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Campbell Brown

Congress Ponders Big Bailout

Aired September 22, 2008 - 20:00   ET

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

CAMPBELL BROWN, CNN ANCHOR: Hi there, everybody.
Tonight, the future of the American economy in Washington, D.C.'s hands. I don't know if that's a good thing or not, but Capitol Hill is the scene of feverish around-the-clock negotiations at this hour, as Congress and the White House struggle to try to bail Wall Street out of its crisis.

Just about an hour ago, the Democratic leaders of the House emerged to face the cameras tonight. Here's what they said.

(BEGIN VIDEO CLIP)

REP. BARNEY FRANK (D), MASSACHUSETTS: We have gotten closer to where we think it ought to be starting from what they sent us. We're not quite there yet. We are going to continue to work on it.

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: And we are not sending a blank check to Wall Street.

(END VIDEO CLIP)

BROWN: Now, until Congress comes up with a bailout plan, the threat of a full-blown national, even global financial crisis is still out there, the clock still ticking. Because of all the uncertainty, Wall Street suffered another anxiety attack today.

The Dow industrials fell 372 points, giving back almost all of Friday's big gain. And there's plenty of anxiety on Main Street, too. Our latest CNN/Opinion Research Corporation poll shows 66 percent of Americans say they're concerned by the financial crisis. Another 22 percent say they're flat-out scared by what's going on.

Tonight, both Barack Obama and John McCain are jockeying for position on this unfolding story, making sure their policy proposals match their political goals. So, who is telling the truth about all this? We are going to put their claims to our no bias, no bull test in the ELECTION CENTER tonight.

But, first, now the big question, what is holding up the deal?

Our senior business correspondent, Ali Velshi, has found that there are four big hurdles.

And, Ali, let's go back here a little bit, because you were here last Friday.

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Right.

BROWN: And everyone was sort of celebrating that Washington was going to come along and rescue us and save us all from this mess. What happened over the weekend to bring us to where we are now?

VELSHI: What happened over the weekend is not enough. They didn't have a deal by Sunday night.

And this has given the opposition time to grow. And there is growing opposition on many levels, but they really come down to four major hurdles. One of them, and this is the one that the Democrats have been putting forward, is this one of, who's in charge of this? You heard Nancy Pelosi saying, we are not issuing a blank check.

Treasury has asked for an unprecedented authority to take this $700 billion and do what they want it. So, that's a concern, who is going to be in charge.

The next one, executive compensation, the Democrats are also saying they don't want leaders on Wall Street, CEOs and other executives, benefiting from a taxpayer-funded bailout. So, they want to make sure that there are caps on the executive compensation that they get.

Number three, the next issue that's been coming up is Main Street issues. This is seen as a Wall Street bailout. And while it's designed to loosen credit all the way to the homeowner and people taking loans, is there direct help for people with mortgages? That's a question that remains to be answered and there's a controversy about.

And the fourth one is this whole idea that there are some people -- and this is particularly coming from the right -- who think that we should be entirely hands-off; the government shouldn't be involved in any sort of bailout. So, a bailout of this magnitude is something they're not liking.

So, we're getting squeezed on both sides, by people who think there shouldn't be a deal -- Campbell.

BROWN: So, why -- Ali, though, explain to us why this sense of urgency, because you see a lot people saying that this has to happen by the end of the week, I have heard some people say, or at the very latest early next week.

VELSHI: The analogy we are hearing is one of a forest fire or a chemical fire or house fire. You can discuss at great length who you think should be in charge, who you think should be responsible, and how you solve it and how you make sure it doesn't happen, but this fire is engulfing the whole financial system.

And I will explain to you what this means. Credit is tightening. What does credit tightening mean? It means companies can't get money that they're trying to raise. Banks can't get money that they're trying to raise. They can't buy then mortgages from the bank that gives you a mortgage, which means your bank can't resell the mortgage it gives you, which means, unless they have the money on hand, they can't give you the mortgage, the car loan, the student loan.

And it's been a long time since banks have had money on hand to give mortgages. So, we are going to see. If we don't get some sort of solution, this one or another one, you're going to see it very hard for Americans to get loans of any type.

BROWN: All right, Ali, take a seat. Join the panel.

We have got a whole crowd here joining us to sort through this all this nation, Diane Brady, senior writer for "BusinessWeek" magazine with me, David Bach, the CEO and founder of FinishRich.com also here, and also the author of "Start Late, Finish Rich: A No-Fail Plan for Achieving Financial Freedom at Any Age." And joining us from Philadelphia, Joseph Battipaglia, a market strategist for Stifel Nicolaus, a full-service brokerage and investment banking firm.

Welcome to everybody.

Diane, let me join with you and get your take on what Ali just laid out for us.

Are we really going to see the effects happen this quickly? We're talking about a week here that everyone is saying is kind of the deadline. On the flip side, what happens -- we know what happens if they don't make a deal. If they do make a deal, are we going to see an immediate ramification to that, too?

DIANE BRADY, ASSOCIATE EDITOR, "BUSINESSWEEK": I think we will see some immediate ramification in the stock market, because right now uncertainty is what is causing it to gyrate back and forth. And basically everybody's scared about what sort of toxic bomb is lingering in all these houses.

So, yes, in the stock market. For the overall economy, definitely not. The repercussions, as people say, could be months, if not years to come.

BROWN: So, it is not something that's going to happen in the next two weeks. So, why is everybody freaking out, if it's not that not happening that quickly?

DAVID BACH, CEO, FINISHRICH.COM: Because it is happening that quickly.

First of all, this is -- this is not actually about the stock market. What happened on Thursday is that people rushed to the bank and cashed out money market accounts. And so we saw nearly $150 billion leave money market accounts and go into treasuries that are paying nothing.

Now, Campbell, this is what you call a crisis, because it's a true run on the banks. It's the first run on the banks we have seen since the Great Depression. That's what panicked the government, because there's $3.5 trillion. And if all of us run down to our bank and say I don't know if my money market is safe, take it out of the money market and put it in treasuries, if we all do that at once -- and, by the way, the corporations doing this, too.

GM moved $3.5 billion in one day from their money market to treasuries. When the government saw that, the government knew they had to step in and assure Americans, look, we are going to make sure your money markets are safe.

Now, I don't know how we are going to do that, by the way. I don't know how we're going to insure $3.4 trillion in money market accounts, but that's a big part of what this was all about, was stopping people from running to the banks and pulling everything out and sticking it in their drawers at home.

BROWN: Trying to restore that confidence that you have talked about a lot, Ali, I know.

Let me bring Joe into this.

Joe, I want to ask you about another aspect of the deal that's gotten a lot of attention. We know the government's going to spend some $700 billion apparently to buy up all these lousy assets. And you hear a lot of people asking, what are taxpayers going to get out of this, other than the stabilization of the economy? Not that that's not an extremely necessary thing, but there's a debate going on right now as I'm sure you know about whether or not the government should have a piece of equity in some of these companies.

What do you make of that?

JOE BATTIPAGLIA, MARKET STRATEGIST, STIFEL NICOLAUS: Yes.

And that's a valid criticism of the plan, that we are going to backstop the financial system, allow for a remedy about all these difficult assets that can't be sold right away, and allow Wall Street to come back in and buy them from the Treasury or from some government agency is counterintuitive, since we are taking all the risk.

So, clearly it's important that there be some way that the American taxpayer can get a return on their investment by bailing out the banks or taking on these assets. When we ultimately sell them and dispose of them, if there's a gain to be had, the taxpayer should get the majority of it. And that's why that question is probably one of the most important and it needs to be dealt with.

BROWN: Is there a way to ensure that? Or are they trying to figure that out?

BRADY: Well, I think Joe raises an important point, which is there is really a feeling you have to take an equity stake. And that's the most important thing because there will eventually be upside. The important thing right now is that the American taxpayers get a piece of that upside.

We saw it with AIG last week. We need to see it with these financial institutions as well.

BROWN: Everybody agree with that? VELSHI: Yes.

And that's one of the big Democratic sticking point. They want an upside. I actually think that's one that is going to get resolved very easily, because it seems very obvious.

But, you know, Campbell, I always talk about the job losses being the biggest single thing in the economy, because, if you don't have a job, you know, none of this matters. We have seen 605,000 jobs lost this year. The number of people directly -- directly related to both the financial industry and the home building industry and the home furnishing industry and the Lowe's and the Home Depots in this country, 14 million people, 14 million people.

So, even if this is a little bit of a hit and you take 10 percent of that out, that's 1.4 million people. And we go from 600,000 being out of a job to two million people being out of a job, people who don't have credit cards, people who don't buy things, who don't spend money and don't pay taxes. That is going to hurt the economy.

BROWN: Right.

OK. Stand with me. We're coming back. We have got to take a quick break.

And when we come, we are going to drill a little bit deeper, look at how this deal being brokered could affect the value of your home, but more importantly, we're going to talk about executive pay, which I know is another big part of the deal, whether or not there should be a cap on what some of these guys make.

We will right back right after the break.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. BARBARA MIKULSKI (D), MARYLAND: This makes the secretary of the treasury a financial czar, a financial potentate, because it says, give us a blank check with no balances.

Well, I say no checks without balances. Even the president of the United States of America has to come to us to declare war. I believe the secretary of treasury should be accountable to the Congress.

(END VIDEO CLIP)

BROWN: Democratic Senator Barbara Mikulski today railing against the Bush administration's proposed Wall Street bailout. Well, she's not the only unhappy member of Congress out there.

We want to go back to our experts now. We have got Ali Velshi with us, Diane Brady, David Bach, and Joe Battipaglia to talk about this plan's specifics. You're talking about two things here, this along with the executive pay question we will get to in a second. But the provision that got her so upset and a lot of people so upset essentially read this: "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, may not be reviewed by any court of law or any administrative agency."

That's insanity. I mean, is it not?

BRADY: Well, I think it was definitely wishful thinking on his part.

BROWN: You think?

(LAUGHTER)

BRADY: There's no question he would get pushback from the Congress on this, especially with weeks to go before an election.

BROWN: What did you think, Joe?

BATTIPAGLIA: Well, on the one hand, what he wants to do is move with due dispatch to handle assets or equity investments that he needs to make on a broad scale. And he wants to keep the legal system at bay as it relates to repercussions.

But, at the same time, he should have been very thoughtful and say, look, let's have an oversight committee to monitor and review the steps that I'm taking, so that they're in compliance with general rule of law. He didn't have that in there. And now, of course, Congress is responding.

BROWN: Well, obviously. Is that how this is going to shake out ultimately, Ali?

VELSHI: Right.

And I think that's where part of these delays are. Henry Paulson's handling of this so far has been not bad. But all of a sudden, he's got the back of Congress up. And that's where the problem is. It has to look like this is a deal.

BROWN: Well, anybody -- I think when you look like you're asking for that power with zero accountability.

(CROSSTALK)

BACH: There's nothing that he could have -- they could bring in there that they're not going to debate.

It would have been impossible for them to not be debating right now, because we have a political system, where that's all these people do.

(CROSSTALK)

VELSHI: With six weeks to go to an election. So, these guys can't go back to their districts and say, I had your...

BROWN: Which is why it surprised me, frankly. Why ask for something so outrageous if your recognize that, given the politics, that there's going to be have a lot of negotiation?

But let me ask you about something else. And we went to some of our man on the street to get their thoughts on where we are. And they raised -- this issue came up from a number of people. Listen.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Why they're bailing out these big multimillion-dollar corporations and putting the burden on the taxpayer, and then the executives from these companies leave, and they get these big, you know, sums of money. So, as a taxpayer, it makes me angry and I just want to find out when that's going to stop.

(END VIDEO CLIP)

BACH: It's not going to stop.

BROWN: This is a huge issue. You just said it's not going to stop.

BACH: This is not going to stop.

Look, Lehman went bankrupt. I read today that they set aside $2.5 billion for bonuses that are going to be paid out, even though Barclays bought them. The bonuses are still getting paid out to the Lehman employees.

(CROSSTALK)

VELSHI: Right. But that's a red herring. That's a red herring, David, because Lehman doesn't touch any taxpayers' money. So, that doesn't matter. What shareholders want to pay their CEOs is not really our business. It's what taxpayers are paying.

BACH: Right. But it's a great example, because the reality is that these people will still get -- there will still be people getting bonuses.

But here's the thing. We are going to focus on that issue, when the real issue is, are we paying for it? And here's the truth. We're paying for it. And what we need is these presidential candidates to look you in the eye and say, here's the deal. We're raising taxes. We are raising taxes on the middle class, because you know what? You can't have a trillion dollar war and now a trillion dollar buyout of our economic system and not raise taxes.

BRADY: But nobody's going to say that during an election season.

BACH: They're not, because they're not telling the truth.

BRADY: They are raising the deficit. I don't know so much if it's -- I don't think anybody's quite sure. And that's why the equity stake becomes so important, because, eventually, they want to be able to say to people, we are going to get this money back for you.

In previous regimes, they did get the money back. It took a while...

(CROSSTALK)

BROWN: But they have to have a mechanism to do that.

BRADY: They do.

BROWN: Joe, what do you think?

BATTIPAGLIA: Well, there's two ways to go at this.

First, for those who got you in to trouble, we do have Sarbanes- Oxley and other corporate governance laws that need to be enforced and investigations have to occur.

On the other side of this, as you try to work through these assets, if you go back to the private sector on a global basis to try to create the value for all these bad assets, you have to make sure first that all of the gains come back to the taxpayer, who took all the risk. And, secondarily, you can incent the private sector that after you have returned our investment as a taxpayer, with some rate of return, you can keep what's in excess of that.

So, incentive can be used properly for the private sector to work through this, while the taxpayer is fully restored on the money they put out. That's where they should use creative techniques to come up with plans to work this through. Again, since it is not already in the plan, Congress is flailing around trying to find this. But there are remedies in the private sector.

(CROSSTALK)

BROWN: All right, guys, that's going to have to be the last word.

Joe, thanks.

To Ali, to David, and to Diane, always, appreciate it, guys.

Here in the ELECTION CENTER, we promise to fact-check the candidates every single day. So, on taxes, you might get your wish tonight, David, especially when they talk about the economy, your money, tonight also Social Security. So, don't miss our no bias, no bull test. That's coming up.

Stay with us.

(COMMERCIAL BREAK)

BROWN: The Wall Street crisis has given voters a serious case of the jitters, not a lot of confidence out there right now.

The CNN/Opinion Research poll, a new one out, shows that 66 percent of voters say the economy is not fundamentally sound. So, how are the candidates responding to all this anxiety?

CNN's Ed Henry is here to break it all down for us.

Ed, Senator Obama today gave what was billed as a major economic speech in Wisconsin trying to sort of big-picture his vision. Let's listen first to what he had to say.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL NOMINEE: We cannot give a blank check to Washington with no oversight and no accountability, when no oversight and accountability is exactly what got us into this mess in the first place. So, I'm working with anybody who's willing to get the job done to try to figure out how we get out of the immediate crisis of this week.

(END VIDEO CLIP)

BROWN: But, that said, Obama has also made a conscious decision not to get in the weeds on this and present an alternative proposal or to comment directly on the kind of things that are being discussed right now. This is a conscious decision on his part, isn't it?

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: That's right.

Top Democrats are saying basically the Obama camp is worried about getting boxed in. This is essentially a moving target. It's a massive bailout, $700 billion. But Democrats on the Hill are talking about adding other provisions. You have got Republicans wanting to add things, wanting to cut things out.

This is a moving target. They don't want to be locked down and then have him take one position and then it changes a couple of days later. So, they're very conscious of that.

But, on the other hand, there's a risk here for Senator Obama. If he doesn't take a firm position, it could feed into the image the McCain camp is trying to put out there, that he's indecisive, that he won't take a position on some of these various bailouts, like the AIG bailout last week.

And, so, with the economy being issue number one, he runs the risk here of not looking decisive enough.

BROWN: And, Ed, both candidates agreed there needs to be more oversight of the financial sector. McCain says that the plan on the table doesn't go nearly far enough. Now, let's listen to some of what he had to say today.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL NOMINEE: We won't solve a problem caused by poor oversight with a plan that has no oversight. And part of the reason we're facing this crisis is an antiquated regulatory system of uncoordinated agencies that just haven't been doing their job.

I believe we need a high-level oversight board to impose accountability and establish concrete criteria for who gets help and who doesn't.

(END VIDEO CLIP)

BROWN: And I think it's surprising to a lot of people, Ed, that you have got John McCain, who was formerly a deregulation conservative -- I think there are a lot of conservatives who were formerly deregulation conservatives -- to be out in front on this. He's actually been pretty critical of some of what's in this bailout package.

HENRY: It's all about one thing. He wants to separate himself from this president. He wants to separate himself from the treasury secretary. He wants to separate himself from the SEC chairman, who last week he said wants to fire.

He, before the week is out, may want to fire the White House chef. Basically, anybody tied to the Bush administration, John McCain wants to separate himself from, because he realizes this is a very dangerous time politically for him. And if he looks like he's too close to this White House, it's going to backfire on him.

And that is why his rhetoric has changed as well. You remember, last week, he was saying the fundamentals of the economy are strong. Today, he said the nation is now facing the biggest crisis since World War II, big departure, big change for John McCain.

BROWN: But also a gamble possibly in the sense that he could alienate those fiscal conservatives, though, who want government still to stay out of it to the extent possible?

HENRY: Absolutely. We have seen the fact that social conservatives have been sort of weary of John McCain, not feeling like they can completely trust him.

He's sort of helped himself by picking Sarah Palin, who they do trust. Now he's got to be a little concerned about economic conservatives. He is beating up on Wall Street so much, that they're worried sort of that the pendulum is going to swing too far and that John McCain is going to all of a sudden as you say go from being someone for deregulation to maybe going too far and sort of making the solution worse than the problem.

BROWN: All right, Ed, stick around, because you are coming back...

(CROSSTALK)

HENRY: That's right. BROWN: ... a little bit later to tell us about Sarah Palin, who's in New York City right now meeting with a number of world leaders. We will about that with you in just a few minutes.

HENRY: That's right.

BROWN: Ed Henry for us -- Ed, thanks.

Coming up next, though, fascinating new poll numbers on who Americans blame for this financial mess. John McCain has been trying to distance himself, as Ed just said, from the Bush White House. Are voters listening?

This is the ELECTION CENTER.

(COMMERCIAL BREAK)

BROWN: No surprise the financial crisis is bad news for Republicans. Our new poll shows that by nearly a 21 margin, 47 percent to 24 percent, voters say Republicans are more responsible for the country's financial crisis than Democrats.

We want to bring in our political panel now, three of the smartest people out there, to talk about this.

We have got Republican strategist Kevin Madden, former national press secretary for the Mitt Romney campaign, CNN contributor Dana Milbank, national political correspondent for "The Washington Post," and Roland Martin, CNN political analyst, syndicated columnist, national radio commentator.

You got your whole resume in here, Roland.

(CROSSTALK)

BROWN: And a Barack Obama supporter, I should mention, as well.

CHRIS MATTHEWS, MSNBC ANCHOR: It's a tough economy. Brother got to have five jobs.

(LAUGHTER)

BROWN: All right.

Kevin, let me start with you. You saw those numbers just a second ago that we threw up there, big hurdle for John McCain.

But that's not all. Take a look at these numbers. More than half of registered voters, 53 percent, think McCain's policies are going to be the same as President Bush -- 46 percent believe he differs -- or he offers, rather, different policies.

That's not good for somebody who spent months trying to distance himself from Bush and from certain members of the Republican Party, is it?

KEVIN MADDEN, FORMER ROMNEY CAMPAIGN NATIONAL PRESS SECRETARY: No, that's right.

And, in those numbers, you can see the challenge, as well as the solution. John McCain, for the next 40-plus days, has to go out there and present himself to the American public with a separate identity, somebody who is much more reform-minded, somebody who has always been every Democrat's favorite Republican, and somebody who has always challenged the status quo, not only on Capitol Hill among -- with Democrats, but also within his own party.

And, you know, the big problem right there for a lot of other Republicans in town is that we have to go beyond being the party identified with just Wall Street, and we have to be identified with the party of Main Street.

Republicans have to go out there and put a very compelling vision for how we're going to lead the country out of this mess and help taxpayers and help small businesses flourish once again.

BROWN: Roland, I am going to counter -- give the counter to that. I think that, unlike Obama, McCain is at least proposing some specifics, like this bipartisan board to try to oversee how the treasury secretary manages the bailout.

Last on "60 Minutes," he named former Housing secretary Andrew Cuomo, a Democrat, as his pick to take over for the secretary -- or take over the SEC, rather. And he's saying, essentially, like, listen, at least I'm doing something. At least I'm offering something, not sitting back and waiting to see how all of this shakes out.

ROLAND MARTIN, CNN CONTRIBUTOR: Actually, he is.

And here's -- I think this is the most -- this is the dumbest thing I have ever seen. First of all, McCain and Obama are wasting our time offering pie-in-the-sky proposals on the campaign trail.

Did we all somehow forget that they are actually United States senators? Maybe what they should do is get off the campaign trail, go to Washington, be involved in this process to get it done now. Nobody cares what they're going to do when they become president. You have a treasury secretary who said this is a dire situation now.

So we don't need to hear ideas. They should be involved in the negotiation in Congress. So why are we hearing all these proposals? Well, if I become president. This is a problem now, Campbell. So they should go to work, the job we're paying them to do right now.

BROWN: Dana, you agree with that?

MILBANK: Well, arguably if you want to get something done here in Washington, you might want to send Senator McCain and Senator Obama on vacation for a while because any time anybody's trying to get something done in the Capitol, it enters this cauldron of national politics. So, I was there on the Hill all day today, there's no shortage of proposal. There's two many of these already and it's just too many cooks in the kitchen right now. MADDEN: Yes.

BROWN: Go ahead, Kevin.

MADDEN: You know, I just while having worked up on Capitol Hill, I know that -- look, the last place that anything gets solved in Washington is in the well of the Senate with a lot of speeches. And both of these candidates politically, they have to look like chief executives. They have to look like they're decisive. They have to go out there and put out some specifics about where they want to take the country, how they want to lead the economy out of this crisis. And that's better done in Columbus, Ohio, and Detroit, Michigan, than it is in the well of the Senate.

MARTIN: Hey, Campbell, I'm sorry. Here's the fundamental problem here. We have a White House that is saying that we have a situation right now where this economy could collapse in the next several days or weeks. And so, listening to a candidate say what I'm going to do in February means nothing right now. And so, again, when you said, McCain, well, I'm throwing this proposal out right now. Well, if it's a great idea then, why don't you make it a part of the process now? That's my point.

BROWN: All right. Stand by, guys. We got a lot more to talk about. When we come back, which candidate do voters want steering the ship in an economic crisis? The answer actually might surprise you and could illustrate a big challenge for Barack Obama.

And then a little bit later on, Sarah Palin on the eve of her meeting with world leaders at the United Nations. Will those photo- ops change voters' minds about her foreign policy credentials? We'll be right back.

(COMMERCIAL BREAK)

BROWN: In the middle of Wall Street's biggest crisis in 75 years, our new CNN/Opinion Research poll shows Barack Obama is getting a bit of a bump. Take a look. Fifty-three percent of registered voters think Obama would do a better job handling the economy. That's 10 points higher than John McCain.

I'm going to bring back our panel now. Kevin Madden, Dana Milbank and Roland Martin.

And, Roland, I want to start with you because voters may think that Obama would do better with the economy overall. But look at what happens when you ask specifically which candidate would display better judgment in an economic crisis. That's when the gap really shrinks. Obama 49 percent. McCain 44 percent. So it looks like, Roland, from these numbers, there are a lot of people out there question Obama's leadership in times of crisis.

MARTIN: I think what people are questioning is, frankly, they are totally confused about both of these candidates. And so, we can say, well, so Obama can handle the economy better but in a crisis which we're in, it closes and so McCain gets better. We're all over the place.

What it simply shows is, frankly, we are in a red/blue situation. People are just cut right down the middle and so both candidates have a problem. Both are dancing around these issues and neither one really wants to step out there with something provocative for fear of getting tagged when it comes to their opponent and the public.

MADDEN: You know -- you know,

BROWN: Kevin, how do you read this one?

MADDEN: Yes. Well, look, you know, I think it's funny that when the numbers are bad for Obama, the voters are confused. When they're good, they just have perfect clarity.

(CROSSTALK)

MARTIN: No. I've always said that they're confused.

I mean, this has always been a split race, Kevin.

MADDEN: Well, look, I think ultimately what those numbers point out is the fact that a lot of voters still have a problem with the fact that Barack Obama has always seemed indecisive. He seems more comfortable with nuance, whereas John McCain for better or for worse, for good or for bad, depending on you're a Democrat or Republican, and that he's always somebody who tells us like it is. He's always somebody who speaks with a little bit more common sense, directly on the issues, whereas Barack Obama's always trying to find that gray area. And voters -- and I think with voters (INAUDIBLE) that decisiveness.

(CROSSTALK)

MARTIN: But Campbell --

BROWN: Hold on. Hold on, Roland. I want to bring Dana into this.

And it's not just -- I mean, to Kevin's point, it's not just Republicans saying this. Some Democrats say that now is especially the time for Obama to be big and to be bold. This is today's "Wall Street Journal." Former Clinton adviser, Lanny Davis, he writes, "Barack Obama has tried to run as unifying centrist. Now it may be time for him to clear the fog and talk, walk and sound like a true FDR liberal - reminding the American people that at times like this, the government is a friend, not an enemy, contrary to conservative theology."

What do you think? Is Obama, Dana, missing sort of the vision thing?

MILBANK: Yes. And perhaps he can get one of those long cigarette holders, too, while he does his fireside chat. You know, the tendency is to pile on folks for what they're doing wrong here. I mean, I think what's remarkable here is the country really isn't split down the middle on the issues. The issues one after the other are favoring Obama. What's extraordinary is that McCain has been able to do as well as he has. It's almost like sort of the Wile E. Coyote. You know, he runs off the cliff but somehow he's defying gravity for this very long period of time.

I don't think it's anything that Obama has done wrong here. It's really a testament to how McCain has been able to do here. And I think now that you're seeing two to one, the country saying Republicans are to blame for this crisis, there's only so much gravity that McCain can fight against.

MARTIN: Hey, Campbell, here's the fundamental problem when you say what Kevin said, well, you know, let's just have the straight talk, be right down the middle. The reality is, we are facing a nuance situation. I mean, I'm utterly amazed how we always want this person to be so common sense and so simplistic when we're dealing with the problem that frankly nobody knows what's going on. OK?

We have members of Congress right now saying, you know, we really don't know if the $700 billion is enough. No one knows. And that's why I think it is wrong headed for any candidate to start just throwing stuff out there hoping something sticks when you need to get a handle on what the real issue is before you offer a sensible plan.

MADDEN: But Roland -- but Roland, I think there is --

MARTIN: That's called common sense where I come from.

BROWN: Ten seconds. Kevin, you get the last word.

MADDEN: Roland, I think the point is that this is a time where it really requires decisiveness. And I think that's why people are gravitating towards McCain. And they see Barack Obama is trying to continue to vote present on really tough issues.

BROWN: All right.

MARTIN: Kevin, that's weak.

BROWN: OK. You got your word in. All right. Thanks, guys. But you're not going anywhere. You're coming back later to talk about something else. We'll see you in a minute.

But first, we have some pretty incredible pictures we want to share with you from Texas today. There are a lot of people who live in Galveston who finally got their first look at what Hurricane Ike did to their homes. We're going to have a live update for you coming up next.

(COMMERCIAL BREAK)

BROWN: We do have some other news today. And Erica Hill joining us now with "The Briefing" -- Erica. ERICA HILL, CNN CORRESPONDENT: The story some people are still wondering about, Campbell, nine days after Hurricane Ike, the recovery is still slow going. Today, hundreds of evacuees who've been staying in Dallas shelters boarded buses heading home to the Texas Gulf Coast and an uncertain future.

Galveston tonight still without power, water, sewer and gas service. Residents, however, will be allowed to return to the city on Wednesday.

CNN's Ed Lavandera is there. Ed, what are they actually going to find?

ED LAVANDERA, CNN CORRESPONDENT: Well, you know, we spoke with one business owner here that managed to get his way on to Galveston Island today to check out his store front. Fighting back tears, he urged people to brace themselves for what they're about to discover.

Here in this downtown area of Galveston where we are, there was -- many of these businesses were under eight feet of water. Many people, we saw a lot of cleaning crews and repair crews on site today. You can see these dumpsters that have already begun to be filled up.

There is a lot of work ahead and on Wednesday, those 45,000 evacuees who left the island will be making their way back down. There will be an onslaught of traffic. There's only one highway into the island. So city officials here bracing for an intense day on Wednesday not only just because of the traffic but because of the emotional impact that many of these people will discover. And they're urging people who live on the west side of the island where there was no seawall, to just look and leave --- Erica.

HILL: All right. Ed, thanks. We'll be checking in on Wednesday with you, as well. Ed Lavandera in Galveston, Campbell.

BROWN: Still a long way to go for those folks. Erica Hill for us tonight. Erica, thanks.

Sarah Palin in New York City tonight. Looking to plug the big foreign policy gap in her resume. Tomorrow, she's going to be at the United Nations meeting with a who's who of world leaders.

Coming up, we'll have some eye-opening details on how Palin's campaign handlers are getting her ready.

This is the ELECTION CENTER.

(COMMERCIAL BREAK)

LARRY KING, HOST, "LARRY KING LIVE": This is Larry King. Joy Behar joins us tonight. She and the other women of "The View" had Bill Clinton on the couch today. What happened? And how about that interview where she accused John McCain of approving lies?

Plus, race, sex and billions of bucks. Their role in the presidential race. All just ahead on "LARRY KING LIVE." (COMMERCIAL BREAK)

BROWN: With nine out of 10 voters either concerned or flat-out scared about the mess on Wall Street, the candidates are trading some pretty wild charges about each over and that's why we have our "No Bias, No Bull" test.

Something Barack Obama said over the weekend really caught our ears. Campaigning in Florida, a state full of retirees, he tried to connect the current financial crisis to Social Security and to John McCain. Take a listen.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: Here's another thing I want to talk to you about. I'll protect Social Security while John McCain has talked about privatizing it. Now, without Social Security, half of elderly women would be living in poverty. Half. But if my opponent had his way, the millions of Floridians who rely on it would have had their Social Security tied up in the stock market this week.

How do you think that would have made folks feel? Millions would have watched as the market tumbled and their nest egg disappeared before their eyes.

(END VIDEO CLIP)

BROWN: Tom Foreman has something new tonight in the "No Bias, No Bull" report card to grade the candidate's claims. So how did Obama do on Social Security, Tom?

TOM FOREMAN, CNN CORRESPONDENT: Well, Campbell, if retirees are afraid John McCain wants to take away their checks as Obama suggested, they need to know that's just not true. Yes, McCain wants to reform Social Security but he would start with younger people who aren't even receiving benefits yet in this process. And contrary to what Barack Obama is suggesting, McCain speaks very strongly about the need to protect Social Security for everyone.

To that end, he has supported the idea of letting some younger workers put some of their retirement money into personal accounts which might be tied to the stock market. But that would not necessarily mean millions of people watching their nest eggs disappear. Even with the recent market troubles, those folks still might make more money with McCain's plan than they would in the long haul. McCain has also said emphatically such a plan would be in addition to Social Security, not in stead of it.

So, let's go to the report card. Obama's claim in this case, it is definitively false. McCain is not talking about the wholesale privatization of Social Security, and he is not sending retirees to the poor house -- Campbell.

BROWN: All right, Tom. John McCain's turn. Late this afternoon at a Pennsylvania rally, McCain said his opponent is "missing in action in the current economic crisis." Listen to this.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: My friends, Senator Obama has declined to put forth a plan of his own. I'm not surprised.

(AUDIENCE BOOING)

His campaign said that today he'd outline his plan but this afternoon instead of offering a single solution, he just gave another speech full of political attacks. One week after this crisis began, Senator Obama has still not offered any plan of any kind. The time of crisis when leadership is needed, Senator Obama has been MIA, my friends. That means missing in action.

(END VIDEO CLIP)

BROWN: So what about that attack, Tom? What are the facts?

FOREMAN: Well, Campbell, McCain is straying off the straight and narrow on this one, too. We're getting a two-fer tonight. No plan from Obama? No way.

To the contrary, Senator Obama has talked at length about reforming Wall Street, getting CEO pay packages under control, instituting new regulations to protect homeowners. In short, what everybody wants, stabilizing the economy.

Yes, Obama has been somewhat reserved in his comments but he says this is not the time for candidates to grandstand about their ideas when Congress and the White House are in the middle of such delicate negotiations on the deal. And McCain, we might note, has also been notably short on details about how he would handle this crisis, especially in the earliest days, too.

So, let's go to the report card here. What about what McCain said? Well, it was, in fact, also false or at the very least misleading. And what he said about Obama, he overstated things. Obama has offered several pillars of his plan for economic reform and when he's been quiet, he's given the reason that voters can accept or reject as they see fit -- Campbell.

BROWN: All right. Calling them out, Tom Foreman for us. Tom, thanks.

It is a big week here in New York City. Leaders from all over the world are flying in for the United Nations' general assembly. And guess who is joining them? Sarah Palin stepping on to the world stage. We'll have more on that coming up next.

(COMMERCIAL BREAK)

BROWN: Sarah Palin had stopped saying that she turned down that infamous bridge to nowhere after widespread reporting that she'd actually done no such thing. Well, now, another project stands to challenge Palin's anti-earmark credentials. It's a brand new road and it leads right to that never built bridge. Here's Abbie Boudreau of CNN's special investigations unit

(BEGIN VIDEOTAPE)

ABBIE BOUDREAU, CNN SPECIAL INVESTIGATIONS UNIT CORRESPONDENT (voice-over): The bridge to nowhere in Alaska became a lightning rod for federal waste and abuse. Governor Palin says she said no thanks to federal money for the bridge.

But take a look down there. That's a $26 million road to nowhere with your tax money. It was supposed to connect that notorious bridge to an airport, but Governor Sarah Palin did not stop the costly road project even after the bridge was canceled.

(on camera): Simply put, what could Governor Palin have done? If she says she's against earmarks, what could Governor Palin have done in this case?

MAYOR BOB WEINSTEIN (D), KETCHIKAN, ALASKA: Governor Palin could have stopped construction of this road.

BOUDREAU: This is Gravina Island highway. It runs about three miles long at $8 million per mile paid for by your tax dollars. But there's no one on this road. Many locals call it the road to nowhere.

(END VIDEOTAPE)

BROWN: All right. Join me tomorrow in the ELECTION CENTER. We're going to have more on Governor Palin's role in building Alaska's road to nowhere.

Sarah Palin may be the most carefully managed, tightly scripted vice presidential candidate we have seen. So, what can we expect when she meets with world leaders at the U.N. tomorrow, or this week, yes? Everybody from Hamid Karzai to Henry Kissinger to Bono apparently on the agenda.

Ed Henry is back with me now to talk about this. And, Ed, I know she arrives in New York tonight, I think, right?

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: That's right.

BROWN: The meeting scheduled for tomorrow. She's going to meet with a long list of pretty big names. Who is she sitting down with, and what are they really trying to accomplish with this?

HENRY: You know, Campbell, it's almost like speed dating for world leaders. It's going to have nine international players that she needs to meet with over the course of 30 hours on Tuesday and Wednesday. Tuesday, she's going to meet with the presidents of Afghanistan and Colombia, also Henry Kissinger, ought to be a fly on that wall for that conversation. Kind of interesting.

Wednesday, more presidents -- Iraq, Pakistan. But also as you mentioned, the rock star Bono. He obviously has a big profile in the international stage, battling AIDS in Africa and poverty around the world.

I think the point, though, is the McCain camp wants to get her out there, show that she can have some confidence in dealing with these issues on the world stage, but they're also, frankly, admitting that there's a hole in her resume. And Democrats are going to try to pounce on that.

BROWN: But these are pretty low risk events she's got scheduled. It's not like she takes any questions here from the press or anything like that, right?

HENRY: Absolutely. Carefully scripted photo-ops. The cameras will be there at the very top just for a few seconds. Get the picture, get the image out there. No questions from reporters. Very little chance really that there will be any sort of a miscue so it's a very low risk for her. So that's why it's perfect for them to try to get her out there.

BROWN: All right. Ed Henry for us. Ed, thanks.

HENRY: Thank you.

BROWN: We want to bring our panel back to talk about this quickly about Sarah Palin's visit to the United Nations. Kevin Madden, Dana Milbank and Roland Martin.

And, Kevin, we're all going to see -- all we're going to see I think as we just talked about is photo-ops. Not a lot of risk here. Are voters actually going to learn anything about Sarah Palin's approach to foreign policy this week?

MADDEN: Well, sure. I think what everybody knows right now, both Democrats and Republicans is that Sarah Palin still remains a largely undefined entity, and at the end of the day, campaigns are contests of images. And the enduring image that the McCain campaign wants left with voters is somebody who can close the stature gap, somebody who's going to stand there with world leaders and essentially fill in that void in her resume.

BROWN: But even if she doesn't say anything, even though she doesn't take a question?

MADDEN: Look, the only thing that voters across --

BROWN: Just a picture?

MADDEN: The only thing that voters across the country are going to see is Sarah Palin standing with world leaders, and when you have a stature gap, that's enough.

MARTIN: Hey, Campbell.

BROWN: The flip side to that -- hold on, Roland, I'll let you get in here.

But, Dana, give me the flip side to this. Is it really any different from what Barack Obama did over the summer with that splashy meet and greet with European leaders?

MILBANK: Well, that was a higher risk thing because he was out there in the public, looked like a smart idea at the time. Perhaps in retrospect, it looked like it was a bit too over the top in terms of assuming he was already moving into the Oval Office.

No such risk here, no such reward. I think unless she comes out speaking French or wearing a tribal dress or something, I mean, she's not going to suddenly impress on everybody that she is a whiz kid at foreign policy.

BROWN: Roland?

MARTIN: Hey, Kevin, if it was all about photos, why don't we go to Madame Tussaud's Wax Museum and just put some of the world figures right next to her? This is all about a photo.

I mean, come on. That's all it is. And so, look, so it is what it is. You get a nice photo. We're not going to learn anything when it comes to knowledge about foreign policy. What we will know this here, she won't be touching down getting gas in Ireland. She will be able to say I have to talk to a real foreign leader.

(CROSSTALK)

MADDEN: I tell you what.

MILBANK: It is pretty cool to meet Bono.

MADDEN: If the Democrats attack her, I tell you what, if the Democrats attack her, that would be an even bigger problem.

MARTIN: For a photo. Let's get some cutouts. Let's buy some cutouts.

BROWN: All right. Guys, we are going to have to end it there. But many, many thanks to Kevin Madden, to Dana Milbank, to Roland Martin, and, of course, to Ed Henry for being with us. A lot tonight. Appreciate it. Good to see you guys.

That is it from the ELECTION CENTER. Thanks for joining us. We'll see you here tomorrow night.

"LARRY KING LIVE" starts right now.