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Campbell Brown
Stock Markets Plunge; Campaign Attacks Getting Personal
Aired October 06, 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, everyone.
Once again tonight, we are beginning with breaking news.
This was the first full day that global financial markets could react to the government's bailout plan. And what a reaction it was. From Asia to Wall Street, it was a wild, wild roller coaster ride. Today's plunge started immediately. The Dow Jones industrial average fell below the 10000 mark for the first time in four years. Things got worse as the day war on.
By mid-afternoon, the Dow hit the never-before-seen mark of an 800-point drop, 800 points. And then everything turned around, and the final hour turned into an incredible nearly 500-point comeback. The Dow almost managed to close above 10000 again.
Now this crisis is anything but over. After the markets closed, the Federal Reserve announced its giving Japan's largest bank, Mitsubishi, permission to buy up to a 25 percent stake in the U.S. investment giant Morgan Stanley. And Morgan Stanley, by the way, was supposed to have been in pretty good shape.
So, tonight with everybody's 401(k) gasping for breath, financial markets all over the world in turmoil, you would think that issue number one, the economy, would be the dominant theme on the campaign trail. Well, not really.
So, first off tonight, we are cutting through the bull. By now, you have probably heard about how ugly things have gotten out there on the campaign trail in the last 48 hours. But we thought for just a moment we would take you back to kinder, gentler times. Remember this?
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL NOMINEE: I pledge again a respectful campaign, a respectful campaign based on the issues, and based on the stark differences and vision that we have for the future of America.
SEN. BARACK OBAMA (D-IL), PRESIDENTIAL NOMINEE: I said that I was looking forward to a civil, substantive debate on the issues, and he agreed.
MCCAIN: I have pledged to conduct a respectful campaign, and I have urged time after time various entities within the Republican Party to also do that. OBAMA: We don't need John McCain and I to be demonizing each other. You won't get that from my campaign.
(END VIDEO CLIP)
BROWN: Oh, how far we have come in such a short period of time.
To say, as Sarah Palin is now doing, that Barack Obama pals around with terrorists is just outrageous. And we are going to be dealing with that charge more thoroughly in our no bias, no bull fact- check later in the show.
But Obama's hands are not clean either. Here is what he said in May of this year about the McCain's involve in the Keating Five in the late '80s. Obama's quote, I don't think there is any doubt that McCain's issues is not Germane to the presidency. And yet this morning, a savings and loan scandal the happened back in the late '80s.
Obama quote: "I don't think there is any doubt that John McCain's public record about issues that he's apologized for and written about is not germane to the presidency."
And, yet, this morning, the Obama campaign released a mini- documentary walking voters through all the details of the Keating Five, making it very much germane.
Candy Crowley is going to have more detail in a minute on this destructive that both campaigns have now chosen to deploy, but, first, a plea, a plea to both campaigns. There is just one month left.
Please, please, don't let this devolve into a campaign that you are sickened by, that we are sickened by, and that you are embarrassed to be part of. I mean, here is a purely practical reason. The negativity you are spewing now is only going to make your job harder after Election Day.
Bipartisanship is really tough to achieve when everyone on both sides is left with a bad, bad taste in their mouth.
Look at this new CNN/Opinion Research Corporation poll. When asked how are things going in the country today, 80 percent said badly, 80 percent. Pollsters have been asking that question since 1974 -- 80 percent is an all-time low.
People want to hear solutions from you. They want to hear how you are going to get us out of this mess. And one of you is going to have to. Don't you want to be able to walk into the White House with your dignity intact and your head held high?
So, with that, let's get on to the mess on Wall Street. And it's just breathtaking, people. Since this time last year, the market lost $6.4 trillion in value. That's trillion with a T. And that is money out of tens of millions of Americans' savings and retirement accounts.
And the free fall continued today. Senior business correspondent Ali Velshi here to explain what the heck is going on.
And, Ali, it was another, yet another roller-coaster ride of a day. What happened? Take us through the day.
ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Let me walk you how it happened. Let me tell you what happened.
We realize that the Dow closed badly on Friday. When Asian markets opened up, they started. So, take a look. Right off the top, right out of the gate, this is what started happening with the Dow. But look at what happened. All of a sudden, it just dropped almost off a clip, 800 points lower.
If, by the way, your first investment in the stock market took place right there today, for the first time in life, here's the interesting part. You ended up 400 points higher at the end. This market went down 800 points, back up 400 points, closing 369 points lower.
The bottom line is that the markets just didn't understand how this bailout was going to help the underlying problem in stock markets. And that's how you make money.
Now, I want to just sort of show you how this works, Campbell. The bottom line is, markets operate differently than the credit crisis. Last week, we sort of really took a lot time to explain to people how the credit crisis worked.
Let's take a look at how stock markets work. The stock market goes up for one reason. And that is the companies that comprise the stock market earn money, they make money. Well, companies make money for one reason, and that is people make money and spend it with those companies. And people spend money for about three different reasons.
One is, they have got good jobs. Because of those good jobs, their wages go up. And, as a result of good economic times, their homes increase in value. Well, guess what? Right now, their homes are not increasing in value. People's wages are not going up. And, as we reported and we have talked about on Friday, Campbell, we have lost 159,000 jobs in September, bringing the grand total for the year to a loss of 750,000 jobs. So, the stock market is just responding to the economic situation out there. It's bad.
BROWN: So, the bailout did very little to sort of send a different kind of message to the market. And is that why I guess we're still seeing what we talked about earlier, Morgan Stanley being bailed out by the Japanese?
VELSHI: The bailout helped the credit markets, which we hadn't talked about for so long and last week we spent so much time on. Maybe we convinced people it was too important.
The credit markets and the stock markets operate differently. They are two different things. The bailout was never designed to bailout the stock market. What's the bailout got to do with J.C. Penney or Macy's or the Christmas shopping season? It had to do with the banks. Morgan Stanley got to become a bank a few weeks ago as part of this whole run-up to the bailout, and it needs money. It has been able to raise money. That's actually a good sign.
BROWN: So, nobody is saying the word yet, but it sounds like we are in a recession.
VELSHI: Unfortunately, they wouldn't deal with this earlier in the year. And now as we head into an election, I guess the president doesn't want to be the one to have labeled this a recession.
The danger about a recession is that, once you say it, you are accused of talking down the economy. Presidents are always in this tough situation of wanting to talk the economy up. But the reality is, Campbell, most economists we talk to say, if this is not a recession, what is?
BROWN: Yes, I know. That's certainly how it looks from the outside.
VELSHI: Yes.
BROWN: Ali Velshi for us tonight -- Ali, as always, thanks.
Today, on Capitol Hill, they started playing the blame game. What else for the financial mess? Lawmakers hauled the Lehman Brothers' CEO in front of a congressional committee. Bristling with indignation, they produced records showing that he took home almost $500 million in the past few years, while steering Lehman into bankruptcy.
Take a listen.
(BEGIN VIDEO CLIP)
REP. HENRY WAXMAN (D-CA), GOVERNMENT REFORM COMMITTEE CHAIRMAN: My question to you, there a lot of people who will ask, is that fair, for the CEO of a company that's now bankrupt to have made that kind of money? It's just unimaginable to so many people.
RICHARD FULD, CEO, LEHMAN BROTHERS: I would say to you the 500 number is not accurate. I would say to you that -- although it is still a large number.
(END VIDEO CLIP)
BROWN: A very large number, indeed. But that doesn't answer the question of exactly how we got into the mess.
And senior correspondent Joe Johns has been digging into that all day.
Joe, what can you tell us?
JOE JOHNS, CNN SENIOR CORRESPONDENT: Hey, Campbell. Well, how does a colossal financial nosedive really start? We have been sort of poring over this 250-page law that Congress approved almost eight years ago, final days of the Clinton administration. Everybody in town was trying to get out of town. It was like the middle of December. This is called the Commodity Futures Modernization Act.
And, so, what did the law do? There are financial tools called credit default swaps, credit default swaps. Basically, it's insurance. The law put these instruments off-limits so the government could not regulate them. And why would anybody want to do something like that? Because Wall Street wanted the government to butt out of its business.
But the sum total of the fact was to create what amounts to the biggest casino in the world. In terms of real money, we are talking about the face value of something like $50 trillion to $62 trillion -- trillion with a T. -- worldwide.
So, what are these things and how do they work? Today, I talked to a former federal official, current law professor, who says, they are basically legalized gambling. Think of Wall Street as a big casino, and it operates the game and provides the players who want to make a heads or tails bet on who got risky mortgages.
Some people were betting that the risky mortgages would get paid off. Some people were betting that the risky mortgages would default. If there was a default, the gamble -- think hedge fund, other streeters -- would get a big insurance payoff. But when homebuyers started to default in record numbers, it turned out the casino did not have the money to pay off the gamblers.
Now you are looking at people lining up at payoff booths with $62 trillion in chips worth who knows what in real money. And that brings us back to the law Congress and then-President Clinton approved years ago, the law that allowed for all of this to happen.
And, by the way, another part of this bill actually told the states, the states, that their anti-gambling laws did not apply. This thing said on page 105 that the act supersedes and preempts the application of any state or law that prohibits gaming.
So, here's the amazing thing. Some people in Congress have started asking questions about these swaps, because they're buried in the financial sector right now. Nobody knows when the next one is going to explode. But when Congress passed its big bailout, it did not close the casino. It did not fix the law that some people say started the whole thing.
BROWN: So, Joe, why would Congress pass a bill like this?
JOHNS: It was the end of the year. We had a president on his way out. A lot of people wanted to get out of town, and this thing -- this thing was buried in a much larger spending bill, thousands of pages. And people knew they had to take a vote to keep funding the government. A lot of people say, it's not a way to do business, certainly on Capitol Hill, but it happens.
BROWN: Already, Joe Johns for us tonight -- Joe, tough to explain, but thanks for trying, there. Appreciate it.
JOHNS: You bet.
BROWN: On the campaign trail, both presidential candidates still promising they have what it takes to fix the economy. They are also trying to beat each other up, McCain connecting Obama to a former domestic terrorist, and Obama connecting McCain to a massive savings and loan bailout from 20 years ago. Does any of this pass the no bias, no bull test?
We're going to check in, in just a moment.
(COMMERCIAL BREAK)
BROWN: Our latest CNN/Opinion Research poll of likely voters showing just how big a challenge John McCain is facing right now. With only 29 days to go until the election, Barack Obama has his biggest lead yet. He tops McCain 53 percent to 45 percent.
So, on to the campaign now. Forget all those stick-to-the-high- road pledges we heard from both candidates oh not so long ago. Tonight, the knives are out tonight and the attacks getting pretty personal.
Candy Crowley is watching the campaign. She's in Nashville tonight for us.
And, Candy, over the weekend, we saw Sarah Palin attack Barack Obama for his association with former radical William Ayers, saying that Obama, in her words -- quote -- "pals around with terrorists."
Today, John McCain basically came out and called Obama a liar. You had some pretty rough stuff from the Republican ticket generally. Let's listen to what they both had to say.
(BEGIN VIDEO CLIP)
GOV. SARAH PALIN (R-AK), VICE PRESIDENTIAL NOMINEE: I'm afraid this is someone who sees America as imperfect enough to work with a former domestic terrorist who had targeted his own country. And this, ladies and gentlemen, has nothing to do with the kind of change that anyone can believe in.
SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL NOMINEE: Rather than answer his critics, Senator Obama will try to distract you from noticing that he never answers the serious and legitimate questions he's been asked.
(CHEERING AND APPLAUSE)
MCCAIN: Well, let me reply in the plainest terms that I know. I don't need lessons about telling the truth to the American people.
(CHEERING AND APPLAUSE)
MCCAIN: And were I ever to need any improvement in that regard, I probably wouldn't seek advice from a Chicago politician.
(CHEERING AND APPLAUSE)
(END VIDEO CLIP)
BROWN: So, Candy, pretty full-throated, personal character attacks here. What is the strategy? Is this the McCain campaign thinking, they have got no choice, given where the polls are showing them right now?
CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, at this point in a campaign, it is unlikely that either candidate is going to move up their favorables.
So, the only thing they can do is tamp down the other guy's favorables. So, yes, at this point, looking at what is ahead, it doesn't really seem like the McCain campaign at this point has much of a choice other than to do this.
However, they also have to go at -- in some way shape or form have a plan for economy, whether it's a broad outline, something like that, because people, yes, can look, and it might change their mind about an opponent, but they also need to have something to vote for. So, it has to be a two-pronged strategy for McCain.
BROWN: And, Candy, I know Obama lashed out at McCain's tactics today. Let's listen to some of what he said.
(BEGIN VIDEO CLIP)
SEN. BARACK OBAMA (D-IL), PRESIDENTIAL NOMINEE: I have got news for the McCain campaign. The American people are losing right now. They're losing their jobs. They're losing their health care. They're losing their homes. They're losing their savings. I cannot imagine anything more important to talk about than the economic crisis.
And the notion that we would want to brush that aside and engage in the usual political shenanigans and smear tactics that have come to characterize too many political campaigns, I think, is not what the American people are looking for.
(END VIDEO CLIP)
BROWN: Now, here is the thing, Candy, as you know, not like the Obama campaign is out there talking solely issues. They launched a pretty pointed attack of their own on John McCain, dredging up his involvement in the Keating Five scandal today.
CROWLEY: Absolutely.
And, listen, this is the lesson of 2004 and to a certain extent of 2000 for the Democrats. And that is, never let anything go unanswered. So, you can be sure that they were waiting with this Keating Five thing in the wings for something to come up.
And we should also note that the Obama campaign has repeatedly called John McCain dishonorable and has repeatedly accused him of being a liar. It has not come from the principal, but certainly it has come from that campaign. So, there has been some tough stuff on both sides, but, with Obama, this is definitely, you have to hit back. You can't let them pound and pound and pound without you pushing back.
BROWN: All right, Candy Crowley for us tonight from Nashville -- Candy, thanks.
And we should mention, too, a little bit, we're going to put Sarah Palin's claim about Barack Obama, the William Ayers relationship to our no bull test. Stick around for that. That's coming up.
But, first, we want to bring in our political panel.
How will anxious voters react to this avalanche of attacks? A fair question, and we want to dig into that now.
We have got CNN political analyst Gloria Borger, here with me in New York, Stephen Hayes, senior writer for "The Weekly Standard" and the author of "Cheney: The Untold Story of America's Most Powerful and Controversial Vice President," and CNN contributor Hilary Rosen, political director of "The Huffington Post."
Welcome to everybody.
Steve, over the weekend, as you just heard Candy and I talk about, Sarah Palin accusing Barack Obama of, in her words, palling around with terrorists.
That's a pretty incredible accusation to make, isn't it?
STEPHEN HAYES, "THE WEEKLY STANDARD": Yes, well, maybe I will surprise you.
I actually don't think that it is. You can look at the things that Barack Obama's own advisers, own close advisers, have said about his relationship with William Ayers in the past, and it actually measures quite closely to what Sarah Palin said.
David Axelrod said that Ayers and Obama were -- quote -- "certainly friendly" -- unquote. And, just six weeks ago, Bill Daley -- or -- excuse me -- Richard Daley, the major of Chicago, who has worked closely with both of these guys, said, they are friends. So, what?
Now, that's a different argument than we are hearing from the campaign. It used to be that they were saying, yes, well, these guys were friends. They worked together. They knew each other, but that doesn't matter and it's irrelevant to voters.
Now what we're hearing is, these guys didn't really know each other. This is a big nothing burger.
BROWN: Go ahead, Hilary. I know you want to jump in.
HILARY ROSEN, CNN POLITICAL CONTRIBUTOR: Well, first of all, the mayor said that the mayor is friendly with Bill Ayers, not that Obama is friendly with Bill Ayers.
(CROSSTALK)
HAYES: That's just not true. That's not true, just to be fair.
ROSEN: It doesn't -- this sort of 90-degree turn here with the McCain campaign, I think, isn't going to be particularly successful, first of all, because Ayers' faults were so long ago. And the reset button that is trying to be hit by the McCain campaign is just almost too obvious.
The conversation was on the economy. That's what people wanted to talk about. And the McCain campaign actually said, let's not talk about the economy. We are going to lose there. Let's get dirty.
Having said that, I think there's risks in the Obama campaign sort of overreacting and over-learning the lessons of the Swift Boat campaign and trying to hit back too hard and dirty on the other side.
BROWN: And I want to mention, too, I don't want this -- you are both partisans. That's why we invited you on.
But we're going to have somebody who is not a partisan actually do the fact--check on the Ayers thing coming up in a minute.
Gloria, go ahead.
GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: I just want to say, Campbell, this is a big-issue election. It's not a tiny-issue election.
And trying to get the voters angry about who Obama has associated with in his past or about John McCain and the Keating Five almost two decades ago is not what the voters want to hear. They are angry enough right now about the economy and everything else.
And, so, I agree with Hilary that this could backfire against both candidates at a certain point.
BROWN: Is the fact, though -- is McCain conceding, though he can't win on the economy? Is that why they are turning this route, as opposed to trying to come up with some sort of economic plan that they can get out there and have it compete for attention?
BORGER: What he is trying to do is untether himself from George W. Bush, because the polls show that people believe he is going to give you more of the same on the economy with George Bush.
So, he wants to try and get people to ask questions about Barack Obama. Can you trust him to manage the economy? Is he the guy you want behind that wheel?
BROWN: Steve, let me ask you, because some Republicans have been raising red flags about McCain's attack strategy.
HAYES: Right.
BROWN: His former strategist, Mike Murphy, writes on TIME.com -- I will read a quick blurb -- "Over-the-top negative attacks and a campaign message that too often seems to be little more than sarcasm and suppressed anger has damaged McCain's priceless and hard earned brand as a different kind of Republican. McCain's best option now is to ditch the chain saw and offer a scared and angry country what it badly wants, hope and leadership."
What do you think? Is he taking a real risk by concentrating so much on the negative?
HAYES: Well, I think he is taking a real risk here.
But I think what really damaged McCain's brand, to use Mike Murphy's word, is what has happened over the past three weeks. This is why, I think, McCain is having such a tough time making the argument that he is this different kind of Republican.
I didn't think -- for months, I didn't think that these attacks by Democrats linking George W. Bush and John McCain would work. And I didn't think there was much sign that they actually were working. What we have seen, though, is we have seen, I think, given the events of the past three weeks, this is starting to resonate. I think voters are saying, look, these are just Republicans. John McCain is another one of them. We don't want anything to do with any of them.
ROSEN: I am not sure that's exactly what they are saying.
I think, in part, what people saw was John McCain sort of being somewhat erratic in the reaction to the economic crisis. But, look, let's be real. Voters of both parties nominated the least politician- like candidates that were running in those primaries.
(CROSSTALK)
BROWN: Let me ask you, quickly. And, Hilary, let me ask you, because Barack Obama is playing the same game to a certain extent, his campaign raising the Keating Five scandal, after just a few months back saying it was not something they were going to bring it up. They didn't think it was germane. I mean, what changed here?
HAYES: Well, that is why I'm saying, I think there is a risk in them overemphasizing that. Of course, they put it out on the web. They did not do television commercials with it yet, and they are not sort of going over out very hard. They are hoping that it's out there enough to sort of warn the McCain campaign off.
BROWN: But that their hands are clean?
ROSEN: Right. Not so that their hands are clean, but to try and ward off kind of both sides going nuclear.
But, as I said, I think the issue here is that Americans have been pretty clear that they want this campaign to be about the issues. I think that's why they nominated both of these guys.
(CROSSTALK)
BROWN: Quickly, 10 seconds, Gloria.
BORGER: It's just too late, Campbell. This kind of stuff normally goes in the summer during a campaign. Right now, it's too late for this stuff to have really any impact. And the voters are thinking of different things.
BROWN: All right, guys, stick around. We're going to check back in with you a little bit later.
But, coming up next, 29 days to go, the polls show McCain's back up against the wall, as we mentioned earlier. We are going to preview tomorrow's critical debate on the economy and other domestic challenges.
Plus, Bruce Springsteen wants you to vote. Voter registration events like this one today in Michigan have added millions of new voters to the rolls -- how that could shape the election when we come back.
(COMMERCIAL BREAK)
BROWN: That's Obama supporter, of course, Bruce Springsteen -- he needs no introduction -- at a get-out-the-vote concert in Michigan. That was just a few hours ago.
Voter registration way up across the country this year, lots of new people coming into the process, and those new voters could well determine who wins come November.
So, which candidate will reap the rewards?
Jessica Yellin has been crunching the numbers, and she is here with us tonight.
And, today, Jessica, I know was the cutoff for 17 states to add new voters, new voter registration. We are getting an idea where things now stand, and it looks like Democrats are benefiting the most from the new registrants.
JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: It does. It does.
And the electoral map, you can see, it currently, according to CNN's estimates, has Obama with 250 electoral votes, 189 for McCain. That is if the election were held today.
Now, today, I spoke to elections offices all over the country. And they are so inundated with news voters, to give you one example, the city of Las Vegas, they added 39,000 new voters last week alone. So, let's take a look. Yellow states are battleground states, where the race is close, and both campaigns have focused on voter registration, in many of them with success.
At least four million new voters have registered in 12 of these states in the last year alone.
OK. So, you want to take a closer look at some of these states. Florida, Democrats there have a roughly two to one advantage registering new voters. Now you recall, Bush won Florida in 2004, and famously in the year 2000 as well. The CNN poll of polls shows just how tight the race is there, and what a difference new voters could make.
Now, we'll move on to another battleground state. Colorado. Democrats have registered four times more new voters than Republicans -- four times. Republicans won there in both 2004 and 2000, and the latest CNN poll of polls shows a one-point difference between Obama and McCain. So you can see in both of these states, new voters really could make all the difference come Election Day.
BROWN: So, how have they done it? I mean, they've had to have been pretty aggressive to get these numbers. To the extent they have, what's been the strategy?
YELLIN: A combination. First of all, you'll see Obama on the campaign trail. He literally holds up voter registration cards himself. So he's been doing this from the beginning. The McCain campaign, they've used lists to target people and go door to door to their homes. They also -- one of the factors in all of this is the fact that the Democratic primary lasted so long, there was a lot of energy. A lot of people turned out to register, some changed from Republican to Democrat. That counts for a lot of it.
BROWN: New registered voters, though, doesn't necessarily mean they're going to vote.
YELLIN: Excellent point.
BROWN: Especially if they're new to the process.
YELLIN: Famously, new voters tend not to vote. Now, the Obama campaign thinks they smashed that myth in the Iowa caucuses because so many new voters did turn out. The McCain campaign thinks they've registered fewer new voters, but the ones they targeted are the most likely to vote. So, it's the $100,000 question. Wait and see.
BROWN: Can't wait. Jessica Yellin for us tonight. Jessica, thanks.
Coming up, Sarah Palin says Barack Obama is palling around with terrorists. Those are her words and we're going to put them to our "No Bull" test when we come back.
And, "Saturday Night Live"'s ratings are through the roof. What Palin has to say about Tina Fey. It actually may surprise you. That's coming up next.
(COMMERCIAL BREAK)
BROWN: For political junkies looking for laughs, the new season of "Saturday Night Live" is must-see TV. Thanks to Tina Fey's spot-on impression of Sarah Palin. She returned on Saturday revisiting the vice presidential debate with Jason Sudeikis' Joe Biden. Check it out.
(BEGIN VIDEO CLIP, FROM BROADWAY VIDEO)
JASON SUDEIKIS, PLAYING SEN. JOE BIDEN: John McCain -- and again, this is the man I would take a bullet for. He's bad at his job and mentally unstable.
TINA FEY, PLAYING GOVERNOR SARAH PALIN: If you want an outsider who doesn't like politics as usual, or pronouncing the "g" at the end of a word she's saying, I think you know who to vote for. Oh, and for those Joe six-packs out there playing a drinking game at home, maverick.
(END VIDEO CLIP)
BROWN: So how is Governor Palin taking this? Take a listen.
(BEGIN VIDEO CLIP)
GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: I was just trying to keep Tina Fey in business, just giving her more information. Job security for "SNL" characters.
(END VIDEO CLIP)
BROWN: Job security? Well, they've got it. So far, "Saturday Night Live"'s ratings are up 49 percent compared to last fall.
Now at the top of the show, I talked about how the campaign is really slipping into the mud this week. Both candidates throwing dirt at each other. Sarah Palin even accused Barack Obama of palling around with terrorists.
Up next, we're going to put the most outrageous attacks to our "No Bull" test. You're not going to want to miss it. Stay with us.
(COMMERCIAL BREAK)
BROWN: If you got a weak stomach, you may want to look away right now, because we're about to show you the lowest of the low personal attacks from the candidates and put them to our "No Bias, No Bull" test.
First up, Sarah Palin who has been leading the charge as the McCain campaign accuses Obama of being friends with terrorists. Here's what she told a crowd in California over the weekend.
(BEGIN VIDEO CLIP) GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: Turns out one of his earliest supporters is a man, who according to the "New York Times," was a domestic terrorist, and part of the group -- part of the group that "launched a campaign of bombings that would target the Pentagon and the U.S. Capitol."
And, these are the same guys who think patriotism is paying higher taxes. Remember, that's what Joe Biden said. Now, this is not a man who sees America as you and I see America. We see America as a force for good in this world. We see an America of exceptionalism. Yes, USA! USA!
Our opponent is someone who sees America as imperfect enough to pal around with terrorists who targeted their own country.
(END VIDEO CLIP)
BROWN: Tom Foreman with us now to put Palin's attack to the ELECTION CENTER "No Bull" test. What about it, Tom?
TOM FOREMAN, CNN CORRESPONDENT: Well, Campbell, this highly charged accusation that Obama is palling around with terrorists is aimed at his association with a man who was a domestic terrorist, according to the FBI.
(BEGIN VIDEOTAPE)
FOREMAN (voice-over): William Ayers is in his 60s now, a college professor in Chicago. But as a young man, he was a founding member of the Weather Underground, a radical group that set off bombs in the Capitol, the Pentagon, and other places in protest of America's Vietnam policies. Ayers and his wife spent 10 years on the run, finally surrendered but avoided jail time because investigators made mistakes handling their case.
More than a decade later, Ayers met a young, rising politician in his Chicago neighborhood named Barack Obama. He hosted an early political gathering for Obama, donated to him, and the two work together on the boards of a couple of nonprofit groups. And that pretty much appears to be the extent of their relationship.
(END VIDEOTAPE)
FOREMAN: So Obama's friends say it's ridiculous to hold him accountable for things Ayers did back when Obama was a child. Obama's foes, of course, say yes, but he kept company as an adult with this man, and he should not have. Ayers is not talking.
But does all of this add up to Obama palling around with terrorists, or as the governor is saying it now, seems to have altered her language a little bit, being willing to work with a former domestic terrorist, a man who was a domestic terrorist? Overall, we have to say, no.
Ayers' terrorist activities are 40 years in the past, and their adult relationship, while apparently cordial, does not appear to have been particularly close. Obama has specifically denounced the idea of violent protests, including Ayers' radical past -- Campbell.
BROWN: All right, Tom. Hold on now. We got another for you. It's payback for the Ayers' attack. The Obama campaign today posted on the Web something it calls a documentary, dredging up McCain's past as one of the so-called "Keating Five."
And there were five U.S. senators who leaned on federal regulators. This was back in the '80s to go easy on a savings and loan operator named Charles Keating. He proceeded to steer his S&L into bankruptcy and that ended up costing taxpayers $3.4 billion.
Here's part of the Obama campaign's documentary. The voice you'll hear is that of William Black who was a federal banking regulator involved in the Keating case. Take a look.
(BEGIN VIDEO CLIP, CAMPAIGN VIDEO)
WILLIAM BLACK, FEDERAL BANKING REGULATOR INVOLVED IN THE KEATING CASE: Senator McCain knew the facts because we have briefed him. He knew this was a criminal enterprise. He knew that what was being done was improper. He knew how much undue political pressure -- his words, at least his words originally, was being brought to bear.
He was uniquely in a position where he could have protested this and stopped it, stop this loss. But he did nothing. And his statement is, "Once I figured out that Keating was not being abused, I no longer had any need to protect my constituent." But all the taxpayers of America were his constituents. We all ended up paying that $3.4 billion. He just never got it.
(END VIDEO CLIP)
BROWN: So, Tom, what about it?
FOREMAN: Well, Campbell, that's part of a 13-minute video on the front page of the Obama Web site. The "Keating Five" scandal was the big financial debacle of its day, and John McCain faced serious accusations for his part in it.
(BEGIN VIDEOTAPE)
FOREMAN (voice-over): Charles Keating was an Arizona businessman who bought a savings and loan and then swindled investors out of hundreds of millions of dollars. It led to the biggest government bailout ever in the late '80s, and when it came out that five U.S. senators had received donations from Keating, federal investigators wanted to know if they interfered with government efforts to catch him.
The first minute of this video suggests McCain was the linchpin of the whole operation. McCain is shown right before the word "fraud." He alone is shown with Keating, although four other senators, all Democrats were implicated, and the names of Enron, Bear Stearns, Fannie Mae and Freddie Mac appear as if, they, the "Keating Five" and John McCain, were all bundled up in the same scandal. That is not true. McCain has generally opposed stringent regulation of business, and that has played a significant role in all these financial problems. It's certainly fair game for voters to be made aware of that. Fair enough, too, to say this affair raised serious questions about McCain's ethics and judgment, but to hint that he was criminally negligent in the case of the "Keating Five" is inaccurate.
(END VIDEOTAPE)
FOREMAN: McCain was one of two senators who received the mildest criticism from congressional investigators in this case, who said he showed poor judgment. McCain also had to pay for some trips to the Bahamas he took with Keating while he was a congressman. This is all serious stuff for sure, but McCain was never charged with fraud or any other crime. And this video while getting some facts right, also exaggerates McCain's role in these events about 20 years ago -- Campbell.
BROWN: We had plenty to work with today, Tom. We appreciate it. Tom Foreman for us -- Tom, thanks.
So with all the attacks, the counterattacks and low blows flying around right now, it should be quite a debate when McCain and Obama get together tomorrow night. Coming up, our top political experts, the best political team, look at what both need to do to try to connect with this town hall audience down in Nashville and the millions of voters who will be watching.
(COMMERCIAL BREAK)
BROWN: There is other news. Erica Hill has got it. She's here right now with "The Briefing" -- Erica.
ERICA HILL, CNN CORRESPONDENT: Campbell, we begin in Los Angeles where police say an unemployed accountant worried about money killed his family and himself. He was found dead early this morning along with his wife, three children and mother-in-law in their upscale home. Police say the 45-year-old man left suicide notes detailing his financial problems.
And in northern California, the driver in a deadly bus crash charged today with DUI. Eight passengers died after that bus ran off the road last night and flipped. The driver is in critical condition tonight.
BROWN: Erica, thanks. Erica Hill for us.
Tonight, there is so much at stake for McCain and Obama in their second debate tomorrow night. We're going to look at the candidates, their strategies, and who is going to come out swinging tomorrow night. Stay with us.
(COMMERCIAL BREAK)
LARRY KING, HOST, "LARRY KING LIVE": I'm Larry King. The stock market went down in flames again. What does that mean for you? We'll ask people who know.
Plus, we'll talk politics on the eve of the presidential debate. And then Oliver Stone will be here to discuss "W.," the man and the movie. He's got something to say about the election, too. It's all next.
Campbell Brown returns right after the break.
(COMMERCIAL BREAK)
BROWN: The presidential debate's round two, tomorrow night from Nashville, for Barack Obama and John McCain stakes could not be higher. So what are their goals going in? For that, we want to go back now to senior political correspondent Candy Crowley, who is at the debate site down in Nashville, and Dana Bash here with me in New York.
So, Candy, give us your perspective from the Obama campaign. What have they been saying? What's their strategy going in to tomorrow?
CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Inside the Obama campaign, they say, look, this is all about John McCain. That's who people are going to watch. You know, one of my sources said to me, listen, you know, which McCain will show up? Will it be the one that's been slamming us for two days, or will it be the one that wants to talk about issues?
If it's the one that's going to be slamming them, then they'll say, listen, here is the deal, we want to talk about the economy. You can say what you want, but we're going to talk about the economy. If it is, of course, John McCain who wants to talk about the economy, then they're going to say he's George Bush.
So they really feel as though they are in a good position right now. They feel that the real onus is on John McCain. Other than that, they want to say, listen, they say, we just want to connect with middle class people, say, we understand your problems. Here's how I'm going to solve them.
BROWN: And, Dana, you've been talking to McCain folks. What's their feeling?
DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: You know, it's probably a combination of what Candy was just describing coming from the Obama campaign of what they're wondering about John McCain. Is it going to be about issues, or is it going to be about slamming Obama?
I think what -- and talking to McCain aides what he's going to try to do is a little bit of both, kind of a combination. They understand that obviously the economy is the top issue, but they also, as we saw from John McCain today, are embarking on the strategy from now until the end, to try to form a more stark contrast with Obama but also to try to say this guy isn't who you think he is. We don't really know enough about him. So by using the economy, by using the reform sort of mantel and mantra that we've heard, he's going to try to, I think, do a little bit of both, according to aides who've been working with him for the past three days nonstop.
BROWN: And again, the same target group essentially here, middle class voters...
BASH: That's right.
BROWN: ... these white working class voters and independents, who are the swing voters last time.
BASH: Absolutely. You know, it's really interesting in talking to them about John McCain's preparation. First of all, the fact that he hasn't even prepared very much, didn't prepare very much before and he's doing it intensively now. But you just nailed it.
What they say that he didn't do last time that they really wanted him to do this time in the McCain campaign is connect. Say to people, I understand, I see that you're anxious. He didn't do it enough last time. They really, really want him to do that and I think he can because of the format, something he's comfortable with, a town hall setting.
BROWN: All right. Dana Bash for us and Candy Crowley as well, thanks, guys. Appreciate it. We will see what happens tomorrow night.
In a moment, my political panel is going to look at all the angles of tomorrow night's debate strategy. Stay with us.
(COMMERCIAL BREAK)
BROWN: The second debate tomorrow night. Let's bring back our political panel to game it out -- Gloria Borger, Stephen Hayes and Hilary Rosen.
Steve, let me start with you. Sarah Palin has been urging John McCain to take the gloves off in tomorrow night's debate to really sock it to Barack Obama. Do you think that's the right thing for him to do?
STEPHEN HAYES, "THE WEEKLY STANDARD": I think he needs to try to find a balance between aggressive but not nasty. I don't think he can afford to come out and really get in Barack Obama's face, and take shots at him again and again and again. It's the kind of thing I think that voters don't like, they don't generally respond well to, and you're much better off letting your surrogates do that kind of dirty work.
BROWN: And is a town hall format, Gloria, the right place? I mean, that's more about connecting with the people in the audience, right?
GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: The both of them have to do a little bit of "I feel your pain" thing and that McCain is going to try and paint Obama as a big spender, big government, liberal, liberal, liberal. And Obama is just going to try and be calm and cool, and tie McCain to Bush. BROWN: And, Hilary, is that enough for Obama to just be calm and cool? I mean, we certainly know that he -- some people have suggested he sometimes is too cool, especially in a town hall setting where you want to see some sort of emotional connection?
HILARY ROSEN, CNN CONTRIBUTOR: Look, I think that, you know, this is not a typical debate. Tom Brokaw, as the moderator, will not be asking the questions. The questions will be coming from audience members and from online. And so, both candidates have to really be responding to the questioner, not to the moderator. And so, that's when they have to really have a connection with people.
I think what Barack Obama has to do, though, is make sure that people understand that when John McCain is talking about health care, he's talking about a 20 percent, you know, cut in Medicare and Medicaid. He's got to talk about the issues of education.
You know, John McCain has not really come up with an economic plan that makes sense to middle class voters. Barack Obama has got to highlight the contrast on the issues, and John McCain, I think, will be on the defensive on those, even though this format clearly, you know, benefits him.
BORGER: Right. John McCain loves these town halls, Campbell. I mean, this is how he won the New Hampshire primary. He's very comfortable doing these town halls. Barack Obama, less so. So I think you're going to see John McCain in his element?
BROWN: Do you agree with that Steve?
HAYES: Yes.
BROWN: It's just that it's just a real opportunity for him.
HAYES: Yes, I think it is an opportunity for him. I mean, you know, the expectations game, I think expectations are higher for John McCain because he's done this and done them well.
BROWN: But he also has more at stake, don't you agree?
HAYES: I think he does have more at stake. And I think one of the things that we'll see him do responding to Hilary is try to blame the Democrats more for the mess that we're in.
BROWN: All right.
HAYES: It's a tough thing to do, but I think he's going to give it a shot.
BROWN: And we're out of time. We got to end it there. Gloria, Stephen and Hilary, thank you. We'll see you tomorrow night.
Join us for our debate coverage. It starts at 8:00 Eastern.
"LARRY KING LIVE" right now.
