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Obama speaks on his economic recovery plan; Earthquake hits Costa Rica; Husband asks future ex-wife for compensation kidney

Aired January 08, 2009 - 14:00   ET

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

(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT-ELECT OF THE UNITED STATES: If nothing is done, this recession could linger for years.

KYRA PHILLIPS, CNN ANCHOR, NEWSROOM: Tackling the recesion with taxpayer dollars. The president-elect makes his case, and he's not holding back. It's his most presidential speech to date. And you'll hear the whole thing.

ROLAND BURRIS (D), ILLINOIS SENATE APPOINTEE: The only thing I regret is not being able to walk on that floor with my colleagues and be sworn in.

PHILLIPS: Still not a senator. The Roland Burris standoff, stirring up painful memories of a painful past, but Senate leaders say it's a matter of procedure, not prejudice.

UNIDENTIFIED MALE: We are asking for the value of the kidney that he gave his wife.

PHILLIPS: Yep, you heard right. An estranged husband doesn't want the house, he doesn't want the car, he wants his kidney, or some cash.

(END VIDEO CLIP)

PHILLIPS: Hello, everyone. I'm Kyra Phillips live at the CNN World Headquarters in Atlanta. You're live in the CNN NEWSROOM.

The economic crisis, and the democratic process, a transition to power that your grandkids will read about in the history books. Twelve days before he takes the oath of office, Barack Obama took the stage at George Mason University, right here, to chart a course for economic recovery. And it's not too late, Obama says, but we've got to move fast.

But first, things first, the newly sworn Congress got together last hour to count the votes of the electoral college. It's no mere formality, either. Remember 2000? But no surprises either.

(BEGIN VIDEO CLIP)

DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: The state of the vote for president of the United States as delivered to the president of the Senate is as follows. The whole number of electorates appointed to vote for the president of the United States is 538, of which a majority is 270. Barack Obama of the State of Illinois has received for president of the United States 365 votes.

(APPLAUSE, CHEERS)

(END VIDEO CLIP)

PHILLIPS: And it's time to play grill the nominees. House secretary nominee and former Senate majority leader, Tom Daschle, the first of Obama's Cabinet picks to get a confirmation hearing. Many more will follow next week. And some, unlike Daschle's, are sure to get pretty testy.

Back now to the state of economy and Barack Obama's plan to improve it. If you missed his morning address, well, here it is, again, start to finish, straight from George Mason University in Fairfax, Virginia.

(BEGIN VIDEOTAPE)

BARACK OBAMA, PRESIDENT-ELECT OF THE UNITED STATES: Throughout America's history there have been some years that simply rolled into the next without much notice or fanfare. And then there the years that come along once in a generation; the kind that mark a clean break from a troubled past and set a new course for our nation. This is one of those years.

We start 2009 in the midst of a crisis unlike any we have seen in our lifetime, a crisis that has only deepened over the last few weeks. Nearly 2 million jobs have been now lost. And on Friday, we're likely to learn that we've lost more jobs last year than at any time since World War II. Just in the past year, another 2.8 million Americans who want and need full-time work have had to settle for part-time jobs. Manufacturing has hit a 28-year low. Many businesses cannot borrow or make payroll. Many families cannot pay their bills or their mortgage. Many workers are watching their life savings disappear.

And many, many Americans are both anxious and uncertain of what the future will hold. Now, I don't believe it's too late to change course, but it will be if we don't take dramatic action as soon as possible. If nothing is done, this recession could linger for years. The unemployment rate could reach double digits. Our economy could fall $1 trillion short of its full capacity, which translates into more than $12,000 in lost income for a family of four. We could lose a generation of potential and promise, as more young Americans are forced to forgo dreams of college, or the chance to train for the jobs of the future.

And our nation could lose the competitive edge that has served as a foundation for our strength and our standing in the world. In short, a bad situation could become dramatically worse. This crisis did not happen solely by some accident of history, or normal turn of the business cycle, and we won't get out of it by simply waiting for a better day to come, or relying on the worn out dogmas of the past.

We arrived at this point due to an era of profound irresponsibility that stretched from corporate board rooms to the halls of power in Washington, D.C. For years too many Wall Street executives made imprudent and dangerous decisions, seeking profits with too little regard for risk, too little regulatory scrutiny, and too little accountability.

Banks made loans without concern for whether borrowers could repay them. And some borrowers took advantage of cheap credit to take on debt they couldn't afford. Politicians spent taxpayer money without wisdom or discipline, and too often focused on scoring political points instead of problems they were sent here to solve. The result has been a devastating loss of trust and confidence in our economy, our financial markets and our government.

Now, the very fact that this crisis largely of our own making means that it's not beyond our ability to solve; our problems are rooted in past mistakes, not our capacity for future greatness. It will take time, perhaps many years, but we can rebuild that lost trust and confidence. We can restore opportunity and prosperity.

We should never forget that our workers are still more productive than any on earth. Our universities are still the envy of the world. We are still home to the most brilliant minds, the most creative entrepreneurs, and the most advanced technology and innovation that history has ever known. And we are still the nation that has overcome great fears and improbable odds.

If we act with the urgency and seriousness that this moment requires, I know that we can do it again. And that is why I have moved quickly to work with my economic team, and leaders of both parties, on an American Recovery and Reinvestment Plan that will immediately jump- start job creation and long-term growth. It's a plan that represents not just new policy, but a whole new approach to meeting our most urgent challenges.

For if we hope to end this crisis, we must end the culture of anything goes that helped create it. And this change must begin in Washington. It is time to trade old habits for a new spirit of responsibility. It's time to finally change the ways of Washington so we can set a new and better course for America. There is no doubt that the cost of this plan will be considerable.

It will certainly add to the budget deficit in the short term. But equally certain are the consequences of doing too little or nothing at all. For that will lead to an even greater deficit of jobs, incomes, and confidence in our economy.

It is true that we cannot depend on government alone to create jobs or long-term growth, but at this particular moment only government can provide the short-term boost necessary to lift us from a recession this deep and severe. Only government can break the cycles that are crippling our economy, where a lack of spending leads to lost jobs, which leads to even less spending, where an inability to lend and borrow stops growth, and leads to even less credit. That's why we need to act boldly and act now to reverse these cycles.

That's why we need to put money in the pockets of the American people. Create new jobs, and invest in our future. That's why we need to restart the flow of credit and restore the rules of the road that will ensure a crisis like this never happens again. This plan begins with -- this plan must begin today. A plan I'm confident will save or create at least 3 million jobs over the next few years. It's not just another public works program.

It's a plan that recognizes both the paradox and promise of this moment. The fact that there are millions of Americans trying to find work, even as all around the country there's so much work to be done.

And that's why we'll invest in priorities like energy and education, health care, and a new infrastructure that are necessary to keep us strong and competitive in the 21st century. That's why the overwhelming majority of the jobs created will be in the private sector, while our plan will save the public sector jobs of teachers, police officers, firefighters, and others who provide vital services.

To finally spark the creation of a clean energy economy, we will double the production of alternative energy in the next three years. We will modernize more than 75 percent of federal buildings, and improve the energy efficiency of 2 million American homes, saving consumers and taxpayers billions on our energy bills.

In the process, we will put Americans to work in new jobs that pay well and can't be outsourced. Jobs building solar panels and wind turbines, constructing fuel-efficient cars and buildings, and developing the new energy technologies that will lead to even more jobs, more savings and a cleaner, safer planet in the bargain.

To improve the quality of our healthcare, while lowering its costs, we will make the immediate investments necessary to ensure that within five years, all of America's medical records are computerized. This will cut waste, eliminate red tape, and reduce the need to repeat expensive medical tests. But it just won't save billions of dollars and thousands of jobs, it will save lives by reducing the deadly but preventable medical errors that pervade our health care system.

To give our children the chance to live out their dreams in a world that's never been more competitive we will equip tens of thousands of schools, community colleges, and public universities with 21st century classrooms, labs and libraries. We'll provide new computers, new technology, and new training for teachers so that students in Chicago and Boston can compete with children in Beijing for the high-tech, high-wage jobs of the future.

To build an economy that can lead this future, we will begin to rebuild America. Yes, we'll put people to work repairing crumbling roads, bridges and schools, by eliminating the backlog of well- planned, worthy and needed infrastructure projects. We will also do more to retrofit America for a global economy. That means updating the way we get our electricity by starting to build a new smart grid that will save us money, protect our power sources from blackout or attack, and deliver clean, alternative forms of energy to every corner of our nation.

It means expanding broadband lines across America so a small business in a rural town can connect and compete with their counterparts anywhere in the world. It means investing in the science, research, and technology that the lead to new medical breakthroughs, new discoveries, and entire new industries.

And finally, this recovery and reinvestment plan will provide immediate relief to states, workers and families who are bearing the brunt of this recession. To get people spending again, 95 percent of working families will receive a $1,000 tax cut. The first stage of a middle-class tax cut that I promised during the campaign, and will include in our next budget. To help Americans who have lost their jobs and can't find new ones, we'll continue the bipartisan extension of unemployment insurance and health care coverage to help them through this crisis.

Government at every level will have to tighten its belt. But we'll help struggling states avoid harmful budget cuts, as long as they take responsibility and use the money to maintain essential services, like police, fire, education and healthcare.

Now, I understand that some might be skeptical of this plan. Our government has already spent a good deal of money, but we haven't yet seen that translate into more jobs or higher incomes, or renewed confidence in our economy. And that's why the American Recovery and Reinvestment Plan won't just throw money at our problems. We'll invest in what works.

The true test of policies we'll pursue won't be whether they're Democratic or Republican ideas, whether they're conservative or liberal ideas, but whether they create jobs, grow our economy, and put the American dream within the reach of the American people.

Instead of politicians doling out money behind a veil of secrecy, decisions about where we invest will be made transparent, and informed by independent experts wherever possible. Every American will be able to hold Washington accountable for these decisions, by going online to see how and where their taxpayer dollars are spent.

And as I announced yesterday, we will launch an unprecedented effort to avoid unwise and unnecessary spending that has never been more unaffordable for our nation and our children's future than it is right now.

We have to make tough choices. And smart investments today. So that as the economy recovers, the deficits start coming down. We cannot have a solid recovery if our people and our businesses don't have confidence that we're getting our fiscal house in order.

And that's why our goal is not to create a slew of new government programs, but a foundation for long-term economic growth. That also means an economic recovery plan that is free from earmarks and pet projects. I understand that every member of Congress has ideas about how to spend money. And many of these projects are worthy. They benefit local communities. But this emergency legislation must not be the vehicle for those aspirations. This must be a time when leaders in both parties put the urgent needs of our nation above our own narrow interests. Now, this recovery plan alone will not solve all the problems that led us into this crisis. We must also work with the same sense of urgency to stabilize and repair the financial system we all depend on. That means using our full arsenal of tools to get credit flowing again to families and businesses, while restoring confidence in our markets. It means launching a sweeping effort to address the foreclosure crisis so that we can keep responsible families in their homes. It means preventing the catastrophic failure of financial institutions whose collapse could endanger the entire economy.

But only with maximum protections for taxpayers and a clear understanding that government support for any company is an extraordinary action that must come with significant restrictions on the firms that receive support.

And it means reforming a weak and outdated regulatory system so that we can better withstand financial shocks and better protect consumers, investors, and businesses from the reckless greed and risk taking that must never endanger our prosperity again. No longer can we allow Wall Street wrongdoers slip through regulatory cracks. No longer can we allow special interests to put their thumbs on the economic scales. No longer can we allow the unscrupulous lending and barrowing that leads only to destructive cycles of bubble and bust. It is time to set a new course for this economy, and that change must begin now.

We should have an open and honest discussion about this recovery plan in the days ahead. But I urge Congress to move as quickly as possible on behalf of the American people. For every day we wait, or point fingers, or drag our feet, more Americans will lose their jobs. More families will lose their savings. More dreams will be deferred and denied. And our nation will sink deeper into a crisis that at some point we may not be able to reverse. That is not the country I know. It is not a future I accept as president of the United States.

A world that depends on the strength of our economy is now watching and waiting for America to lead once more. And that is what we will do. It will not come easy or happen overnight. And it is altogether likely that things may get worse before they get better. But that is all the more reason for Congress to act without delay. I know the scale of this plan is unprecedented, but so is the severity of our situation.

We have already tried the wait-and-see approach to our problems, and it is the same approach that helped lead us to this day of reckoning. And that is why the time has come to rebuild a 21st century economy in which hard work and responsibility are once again rewarded. That's why I'm asking Congress to work with me and my team, day and night, on weekends if necessary to get the plan passed in the next few weeks.

That's why I'm calling on all Americans, Democrats and Republicans and Independents to put good ideas ahead of the old ideological battles. A sense of common purpose above the same narrow partisanship and insist that the first question each of us asks isn't what's good for me, but what's good for the country my children will inherit. More than any program or policy, it is this spirit that will enable us to confront these challenges with the same spirit that has led previous generations to face down war and depression and fear itself.

And if we do, if we are able to summon that spirit again, if we are able to look out for one another and listen to one another, and do our part for our nation and for posterity, then I have no doubt that years from now we will look back on 2009 as one of those years that marked another new and hopeful beginning for the United States of America.

(END VIDEOTAPE)

PHILLIPS: Once again, that was Barack Obama's economic speech today. You know, Ronald Reagan also inherited a huge economic mess. His philosophy back then, less government. Well, today the opposite could be true. We're going to take a look at two different times, two different presidents, and two different tactics with our favorite special correspondent, Frank Sesno.

(COMMERCIAL BREAK)

PHILLIPS: Every morning we try to figure out what our lead story should be, what you, the viewer, will find interesting. And we knew we had President-Elect Barack Obama's economic speech today, but we weren't quite sure how to tack will it. My segment producer's phone rang -oh, and by the way, it wasn't Jack Bauer, it was Frank Sesno.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Yeah, Mr. President we need you.

No, this is probably Sesno. Do we still want that tape?

PHILLIPS: Sesno may be good for our legislature stuff.

UNIDENTIFIED FEMALE: Why can't we see if he could do something on this. That would be better.

PHILLIPS: Yeah.

UNIDENTIFIED MALE: If he could talk to the news points about how the president-elect is giving his first presidential speech to try to boost confidence.

UNIDENTIFIED FEMALE: We're going to want him. We're just figuring out the angle.

(END VIDEO CLIP)

(LAUGHTER)

PHILLIPS: So now here he is live from George Washington University, much better looking than Frank Battle - sorry, our Special Correspondent Frank Sesno -- or Jack Bauer. I guess I should name you Frank Bauer now. That works.

FRANK SESNO, CNN SPECIAL CORRESPONDENT: I'll stick with what I've got, but thanks for thinking of me.

PHILLIPS: No problem. OK. Let's get right to it.

What do you think Obama was trying to do with his speech today, Frank?

SESNO: A lot of things, Kyra. He was setting expectations, he was lobbying the Congress, he was talking directly to the American people, he was laying out areas of sacrifice. You know, he even sounded, for a moment, like a little paraphrase of John F. Kennedy, remember when he said, ask not what your country can do for you, but what you can do for your country. When Obama said, essentially, he said, ask not what good for me, but what's good for the country. So, he was trying to hit a lot of points in that speech. And I think he did it.

PHILLIPS: Well, tax cuts. He was playing that.

SESNO: Tax cuts, he has to play. Because he wants to show that he's not a tax and spend liberal, that this gigantic rescue package is not only going to be about spending money, that it is going to be capable of reaching across the aisle to both conservative Democrats and Republicans alike. You and I talked about that. These tax cuts both play an economic role because they get money going back through people, and people care about that, and a very big political role in making this thing somewhat palatable.

PHILLIPS: You see parallels to Ronald Reagan, don't you?

SESNO: It's very interesting. We're in a very different time, it is sort of a bookended time, really. But when Reagan came in he was inheriting a terrible economy, a country that was very down in the dumps. People were scared. I think we forget about that. As Jimmy Carter was going out he was talking about an era of limits and people were on gas lines and they were afraid America had peaked in the world.

What Obama is inheriting now is an economy that really puts America very much on the ropes. But where Reagan came in saying the answer is smaller government, and cut your taxes, and we'll grow out of it that way, Obama's coming in and saying, government needs to be much more involved. And if anything, just sort of unbridled tax cuts and deregulation is somewhat discredited. So in a way it's kind of bookending an era, but at a very different time in the economic cycle, in history of things.

PHILLIPS: You remember that race, you remember that presidency. That was your time.

SESNO: There you go again, Kyra.

(LAUGHTER)

PHILLIPS: I'm not aging you.

SESNO: Yes, I do. PHILLIPS: I'm showing how wise you are, Frank Sesno.

SESNO: I was three at the time I was covering that.

PHILLIPS: I think I was your intern back then. There was a lot of talk about alternative energy as well. We sort of expected that. How is that going to play?

SESNO: Well, again, very interesting here, because Obama laid down the marker here. He said, look, what we can do is we can double the output of alternative energy in three years. That is incredibly ambitious. It also shows, if you pardon the pun, the crosswinds that he's caught in on this one. Because as he's trying to make this big pitch on alternative energies, what has happened to the price of oil? It's come way down. So that makes these alternative energies, which are more expensive, more difficult economically and commercially to get through.

So it's part of his commitment to this spending package. It also shows you where he's -- and he's been very open about this all along -- saying this is a growth area for this economy and a leadership role for the country.

PHILLIPS: Frank Sesno, good to see you.

SESNO: As always. Thank you. Thanks for the little bit on the phone today. That was fun.

You know, we were always waiting for your call, just so you know. We try to hold onto it just to know that you're available.

SESNO: I'll call you every day at that time.

PHILLIPS: Fabulous. Thanks, Frank. We look forward to it.

SESNO: Well, the bears and the bulls.

The bears and bulls, we're not talking about pro sports and Chicago, I promise, we're talking about the economy with a couple of guys who know their stuff. You probably remember them, too. We bring them back here all the time. One of them says that president-elect's plan will help destroy the country. He doesn't hold back.

And from bears and bulls to Blagojevich, how is that impeachment process going, pal?

(COMMERCIAL BREAK)

PHILLIPS: It's 2:28 Eastern Time right now.

Here's the stories we're working for you right now. An Illinois legislative committee has written a draft report now recommending the impeachment of Governor Rod Blagojevich. That full committee may report on the report today, even at this hour. And if it passes, the matter would head to the Illinois house, which would decide whether to impeach the governor or not. Clearly the governor can no longer lead. The state is just falling apart. He's led us to the abyss. We can't get anything done. We cast pass the jobs bill. We have many people unemployed. Our roads and bridges are falling apart. We're not paying the bills to our providers. The people who need our services the most such as Medicaid patients can't get them to the doctors.

If there's a vote, we're going to talk with jack franks again to tell us what's going on.

Day 13 now of the fighting in Gaza. And more troubling developments. Apparently the united nations' main humanitarian aid group has suspended operations in Gaza after two of its workers were killed. The U.N. is saying that they were in a convoy, fired upon by Israeli forces during a three-hour truce, and that's why they ceased it.

Well another big revelation in the Bernard Madoff investment scandal. Prosecutors now say investigators found 100 signed checks worth, get this, $173 million in Madoff's office desk. And he was getting ready to send that money to his family and friends right at the time of his arrest. Classy guy.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT-ELECT OF THE UNITED STATES: It is true that we cannot depend on government alone to create jobs or long-term growth. But at this particular moment, only government can provide the short-term boost necessary to lift us from a recession this deep and severe.

(END VIDEO CLIP)

PHILLIPS: Well, that was President-elect Barack Obama speaking earlier today about his plan for economic recovery. No one wants to see a turn-around more than Wall Street. That's for sure. Let's get straight to there. Susan Lisovicz getting the reaction from the president-elect's speech.

What do you think, Susan?

SUSAN LISOVICZ, CNN CORRESPONDENT: Well, you know, Kyra, we were lower at the open with the three major average. The president-elect starting speaking about 90 minutes or so later.

We did see the Nasdaq moved into positive territory. But it's not really doing much at this point. You know, look, we continue to get a barrage of very bad economic news. Seemingly all fronts. So, investors are encouraged by the president-elect's call for quick and drastic action.

What he wants to do, prevent foreclosures, restore credit markets and create or save three million jobs. That is a tall order. Considering that more than 4.5 million people are now drawing unemployment benefits. What investors ultimately want to see are results, and in the meantime right now, well, stocks are mostly to the down side. The Dow Industrials are off 87 points, or one percent. Walmart, a big drag there, down eight percent. December retail sales, not good.

The Nasdaq composite is flat. The broader S&P 500 down half a percent. The problem in the economic reports that keep pouring in really reinforce the negative retailers, ranging from Walmart to Nordstrom, posting disappointing sales. Numbers for December, the most critical month. Macy's is actually closing 11 underperforming stores.

But, if you want a silver lining, and I know you Kyra do, mortgage rates have hit a record low for a tenth straight week. A 30- year fixed mortgage, now averages 5.01 percent. A beneficiary of the Federal Reserve's decision to buy mortgage-backed securities.

So it's really been helping there. Oil also falling. Another $1 after sliding nearly six bucks yesterday. Oil trading under $42 today. That's kind of like a little stimulus in the meantime.

Kyra, back to you.

PHILLIPS: Here we like the silver linings, we like a little stimulus, don't we, Susan Lisovicz?

LISOVICZ: We do.

PHILLIPS: OK. I'll see you again.

All right. Let's go ahead and get some more feedback on President-elect Obama's speech. We have Peter Schiff the Bear, and he's a bear, believe me from Euro Pacific Capital. He's not a big fan of the plan. And Jeremy Siegel the Bull, from Wharton Business School, he's not as pessimistic about what he heard today. But he's got some interesting thoughts.

Gentlemen, good to see you again.

PETER SCHIFF, "THE LITTLE BOOK OF BULL MOVES IN BEAR MARKETS": Nice to be here, again.

PHILLIPS: You know, why does this not surprise me as I'm looking through what both Jeremy and Peter said. And Jeremy, Peter says "I think Obama's plan is a disaster and will help destroy this country."

Boy, Peter, tell us how you really feel.

SCHIFF: Well, you know, the problem is, the only way out of this mess that the government helped create is to have less government. What we need is more production. We need more savings. But unfortunately, what Obama is going to try to do is force feed more consumer spending and more credit in an economy that's suffering from an excess of both. He's preventing the free market from rebalancing the economy. He is going to create a far greater crisis than the one he thinks he's trying to solve. And unfortunately, we're going to have this recession turn into a depression. It's going to linger for years, maybe a decade, and it's going to have all these terrible things that Barack Obama fears, but because of what he's doing.

PHILLIPS: Jeremy, is it that dismal?

JEREMY SIEGEL, FINANCE PROF., WHARTON BUSINESS SCHOOL: No.

PHILLIPS: I know you're the finance guy, you probably want to see the hard numbers, right?

Right, I -- I mean and I'll tell you, I like the thrust of his speech. I think he's appropriate. The government needs short run, and he did say short run, to provide extra spending. The only numbers I heard was $1,000 and 95 percent of the families. A lot of the devil is going to be in the details. But I think the main thrust is right. As Peter said, I mean, there was too much credit. Now there's too little credit. We're not suffering now from too much credit. We had the biggest drop of consumer spending since World War II.

SCHIFF: And it needs to drop more, Jeremy. We're spending too much still. We need less spending. We need more savings. The government is trying to pour gasoline on this fire.

SIEGEL: It's not a fire at all. You said we're going to have hyper inflation. I don't see inflation anywhere, Peter. We're already below capacity. (CROSSTALK) Unemployment is going toward seven percent. Capacity utilization is going down. That's not fuel on the fire.

PHILLIPS: OK, well, you say --

SCHIFF: That has nothing to do with inflation. We're going to have massive inflation and sky-high unemployment. The two are not mutually exclusive.

PHILLIPS: All right, when you -- let me ask you a question. You say sky-high unemployment. And if you look at the American Recovery and Reinvestment Plan, which is what Barack Obama really stressed today, he lays out exactly what he wants to do, and one of the points he makes is immediate action to create good jobs in America.

Did either one of you hear what he was going to do to create that immediate action to create good jobs in America?

SCHIFF: Good jobs are created by the private sector. What Barack's going to do is destroy private sector jobs to create less efficient government sector jobs. He's going to undermine our economy. And exacerbate these problems. The governemnt can't do anything; they have no wealth. All they can do is redistribute the wealth that is created in a private sector and in the process make it less efficient and less productive.

PHILLIPS: Can you create more wealth, Jeremy? SIEGEL: Well, first of all, you know, I like the private sector to say the least. But the private sector isn't all wonderful. Look what happened to the private sector the last three years. I mean...

SCHIFF: Because of government.

SIEGEL: ...it wasn't government. But we had a lot of houses that shouldn't have been built. You know, people say we might have a road that shouldn't be built. (CROSSTALK) I would say we had a lot of houses that shouldn't be built. And the government does have a place in our economy.

(LAUGHTER)

SCHIFF: But Jeremy, if the Federal Reserve didn't make money so cheap, none of those houses would have been built. If it wasn't for Freddie and Fannie, they wouldn't have been built. The government interfered in the free market and caused tall this wreckage and speculation.

(CROSSTALK)

SIEGEL: All those private lenders, much of that debt was sold to the private sector. We didn't need Freddie and Fannie to buy that debt.

(CROSSTALK)

PHILLIPS: Wait, guys, guys, and number four, in the American Recovery and Reinvestment Plan, direct immediate assistance for homeowners, not a bailout for irresponsible mortgage lenders.

SCHIFF: We don't -- we need to let home prices fall. We don't need to assist people. The government should not be subsidizing buying homes or buying cars or sending kids to college.

We need to let the market determine prices. Home prices are too high. College tuitions are too high. And Americans have too many cars right now. We don't need to buy more. We need to start making cars and exporting them. We need more production and not more consumption. And unfortunately the government is trying to prevent that from happening.

PHILLIPS: Jeremy, final thought.

SIEGEL: Final thought, yes, I agree with Peter. We do need the house prices to fall. They are falling. We also need a template to have some sort of negotiation between borrowers and lenders. Because right now, the lenders, look at their mortgages, see 10 cents on the dollar, 20 cents on the dollar, that's what's causing all the pain in the financial sector. The homeowner's looking at 100 cents on the dollar and all this debt, there's a middle place where both can gain. We need to have a coming together of that. There are some measures taking place. I think that will do a lot to help that housing situation. As well as the news item you had, mortgage rates, 30-year town to 5.01 percent. That's also excellent. SCHIFF: They're not going to stay low, though, Jeremy. They're going to go ballistic.

PHILLIPS: But Peter, I'm with you about bringing down college tuition. Good God, it's unbelievable. I thought mine was high.

Jeremy Siegel, Peter Schiff. Guys, thanks so much. Always great to have you.

Danger in the Pacific Northwest after weeks of heavy snow. We told you about these floodwaters. They're swamping homes and highways and it's not stopping anytime soon.

(COMMERCIAL BREAK)

PHILLIPS: Time to open up the "what the file," stories you've got to see to believe, and even then there's probably no guarantee.

OK. If you thought your divorce was bitter, take a listen to this guy. Talk about a jerk. A New York doctor wants his future ex- wife to give back his current ex-kidney. Of course, if that's not convenient, he said I'll settle for $1.5 million in compensation. Well, it seems he donated the kidney back when she was the apple of his eye. But their split has caused a definite change of heart.

And talk about stimulating the economy, the porn industry says its sales are sagging. So it wants your tax dollars. "Hustler" founder Larry Flint and "Girls Gone Wild" creator Joe Francis have put out a press release saying the porn industry needs a government bailout. That's right, a government bailout. Francis says that jobs are at stake. Come on. Help him out. But the chances of the government bailing out the porn industry, thank goodness none to none.

And sometimes you don't have to call Jenny if you want to lose weight. Just go to jail in Morgan County, Alabama. The sheriff there got locked up for feeding inmates skimpy meals and helping himself to the profits from the kitchen. Well, a federal judge ordered the sheriff released today after his lawyer offered up a plan to improve the calorie count.

Somebody who never counts calories. Rick Sanchez, who I see down at the gym every morning, working hard.

RICK SANCHEZ, CNN ANCHOR: Somebody's got to.

PHILLIPS: Working on that six-pack.

SANCHEZ: Yes.

PHILLIPS: All right. What's happening, Sanchez?

SANCHEZ: Well, it's called the American Recovery and Reinvestment Plan. Sounds kind of boring, doesn't it? But actually, it may be one of the most important legislations that's ever been passed in this country. It's what Barack Obama spoke about today. It's the idea that this country has to find a way to get out of this economic mess, this recession.

And we're going to let you hear the entire speech. But it's important, because a lot of people are talking about -- and he, by the way, is talking about the national impact that this is having. It's also having a local impact as well. We're going to share with you some of the pictures that are coming in from Oakland after that police incident out there. There's been disturbances. So, we'll have that for you, as well.

And I understand you've got somebody standing by in Costa Rica?

PHILLIPS: That's right. Costa Rica. One of our favorite places. But not a good time to be there right now. They've had an earthquake, apparently. Let's -- We're going to actually get to that -- are we going to go straight to it on the phone?

OK. We'll going to take a quick break, and we'll get to that. Stay with us, folks.

(COMMERCIAL BREAK)

PHILLIPS: Breaking news. Costa Rica getting rocked by an earthquake. Chad Myers got right to it. What can you tell us, Chad?

CHAD MYERS, CNN METEOROLOGIST: 6.1 now. Sometimes it was -- they moved the numbers around when they first make it. It was a 6.2 earlier, so not quite as large as we thought, but still a big, strong quake.

The pictures we see coming in here, a lot of broken glass. We're also seeing some of the tiles, the panels on the ceilings that have fallen down. An awful lot of people scrambling when it was happening here. This was just about 30 minutes ago, maybe a little bit less. There's the shaking right there from their tower cam, from our network affiliate there in costa rica. A big shake. It was located about 20 miles to the northeast of the city here.

But I'm telling you what, this was right in the swing house, the roundhouse of where this shake map comes down with significant damage here. I think probably to the north and east of the city itself. That gets you up into the mountains, Kyra.

PHILLIPS: OK, so at this point, and I apologize because I'm reading the wires. Did you say there's been an aftershock yet?

MYERS: Well, there has been not a significant aftershock. This --again, when you're talking about a 6.1 quake. The aftershock in a 3 range is not significant compared to the first shake. The first shake did all the damage for sure.

PHILLIPS: All right, we'll keep track of this, of course. A earthquake now rocking Costa Rica's capital there.

Chad Myers is all over it. We're going to have more with Rick Sanchez in just a second.

(COMMERCIAL BREAK)

PHILLIPS: Well, that does it for us. I'm Kyra Phillips. Rick Sanchez has more on that earthquake rocking Costa Rica, and also Barack Obama's economic speech.