. They are set to testify.
And as Rick Wagoner was just making his case again to the public, speaking that $34 billion loan, one analyst says that if it isn't approved, the stock market could take a hit again. Bloomberg reporting that GM and Chrysler are considering accepting a pre- arranged bankruptcy as a last resort price of getting their hands on some cash.
In the meantime, we're seeing a soft open. The Dow right now is down 95 points or one percent. The Nasdaq is down 1.067 percent.
Want a bright spot, Heidi?
HEIDI COLLINS, CNN ANCHOR: Yes, please.
LISOVICZ: The queen of soul -- the queen of soul will be here on the street ringing the closing bell to plug her first ever Christmas album. And she's going to perform.
COLLINS: Oh, nice. Well, maybe that will turn things around a bit. At least for the next day. Not that I'm being, you know, negative at all.
Hey quickly, Susan, before we let you go, when we were listening to GM's CEO there, Rick Wagoner, obviously GM is the largest of the big three. So therefore, they are asking for the most money, right?
LISOVICZ: Yes, they are. You know, I can't remember exactly how much it is. $18 billion I think might be the number. And some of that is just for -- just to get them to, you know, the end of the year. I mean, the next couple of weeks, literally. That's how precarious their cash situation is.
Let me see if I've got GM on the screen. I do. GM shares right now down about five percent. This is the stock that's trading under $5. Ford, meanwhile, also under pressure. So, there's some nervousness about the outcome of these hearings.
COLLINS: Right. I guess, they're asking for $12 billion and then $6 billion in a line of credit. So, all together, you're right, about $18 billion just for GM there. So obviously we are going to be following all of this very, very closely today. And sure do appreciate it. We'll check back with you later on as well. Susan Lisovicz, thank you.
Once again, those hearings coming up in about, if I'm being exact, 27 minutes from now. So we will bring all of that to you live when it begins on Capitol Hill.
(COMMERCIAL BREAK)
COLLINS: There you have the Dow Jones Industrial Averages, now down double digits right there. Only been open for about six minutes. So of course we will continue to watch the stock market as well as a failing U.S. economy and perhaps how to fix it. It is the number one issue in Washington today.
Mortgage industry lobbyists are pushing the Treasury Department now to lower home loan rates by buying mortgage backed securities. The goal here to get the housing market moving again. And later this morning, Federal Reserve Chairman Ben Bernanke focuses on housing and its financing at a policy forum on poverty.
Next hour, a do-over by the big three auto executives. They'll be back before Congress pleading for a $34 billion bailout. We, of course, are going to be watching all of that very closely as we've been saying here.
In the meantime, let's take a moment now to talk with Charles Craver. He's a labor law professor from George Washington University. He is on the line now with us this morning.
Thanks for being here, professor. We sure do appreciate it. Tell us a little bit about what you think the relationship is at this point between the unions and management.
It seems to me, because we just spoke a little while ago to one of the gentlemen who is basically running one of the labor unions there in Lansing, Michigan, it seems to be that they were really joining together in trying to make this thing work the best they can through these concessions.
VOICE OF CHARLES CRAVER, LABOR LAW PROFESSOR, GEORGE WASHINGTON: I think they're going to have to work together. For years they've had a fairly adversary relationship and the union has done an extremely good job at getting high wages and benefits. Now, they're in it together. They will either survive together or they will fail together.
COLLINS: Do you find that interesting or do you find that a little too late?
CRAVER: I'm sorry it didn't come earlier, although believe it or not, with the UAW and General Motors it did when they formed the Saturn Corporation. They actually negotiated the wheel base of the car, the price of the car. They had a very cooperative relationship, very similar to the unions in Japan and the Japanese auto companies. And the workers don't seem to trust the union being too cooperative. But this is one time whereas the workers don't trust their union, they're going to lose their jobs.
COLLINS: Yes. It's a very difficult position to be in. And we keep talking about, you know, the average worker and what is going to happen to them in all of this.
Talk to me a little, if you could, about whose decisions really end up putting them in the position that they are in. And what I mean by that is, you know, it's management, isn't it, who decides on what labor contracts are signed and how those terms are negotiated? It's also management who decides and has the ultimate say on the way that the cars are designed. It seems to me a very interesting discussion about whose responsibility falls where.
CRAVER: The real responsibility does fall with management. David Halberstam wrote a book 25 years ago called "The Reckoning." We talked about the auto industry and the failure of the leaders to recognize we were going to a global economy. They were fighting everything that increased gas mileage. They didn't want a hybrid. They didn't want electric cars. In fact, they recalled the electric cars. They gave in to the unions because they thought there would never be foreign competition. And they simply didn't move into the end of the 20th century, let alone the beginning of the 21st century.
So you had very, very poor management in that regard, and that was demonstrated three weeks ago when they flew down here in three separate jets, and acted as if they were rich even though now they want $34 billion. They should have driven down here three weeks ago, and they should have a very specific plan.
But the other problem is they did give in to union demands for you'll have what's called 30 and out. You work 30 years, you get to retire. You can be 50 years old. You have a huge number of retirees and dependents who get very generous health care. About $1500 per car or fringe benefit costs.
COLLINS: Right. But that is one of the concessions, correct?
CRAVER: Yes. They're going to have to deal with that. The problem they have is a huge one. About three to four times as many people are retired as compared to currently working. And the retired people have, in general, vested benefit. The union can't negotiate those away. In fact, they don't technically represent the retirees.
COLLINS: Right.
CRAVER: And as a result, unless they can deal with the benefits the retirees are getting, they're going to go bankrupt. And the only way they can deal with that is through the bankruptcy code. Now, I'll quickly say, I hope labor and management convince the retired people to agree to some concessions because if those people don't agree to concessions, the companies will have to go into bankruptcy, reorganization.
COLLINS: Wow. And tell me that number one more time? I think you said one of the big three has 275,000 retired workers?
CRAVER: They have about 270,000 some retirees and dependents versus only about 75,000 current employees. And those current employees are, in effect, generating the revenues for the retired people.
COLLINS: Sure. Sure, absolutely. All right. Well, you raise a very interesting point. We'll continue to question about that today, definitely. A lot of money are being funneled in that direction. Obviously, those people gave their entire working lives though to those companies. And I'm sure that they believe that they deserve that money as it was set up for them.
CRAVER: I'm sure they do, too.
COLLINS: Charles Craver, we sure do appreciate your time here. He is a labor law professor from George Washington University. Thank you.
Auto industry CEOs take center stage on Capitol Hill for today's bailout. Hearings, of course, we are going to have live coverage the next hour as it gets underway. You're looking at a live picture there from inside the hearing room. We're going to watch closely these proceedings and bring you the critical moments right here in the CNN NEWSROOM.
And after making their pitch on Capitol Hill, the heads of General Motors and Chrysler are joining "THE SITUATION ROOM" to discuss why they deserve this bailout. You can send your questions to ireport.com/situationroom.
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COLLINS: That sweet tooth you have as a kid may leave you after you become an adult, but it's a good bet it will come back later. CNN's Judy Fortin explains in today's "30, 40, 50."
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JUDY FORTIN, CNN MEDICAL CORRESPONDENT (voice-over): It's lunchtime in Philadelphia. And Dennis Schenners (ph) is having a cheesesteak. He used to grab a candy bar as well to hold him over until dinner. But he's said he's lost that craving.
UNIDENTIFIED MALE: I don't usually eat sweets or snacks. As an adult, I don't have a sweet tooth.
FORTIN: Schenners (ph) says he used to love sweets as a kid. But in his early 30s, he began to give up sugar. Doctors say that's not unusual. In your 30s, your sweet tooth begins to diminish. As children we crave sugar because our bodies need energy. But as you age, that need decreases. So adults often trade in those sugary goodies for other carbohydrates. Unfortunately, while they don't taste so sweet, they turn into sugar and that can add on pounds.
KATHERINE TALLMADAGE, AMERICAN DIETETIC ASSOCIATION: There are hidden sugars in things like muffins and cereals, and even white bread and white potatoes turn into sugar quickly in your bloodstream.
FORTIN: And keep away from the sodas and juices as snacks. An average can of soda has 35 grams of sugar. A juice box, 20 grams. The recommended daily sugar intake is only 40 grams so you can consume that pretty quickly. Don't forget that in your 30s your metabolism begins to slow down. Your best bet? Stay active and burn up the calories because too much unused sugar in the body can lead to health problems.
TALLMADAGE: We used to think of diabetes type II or high blood sugar as a disease of old age. But now we know it's actually a disease of being sedentary.
FORTIN: In your 40s and 50s, the sweet tooth can come back. This time because your smell begins to diminish. The taste of sweet and salty become more prominent so you can begin to crave things like chocolate again.
DR. GARY BEAUCHAMP, DIRECTOR, MONELL CHEMICAL SENSES CENTER: Sweet and salty remain even after you've lost your sense of smell. So these are the most powerful and profound defenses and they are probably, they become much more important for older people who don't have some of the other senses.
FORTIN: But if you're craving sweets, nutritionists say it's best to reach for fruit. It contains national forms of sugar and its chock full of vitamins. A one-two punch keeping you healthy as you age. Judy Fortin, CNN, Atlanta. (END VIDEOTAPE)
COLLINS: Quickly now, just a reminder, we are waiting for the hearings to begin in about 15 minutes or so for the big three. There we've got GM, Ford, Chrysler CEOs standing by getting ready to take their seats. As you well know by now, these are some pretty high- stake hearings for them. The second time they have been to Washington. This time they drove, they didn't fly in those private jets that everyone -- corporate jets, I should say, everyone was very upset about.
They are going to be asking lawmakers today for $34 billion in emergency aid. And we are going to be watching closely, and bring it to you just as soon as it begins here live in the CNN NEWSROOM.
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COLLINS: Another plea to Congress by the big three. We are waiting to hear testimony now from auto company CEOs on their bid for that $34 billion bailout. Brianna Keilar is live on Capitol Hill this morning. She's been watching all the developments and seeing some of the CEOs arrive there.
Important I guess to point out, a lot of people very upset, Brianna, about their mode of transportation last time around. This time, a completely different scene.
BRIANNA KEILAR, CNN GENERAL ASSIGNMENT CORRESPONDENT: That's right. Two weeks ago, it was the jet fiasco. All three CEOs flying from Detroit here to Washington, D.C. separately in private jets and they got hammered for doing this by lawmakers and also Americans who just thought it was absolutely wrong and disingenuous that they showed up in that matter.
COLLINS: Yes, and Brianna, it feels like to me we should point out that I don't think anybody thought that it was this huge, huge amount of money that they couldn't afford. It was more of a PR nightmare, because they chose to do this and spend the money that they, you know, really didn't have and are asking for billions and billions of dollars.
KEILAR: That's exactly right. I've never chartered a private jet. I'm sure you probably have not either, Heidi. But it's very expensive. And especially for all of them to come separately. Well, this time around, they drove from Detroit. And the CEOs of the automakers rolling up here in front of Capitol Hill in electric vehicles. So obviously he's trying to put a very different foot forward. But is it going to work? Are people just going to think this is a dog and pony show? Is the damage already done?
You know, we're really going to have to see. Because -- there's actually a poll out, a CNN Opinion Research Corporation Poll that shows 6 in 10 Americans are completely against these bailout loans being given from the government to these automakers.
You know, so they're also -- they pointed to that jet fiasco, according to some surveys, their growing sentiment against it, but also what they considered to be a poor performance a couple weeks ago when the automakers were here talking to Congress.
What we're expecting today is the hard sell. They are going to be pushing these automakers. They are going to be pushing these plans that they unveiled on Tuesday, that include changes that they say they'll make in order to get these bailout loans. That includes having CEOs paid for just $1.00 a year, as well as pairing down some of these not profitable car lines and just going for more fuel efficiency, most marketable vehicles.
COLLINS: Yes. All right. Well, a couple of them have already agreed to that, and others have not actually taken action on that $1.00 a year salary. So we'll continue to watch that as well. CNN's Brianna Keilar on Capitol Hill. Thanks, Brianna.
KEILAR: You're welcome.
COLLINS: High-stake hearings on Capitol Hill. We are waiting for the big three CEOs to begin testimony. Their new plea for your money.
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COLLINS: Quickly want to show you a live picture now inside the hearing room that is going to be very busy here in about six minutes or so. We expect that these hearings will begin for the big three automakers. We're looking at -- you can see there GM CEO Rick Wagoner, who has already taken some questions from the press as he went in to the billing. Also Ford CEO Allan Mulally and Chrysler CEO Bob Nardelli are going to be coming shortly, I'm sure.
They're asking for $34 billion in emergency aid to keep their companies afloat. But unfortunately according to at least the CNN Opinion Research Corporation Poll, 61 percent of people asked are completely opposed to providing the auto industry with that bailout. So things are going to get pretty heated, I'm sure. And we will be watching very closely here on CNN.
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COLLINS: All right. Once again, we want to give you that live picture now of the hearing room where everything is going to take place. It looks like the CEOs of the big three are getting ready to be seated at the table. A lot of chatting and shaking of hands has been going on as they prepare to sit down and begin asking for that $35 billion in emergency aid.
As you well know this is the second time around now for them before the same people. And some are calling them skeptical lawmakers, trying to get the money that they say they need to bail out their auto industry.
Now for some insight from our own money team before things begin here. Christine Romans is joining us live from New York. And we are going to also speak with Lauren Fix once again, who has been with us all morning long as well. Christine, I want to start with you quickly. It seems like for many, many years, it would be fair to have a discussion about -- I was talking to Lauren about this earlier, about quantity. But what about quality, when we're talking about American cars? What about today, if they get this bailout, is going to turn things around so that people begin buying American made cars?
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Well, that's a big question. And the auto industry is in this really tough spot, because they're dealing with issues that we've been talking about in terms of the desire and demand for American cars versus foreign competitors for some time. And then it gets slammed with a global recession at the same time and a credit crisis. So you've got -- I mean, it's a terrible cliche, but a perfect storm here for the industry. A couple of things as I watch the pictures of that hearing room, Heidi. What is the approval rating of Congress right now? 23 percent?
COLLINS: Yes, it's not very high. That's for sure.
ROMANS: There is a real element of political spectacle here, if I could say so. Because these are people who have to be re-elected, these are people who are hearing from their constituents who are dealers and who get work from dealers and who are related to the car industry in their towns and in their districts, they're hearing that they want low interest loans. They want bridge loans for this industry.
And they are hearing from their other constituents that they're sick and tired of anything that reeks of a bailout even if it's a loan. So I think you're going to see a lot of posturing here today. We should be talking soon about whether the Fed, the Federal Reserve might end up in the end being the place where we go to, to actually pay for some sort of low-interest loans to this industry.
COLLINS: Yes, absolutely. All right. Lauren, I guess I just want to ask you, are they going to get the money?
LAUREN FIX, CAR EXPERT: Well, it's interesting. They have a very convincing case to put down. And it's a make it or break it today. Because the stock market is very affected by what's happening. When things were sounding good yesterday, you watched the market rise. I've been watching Ford, GM stock. And it's been very interesting on a day-to-day basis. I mean, if you're one of those people that watch the market. But if they make things happen --
COLLINS: I think everybody is watching the market right now, that's for sure, over the past several weeks.
FIX: Down today, yes. But I mean, hour to hour I'm constantly on it, watching it. But the truth is, is that if they can make this happen, the stock will go up. There will be money to be made. If they can't come up with any kind of bridge loan, any kind of deal, any sort of line of credit, anything, it's going to be a very bad hit to the stock market as well as to the economy. So, this is a very strong case they're going to have to present. It looks like FORD and GM are willing to make concessions. I'm not seeing much out of Chrysler. I'm not seeing that they're going to cut back dealers. They're going to cut back product line. They have seven product lines that are very successful. OK. And everything else that they are claiming, I'm not seeing great results and profits.
COLLINS: Yes. All right. Well, we are watching all of it. Things about just ready to begin now on Capitol Hill. Christine Romans and Lauren Fix, thanks, guys, very much. Appreciate it.
FIX: Thank you.
COLLINS: Live this hour now on Capitol Hill, big three CEOs come back with a plan. Their cost for a bailout more than before. Will Congress be buying with your money? The hearings right here. You see those live pictures. It is Thursday, December 4th, I'm Heidi Collins. And you are in the CNN NEWSROOM.
