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Defending their Spending; Stimulus: Let's Make a Deal; Stimulus Reality Check; Salmonella Outrage

Aired February 11, 2009 - 12:00   ET

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

TONY HARRIS, CNN NEWS ANCHOR: With the latest, CNN's Samantha Hayes.

SAMANTHA HAYES, CNN METEOROLOGIST: Tony, people who live here in Lone Grove are not unaccustomed to tornadoes, but they are unaccustomed to them touching down and causing this kind of destruction.

There was a house there behind me where you see many people sifting through the debris looking for things that they might be able to salvage. This over here to my right was John's Furniture Store. You see a cinder block wall, giving you an idea of the might of that storm last night of those tornados.

Unfortunately, eight people did not survive the storms last night. The first thing search and rescue crews did this morning was to go out to the areas hardest hit to see if perhaps there were more people that are unaccounted for that they didn't find last night. It's been a heart breaking scene for folks showing up this morning, people who perhaps went somewhere else for shelter last night, coming to town today hoping they'd maybe only see superficial damage to their homes and businesses, and instead discover this, that it's been destroyed, demolished and they'll have to start all over.

It is a tough day for people here. It is a town of about 5,000 and it is going to be a long period of cleaning up and starting over.

In Lone Grove, Oklahoma, I'm Samantha Hayes.

Tony, back to you.

HARRIS: Samantha, I appreciate it. Thank you.

Let's get to Chad Myers in the Severe Weather Center.

Chad, you're so good at this. Can you walk us through what we actually witnessed tomorrow? I know it usually takes a day or so to get the full intensity of a storm like the one that passed through Lone Grove. What is on stand-by for today?

CHAD MYERS, CNN METEOROLOGIST: I think we're going to get -- some people are going to get surprised that we don't have enough watches and warnings out maybe. Now through Louisville and into Kentucky, what happened last night in Ardmore, Oklahoma, that's the town you might recognize, on the I-35 corridor. To the west the storm was very large, spinning, rotating. Right in between radar sites, as far as you could possibly get from a radar site because the Oklahoma City one was north, Lawton off to the west. There wasn't really a great picture of the storm. Spotters saw it a half-mile wide. Warnings were out 15 minutes ahead of time for those people there but sometimes you can't just get out of the way. Plus there are no basements in Oklahoma at all. 60 miles an hour demolished a mobile home where it only takes the shingles off a house. Mobile homes are so fragile. If you drop a clock or an egg, the egg will break but the clock you'll pick up and it will be just fine. It is all about the strength of the materials on some of these buildings.

These boxes are actually serious thunderstorm warnings going on from Hopkinsville down to Lawrenceburg, moving to Nashville in the next 15 minutes. Bring the dogs in, umbrellas down. Not tornadoes yet but certainly the potential because now that watch box has been issued, severe weather all the way from Ohio through Kentucky. I think Lexington and Cincinnati really under the gun today. This is the battle zone, and also eastern Tennessee.

We'll keep watching these storms and they spin and getting warnings out.

HARRIS: Chad, is it at least moving quickly? It would seem that that would be a good thing.

MYERS: It would seem that would be a good thing. But when a storm moves at 60 miles per hour by itself, and it has a wind of 30, we add those two together, you got a wind of 90. A wind of 90 is going to do damage, like a tornado can. You don't want them to move fast actually.

HARRIS: Good point, Chad. Thank you.

We want to take you back to Capitol Hill right now. Let's listen in again. We've been dipping in back and forth just to give you a flavor of the hearings right now, bank executives, as we've been telling you, facing some tough questions about how they're spending your tax dollars.

Let's listen in.

UNIDENTIFIED CEO: -- this stuff will clean up on its own.

UNIDENTIFIED SENATOR: I saw your piece in the "Financial Times" on the rating agencies, what role did they play?

UNIDENIFIED CEO: Well, one of the big problems is that people subcontracted risk management out to rating agencies and I think we've all done that to some extent. I think we're all culpable of that. So we join the rating agencies in the problem. But obviously they got these things quite wrong and never re-investigated. They were too much relied upon by institutions. When loans were packaged and resold, once they bore the stamp of a rating agency at a certain level, no more investigation was done, and that certainly contributed to the accumulation of assets on people's balance sheets that they wish weren't there.

UNIDENTIFIED SENATOR: Thank you.

Thank you, Mr. Chairman.

REP. BARNEY FRANK, (D), HOUSE FINANCE COMMITTEE CHAIRMAN: Thank you.

The gentlewoman from New York, Ms. Riscus (ph).

(END VIDEO CLIP)

HARRIS: All right, so where -- we didn't really get an answer there, but the question -- where's the money? More specifically, where is your taxpayer money?

Allan Chernoff has been following the hearing for us from New York, the hearing on Capitol Hill.

What are you hearing? One of the things I would suspect people at home would like to hear in addition to an explanation as to where the money has gone and what's being done with the money that they're holding on to. Any apologies yet?

ALLAN CHERNOFF, CNN NEWS CORRESPONDENT: A little bit. A little bit. We should first say that the bankers are saying we're lending the money, we're taking that money and we're putting it to work out there in the marketplace. We're giving loans to companies. Of course, that doesn't quite jive with what's going on in the economy right now, because there is a credit freeze. So it's the AAA credit, super fine companies that haven't been able to get money from bankers. Consumers who have some debt problems, small businesses with less than optimal cash flow, well, they're not getting loans at all.

That's one side of it. Then the apologies. OK? The companies have been saying the chief executive officers have been saying, no, we're not using the TARP money, the government bailout money, to pay out compensation. We're not wasting it.

And in particular, the chief executive of Citigroup was asked about that company's plan to buy a new aircraft. And he did offer an apology.

Let's have a listen.

(BEGIN VIDEO CLIP)

VIKRAM PANDIT, CEO, CITIGROUP: I would also like to say something about the airplane that was in the news. We did not adjust quickly enough to this new world, and I take personal responsibility for that mistake. In the end, I canceled delivery. We need to do a better job of acknowledging and embracing the new realities.

(END VIDEO CLIP)

CHERNOFF: In other words, Mr. Pandit is saying Citigroup has to get real, really understand what's happening with the economy. And the fact is that this is tabs pare money that has been handed over to the bankers -- Tony?

HARRIS: It's interesting. Let me drill down another point. You're talking about the folks and maybe the institutions and companies with AAA ratings being able to get loans. But what about the people who have 700-plus credit scores, who have down payments on their new car or their new home. We keep hearing that those people are being turned down. Has that been addressed by the CEOs?

CHERNOFF: Right. There has been just a little bit of that. Maxine Waters, the congresswoman from California, did ask the bankers, why is it that you're taking fees on these mortgages? Why are you getting extra money when people are getting squeezed so badly here?

Part of the issue here is that consumers generally are having a rough time of it. And as you point out, even those with pretty decent credit. The bankers have been saying, look, this is a new environment. The federal government has been saying you need to be careful, you need to be cautious.

So on the one hand they've been getting these billions of dollars in government bailout money. On the other hand, there are bank regulators at these banks every single day checking their books. And after the fiasco of last year, they're saying, hey, be careful with your lending, don't make irresponsible loans. It is almost a mixed message bankers are getting.

HARRIS: Allan, thank you.

The anger and outrage over the financial bailout expressed in newspaper editorials across the country.

Pat Morrison, op-ed writer at the "Los Angeles Times," shared this sentiment about the hearing with bank CEOs, quoting now, "I want groveling. I want show-trial sweating and stammering. I want their nine-figure bonus checks endorsed over to the rest of us. I want my 401K money back."

U.S. bankers aren't the only ones having to account for their actions. Former heads of British banks bailed out by the government offering their apologies. The ex-executives appeared before a committee investigating the financial crisis. They apologized for not anticipating the financial turmoil that led to the bank rescues.

(BEGIN VIDEO CLIP)

ANDY HORNBY, FORMER CEO, HBOS: I've already apologized several times on behalf of myself and the whole board for what has happened. The precise question of whether I feel personally culpable. I think we all take responsibility for what happened in the two years I've been running the company. And I fully accept my own role within all of that. And can I repeat the apology.

DENNIS STEVENSON, FORMER CEO, HBOS: We are profoundly -- I done think I would say unreservedly sorry at the turn of events.

FRED GOODWIN, FORMER CEO, RBS: I've apologized in full and happy to do so again. I, too, would echo Dennis Stevenson's comments and Tom's comments that there is a profound, unqualified apology for all of the distress that's been caused.

(END VIDEO CLIP)

HARRIS: The bankers were also grilled about the size of their bonuses.

Hammering out a compromise as Congress works on details of the stimulus package. The president is on the road pointing out the potential benefits of his plan.

(COMMERCIAL BREAK)

HARRIS: One minute after the hour. Welcome back to the "CNN newsroom." I'm Tony Harris.

We're asking economic and financial experts what they think about the stimulus. They're sharing their 90-second prescriptions with us.

(COMMERCIAL BREAK)

HARRIS: The president made a fast trip to the Virginia Birds last hour focusing on a key component of the stimulus package, road building.

White House Correspondent Suzanne Malveaux now.

Suanne, great to see you. The latest stop for the president, Springfield, Virginia, not far from where you are.

SUZANNE MALVEAUX, CN NEWS WHITE HOUSE CORRESPONDENT: Tony, anybody who does the commute from northern Virginia to D.C. knows just about the highways, the construction, the congestion. So obviously, the president going just next door to highlight some of the concerns about those construction projects. He's making the case obviously that he believes his economic stimulus package is going to create those jobs, those construction jobs that are going to help put so many people back to work.

What you're seeing the president do here, Tony, is that he's trying to get this debate out of Washington and to talk to real people. Yesterday we saw a McDonald's worker who approached the president, been working there for four years, wanted some benefits. There was an unemployed secretary who was pleading with the president, saying she wanted her own bathroom, needed her own kitchen. We saw the president hugging her and trying to re-assure her.

Today obviously, he is with the governor of Virginia and he's making the case here that he believes there are these jobs that are ready, that it is simply a matter of getting the money to the states and to the local officials to make these jobs happen.

Take a listen.

(BEGIN VIDEO CLIP) BARACK OBAMA, PRESIENT OF THE UNITED STATES: We're surrounded by un-met needs and unfinished business in our schools, on our roads, in the systems we employ to treat the sick and the energy we use to power our homes. That's the core of my plan, putting people to work, doing the work that America needs done.

(END VIDEO CLIP)

MALVEAUX: Tony, tomorrow he's going to Peoria, Illinois, where he will visit a Caterpillar plant. Caterpillar laying off lots of employees. He's again going to make the case here, put that money, invest it in the economy, you'll have more demand for heavy equipment and that will translate into more jobs.

Obviously, he's using the backdrops of these various places, the stories of ordinary folks to try to make his case that he believes he knows what he's doing when it comes to the economic stimulus package, fix being the economy.

HARRIS: The kind of equipment that Caterpillar makes, that's used in construction projects like the one featured this morning.

At the White House, Suzanne Malveaux for us. Great to see you, thank you.

Negotiators appear to be close to a compromise on that massive economic stimulus bill. Democrats say they are optimistic about reaching a deal by this afternoon.

Senior Congressional Correspondent Dana Bash is on the phone with us from Capitol Hill with the latest.

Dana, the deal may actually come in with a lower price tag? Is that possible?

DANA BASH, CNN NEWS CONGRESSIONAL CORRESPODNENT: That is what we are told that they are talking about now. And these meetings are still ongoing, Tony, inside Senate Majority Leader Harry Reid's office. White House officials, other Senators, other officials are in there right now hammering it out. What we are told by several of these negotiators is that they tentatively agreed to lower -- lower -- the cost here to about $289 billion to $290 billion. The reason is they believe that there are three Republican Senators who hammered out the deal inside the Senate last week and they want to keep this spending level down. Now the big question is, how are they doing that. That is still what they are trying to work out, what programs are going to be in and out.

Let me give you some examples of what we are told. One of the issues has been education, that House Democrats are not happy that the senate cut particularly nearly $20 billion for school construction. Senator Ben Nelson, one of the centrist Senators involved in these negotiations, told us that perhaps what they're going to do is just change the way that that money would be spent, make it for modernization, not construction. And so it would basically be because this would expedite the spending, the school construction takes years an years. They want to make sure the money is used for modernization for immediate jobs and to ensure spending taxpayer money that's out there is for immediate stimulus and that it will create jobs right away. So that's an interesting thing.

One thing I can tell you we are told at least at this point, at this point, what is gone is what the senate passed or at least scaled back, a tax credit for home buyers and also a tax deduction for people buying cars. Those are some of the issues that they've perhaps taken out in order to bring that price tag down.

HARRIS: Dana, maybe you can help me explain this to folks watching what we're seeing here. Put the picture back up. I don't know exactly where you're making the call from. We're looking at a picture, and I am assuming we are looking at the picture of the hallway outside of the room where the conferrees are working. Is that correct?

BASH: That's exactly right. I can tell you that it's been a little bit of a struggle because all of this is happening behind closed doors, inside Harry Reid's office, inside the House speaker's office, they've been going back and for the, back and forth all morning. and it's been hard visually for us to cover. But they've agreed to let us have the camera to get a sense of the hubbub, frankly. There's white smoke kind of coming from behind.

Let me tell you that, right now there is to have an official meeting planned for the conferees, the senate members and House members officially pointed to hammer out the details.

The reality is the real work is going on at almost the highest levels of the White House, the chief of staff, Rahm Emanuel, is here. He has been here virtually non-stop since yesterday and the leader in the House and the senate. They're the ones really working this out.

HARRIS: Our Senior Congressional Correspondent Dana Bash for us. Thank you.

Another installment now of something we like to call "90-second prescription." Top economists give their advice on fixing the country's financial mess in 90 seconds or less.

(BEGIN VIDEO CLIP)

PETER MORICI, PROESSOR OF INTERNATIONA BUSINESS, UNIVERSITY OF MARYLAND: We need a big stimulus package -- To get Americans working again, building bridges, fixing school, weatherizing buildings and so forth. In addition we need to fix the banks and stop borrowing so much from foreigners, consuming more than we produce, having a huge trade deficit.

ROBERT HORMATS, VICE CHAIRMAN, GOLDMAN SACHS INTERNATIONAL: There are no quick fixes. One of the most important parts of any stimulus package is an investment in infrastructure. And by that I mean transportation infrastructure, educational infrastructure, health care infrastructure. All these both create jobs, if they're done correctly, and they also improve the long-term productivity of the economy so that we'll be able to enjoy a higher rate of growth and broader benefits once we do come out of this crisis.

(END VIDEO CLIP)

HARRIS: There you go.

Israelis have voted. Now what? We are looking at how these results could impact the search for peace in the region.

(COMMERCIAL BREAK)

HARRIS: A double car bombing struck a Baghdad bus station today. Iraq's interior ministry says 16 people were killed, dozens more wounded. Many of those killed were Shiite pilgrims waiting to board buses to Karbala for an upcoming holy day. The bombing was one of several attacks targeting the pilgrims in Baghdad.

A worldwide alert is issued for 85 suspected terrorists on the lam. Saudi Arabia sending out a rare alarm asking for Interpol's help to round them up. Interpol says, that suggests the kingdom considers the men extremely dangerous.

It could be weeks before Israel has a new coalition government in place. With most of the votes from yesterday's election tallied, there is no clear winner and both leading candidates are claiming victory.

Here's CNN's Ben Wedeman.

(BEGIN VIDEO CLIP)

BEN WEDEMAN, CNN NEWS CORERSPONDENT (voice-over): They came, they voted, and now Israeli politics begins in earnest. Initial exit polls sparked jubilation at centrist Kadima party.

"The people chose their representatives," Tzipi Livni declared. "And today the people chose Kadima."

Conceding defeat, the leader of the right wing Likud party, Benjamin Netanyahu, declared with characteristic confidence he would be Israel's next prime minister.

"With God's help, I shall head the next government," he said. "I'm sure that I'll manage to put together a good broad-based and stable government."

While Kadima may have won a battle, it could lose its war.

After bloody and inconclusive fights in Lebanon and Gaza, as the peace process goes nowhere, the Israeli electorate is set on a definite course.

RON DEVMER, LIKUD PARTY: It's clear that you've had a big shift in Israel from the center left bloc to the center right bloc.

WEDEMAN: Likud may have come in second to Kadima, but it could join with Yisreal Beiteinu and other parties, religious and ultra nationalists to form the next government. If Likud can craft a majority coalition, more than 60 out of the 120 seats in the Israeli Knesset or parliament, it could indeed emerge the winner in this frenetic race. And if Yisreal Beiteinu is part of that government, it's number one priority is clear.

"It doesn't matter what government comes in to existence," the party leader, Avigdor Liebermam, vows. "If we're members of that first government, our first goal will be absolutely crystal clear, to eliminate, to liquidate Hamas."

Beware, stormy weather ahead.

Ben Wedeman, CNN, Tel Aviv.

(END VIDEOTAPE)

HARRIS: The new treasury secretary has laid out his plan for solving the bank and lending crisis. So far, Wall Street hasn't been very impressed. Does the plan have what it takes?

(COMMERCIAL BREAK)

HARRIS: Once again the CEOs of eight of the nation's largest banks testifying before the House Financial Services Committee. We've been actually waiting for this give-and-take, this back-and-forth between the CEOs and Democratic Congressman Gary Ackerman of New York.

Let's listen in.

DIMON: ... state of Illinois, interbank lending, the purchase of mortgage securities --

REP. GARY ACKERMAN, (D), NEW YORK: Why can't people get mortgages?

DIMON: I believe that mortgage -- we did 30 -- I got the number -- $35 billion in mortgage originations.

ACKERMAN: What did you do last year, the year before?

DIMON: In this same quarter, I don't remember the number, but I'd say approximately the same.

ACKERMAN: With $25 billion more you gave out the same as the year before so there is no increase.

DIMON: Some were up, some were down. Some...

ACKERMAN: Yeah, but if you -- if you did $35 billion last time, you did $35 billion this time, we gave you $25 billion more to do it, then nothing of that went out then.

DIMON: Well, right.

ACKERMAN: Could you each send us in writing what you did with all of those billions of dollars that you got? Is anybody unwilling to do that at this point? Is anybody going to say, it's not your business, we don't have to? We'll expect that from each of the eight of you in writing then. OK.

The $165 billion that we put into y'all's companies shows that we have some degree of confidence in what you're going to do with that money and that you're going to be around. Each of you are individually wealthy. Could you go down the line and just give us a number, how much of your personal money you've invested in your company in new money during the last six months and zero is a number.

Mr. Blankfein?

LLOYD BLANKFEIN, CEO, CHMN., GOLDMAN SACHS: (INAUDIBLE).

UNIDENTIFIED FEMALE: Would you speak into the microphone, please.

ACKERMAN: I'm sorry, I can't hear you. Just a number.

BLANKFEIN: My wealth is in my company because that's how I get compensated and my ...

ACKERMAN: No. How much of your ...

BLANKFEIN: New money went in, zero, because that money is already in my company.

ACKERMAN: Thank you.

Mr. Dimon?

JAMIE DIMON, CEO, J.P. MORGAN CHASE: $12 million.

UNIDENTIFIED MALE: I did not put any new money in.

UNIDENTIFIED MALE: I've bought 400,000 shares and -- I've forgotten the amount. But I bought 400,000 new shares.

UNIDENTIFIED MALE: Nothing.

UNIDENTIFIED MALE: Nothing.

UNIDENTIFIED MALE: $8.4 million.

UNIDENTIFIED MALE: Nothing new. All of it's in.

ACKERMAN: Thank you, madam chair.

UNIDENTIFIED FEMALE: Thank you very much.

On that note, we will recess until 1:15.

TONY HARRIS, CNN ANCHOR: All right, terrific. Perfect timing for us and for you as well as the CEOs of eight of the nation's largest banks, at least take a quick recess until about 1:15 Eastern Time and then they're back to answer more questions. The Q&A you just saw, pretty good from New York Congressman Democrat Gary Ackerman. We want to get to Susan Lisovicz at the New York Stock Exchange to talk about this.

And, Susan, I'm just wondering, I want to get to market reaction in a moment, but I'm wondering what you're hearing from the CEOs. Part apology, according to Allan Chernoff, but also are you hearing much in terms of what the banks are willing to do moving forward to help everyone out in this crisis?

SUSAN LISOVICZ, CNN CORRESPONDENT: Well, I think that we already saw the blueprint for what was going to happen today, and that is that we've seen it with the automotive executives, for instance, and that is, "you guys are getting our money and you screwed it up royally, and how do you defend yourselves?" And I think that you're seeing a certain amount of contrition there. They know that it's not going to be a welcome reception.

I think, you know, some of the things you're hearing is that they are lending. They are lending money. But they're certainly not lending it the way they used to. That's not an entirely bad thing, Tony, because there was too much lending going on and there was a complete lack of standards. That was just one of the many problems that got us into this mess.

HARRIS: But, Susan, you can lend to AAA-rated companies and that's fine. That's lending. You can call that lending, because that's what it is. But the real lending that main street wants to see is main street wants to walk in with a 700-plus credit score and with money for down payment on a home and be able to get that loan. The small businesses want money.

LISOVICZ: It's an excellent point. And I think that there is a fear. A fear because of the recession we're in. We've seen it not only with consumers making late payments or defaulting outright on their mortgages, but we've also seen it extend to auto loans, student loans, credit card loans. That's the reality that is in the marketplace these days. And they have to ...

HARRIS: Well, why is it not -- why is it not -- I'm sorry, Susan, but why is it not just a bad idea to focus all of the resources of the government on the TALF program, on the secondary lending markets, these consumer markets, and get them really going again. And, look, the banks you can come play when you're willing to be open and transparent.

LISOVICZ: Well, I think that, you know, this is a -- you know, to Richard Quest's metaphor before, you know, and hour ago, which this is -- you know, comparing it to these, you know, these brush fires that are just ravaging parts of Australia, this is a problem that exists on many levels and so you need these big banks to function, not only for small business lending and for student loans and credit cards, but you also need it for corporate America to, you know, to expand and upgrade their businesses. I mean this is a problem on many levels.

And I should also mention the TALF program is something that the Federal Reserve is doing. It doesn't get as much scrutiny as the Treasury does. Doesn't have to go before Congress the same way that Treasury does. But I think in terms of, you know, being transparent, yes, that was a big problem, too, that, you know, you can't begin to value these toxic assets. They are so complicated and they were -- an they were created at a time when everybody thought the housing market was just going to continue to go up.

HARRIS: Please. Yes, you're right.

LISOVICZ: Please. Please. And so nobody wants them. And they are -- they're, you know, just lingering there on the balance sheets and it's one of the many problems that the Treasury Department has to wade through in fixing this problem.

HARRIS: And, Susan, very quickly, what are you seeing with the markets?

LISOVICZ: We're seeing a little bit of nibbling. We're seeing the Dow is still below 8,000. We saw the worst sell-off of the year because of the lack of details. The Treasury Department had this big build-up leading up to it. It was a delay and there was an expectation we'd get some meat on the bones. There wasn't enough meat to please investors.

We're seeing financial stocks come back a little bit. So even though the executives of these companies are getting pummeled, shares are not. We're seeing a little bit of life in them. Bank of America shares up 8.5 percent. J.P. Morgan up 6 percent. And they're leading the Dow higher.

Tony.

HARRIS: Yes, a little mea culpa can go a long way. Hmm.

All right, Susan Lisovicz at the New York Stock Exchange for us. Susan, good to see you. Thank you.

LISOVICZ: You're welcome.

HARRIS: Very quickly let's get to our senior congressional correspondent Dana Bash. She is on The Hill and on the phone with us right now with some new developments with the conferrees working to merge the two versions of the stimulus bill.

Dana.

DANA BASH, CNN CORRESPONDENT: Hi, Tony.

Well, they have now broken for lunch in this meeting. And they came out extremely positive. In fact, confirming that the number that, what I talked about not too long ago, still seems to be intact. They're looking at $789 billion stimulus package.

And Max Baucus, the chairman of the Finance Committee, who's a key player here, he came out and told reporters he said he believes that both are there for passage. Now he was careful that there are still some what he called muddier issues that they're still trying to work out and it's not done until it's done, but extremely positive coming from -- words coming from him. And also just moments ago from one of the centrist Democratic senators, Ben Nelson, also sounding like they're very, very close to getting this done.

So again, top line here that we're talking about, $789 billion. Less, less money that both what the House and the Senate passed. But again, these Republican senators, we can't emphasize it enough, these three Republicans who are saying that they want to keep the spending low, they have a lot of power and it looks like they're using it.

HARRIS: Yes. Let's see how this bit of news actually impacts the markets. Let's listen in.

SEN. BEN NELSON, (D) NEBRASKA: Or so we've calculated there what might be acceptable, recognizing that it's not just what happens within this room, but it also has to include the House. And so it's been shuttling back and forth on many of those items, knowing what some individuals absolute insistence might be versus somebody else's and try to smooth those out.

UNIDENTIFIED FEMALE: Would you say you're close?

NELSON: Well, I think we're getting closer. You know, I always -- I never really know how close we are until you get right to the end. So it seems that we're getting closer at least.

UNIDENTIFIED FEMALE: Are there any serious insurmountable sticking points?

NELSON: I don't see anything that would constitute a deal breaker.

UNIDENTIFIED FEMALE: Senator, how did you get the number down to 789? I mean that's less than what the House and the Senate both passed.

NELSON: Fabulous negotiation.

UNIDENTIFIED MALE: And how do you address the president's desire to get more education funding back in there at the same time?

NELSON: Without confirming that number -- well, you know, that's why I said, a lot of the numbers are mobile and the categories are broad. But numbers within the categories are somewhat mobile. And if somebody doesn't think you can do it one way, the question is, can you do it another way. And that's what it's all about. I think when you get down to confidence, because they're different approaches, and can you smooth them into a single solution that gets everybody's support.

UNIDENTIFIED FEMALE: When your critics say that you are -- Republicans are, by and large, you're (INAUDIBLE) this point, your crafting this behind closed doors. The American people can't see what's going on. What do you say?

NELSON: It's a conference. That's why Nebraska has a unicamera (ph) legislature, no-conference committees. But I'm here. And so this is the way it's typically done. And at the end of the day, numbers will be out there for everybody to see. And there will be changes, but I think the categories have been known and people who are critical are going to be critical because of -- fill in the blank.

UNIDENTIFIED MALE: Are the Republicans being participatory in this process? I mean are they ...

NELSON: No, it's my understanding that the minority conferrees have been consulted along the way. But I don't know that. I've been told that. I wasn't in those meetings.

UNIDENTIFIED FEMALE: Senator, is it your goal that by the time you get to 3:00 conference, there will, in fact, be some kind of deal?

NELSON: Well, it would be -- if we're able to get there, that would be a good time frame. But, as I say, I want to be cautionary note, that is until it's all done, it's not. And that's why you have to hold back and reserve your enthusiasm until you're there.

UNIDENTIFIED FEMALE: Senator, what is happening ...

BASH: (INAUDIBLE) education as you know and House Democrats were not happy that, for example, $20 billion in school construction was cut out. Can you describe how you put some of the education money back in?

NELSON: Well, no, I'm not at the moment. But I can tell you that that's been a point of considerable interest given divergent views of what the role of the federal government is to local education, and even higher education, but particularly K through 12 education. There are different views about that. And smoothing those different views is a bit of a challenge, to be quite candid. And -- but that doesn't mean it's not possible and it doesn't mean that we're not working on it. And -- but that's an important point.

UNIDENTIFIED FEMALE: And, senator, can you confirm that ...

UNIDENTIFIED MALE: What about direct (INAUDIBLE) directly to the states? What about the (INAUDIBLE)?

NELSON: Well, you know, that's under consideration. And as to an amount, that will have to be finalized, but there's no final ...

UNIDENTIFIED FEMALE: Can you confirm that -- I'm sorry. Go ahead.

NELSON: Confirm what?

UNIDENTIFIED FEMALE: Can you confirm then that there is an increase from the Senate amount for education?

NELSON: No. No, I can't confirm any numbers at the moment.

UNIDENTIFIED FEMALE: Or even just in general?

NELSON: I know, I don't. Just (INAUDIBLE). UNIDENTIFIED FEMALE: OK, OK, I got it. What's happening right now, senator? Staff putting the numbers in a document?

NELSON: Well, I think staff right now are talking about the numbers. I imagine they will end up in a document. I don't know which -- as long as the staff of everybody is working -- are all working on this, there will be a sheet at some point we can look at.

UNIDENTIFIED FEMALE: So there are some modifications to making work pay too, correct, to say ...

NELSON: Well, there are modifications to almost everything. But some are more major than others are minor. So I mean I can't ...

UNIDENTIFIED MALE: Could you say that again (ph)?

NELSON: Pardon.

UNIDENTIFIED MALE: (INAUDIBLE).

HARRIS: Wow. OK. So you heard it for yourself there. There is a possibility that by 3:00 p.m. Eastern Time there could actually be a -- and let me know when Dana can go a little back-and-forth with me on this.

All right, Dana you're there. All right, Dana Bash is with us now. Dana, by 3:00 p.m. this afternoon, there could be -- underline it, exclamation point -- there could be a deal on this massive stimulus package which, at the end of the day, if it is done at any point by the end of this day, I mean it would have to be considered a pretty amazing achievement by Congress' standards.

BASH: Well, it would certainly be unprecedented to spend, you know, however you slice it, whether it's $10 billion here or $10 billion there, nearly $1 trillion. And this is, you know, we have to remind our viewers, obviously, this has been what the White House and what Congress had been working on day and night. The Democrats, along (ph) with the president, think that this is the only way, is a chief way to stimulate the economy.

In terms of the details, I mean I think our viewers kind of saw what we like to call here the sausage being made. And it's these negotiations that really, in this particular case, have been going on entirely behind closed doors. These key players have been talking about programs -- what programs to put in, what programs to come out, with regard to education, with regard to health care, with regard to unemployment benefits. It's that kind of horse trading that has been going on really all day yesterday, all night last night and really -- and this morning.

You talked about the 3:00. Well, that is the deadline that appears sort of tentatively given for this to be done because that is when they want the official conference, the official mechanism to write this compromise between the House and the Senate. That's when they want it to begin. You know, we've watched this before. It's entirely possible that it would slide past 3:00. But that is certainly what we are looking for.

And that actually will be an open process, Tony. That's actually going to be a process where we will have cameras and watch and listen to the lead negotiators in the House and the Senate get together. So it will be very interesting to see what happens there.

But behind closed doors meetings, those are not over. Those are going to continue. They just broke for lunch. And as you just heard, we are trying to get every little detail in terms of what they are agreeing to cut and keep with regard to so many billions of dollars in taxpayer money.

HARRIS: Man. Yes. Our senior congressional correspondent Dana Bash.

Dana, good work on that. Thank you so much.

And you heard from Senator Ben Nelson that at least, at this moment in time, there are no deal breakers out there right now.

You know, few people are untouched by this economic downturn. College students feel an especially heavy burden as they think about graduating into this terrible job market.

(BEGIN VIDEO CLIP)

HARRIS: Are you angry about the circumstances that we're in now? And do you attach blame to anyone? Raw emotions here.

UNIDENTIFIED FEMALE: Absolutely.

UNIDENTIFIED FEMALE: Yes. Oh, yes.

UNIDENTIFIED FEMALE: So angry. I'm a first generation American. And so we moved here because we felt like this was the land of opportunity. And if we could make it anywhere, we could make it here. And now I'm looking like, maybe I'll have a job if I move back to where my parents are originally from, you know? And that should never be.

(END VIDEO CLIP)

HARRIS: And coming up Friday, noon Eastern, my Friday "Class is in Session" series. College students share their daily struggles and fears for the future.

(COMMERCIAL BREAK)

HARRIS: You know, there are so many claims flying around about the stimulus bill in Congress right now, we need to separate the fact from fiction, really. Our Josh Levs is keeping an eye on that for us.

Josh, good to see you.

JOSH LEVS, CNN CORRESPONDENT: Tony, you know what, another day, another set of claims. HARRIS: Yes.

LEVS: Seems to be the process lately. Fortunately, the fine folks over here at politifact.com are keeping a close eye using the Truth-o-meter. And we're going to start off with this.

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BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Understand, this bill does not have a single earmark in it, which is unprecedented for a bill of this size. Does not have a single earmark in it.

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LEVS: This has actually been a central argument of President Obama and his administration. Politifact over here calls it false. They say they look like earmarks to us. The head of Politifact was on "American Morning" and he explained.

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BILL ADAIR, POLITIFACT.COM: He's right in the sense that this bill does not have many, but there are at least a few. There's money in the latest version, in the Senate verse, for Future Gen, a big coal plant in Illinois. There's an authorization to reimburse -- to make a payment to Filipino veterans of World War II. There are some other things that really -- we would consider reasonably to be earmarks.

(END VIDEO CLIP)

LEVS: All right. Now let's get to the other side here. I want to show you this from Republican senator -- and you'll be able to see it when we zoom in -- there you go, Pat Roberts. This is the quote. The Congressional Budget Office "estimates that only 15 percent of this stimulus package will be spent in 2009" and only 37 percent in 2010.

Well, we have Politifact's ruling on this graphic for you. Tony, they're calling it barely true. They're saying that when you actually look at what he was looking at, he was ignoring tax cuts and also the Senate version itself has different figures from that and they look at the analysis that say actually there really could be an impact by the end of 2010. So that's how they got to barely true on that one.

And, you know, lots of rulings every day at politifact.com.

HARRIS: Will you keep us posted on that?

LEVS: Oh, yes, you kidding, I'm all over it.

HARRIS: Yes, good. Josh, thank you.

LEVS: Thanks, Tony.

HARRIS: The head of a controversial peanut company appears on Capitol Hill. What did he have to say. (COMMERCIAL BREAK)

HARRIS: Just in -- peanuts and salmonella. House lawmakers looking for the connection. The owner of a Georgia peanut company in the hot seat this hour. Our senior medical correspondent Elizabeth Cohen is following the testimony.

Elizabeth, good to see you.

You know, we've been waiting to hear from Stuart Parnell, president of the Peanut Association ...

ELIZABETH COHEN, CNN CORRESPONDENT: Corporation of America.

HARRIS: Yes. Of America.

COHEN: Right. Right.

HARRIS: Was there testimony? Was there an opportunity to ask some questions of Mr. Parnell?

COHEN: Right. We've all been hearing about this outbreak for a week now but we haven't heard from the man in charge of the company that's been linked to these six -- eight deaths and nearly 600 people sick. And so we actually did hear from Stewart Parnell from the Peanut Corporation of America, but it was a very short exchange between a congressman and Mr. Parnell. Take a listen.

(BEGIN VIDEO CLIP)

REP GREG WALDEN, (R) OREGON: It seems like, from what we've read, you were willing to send out that peanut base went into these ingredients. And I just wonder, would either of you be willing to take the lid off and eat any of these products now, like the people on the panel ahead of you, their relatives, their loved ones did?

STEWART PARNELL, PRESIDENT, PEANUT CORPORATION OF AMERICA: Mr. Chairman and members of the committee, on the advice of my counsel, I respectfully decline to answer your question based on the protection afforded me under the United States Constitution.

WALDEN: Mr. Lightsey?

SAMMY LIGHTSEY, MANAGER OF BLAKELY PLANT, PEANUT CORPORATION OF AMERICA: At this time, on advice of counsel, I exercise my rights, the Fifth Amendment of the Constitution.

(END VIDEO CLIP)

COHEN: So, again, just within the past half-hour, two top executives from the Peanut Corporation of America taking the fifth, not wanting to speak to members of Congress about this outbreak.

HARRIS: Well, wait a minute. Did we get any evidence entered into the record here? I don't know, communications, letters, e-mails, something? COHEN: Several e-mails. Several e-mails were read at this hearing about what went on at Peanut Corporation of America when they realized that they had salmonella-tainted products. So I'm going to read one of these e-mails that was between two executives at the Peanut Corporation of America.

"The cost is costing us huge money and causing obviously a huge lapse in time from the time we pick up peanuts until the time we can invoice." In other words, when you hear that, you hear that they are very concerned about how much money this is costing them. And, Tony, there were family members of people who died in this outbreak and, boy, were they not happy to hear that. Let's take a listen.

I'm sorry, we don't have sound from this. We don't have anything from these families. But one of the family members said, man, I was mad before. You know, my mother died from this. But after reading those e-mail where all they can talk about is how worried they are about money, I'm really mad now. That's what had he to say.

HARRIS: Well, you may not have the sound, but I've got another question for you. What about the folks who sort of run the labs that were charged with testing some of this material? Was there any testimony from any of those folks?

COHEN: Yes, there was some. Not direct testimony, but there were some document presented. If you remember what happened here, the Peanut Corporation of America sent out some of their products. They tested positive for salmonella. So they went and found another lab who would give them another kind -- who would give them a result that they liked better. And some of the lab folks said that they called ...

HARRIS: Cherry picking a bit.

COHEN: Cherry picking. They called Peanut Corporation of America and said, you got salmonella. And they said, well, we still shipped it out.

HARRIS: Elizabeth, appreciate it. Thank you.

All right. CNN NEWSROOM continues in just a moment with Fredricka Whitfield.

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