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Glenn Beck

What will Mortgage Bailout Actually Cost?; Dispelling Internet Rumors about Candidates; U.S. Paying for Health Care for Mexican Drug War Casualties

Aired September 08, 2008 - 19:00   ET

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

(BEGIN VIDEOTAPE)
GLENN BECK, HOST (voice-over): Tonight, gee, who would have seen this coming? The U.S. government seizes Fannie and Freddie, but how much is this bailout actually going to cost? I`ll talk to one man who says any bailout will be in the trillions -- with a "T" -- of dollars.

Then Sarah Palin gets a lot of credit for pumping up the McCain campaign. Can this working mom from Alaska counter the cult of Obama?

And we`ve been telling you for a while that victims of drug violence in Mexico brought across the border for treatment in U.S. hospitals. Guess who`s paying for that, as well?

All this and more, tonight.

(END VIDEOTAPE)

BECK: Hello America. Welcome to the program. I`m from Los Angeles tonight and I`m -- I`m thrilled to be here. NO, I really am.

We have Barack Obama and Sarah Palin coming up in just a minute. And it was about a year ago everybody was still pretending that our financial crisis was nothing more than a blip on the way to a Dow, 50,000. It`s all up from here.

I did a "Real Story" on how the Democrats were proposing that Fannie Mae and Freddie Mac should be able to take on more mortgages than usual. Bring them on in. You know, just to get us through a rough patch in the economy. I warned you, and here`s what I thought about the idea at the time.

(BEGIN VIDEO CLIP)

BECK: What a fantastic idea. So that way when those loans go bad, we get to shift the burden from the people who actually wrote the loans and took the loans, you know, the ones who are actually responsible, and shift that burden right to you and me, people who didn`t have anything to do with them. That sounds great. It`ll make the $519 billion S&L bailout from the 1980s seem like a picnic.

(END VIDEO CLIP)

BECK: That was over a year ago. Pass the potato salad, America, because here`s "The Point" tonight.

Despite what this government says, this bailout, which could be turn out to be the largest in our country`s history, will cost every single household in America over $14,000. Congratulations. I hope you enjoyed it. Was it good for you? Let`s have a cigarette. How`s that for an election-year tax hike?

Here`s how I got there. When Secretary of the Treasury Hank Paulson announced the bailout yesterday, he said that the cost to the taxpayer -- and if I may quote -- is very difficult for anyone to know. Really? Good thing for you I speak fluent bull crap, so I can translate. May I try?

What Secretary Paulson should have said is that the cost is very difficult for anyone to admit, given that this is a presidential election year and it`s just eight weeks away. Don`t be fooled. Everything about this bailout is connected to the election in some way or another. In fact, the current plan is to actually just take over Freddie and Fannie, just temporarily, so the next president and Congress can decide what to do with them: either nationalize them -- hello Hugo Chavez -- or privatize. Hum. I wonder which way President Obama will go?

The truth is, the cost to the taxpayer isn`t difficult to find out. But when you want to keep America`s focus on buying homes and spending more money, you know, then throwing numbers around that end in the word trillion -- yes, with a "T", trillion -- isn`t the smartest approach. So America, here`s what you need to know tonight.

Fannie and Freddie weren`t just too big to fail. They were also too poorly managed to survive. And yet, instead of hearings, instead of investigations, instead of trials and jail time -- does Enron come to mind? --we`re bailing them out.

Hank Paulson was careful not to blame any of Fannie and Freddie`s executives. No, no, no. They have nothing to do with it. In fact, the CEOs are actually staying on to help with the transition, which I think is a little like having O.J. Simpson help the police find the real killer. I`ll have a lot more on the unbelievable parallels between these two and Enron tomorrow.

But right now I want to bring in somebody who doesn`t nearly have the resources of the federal government but was still somehow or another able to figure out exactly what this bailout is going to end up costing you. Don Rich is the vice president of the Philadelphia chapter of Business Economics.

Don, I want to start with this bubble chart. Can you please explain the bubble chart here and what it is? Just put it up on the screen.

DON RICH, VICE PRESIDENT, PHILADELPHIA CHAPTER OF BUSINESS ECONOMICS: What the chart shows is the relationship of housing prices to the price of other goods, and why you see it return to a level of 100 is that people in general are only able to spend so much of their income on housing.

BECK: OK.

RICH: You`ll note that over long periods of time, it always returns to a hundred, which is why...

BECK: So wait a minute. You`re saying that that big line at the end is coming down, back down to a hundred?

RICH: It could go below 100, actually, either because housing prices fall that far or because the price of other goods rises, i.e. inflation, which is where the cost number comes from. It`s a combination of either higher taxes directly or indirectly through the inflation tax. That`s what people are talking about.

BECK: All right. So what does this mean on the cost, then, of this bailout, don?

RICH: Well, the federal government has said THAT it will back, to an unlimited extent, $5.4 trillion in mortgages and associated guarantees. Well, if you look at the index, that means the underlying assets, in the end, their real value is probably around $2.7 trillion.

The federal government either has to extract that much in income taxes over, say, a five to ten-year period or it has to raise the inflation rate to devalue other liabilities of the federal government or some combination of the two. But there`s no free lunch here. That $5.4 trillion is what is promised to remain constant in stated value, where the real -- where the real value of the asset is half that, at best. It might even be worse.

BECK: OK. So in other words -- in other words, we`re going to have to make up at least $2 trillion?

RICH: Well, I think when you look at it, $1.3 trillion is the absolute best-case scenario. And remember, that`s out of a $12 trillion economy over five years, but that is still way past what politicians are talking about.

BECK: OK.

RICH: As you said, they don`t want to talk about it.

BECK: All right. This is, you know, Wall Street went crazy today, and everybody is like, you know, "Hey, this is great." We are marching down the road of socialism so fast your head should spin, America.

And what -- what`s crazy about this is all the people who did this -- I don`t see any hearings. I don`t see anybody calling them out. I don`t see anything other than keeping them on. This is truly about politics and special favors to big business, big banks, and friends in the government, is it not?

RICH: Well, you can see the federal government did very little about this until Bear Stearns collapsed. And then all of a sudden, there`s all this concern in who they`re protecting, is like you say, powerful financiers on Wall Street who have special access to the Federal Reserve, who is the other villain of the piece. It`s not just Fannie and Freddie.

If you look at when the bubble started, it was created by excessively easy monetary policy, which is the hint of how they`re going to pay it off. If the federal government says we`re going to back these loans to an unlimited extent, that means a lot of higher taxes or more likely extended inflation or asset price instability over time. It`s just simple math.

BECK: All right. Don, thank you very much. We`ll talk to you again.

Now, let`s see if I got this right. We bailed out one major Wall Street firm in Bear Stearns. We have now two major mortgage firms. The next thing we need to bail out should be three.

Good news in the paper today. Three companies, the big three auto makers are more than happy to step up to the plate to fill the void.

So you got something again that is just too big to fail. Well, I hope we can all get employee pricing, you know, on a permanent basis, because the taxpayers will technically be owners of the companies, won`t they? And by the way, gang, if you`re in love with the government being, you know, in the mortgage and auto businesses, just wait, because they`re about to take over health care. Mark my words: they`re going to make a move for oil and energy, and the airlines are also too big to fail. It`s coming.

Steven Moore is the economics writer of the editorial section for "The Wall Street Journal." Steve, you and I have disagreed. I think about a year and a half ago you and I were disagreeing. You`re in my camp now, aren`t you, Steven?

STEVEN MOORE, ECONOMICS WRITER, "WALL STREET JOURNAL": You love to tell me "I told you so," don`t you?

BECK: I sure do, because you`re smarter than me, Steve, and I saw this. I`m a recovering alcoholic former deejay, and I saw this coming.

MOORE: Well, you have that advantage over me. You know, I`ve got to -- before we talk about these other bailouts, there is one question over the last 48 hours, as this bailout took shape, that no one in the media except for you, as far as I can see, has asked. How much is this going to cost? The Congressional Budget Office says, "Oh, we think maybe $25 billion."

BECK: No way.

MOORE: If your previous guess was right, it`s not $25 billion, not $250 billion, but potentially $2.5 trillion. So this is one of the biggest rescue plans ever.

BECK: Steve, put this into perspective. Nobody has any -- nobody has any idea what $2 trillion means. Put it into perspective.

MOORE: Well, a trillion dollars is a million, million dollars. So that`s -- that`s a pretty big number. And the thing is that most Americans cannot fathom a number like this.

But when we talk about these bailouts, Glenn, one thing to think about, you know, a lot of people who listen to your show, own and operate small businesses. When is the last time Washington bailed out a small business that got in trouble? It`s only these huge industries that have mega-lobbyists in Washington that get these gold-plated rescue plans.

BECK: OK. Now we`re not talking about -- with the big three, we`re not talking about an actual bailout. We`re talking about loans. But they are -- they`re guaranteed.

MOORE: What`s the difference?

BECK: No, no. Listen to me, I am with you on this, Steven. I mean, I know that the insurance for these loans, because it`ll equal $50 billion in federally guaranteed loans. Fifty billion dollars. Just the insurance -- you know we have to pay insurance when we get a house. Just the insurance is -- what is it, $7 billion, over the life of the loan?

MOORE: That`s right. And don`t forget, when they say, "We`re only giving to give loan guarantees to the big three auto companies, the housing crisis, all of these -- we didn`t give direct subsidies to the housing industry. It was loan guarantees. Doesn`t this sound familiar?

BECK: Yes.

MOORE: At some point those loan guarantees have to be repaid. And, by the way, Glenn, it is -- as I told you before, it`s not just the big three auto companies. Now there`s talk about maybe the airline industry is in trouble.

BECK: I know.

MOORE: United Airlines. There`s almost certainly going to be additional bank failures. Potentially one or two more Bear Stearns. Are we going to bail out them?

And then, of course, I go back to the first question I asked, Glenn. Where is the money going to come from? It`s almost like it`s Monopoly money.

BECK: Well, it`s going to be, soon. Steve, you and I -- you and I talked about this. When we first started talking about, you know, the economy, it was -- all of the financial institutions said, "Oh, no. This`ll be tops 200 -- $200 billion. That`s tops."

We`re now talking about one bailout being up in the neighborhood of $2 trillion. That`s just the bailouts that happened today. What is the end game here? How do you stop it ever?

MOORE: You used the word "socialism." I don`t know if I would go that far, but you`re pretty close. This is clearly the Europe model.

The reason the European models crashed and burned in the `80s and `90s is they did just this. Any time an industry was in trouble they would rush in and bail them out. So what they did was take money from their healthy companies and give it to the companies that were on their sick beds.

If we had this kind of mentality 50 years ago we`d be bailing out the telegraph companies, the stage coach companies, the Betamax producers, all of the companies that have -- I mean, creative destruction. It`s not such a terrible thing when a company goes out of business.

BECK: Yes. Look, here`s the -- here`s the thing, Steve. You know and I know that this is all favors to friends and Congress, and I`m doing a piece on it tomorrow on the radio. Congress is delaying almost everything they can until this next election, so they can have the votes that they need to barrel all these things through. This stuff is coming.

MOORE: Just to make your day, Glenn, I am predicting...

BECK: Yes.

MOORE: ... you heard it first on the Glenn Beck show, we could be facing a $1 trillion budget deficit in 2009. Nobody`s talking about that because we`re passing out this money as if it`s free. A trillion-dollar deficit!

BECK: All right. Thanks, Steven.

And coming up next, a lot to be concerned when it comes to Senator Barack Obama, but let`s not get into the Internet rumors. I`ll separate the fact from the fiction. And it`s important we do so. Next.

(COMMERCIAL BREAK)

BECK: Tonight I`m going to bring you a story and talk about a new skeleton that seemed to have been emerging from Barack Obama`s closet. It appeared that someone else from his past had some controversial views about America, politics, pretty much everything. His name is Dr. Khalid al- Mansour. He is a former Black Panther advisor who had reportedly helped get Barack Obama into Harvard.

Well, as we continued to look into this story today, things began to shake apart. We finally found a reliable source who spoke to al-Mansour, who said he`s never met Barack Obama. OK. How did this story get around?

Just because I say ten times a day I am not a journalist doesn`t mean that I don`t care about the facts. All I want is the truth. I want the truth on both sides.

And that is the thing about Barack Obama. The facts are far more terrifying than fiction could ever be. Why go off on these tangents of "Oh, I hear he`s a Muslim"? What? Stick to the facts.

Barack Obama is -- I swear to you, he`s one of those Awesome Blossoms they have at Chili`s. You ever have one of those? The difference is that, with the Awesome Blossom, each layer you peel away reveals another delicious deep-fried layer of goodness. Um-um.

With Barack Obama the more you peel away, the more you find influence- peddlers and radical reverends and Pentagon bombers. The latest, now, on the presidential nominee is David Freddoso. He is here with us. He`s the author of "The Case Against Barack Obama," a political reporter for "The National Review."

You know, David, I saw this story today about, you know, his entrance into Harvard, and it`s easy to believe these stories because he`s got real- life stories like this in his life.

DAVID FREDDOSO, AUTHOR, "THE CASE AGAINST BARACK OBAMA": Yes, and now, you know, I think it`s interesting in this story that Percy Sutton said those things. It`s undeniable that he said it on New York One about writing the letter at the request of al-Mansour.

I think it`s perhaps important to -- to be careful about whether we`re going to believe what Sutton said. Whenever someone`s as successful as Barack Obama, there are a lot of people there, lining up to take credit. He`s in his -- he`s in his 80s, not well, and unfortunately, apparently, he can`t be interviewed. And the Obama campaign didn`t respond to the report originally, so that if it`s untrue, we wouldn`t get their side of the story on it.

But, so, you know, there`s something there that`s interesting, the fact that Sutton said this. I think that what`s more interesting and that the press has really failed to cover are the problems in Chicago, the real associations that Senator Obama indisputably had, where there`s absolutely no question.

Particularly, just this Friday another story came up that`s being ignored, which was that the city had to re-award a sewer inspection contract that originally had gone to a firm where Patrick Daley, the son of Mayor Daley, and Obama`s very close ally, Mayor Daley, and his nephew had gotten this -- they had an ownership in the company, and apparently, they didn`t disclose their interest in it. They had gotten $8 million in city work. That -- that contract is finally being awarded on a non-friends and family basis.

But this is the way Chicago works. It`s just one more story among so many. And it is a corrupt system...

BECK: Wait, wait. Let`s be careful that I understand this. You`re not saying that Barack Obama had anything to do with that, awarding of that?

FREDDOSO: No, he didn`t award the contract. Senators don`t do that.

BECK: Right.

FREDDOSO: But what he did -- but what he did is he has repeatedly endorsed Mayor Daley. He`s never criticized Mayor Daley for the way Chicago is run. And for someone who claims to be about changing the system for the better, he`s definitely never done that in his entire career in Chicago.

BECK: I think -- I think, David, that is the thing that I find interesting about Barack Obama, is he talks about that he is a great catalyst for change, and I think he is. I think he`s just a change to socialism. He`s not a change of the system.

He was on with -- who was it -- one of the guys had a spokesman on over the weekend. I`m trying to remember. And he was talking about how, you know, you always say that, you know, you`re going to reach across the aisle, but you`ve done it.

The two big things that they always quote are the getting Google -- getting Google to actually put online the budget and -- and the political reform that everybody -- it was -- it was unanimous. He doesn`t have any record of change.

FREDDOSO: What`s really interesting about this ethics reform bill from 1998 is the fact that it was -- it was someone else`s bill that he`s carrying and...

BECK: I guess we`re being told to shut up. I`m sorry. Dave, thanks a lot.

(COMMERCIAL BREAK)

BECK: It`s no surprise that American hospitals provide the finest medical care in the entire world. However, you may be surprised that our hospitals are giving care to more than just Americans.

The hospital in the border town of El Paso, Texas, has been treating dozens of Mexican patients, most of them suffering injuries in gunshot wounds resulting from Mexico`s out-of-control drug war. This will cost El Paso an estimated $1 million just this year.

So why are we spending hard-earned money of Texas taxpayers to pay for the health care of Mexican nationals and crime victims that are brought across the border? Because the United States federal law says they have to.

John Cook is the mayor of El Paso, Texas.

John, I don`t know. I mean, I think I read a story with you where you said, "I couldn`t, if I were shot or had some kind of injury I couldn`t get across the border to their -- to their hospital as fast as they`re somehow or another getting over here."

What`s going on?

JOHN COOK, MAYOR, EL PASO, TEXAS: Well, you know, Glenn, one of the things you have to realize is, out of the 34 people that we`ve treated from gunshot wounds in the drug wars, 25 of those people are actually U.S. citizens who live or work in Mexico. The other nine all have proper documentation.

Yes, we were surprised at just how quickly they get across, and what they`re doing is they`re calling for 911 service as soon as they get over to the U.S. side.

BECK: OK.

COOK: And then they assess them and say this is a trauma level one patient, and we`ve -- the closest trauma hospital is Thomason (ph), and that`s a county hospital. The nearest one other than that is 280 miles away.

But you know, there`s a bigger elephant in the room than these 34 victims of the drug wars, and that`s that 6 percent of Thomason`s (ph) approximately $340 million-a-year budget goes for treating people other than U.S. citizens. They get across the border...

BECK: Wait, wait, wait. Wait, wait. John, wait a minute.

COOK: Sure.

BECK: Are you -- it`s my understanding that you went to Washington to ask, "Do we have some sort of secret deal with the Mexican government?"

COOK: Well, I didn`t actually go to Washington. I did ask that question, though.

BECK: OK. What would make you -- go ahead.

COOK: What made me ask the question is how come these people are getting across when it takes me two hours to get across the bridge from Soledad Juarez (ph) to El Paso. How does a gunshot victim that has 21 bullets in him get across the border in time for us to save his life without having to wait like I did?

BECK: OK. What was -- what was the answer? Because this hospital -- and correct me if I`m wrong -- has now lockdown situations or has homeland security color coding systems, because you don`t know who`s in the hospital.

COOK: Well, we`ve only had three cases where we went to what we were calling heightened security, which means everybody comes through one entrance, goes through a metal detector.

But if your grandma was in the hospital, and you had to go through a metal detector to go visit her and get past armed guards with AK-47s or M- 16s -- whatever they carry -- it would probably make you a little bit nervous going to visit grandma.

BECK: OK. Did you get an answer? I`ve only got 15 seconds now. Did you get an answer from the government? Is there a secret deal that we don`t know about?

COOK: We were told there`s no secret deal. Everybody came in the country legally.

BECK: Do you believe it?

COOK: Well, I wish I could get across the border that quick.

BECK: OK. Thanks, mayor. Appreciate it.

Coming up, Sarah Palin may have just rescued this election for John McCain. We`ll get to know her a little better with somebody who actually knows her. Tonight`s "Real Story," next.

(COMMERCIAL BREAK)

BECK: Coming up the guy who brought you comedy classics, "Airplane," "Naked Gun," all of those. He`s about to release a new movie and the rumor is -- it`s conservative. We`ll be looking at a little equal time in Hollywood? Is that possibly true? David Zucker and I will dream the impossible dream in just a minute.

But first, welcome to the "REAL STORY." The latest CNN poll numbers show that Barack Obama and Republican John McCain are in a virtual dead heat. I saw on "USA Today" that John McCain and "USA Today" had him up by ten points. Well, there are a lot of people are saying that`s due to the selection of Alaska governor Sarah Palin, his running mate. She`s the one tightening the gap and breathing new life into the campaign.

But the "REAL STORY" is people want to know the "REAL STORY" on Sarah Palin. Who is she? If you watched this program you`ve seen and heard her courageous stance on a variety of issues from the sanctity of the second amendment to understanding the family as the cornerstone of our society. I believe there`s a lot to like about Governor Palin.

So far, she`s one of the few things that John McCain and the Republicans have done right in this election. But in record time, Palin went from a name at the bottom of a short list; the only one that has interviewed her on television that I know of before they announced was me. And now the liberal media has wasted no time going after her. Oh, they got to find out everything about her and they`re aiming way below the belt.

So while more skeletons climb out of the Barack Obama closet and the main stream media doesn`t whisper a peep, let`s find out what Governor Palin is all about. She`s forced to answer all sorts of personal questions that prove the double standard is alive and well and kicking in high gear for the election.

Let`s separate the facts from fiction. Somebody who actually knows the truth, she`s worked with her. Meg Stapleton, is a former aide to Governor Sarah Palin. Meg, how are you?

MEG STAPLETON, FORMER AIDE OF GOVERNOR SARAH PALIN: Glenn, I`m doing great. Thanks for having me. It`s an honor to be here.

BECK: Ok, here`s the thing, Meg. I read today the new one if I can remember, Sarah Palin hates Eskimos and that`s why the Republicans are for her, because she`s a racist. Now, I swear to you, that was the latest I heard today.

STAPLETON: You know I cannot begin to tell you the ridiculous claims that have come in. Well, maybe I can. You`ve seen them. We`re seeing them. Her husband is U-peak Eskimo, Glenn. I mean -- that doesn`t even make sense. Her children are part Eskimo. She adores the first people, the native peoples of Alaska. She respects their lifestyle. It drives some of her management of the state. That is absolutely ridiculous.

BECK: Ok. She has -- what is it -- an 83 percent approval rating?

STAPLETON: It is around there, yes. I think the latest number I saw was 82 but 83 is about right.

BECK: Ok. Let`s debunk some of these things. Next one is, if she`s not a racist she`s a liar. She never sold her jet on EBay?

STAPLETON: Ok. Let`s clarify some of this. What she has been saying is I put that jet on EBay. Did she put the jet on EBay? You bet. It went through a number of rounds on EBay and it came to a point where she said we need to get rid of this thing because we continue to waste state dollars on a Murkowski investment that`s a symbol of corruption. When I say investment it`s facetious.

To sit there and say and to pick whether it was actually sold on EBay, it drew a number of bids. She said I think we can command an even higher price. Let`s make sure we ultimately have to pull in a broker. I don`t want to do it but we need to make sure we get the most for this plane.

And so we brought in a broker who commanded the highest dollar possible and it sold to a broker. But she did put the jet on EBay. It stayed on EBay and it drew worldwide attention.

BECK: All right, Meg. Now let me see if you can debunk this one. I saw the photos. She didn`t look pregnant. Nobody even knew she was pregnant.

STAPLETON: Glenn, that`s true. Nobody knew she was pregnant. I think she is a very private person.

BECK: Yes.

STAPLETON: To say that they saw the photos because she is a slender woman and a runner, I mean this is just so ridiculous. I can`t tell you how many times I have had to defend the fact that Trig came from the governor`s body. And I find it so disgusting and I`m to the point where I just say, forget it. We`re not talking this.

We`d really like to start talking about the issues. Do you know that this governor is the only governor to bring an Alaska natural gas pipeline to market and to get it moving forward to bringing in our natural gas to market to help Americans?

BECK: I do.

STAPLETON: And I know you do and I appreciate the fact that you are at least focusing on those issues.

BECK: Yes. I will tell you, Meg, I love her. I hope to God that she understands the position that she is now in. That if she isn`t who she says she, is a lot of people are looking at her saying you know what? I`m going to go but only because I think I trust this woman to actually be a guardian for the values that I hold.

Somebody that can say, you know what? Here, let me give you this, Meg. I will vote for her because I believe that she`s the kind of person that will do what she did with the ethics committee and just walk out and leave and then rat these people out.

STAPLETON: You bet. You know what? So many people said, wow. That was a $125,000 salary you gave up. You really think that it`s worth for the ethics? She didn`t even hesitate, Glenn. She got up and walked out.

And you know what, that 82, 83 percent approval rating comes as they say because she has taken on 83 percent of the corruption in this state. She`s still getting to the rest of it.

And as a result to that, she`s got a huge target on her back and there are people who will just fight reformation, they`ll fight the maverick in her, and they`ll fight the fact that she is changing the state and can now change the nation with John McCain.

BECK: Ok. Tell me a little bit about Troopergate because this is being spun out of control. First of all, tell me who the trooper is. Everybody knows that, you know, he threatens the life of her father but tell us the whole story on him.

STAPLETON: Well, I mean the whole story is, and unfortunately it was a nasty divorce battle that has now garnered nationwide attention.

Look. It was a trooper who, let`s put ourselves in the family shoes, still patrols the neighborhood of the guy he threatened to kill, the governor`s father, of the ex-wife who he physically abused, of the stepson he tasered and admitted to. I mean this a guy who still patrols the neighborhood of the family members.

And they have every right to be absolutely concerned about not only their safety but the safety of the community because he`s also been reprimanded and suspended for driving with a beer in his hand in a marked patrol car. This is not a good individual.

BECK: Ok, people are saying that, well, then why is she trying to bury everything by having it in the personnel board? A personnel board where she appointed every single person on that board?

STAPLETON: Ok. First of all, I think you know, Glenn, she did not appoint that personnel board. And in fact, those are holdovers from the Murkowski administration; the same governor she took down for being part of that entrenched establishment.

So if there is any personnel board that may not actually be in her favor, this may be the personnel board. She has re-appointed one of those but she has not had any influence on that. Secondly, that`s the law, Glenn, as you know. That is the only way to deal with personnel action and the ethics act directs people to that personnel board and that is the legal way to do it.

If you also, thirdly, look at the comments of those on the legislative counsel, when they first voted to form this legislative council and to look into this investigation is what they`re calling it, they said we`ll keep an arm`s length with this partisan investigation and we won`t get into partisan politics.

This governor is chosen by John McCain and what do they do? They come out and say can`t wait for that October surprise. Boy, we`re looking forward to the fact that letting everybody know how damaging this is going to be to this administration. How the heck, Glenn, are they working through an apolitical, nonpartisan investigation and giving the result of that, saying it`s going to be damaging, --

BECK: Yes.

STAPLETON: -- when it hasn`t even begun.

BECK: Ok.

STAPLETON: And so you look at that and you say, we`re going to move this to the legal authority here, the personnel board.

BECK: All right, let me ask you two questions. I only have 40 seconds left.

STAPLETON: Ok.

BECK: First of all, is she good at a debate?

STAPLETON: Yes. She is very good at debate. And if you look at her during the primary, she took on those guys, including an incumbent governor Frank Murkowski who had been serving in the senate for years and decades.

BECK: All right, second of all is her husband uncomfortable with how many of us down here in the lower 48 find her hot? I`m just saying.

STAPLETON: I don`t know. I haven`t spoken to him about it. I`m sure he`s pretty used to it by now, because I`ve seen hottest governor in the coldest state. I think he`s gotten used to it.

BECK: Oh she is hot. Meg thanks a lot. Appreciate it and I hope to talk to you again.

STAPLETON: Thank you.

BECK: Coming up the comedy legend behind the upcoming film "American Carol" David Zucker, we`ll laugh at the left, yes, from right here in Los Angeles, California. Actually I`m in Hollywood. Don`t miss this rare Hollywood occasion. Coming up next.

BROOKE BALDWIN, HEADLINE NEWS CORRESPONDENT: I`m Brooke Baldwin.

And we`re with your "Headline Prime Newsbreak" is the O.J. Simpson trial began Monday. And the judge was quick to warn the potential jurors if they want to punish Simpson for the 1995 murders, this is not their case.

Simpson and his golf buddies are accused of robbing two sports memorabilia dealers last year in a Las Vegas hotel room. They face charges of kidnapping and a robbery with a deadly weapon and if convicted could face life in prison. Jury selection should take a week.

And of course, once the trial begins keep it right here on "Headline News" for complete live coverage beginning with the opening statements.

Time running out for those tree sitters of the University of California Berkeley. Four protestors have been living in a redwood for 21 months, all in hopes the tree would not be cut down but Monday a California Court of Appeals gave the university the green light to bring down the tree to make way for a new sports center. The tree will be cut down this Thursday.

And a father and his 12-year-old autistic son were swimming off the coast of Florida when they got caught in the current and swept out to sea. They spent more than 12 hours overnight treading water before being rescued by the coast guard.

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CHRIS MARINO: The coast guard rocks. God bless the coast guard.

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BALWIN: Amazing. The father and son got separated when the tide pulled them out. They were an entire mile apart when they were rescued.

And a 3-year-old little girl in eastern England is still alive today because of her dad. This is amazing. Leona Faster, fell into a concealed storm sewer, carried 230 feet underground before being shot out into a flooded river.

Her dad watched the whole thing happen, was able to follow the drain to the river bank, then jumped in and saved his daughter`s life. The girl was taken to a hospital and treated for cuts, bruises, and hypothermia.

And that is the news for now. I`m Brooke Baldwin.

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BECK: There is one thing that I have learned. And here it is. You might love to eat sausage but you never, ever want to see them put the hooves into the little grinder. You`re like I think that was a tooth.

You might like the news. You might trust the news. But you never, ever want to see it made because when you see the raw stuff, and you will see exactly how it`s been edited and clipped and positioned to tell a totally different story.

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BECK: And I think that is a tooth in this story. David Zucker is responsible for legendary films like "Police Squad" and "Naked Guns" and "Scary Movie 3 and 4". When he is not writing, producing or directing some of the funniest movies in the last 25 years he has for some reason or another decided to become a pariah. He is one of the few outspoken conservatives.

His latest film is "An American Carol" and takes aim at a -- this is unkind -- but a huge target. Here`s a look.

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MICHAEL MOORE, ACTOR: I`ve got two Americans here, Bob and Joan Friedman who are injured during hurricane Katrina caused by you know who but still haven`t been able to get an American doctor to pay a simple house call to their gated community in Shaker Heights.

And why; because we`re spending all the money on the military buildup for this phony war on terror. Doctor, we just want the same care you give your own people.

UNIDENTIFIED MALE: Ok, then get in line.

UNIDENTIFIED MALE: Oh, oh, comrade.

(END VIDEO CLIP)

BECK: Well, I can`t believe, everybody loves Michael Moore in Hollywood. What the hell are you thinking?

DAVID ZUCKER, CONSERVATIVE IN HOLLYWOOD: Well, I have correspondence going on with people in the middle of the country so like I know people in Tennessee; there`s a guy Jim Clayburn, and I know guys who shoot flintlock rifles.

BECK: What is it like to be, to live out here, work out here, and to be a conservative?

ZUCKER: Well, it`s like when we first came to Hollywood we were out of the business and so I kind of got nostalgic.

BECK: You`re like, yes.

ZUCKER: Out of business again. Well, it`s a minority and --

BECK: Does it concern you at all? I mean, you`ve made hugely successful films and now with "American Carol" if you don`t make a lot, even if you do make a lot of money --

ZUCKER: Well, you`re allowed a few bombs.

BECK: Not conservative bombs. Are you new to this?

ZUCKER: But I still have a lot of ideas. Even if this doesn`t perform, but I really don`t think that it won`t perform. I mean, I don`t do movies to be a martyr.

BECK: Yes.

ZUCKER: And although -- you never know, but the movie is funny and it plays great and even to my liberal friends, which is all of them.

BECK: Yes, how do I say this, because you`re a September 11th conservative, right?

ZUCKER: Yes. I`m a September 11th. I came over -- I mean I voted for Gore. I just stuck with the Democratic Party as far as I could -- oh, yes. No.

There have been articles that have written about me. I cringe it because it says, you know, they see what my campaign contributions were and I gave a thousand dollars to Barbara Boxer and everything and I mean, now, I --

BECK: And so how much have you changed? I mean -- are you a one issue guy or are you just like the war on terror and everything else?

ZUCKER: Well, no I was a one issue guy and it was the environment. I just clung to the Democrats because I thought they, you know, had a better take on that. But then after September 11th I literally said, "Oh wait a minute, they`re trying to kill us."

And then I saw the reactions of both parties and it was one party was saying, well, how is this our fault? You know, what have we done to deserve this? And it kind of got me angry. And the other party said, hey. Let`s go and let`s defend the country.

BECK: So when you made this movie "American Carol" it comes out when, October?

ZUCKER: October 3rd.

BECK: October 3rd, did you make it with an intent of influencing the election?

ZUCKER: No, you know, I can`t have that much hubris to think that I would actually influence an election but it is done for, because people will be talking about the election during that time. So, I mean, this is, you can do a movie like this probably once every four years.

BECK: So the premise of the movie is what?

ZUCKER: Well, it`s a take off on "Christmas Carol" only instead of Christmas it`s the 4th of July and instead of scrooge its Michael Moore, I mean it`s a parody of Michael Moore. Our Michael Moore wants to abolish the 4th of July. He`s saying bah humbug to America and the 4th of July. I mean it`s an exaggeration and I`m sure --

BECK: Have you heard from Michael Moore?

ZUCKER: No but he was on Larry King and Larry King I think surprised him a little bit and showed him a clip from this.

BECK: Yes, do you -- you said you don`t have the hubris to think that you could change the election. Michael Moore does.

ZUCKER: Well, I will definitely change the election if it comes down to ten people in Florida. I`m going to change their minds.

BECK: It may.

ZUCKER: And they`re going to come to me be gracious and have some gratitude.

BECK: Yes. What do you think about the conservatives -- I`m a conservative -- what do you think about the conservatives saying can you stop with the message movies? I just want to go and be entertained but I want to see this movie. Am I a hypocrite?

ZUCKER: But all movies are message movies. I actually like Rob Rhyner movies. So he makes a movie called "American President" and the bad guy is a Republican. It`s Richard Dreyfus and I`m sitting there with everybody else rooting against those bad Republicans. But it`s entertainment.

Barbara Boxer and remember the Rob Rhyner. Oh no, I have much to be embarrassed about and people could pick certain movies that I`ve done but - -

BECK: All right, does in the end, and don`t wreck anything, but in the end does Michael Moore -- does he change his ways?

ZUCKER: Yes, he changes his ways and becomes a right-wing Republican.

BECK: So I don`t want to miss it.

ZUCKER: Of course it`s a happy ending.

BECK: All right, that is coming out October 3rd and check it out in theaters everywhere.

Coming up, stories buried in today`s headlines. You don`t want to miss it, that`s next.

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BECK: And finally this note. Late tomorrow night the world will end. No, this isn`t my bi-weekly warning of the apocalypse this time it`s coming from other crazy people.

Late tomorrow night, U.S. time, the LHC or large Hedron Collider located near Geneva will fire up. Now if you`re one of the rare people who just don`t understand super colliders, like I do, basically the vice will re-create energy that hasn`t been seen since just after the big bang.

They`re going to smash particles together at near the speed of light. Some believe that when this thing turns on it will form many black holes that will swallow up the earth. The report I read today had scientists saying they are pretty sure they have this under control and that many black holes won`t destroy our planet. That, of course, will come from your SUV.

I think that maybe, and maybe it`s just me, they should be a little more than pretty sure they`re not going to cause a whole bunch of black holes that will suck the earth into it and destroy the universe before they can turn the damn thing off, but call me Mr. Safety.

Now, speaking of intellectual conversation with those with giant scientist type brains, we showed you last week the devastating political analysis of Mr. P. Diddy who had this to say about the selection of Sarah Palin for vice president.

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P. DIDDY: Alaska? [bleep] what is the reality in Alaska? There`s not even no crack heads in Alaska. There`s not even -- no black people. There`s not even no, like, crime, or like foreign policy.

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BECK: Just a bit of advice to P. Diddy, you know, P., if I may call you that, you can re-cut these videos. I mean if you`re really blow it or you just do it over it`s ok, we`ll just post it when you get it right, really.

Apparently, Mr. Diddy has since learned that there are black people in Alaska. Who knew? I`m not sure whether they have any foreign policies there, though. Diddy felt the need to respond.

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DIDDY: Diddy blog number 16. I`m sorry, so sorry. I would like to take out the time to personally apologize to all of the citizens of the great state of Alaska. Now my Diddy blog there was meant to come across as funny and humorous. At the same time to kind of promote some thought.

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BECK: Well, promote thought? Mission accomplished. Thank you, Mr. Diddy. From Los Angeles, good night America.

END