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In the Arena
Worst Day of the Year for Stock Markets; President, Republican Congressmen Talks Debt Ceiling; The Face of Syrian Struggle
Aired June 01, 2011 - 20:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ELIOT SPITZER, HOST: Good evening. I'm Eliot Spitzer. Welcome to the program.
It was the worst day of the year by far for the stock market. Take a look at this chart. It dropped from the Opening Bell, ended up down nearly 280 points, 2.2 percent down in one day.
And there's a simple reason. No jobs. Big report came out today that said the private sector created only 38,000 jobs last month. People had thought there'd be close to 200,000 created. And we need at least 150,000 every month just to keep up with population growth.
We have 20 million unemployed Americans. And we've got a job crisis. On top of that, we've got housing values, housing prices dropping, down 33 percent, since their peak a couple of years ago. A bigger drop than during the Great Depression.
Folks, this is a dismal, dismal situation we're in. Much more of what is turning out to be a terrible recovery in just a minute. But first, the other stories we're drilling down on tonight.
(BEGIN VIDEO CLIP)
SPITZER: Is this the face of an uprising in Syria? Will the violent death of Hamza al-Khateeb be the tipping point that brings down a brutal regime?
And cancer. Your cell phone could be a carrier. We've heard it before. But E.D. Hill tells us this time there's reason to worry.
Then some potential Republican candidates for president make great TV. But a former adviser to John McCain warns the candidates who are good for the media may not be good for the party.
(END OF VIDEO CLIP)
SPITZER: We begin with our top story. The stock market losing nearly 280 points, the biggest one-day drop since last August.
Joining me to discuss the economic and political implications of this plunge, from Harvard, CNN senior political analyst David Gergen. And in Berkeley, former labor secretary, Robert Reich, author of "Aftershock," now available in paperback.
Welcome, gentlemen.
Secretary Reich, let me begin with you. Jobs are not being created. The job market terrible. Housing prices declining. Corporate profits still up. If you were still in the Cabinet and you could go to the president with one policy to create jobs, what would it be?
ROBERT REICH, FORMER SECRETARY OF LABOR: Eliot, there's no magic bullet. I don't think I would say to the president there's one policy. I'd come with an assortment. I'd say, let's have another, a neo-WPA to get the long-term unemployed. Let's exempt the first $20,000 of income from the payroll tax to put money directly in people's pockets and create incentives for businesses to actually hire.
Let's allow people, homeowners who are in trouble to declare personal bankruptcy on their primary residence so that they have more leverage with lenders to reorganize their mortgage and to get better terms.
There are a lot of things that can be done. No magic bullet.
SPITZER: Secretary Reich, that is a very wise array of policies.
I'll get to you, David Gergen, in one second, but Secretary Reich, here's the problem. All of those are things that run right into the jaws of the Republican congressional concern about the deficits. Every one of those policies costs money. The Republicans are saying all we're doing is cutting now.
So are any of those politically viable given the climate which focuses exclusively on deficits?
REICH: Well, I would say -- again, if I were advising the president, right now the public should not focus on, does not care about, is not really the central problem, the budget deficit.
Yes, we need a long-term deficit strategy but right now the central problem is jobs, and the economy and getting growth back and getting wages back.
So, Mr. President, look it, as more -- as important as that long- term budget deficit issue is, right now change your focus, don't pay attention to these Republicans. Make a fight out of what they are stopping you from doing. Because jobs and the economy are the most important thing facing Americans right this moment.
SPITZER: Secretary Reich, I could not agree with you more.
David, let me come to you. Isn't there a problem now? Because the president's entire political debate relates to the deficit. And yet in order to get out of the economic quagmire that we're in right now, he may need precisely the policies that Secretary Reich discussed.
In other words, a second stimulus, a second round of fiscal policies, but there's no political argument that he's making or that will carry Congress towards those policies right now. Isn't he in that bind right now?
DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Yes, he is, Eliot, but it is really as these darkening -- this picture darkens and it is. It was particularly stark today with manufacturing, with housing, auto sales, jobs. All of these issues.
As Bob Reich I thought wrote well in the "Financial Times" today, we obviously have an economy that's stalling out. And we're in very great danger of a double-dip here now which would be -- which would be a very big disaster for an awful lot of Americans.
So I do think that there has been almost a paralysis in Washington in dealing with today as opposed to looking down the road to tomorrow. However, that also gives an opportunity to strike a bargain. And that is, I do think the president has room here, if he would take the lead, to say we must do four or five things right now to deal with these jobs issue.
You know payroll tax holiday was something that Republicans would go along with. You know something back on the housing credit side because -- you know the housing market is falling apart again. These kinds of things.
Exchange that kind of effort. And in exchange for the president going deeper with the kind of spending cuts he doesn't want to make over time. But start those spending cuts a couple of years down the road as the Bowles/Simpson commission argued all along. But go deeper on that side down the road than he would otherwise. That's a bargain he could strike.
SPITZER: You're basically saying let's transition this issue. One of the immediate issue is job creation. The deficit is an issue we have to deal within year three and four. But in years one and two, let's get job creation because without growth all the revenue prediction -- projections will be thrown into the soup anyway.
GERGEN: Yes, let's get out of the ditch first because we're sinking deeper into that ditch. Bob Reich and I agree on that. I think he stated it well. But I also believe, and I disagree with him on this point, I think Americans are rightly concerned about the deficits. They're rightly concerned about the level of spending. And there ought to be some kind of agreement.
If you're going to -- if you're going to provide more help for the economy now, it's got to be done in exchange for deeper cuts that are built in, that are permanent, that are reliable down the road.
SPITZER: Look, I happen to think that the two numbers that are going to determine the presidential race in 2012 are the unemployment number and whether housing values are going up and down.
Secretary Reich, let me come back to you. If you need -- you mentioned the capacity to reform mortgages. That was proposed in the United States Senate. Voted down. Is that we need to go back to, to relieve homeowners of that burdensome debt just the way we relieved banks of so much of their debt?
Do homeowners need to be relieved of some of the debt that they can no longer afford to carry? And how do we get to that policy?
REICH: Well, Eliot, that's certainly part of it. I mean, look it, we bailed out the big banks. I think that one of the conditions we should have put on the big banks to get that bailout, you know, two years ago, was you've got to renegotiate these mortgages so a lot of people who were caught with predatory loans, could not pay, they can now pay.
But we didn't do that. And now we ought to go back to the banks indirectly. This is why I think that changing the bankruptcy laws to allow individuals to declare bankruptcy on their personal residences, gives them so much more bargaining leverage with their lenders, with their banks, to renegotiate those loans.
It's something that the big banks in New York don't want. Obviously, they don't want it. But look it, we've got to do this. Because what's happening is it's not just a problem for individual lenders -- individual homeowners who are under water or can't pay their mortgages.
What's happening is the entire structure of the housing market is going down. Housing prices are going down all over the country because this has a kind of multiplier effect. If people cannot pay their mortgages, then their homes go on the market at discounted rates and that means everybody else's home value goes down as well.
SPITZER: Mr. Secretary, the crisis and the cycle of the additional foreclosures leading to more supply, leading drivers -- prices to even lower is a disaster.
David, last question, quickly, is there any political appetite in Washington to go back to the banks now and say, look, we gave you the money when you needed it, now you've got to ante up?
The housing market is still a disaster, you must agree to reform these mortgages one way or another or else our economy will continue to sink. What do you think? Is there political appetite for that?
GERGEN: There's no -- there's no appetite right now for this. And there's almost a singular, almost obsessive focus just on the debt ceiling question.
But these numbers, Eliot, as the news comes in, there's going to be a jolt out of this. I mean all of us are looking at this, oh, my goodness, this is terrible, we've got to get this economy up and running again. You have to have a good running economy. You've got to get some growth in order to deal with the deficits.
SPITZER: All right, David Gergen, Robert Reich --
REICH: David, I hope -- I really hope you are right, David Gergen. SPITZER: All right, we hope you're both right. All right, guys, this is a dismal day in the stock market and even more dismal day for those of us who live in the real economy. Thank you to both of you for coming on the show.
Coming up, the president and Republicans continue to play a dangerous game of chicken over the debt ceiling. We'll meet one congressman who refuses to blink. But first, let's go to E.D. Hill.
What are you working on, tonight, E.D.?
E.D. HILL, CNN CONTRIBUTOR: Well, I'm not necessarily bringing you any good news. If you are one of the people, and I think like most of us, who talk on your cell phone with it right up to your face, instead of holding it about an inch or so away, we're going to explain to you why that could be almost as detrimental to your health as pesticides and lead.
SPITZER: Not good news.
HILL: Yes.
SPITZER: And now we're going to start walking around with our phone this far away.
HILL: Yelling.
SPITZER: All right. This is going to be a new fashion trend.
All right, thanks, E.D. Look forward to it. We'll be right back.
(COMMERCIAL BREAK)
SPITZER: It's a fact of life. The government spends more money than it takes in so we have to raise the debt limit, allowing the government to borrow more money to pay off our debts.
Why is this such a critical issue? Because the world depends on an America that pays its bills.
My guest tonight hiked through the haze in the heat in Washington to talk debt ceiling with the president today.
Congressman Steve King, welcome to the show.
REP. STEVE KING (R), IOWA: Thanks for having me on. I appreciate it, Eliot.
SPITZER: Our pleasure. Look, let's see if we can agree at least on the premise. Do you agree with the White House and a boatload of economists out there that if we don't raise the debt ceiling and go into default, that would be an economic cataclysm?
KING: I think it could take us into that if -- you know, if we slide into that thing over a period of time. I don't think there's a hard break on it that gives us a definite date. But it's something that is impending.
And I think it will also be responsible for -- especially the conservative members of the House to say to the president, we're just going to give you a new credit card. There's got to be some kind of agreement here.
If we fail to do so, then also the credit markets will start to dry up because they will lose faith in the full faith and credit of the United States because we will not have kept our house in order.
SPITZER: Look, Congressman, the backdrop to this of course is today's dismal economic news and it could get worse on Friday with the sort of more -- the broader employment numbers coming out from the government.
But let me ask you this, what is the bargain you would like to see struck? What could the president say to you or what would you offer to him to get you to vote yes on raising the debt ceiling? What do you want to see in terms of deficit reduction plan?
KING: Well, I would lay out four things. Two of them be predicates to the discussion. The first one is to pass Congressman Louie Gohmert's bill that guarantees that our troops will be paid on time, every time, no matter the circumstances so they'd never be used as a leverage in a bargaining device in this Congress again.
That's number one. Number two is, Tom McClintock's full faith and credit bill that sets up the sequence that the bills would be paid in the event of hitting a debt ceiling. If we can get both of those things put into law, then it wouldn't be political leverage and we could talk about the pieces that I think are necessary.
For me, if the president would like to see a debt ceiling increase of $2.4 trillion, we can cut off $2.6 trillion in outlays in the first 10 years, if we just simply freeze the spending on implementation or enforcement of Obamacare.
That's my marker I'd put down. The other one, we'll be taking up tomorrow in the Judiciary Committee which is Congressman Bob Goodlatte's constitutional amendment to require a balanced budget and that's worth a lot, I think.
SPITZER: Bur wait, Congressman, I got to push you a little bit here. The first one, paying the troops, everybody agrees on that. The second one, setting up a sequence so that if we don't have enough money -- that's a little technical. Lawyer's deal with that. But that's saying it making it easier to go into default. Let's not go there but let's not debate that right now.
KING: Yes.
SPITZER: Three, I think you're just factually wrong. The Congressional Budget Office has said that Obamacare, which is your phrase for the president's health care bill, will actually save trillions of dollars over the next decade. So -- but what I think I just heard you say is the only actual spending cut you're suggesting, put aside a balanced budget amendment -- that's words, I don't diminished it, but it's words. The only cut you're suggesting is repealing health care. Am I correct?
KING: I would go through a whole series of cuts that are discretionary spending. I would address entitlements. I would do all those things.
SPITZER: Well --
KING: But to put one marker up on the table that $2.6 trillion in outlays, that's chairman of the Budget Committee Paul Ryan's number in the first full 10 years after the implementation of Obamacare is $2.6 trillion.
So I put that up to juxtapose it against the president's request for $2.4 trillion in new borrowing authority as a means to compare the two.
SPITZER: Look, I think we have a factual disagreement over whether that repeal would save anything. I think repealing would cost money.
Put that aside for a minute. Let me give you another one to see how you respond to it. We spend $6 billion a year subsidizing ethanol production, which "The Wall Street Journal," a very conservative newspaper, the bane of my existence for a couple of years, has called a racket. I think they called it a shameless racket.
You're from Iowa. Gets a lot of money through that subsidy. Would you support repealing that $6 billion a year that goes straight to the ethanol industry?
KING: There's a limited amount of time on this, Eliot, so I'm not going to -- I'm not going to take you down through all the components of this, but I will say this.
The federal government provided an incentive to build an industry for renewable fuels. We've done that. Now the industry is talking to me about how they are willing to accept a soft landing and wean themselves off of the blenders' credit, which is a subsidy to produce ethanol.
So I think they are ready to go there and the timing and the sequence of it is still open to debate. And yes, I will support that. It looks to me like the industry is ready to accept that. And over a very short period of time, I think the industry can stand on its own two feet.
SPITZER: All right.
KING: So I think we get there and resolve that issue eventually.
SPITZER: All right. Look, I'm with you on that. Anybody from Iowa willing to say repeal the ethanol subsidy, even if it's over a matter of years, I applaud you for that courage. You may have some tomatoes thrown at you or corn ears thrown at you when you get back home.
(LAUGHTER)
SPITZER: Let me throw these numbers at you. The Bowles/Simpson bipartisan plan would have cut $5 trillion -- I'm going to make sure I got this right -- over a decade. The Paul Ryan -- your guy's plan, chairman of the Budget Committee, Republican -- cuts $6 trillion, excuse me, requires $5 trillion in additional borrowing.
Paul Ryan requires $6 trillion in additional borrowing. And the president's budget requires $7 trillion in additional borrowing. They all require that much additional borrowing over the next 10 years.
That blue line there on the screen is where we -- the current budget -- the deficit limit is right now. The red line is what is required by Paul Ryan.
So given that your own plan requires an incremental $6 trillion in borrowing, don't you need to agree with the president that raising that debt ceiling is a necessary next step?
KING: Well, I think you also have to agree that the Ryan budget cut $6.2 trillion out of this. And in looking at your chart, and I can't see what you have, but I think I've seen the same chart, the president's line is above Paul Ryan's line. And it's off the chart. And I don't know where that actually goes --
SPITZER: No, no. Congressman, I agree with you. As I said, Congressman Ryan's plan requires $6 trillion in borrowing, the president's, $7 trillion and the Bowles/Simpson plan, $5 trillion. So either one of them, any one of the three, we're borrowing $5, $6 or $7 trillion additionally over the next 10 years.
Even your plan requires $6 trillion. That's why I'm saying, shouldn't we just agree to go forward with the borrowing and then figure out which one of these plans which we want to embark upon, rather than risking the credit of the United States in trying to resolve this in the next two weeks?
KING: Let's say, Eliot, I won't disagree. What you said is true in the short term. In the longer term, though, the Ryan budget does get to a balance. It takes too long to suit me. Twenty-six years to get the balance does not satisfy me.
It doesn't satisfy me to tell my sons that are in their early 30s that they'll work their whole working career and when they're ready for a retirement, we'll finally balance the budget and they can start to pay interest and debt on that budget.
I'm not satisfied with that. I supported the Republican Study Committee's budget which balances in a little less than nine years. Heritage Foundation has a proposal to do something in the same period of time. All of them, though, do require, to your point, an increase in the debt ceiling. My point is that if we just simply increase the debt ceiling, we will get more and more spending and if that's the case, it will be back to haunt us a lot sooner than we need to. We need to be able to put together a longer-term plan here that gets this budget under control, Eliot.
SPITZER: Look, I appreciate you coming on TV. Being what it is, we're going to have to continue this conversation some other evening.
KING: Thanks.
SPITZER: I hope you can join us down the road.
KING: I'm happy to. Thank you.
SPITZER: Congressman King, thank you so much for being here.
Up next, could a 13-year-old boy's brutal death become the spark that helps topple Syria's government? That story when we come back.
(COMMERCIAL BREAK)
SPITZER: We return now to a story I brought you last night, of this 13-year-old Syrian boy, Hamza Ali al-Khateeb. He was brutally tortured and murdered. His body, bullet ridden and even castrated.
Hamza's death is turning into a rallying cry in Syria's streets, a symbol of the uprising.
Well, today, the Syrian government responded with their version, trying to undo the, and I quote, "lies and false accounts spread by the foreign press." They didn't kill Hamza, they didn't torture him. They even dragged out Hamza's father and uncle on state TV to call President Bashar al-Assad the best president ever.
Remarkable.
For more on this, I'm joined by two esteemed veteran diplomats. Anne Marie Slaughter was until recently director of policy planning at the State Department. She's now at Princeton University.
And with me here is Jamie Rubin, former assistant secretary of state. He's also the executive editor of the "Bloomberg View," which just published an editorial on America's limited options now in Syria.
Welcome to you both.
Jamie, let me start with you first. You're right here. Does this event crystallize the public's opposition to Assad and jeopardize him? Or does it mean he will go to no ends to suppress the revolution?
JAMES RUBIN, EXECUTIVE EDITOR, THE BLOOMBERG VIEW: I think it's both. I think the people will be outraged. I don't think they will believe the father saying today that Bashar Assad is a great president. I think they will believe what happened yesterday. These crude attempts to turn things around don't convince anybody. So I think it will be a rallying cry.
The problem is, these equation, Eliot, we've been talking about this since the Arab spring began. How many of the security services are prepared to shoot and kill their fellow countrymen? And in this case torture them? And there are thousands, tens of thousands of Syrian security forces prepared to do that.
And then how many people on the other side prepared to face that kind of brutal attacks on the streets or in the jails or elsewhere? And unfortunately, right now that balance, unless there are suddenly hundreds of thousands that come out in Syria, favors this brutal regime.
SPITZER: So Anne Marie, let me turn to you. Make a prediction. Does the brutality that the Assad regime has shown, does it in fact lead people to leave the street or does it lead to marches, some of which we saw yesterday, of kids, 10, 11, 12-year-old kids in the streets, saying this brutality is too much?
Play this out for us based on what you think the State Department understands about Syrian culture. What happens over the next week or two?
ANNE MARIE SLAUGHTER, FORMER STATE DEPT., DIRECT OF POLICY PLANNING: Eliot, I think this really breathes new life into the protests. The protests started with the arrest and torture of a group of 10- to 15-year-old boys. So it started around the willingness to torture children and the visuals of the horrific atrocities committed against this 13-year-old child, really do crystallize the rage and the injustice of a government that is willing to do anything to stop its people.
And then is lying about it. And I think we move here from the war of words to facts. This picture cannot be denied. They can say whatever they want. But the fact is, the world is seeing this picture.
The president and the first lady of this country that have two young children of their own. The juxtaposition of what they say and what they're willing to do I think is going to breathe new life into the streets. We're seeing people with incredible bravery saying enough.
And we don't know whether it will be enough to overcome, as Jamie says, the tens of thousands of security forces, but there's a whole new chapter here.
SPITZER: Look, of course, the question that irks and troubles any United States citizen is that we have not yet done anything tangible, palpable to assist those who are revolting against Assad's horrendous rule.
So the question is, beyond the outrage expressed by Secretary Clinton, very palpably, powerful, yesterday what can we do? And in fact the rule seems to be, if you're Mubarak and you've been our ally, we push you out with a few words. And yet with Assad and Gadhafi to a lesser extent we seem to have limited choices.
So, Jamie, what can we do -- what should we do right now about Syria?
RUBIN: Well, each of these cases, Egypt, Libya, Syria, that you mentioned are different for a whole bunch of reasons. I obviously won't get into all of them.
But in Syria, our options are quite limited for a lot of reasons. Number one, the security forces are still in charge. There is no rebel security force fighting it the way there was in Libya. Number two, the kind of thing we did in Libya, air power, wouldn't work as well in Syria.
You don't have a big desert. You don't have an overwhelming role for air power in a city's war like this. The worst thing we could do, and this is the hard part and the tricky part, as Anne Marie said, these are very, very brave people, but we don't want to give them the impression that we have a solution that we're going to come save them and make additional people go out and risk their lives and risk the kind of torture that we're seeing, when our options are so limited.
All we can really do is cause economic and political pain --
(CROSSTALK)
SPITZER: To go back in history a little bit where you speak and then you don't follow through.
RUBIN: Exactly.
SPITZER: But, Anne Marie, then, is the takeaway for the Arab leadership then, that the more brutal the dictator, the more likely he or she is, and I guess he in this context, obviously, to be able to stand up to all the words that emanate from the State Department and all those words don't amount to anything if you are sufficiently brutal and you can just wait us out.
That is not the message we want the rest of the world to take away from our response to the Arab spring.
SLAUGHTER: I don't think that's the message we're sending. And I -- it's not true that we've done nothing. We have actually imposed sanctions against top government officials including President Assad. We've worked with the EU to do that. We're tightening those sanctions.
We are doing what we can economically. And above all, in terms of diplomatic isolation, and there are other things we can do in terms of going to the Security Council, asking for condemnation of this behavior, asking for the world community to impose those sanctions.
But if you look at it, the most violent, which is thus have been Gadhafi, actually has military power being used against him.
In Yemen, you have an active regional intervention. In Syria, you've got diplomatic measures against (INAUDIBLE). Of course in Tunisia and in Egypt actually, there's individual accountability, like, say, for Mubarak, but the country's progress is going forward.
So I don't think it's true that you get the message that you can just do whatever with impunity. But I do think there are these governments that have said we'd rather shoot than leave power. And we don't know how those games are -- they're not games.
SPITZER: Look, I --
SLAUGHTER: How those situations will end.
SPITZER: I disagree with you only to the very limited extent. I think it's a fair debate whether Assad or Gadhafi is more revolting in terms of their abuse of power. But that's reasonably small issue, a side of the context of history. The takeaway is we are not omnipotent. Consistency will never be possible in these multiple and very difficult and subtle context. And you do what you can do.
Jamie, 10 seconds for the last word.
RUBIN: That's the key thing. Where you can make a difference.
SPITZER: Right.
RUBIN: You've got to try to do it. And show them that we're on their side but not put them in more danger.
SPITZER: So the lack of consistency doesn't mean you shouldn't do anything but you can't say that we're not omnipotent.
RUBIN: We can't do everything, so that doesn't mean we should do nothing.
SPITZER: All right.
Anne-Marie Slaughter --
SLAUGHTER: But we honor the people.
SPITZER: Anne-Marie Slaughter, Jamie Rubin, thank you so much for being with us. I want to have you back on the show. This is a story that unfortunately is continuing. Thank you, both.
Up next, the top Republican strategist says the GOP field is packed with pretenders with just three real contenders. You'll be surprised who's not on his list. Stay with us.
(COMMERCIAL BREAK)
SPITZER: Mitt Romney, to the surprise of no one, is expected to officially announce his candidacy for president tomorrow. According to most polls, he is leading a crowded field of possible candidates. To help us separate the wheat from the chaff, we're joined by former McCain campaign senior adviser Steve Schmidt.
Steven, thanks for coming on the show.
STEVE SCHMIDT, FORMER MCCAIN CAMPAIGN SENIOR ADVISER: Governor, good to be with you.
SPITZER: Now you used a pretty harsh phrase the other day to describe the Republican conversation in the presidential race. You said it is a mosaic of nonsense. Who were you talking about? That's pretty harsh criticism.
SCHMIDT: Well, I was talking in that context about Donald Trump, when we went through that a couple of weeks ago. But the point I was trying to make is this, that we have some very good and very serious candidates in this race. But one of their big challenges is trying to navigate what is in essence a reality show, if you will. And I think you see that playing out this week. And I think whether you're Jon Huntsman who wrote an excellent article I think framing his candidacy in "The Wall Street Journal" today, talking about some of the major issues that this country faces, Mitt Romney, who's going to be announcing his candidacy this week, all of it is taking place in this context of what I call the mosaic of nonsense.
SPITZER: You're dismissive quite openly of Trump and I gather Palin and Gingrich. You put them in a category almost as a sideshow, almost as a comedy act.
SCHMIDT: Well, clearly, it's -- none of them are going to be president of the United States. None of them is going to be the Republican nominee. But you've had this theater of the absurd taking place over the course of much of the spring. In there somewhere is a serious campaign waiting to get started. And I think when you look at the Republican field right now, you're looking at three serious candidates. And they're Governor Pawlenty, Governor Huntsman and Governor Romney.
SPITZER: And so what advice would you give right now to anyone of those three? Would you say, keep your head down, the silliness, the silly season will pass and the Palins and the Trumps fall by the wayside? Or do they need to be more aggressive, more assertive to grab the media attention that right now is focused like a laser beam on Sarah Palin's road show?
SCHMIDT: Right. I think at the end of the day, once people start voting, the national media starts really focusing on the races. Once the debate start, people start focusing on it. But in the early states, Iowa, New Hampshire, people in those states take this process very, very seriously. All of those candidates have gone up there. All of them have begun the process of engagement with the voters.
Governor Pawlenty last week, you know, I think very important in a Republican primary, talking about the absurdity of these ethanol subsidies in Iowa. Politically courageous. Governor Romney is going to start to lay out his governing vision for the future. Governor Huntsman had a very successful trip up in New Hampshire. If you talk to activists in the state of New Hampshire, people were mightily impressed with the job that he did. So I think that they're communicating to the people that they need to communicate to and doing it in the places where people take this process seriously and are paying attention to it.
SPITZER: Look, I certainly agree that those three and I would have added Mitch Daniels to that list before he decided not to run.
SCHMIDT: Sure, of course.
SPITZER: Those four, all of them, former governors, have a certain gravitas and seriousness about them that certainly I don't think Donald Trump or Sarah Palin ever did or could have as a candidate. But does it say to you as somebody who lives within the Republican Party that the enormous attention that Palin and Trump could get suggest an underlying dissatisfaction with the more serious candidates and some of the poll numbers would seem to validate that? It says here I think that 39 percent of the Republican electorate is dissatisfied with the current crop of candidates. Does that worry you at this point?
SCHMIDT: It doesn't worry me at this point because I think as they get to know those three candidates and if the field didn't grow any larger and it was just those three candidates, I think as their name recognition rises as Republican primary voters get to see the performances in the debates, I think those satisfaction levels will rise. I think all of these early polls are fundamentally a -- you know, fundamentally about name recognition. And that's what drives it. But, you know, as the process unfolds, I think you will see that -- you will see that number decrease. But we do have a number of good candidates in this race. And until though they're better known, I think you're going to see that there's demand for more people to get in the race and we'll see what happens on that front.
SPITZER: Steve, last question.
SCHMIDT: You bet.
SPITZER: Who's going to be the nominee on your side of the aisle?
SCHMIDT: Well, I think it's very tough to predict. And I don't have a prediction for you, other than to tell you that I believe it's either going to be Governor Huntsman, Governor Pawlenty or Governor Romney. And I think all three of them would be effective general election candidates.
SPITZER: All right.
SCHMIDT: And it will be an interesting race to watch.
SPITZER: I agree. It's going to be one of the former governors in that race. All right. Steve, thanks so much for joining us.
SCHMIDT: You bet, thank you. SPITZER: Coming up, our own E.D. Hill on the news that cell phones might cause cancer. She talks to the doctor who's been warning about this all along. When we come back.
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E.D. HILL, CNN CONTRIBUTOR: There are new concerns tonight that cell phones may cause cancer in part perhaps because of how we use them. After the World Health Organization reviewed numerous studies, it decided this week to list cell phones in the same category as lead and pesticides. Now the cell industry disputes the claim and says phones are safe. Tonight, we learn more from Dr. Keith Black. He has been researching this for years. He's head of the neurosurgery at Cedars-Sinai in Los Angeles.
Thank you so much for joining us.
DR. KEITH BLACK, NEUROSURGERY DEPT. CHAIRMAN, CEDARS-SINAI: My pleasure.
HILL: Well, you know, the FCC regulates the cell phone radiation levels. The FCC says it's safe. So why do we take a look at these old studies and now believe the WHO when they come out and say, hey, wait a second, they're not safe?
BLACK: So what the 31 experts from 14 different countries in WHO did was to look at all of the available evidence, you know, the hundreds of studies that have been published looking at the correlation between cell phones and brain cancer and put in all of that information under very strict scientific scrutiny. You know, they came to the conclusion that there is a possible correlation between using cell phones and brain cancer.
HILL: Now, why that, a possible correlation? Whenever I hear that I'm like, why couch it? If you think it's that serious, why couch it with the "possibly," "maybe"?
BLACK: You know, the difficulty that we have is that we haven't had a study that is perfect at this point. You know, all of the studies have some flaws associated with the studies.
You know, there are a number of difficulties. One is that half of the studies have shown that there is no correlation between cell phones and brain cancer. The other half has shown that there is a correlation. The studies that have shown a correlation have tended to be studies that have looked at people who have used cell phones for at least 10 years and have had high use. And the ones that haven't had a correlation have been ones that have looked at very short duration, people that use cell phones in a very limited way. So --
HILL: And we were just thinking and look at in a graphic here that shows it's basically your brain on cell phones graphic.
BLACK: Right.
HILL: And it that shows the colors change. When you have the cell phone and you're using it, there are these higher radiation levels. And you see that with the purple.
BLACK: Right.
HILL: And the yellow, the yellow is showing the -- when the cell phone is on, and there's much less when the cell phone is off.
BLACK: Right.
HILL: Now, I was surprised because I use a cell phone, and I never really thought to read the manual. I figure I know how to use a phone.
BLACK: Right.
HILL: I was shocked frankly. When I looked at the safety instructions in these iPhone, BlackBerry, Verizon, all those manuals, and they say if you want to be safe, hold the BlackBerry almost an inch away from your head. If you've got it on your body, it's got to be in that holster, not in your pocket. Otherwise, again, keep it an inch away. And then you take a look at the iPhone and basically the same thing. They've got the warning there in black and white. Keep it about 5/8 inch away from your body. Do not hold the cell phone to your head. Well, why is there that difference with one inch to right on your head? How does that small distance matter?
BLACK: We know that the amount of radiation that's emitted from a cell phone is related to the square of the distance. So, you know, the distance is really the critical part of this.
If you hold the cell phone two inches away, it delivers one- fourth the amount of energy. So it's very important to keep the cell phone away from the brain where you're not getting that intense microwave radiation penetrating into the brain tissue.
HILL: How do you -- I assume you've got a cell phone?
BLACK: I do.
HILL: What do you do? How do you use it?
BLACK: Well, you know, I use it in a way that is viewed to be safe. I always use an ear piece or I use it on speaker mode or I text or I use, you know, sort of hands free mode. You know, the critical thing is to not put the cell phone, as you indicated, right next to the brain where you can get the microwave energy delivered right into the brain tissue. The other thing that we know is that, you know, in a child, you know, the skull is thinner, the scalp is thinner so the amount of energy going into a child's skull is much greater than an adult. So you have to be very cautious when you're looking at, you know, children using these cell phones. You know, that could be a very serious issue.
HILL: Yes, that's increasing. Yes, more and more kids are getting cell phones.
BLACK: Right. HILL: It's sort of normal for them. But -- so you're telling me that there is a difference really by using just that ear piece? You've got the blue tooth and, you know, your regular ear piece that you can put in your ear. Doing that makes it much safer, is that correct?
BLACK: Well, you know, the way to think about a cell phone is that it's essentially a microwave antenna that's generating microwave energy. And that energy intensity is directly proportional to the distance. So if you hold it away from your head, hold it away from the brain, it's not delivering a harmful amount of energy. So if you use it on speaker mode or with the ear piece, you know, or texting, you know, that is probably going to be a safe way to use it.
HILL: Well, that's probably a good way for us to think about it. Think about having a microwave next to your head.
BLACK: Right.
HILL: And that will probably cause you to pull that phone a little bit further back.
Dr. Keith Black, thank you very much for being with us. Obviously our lives revolve around using cell phones so being able to do that as safely as possible based on this information is certainly helpful to us all. Appreciate your time.
BLACK: Thank you.
HILL: Coming up, is health care reform unconstitutional? Lawsuits have already started. Eliot hosts our own legal battle right here. And you don't want to miss that.
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SPITZER: It's the legal issue that will impact every American and define President Obama's administration, health care reform, or more precisely, the lawsuits over the constitutionality of it. And one of the many challenges to the case, arguments were heard today in a federal appeals court in Cincinnati. Other cases have spread like weeds across the country.
Tonight, we've got two heavy hitters, one on each side of the debate, arguing the act is unconstitutional. We've got Virginia Attorney General Ken Cuccinelli. Arguing for the act's legitimacy, former solicitor general and Duke University law professor Walter Dellinger. Both have argued their positions in cases now pending in federal court.
Gentlemen, welcome.
WLATER DELLINGER, FORMER SOLICITOR GENERAL: Thank you.
KEN CUCCINELLI, VIRGINIA ATTORNEY GENERAL: Good evening.
SPITZER: We're going to try to stage a very quick mini debate right here tonight. We're going to start with you Attorney General Cuccinelli. In one minute, explain why the law is unconstitutional.
CUCCINELLI: Sure. The commerce clause of the constitution gives the Congress the power to regulate commerce among the states. But that presumes that the commerce already exists. That does not give the federal government the power to compel you into commerce, forcing you to buy their chosen product. Yet that's exactly what the government is arguing, the federal government is arguing in this case is that they can order you to buy their chosen product because of the challenges we face in health care and health insurance. But if we allow this, if we allow this, and this is the bottom line about the litigation, this is going to be such an egregious breach of liberty. That's why this case is about liberty, not health care because if the government can order you to buy this product, they can order you to buy any product. There is no legal or constitutional limit that the federal government has articulated that's left, if this case stands.
SPITZER: All right, Solicitor General Dellinger, you explain why it is within the bounds of the constitution, the commerce clause, the federal reform act about health care. Why is it constitutional?
DELLINGER: Well, Eliot, look what it does. This is a bill that guarantees that people will not be denied health insurance coverage because they're disabled or because they changed jobs or have a pre- existing condition or have a child born with a birth defect. That guarantee is clearly a regulation of commerce in the interstate markets, in health insurance, and in health care. It was a market- based approach that was first proposed by Republican senators and governors. It is designed to avoid the problem with people who free load, insurance free loaders, who cannot choose but to be active in the health care system because no one can choose not to be in an accident and be medevac'd to a trauma facility. So people will be active in the health system. This means that you have a financial incentive, 2.5 percent, on your federal income tax if you don't maintain coverage and if you plan to have other people pay for your health care.
The Supreme Court will uphold this. And I think they will uphold it on an easy limiting principle that gets rid of all of the horrors that the attorney general of Virginia suggests because the limiting principle is simply this -- health care is a unique product. You cannot choose not to participate in the market for health care. You never know when you're going to be medevac'd unconscious to a trauma facility. And when you get there, people will provide you with the service, whether you make plans to pay for it or not. It would be an astonishing proposition if Congress didn't have the constitutional power to have a modest financial incentive, more modest than social security or Medicare, to encourage people to have health insurance and pay for their own health care.
SPITZER: Attorney General Cuccinelli, let me you ask you this question.
CUCCINELLI: Yes.
SPITZER: You do not deny the fact that Congress can pass comprehensive regulations that will dictate the regulatory structure for insurance, do you? You acknowledge that fact?
CUCCINELLI: They've been able to do that for over 50 years under Supreme Court precedent, but they've never been able to compel you to buy a product. You know, Walter talks about all these great things that are the goals of the legislation but he skips over how they're doing it. And they're compelling every American who fits their qualifications to buy their chosen, approved product. That has never happened before in the history of this country.
SPITZER: Attorney general, I will interrupt only because I'm playing the role of the judge here this evening, otherwise, I wouldn't do it. Actually, I probably would. But let me ask you this, social security and Medicare, are those not programs created by Congress that require everybody's participation just because as Solicitor General Dellinger articulate health care is different? You're required to participate in those, aren't you?
CUCCINELLI: I'm glad he raised those two because they're both tax programs. You pay a social security tax. You pay a Medicare tax. How the Congress and the president spend that money has nothing to do with them collecting the tax. It's pure taxation. If they had gone about what they've tried to do in this health care legislation by taxing everyone, taking the money and paying for the benefits that they want to provide, that would be constitutional. But they didn't do that. And let's face it, they probably didn't do it -- and I'm speculating here a little bit, because they didn't want to take the enormous tax vote that would be necessary to pay for everything --
SPITZER: Attorney general, let me just refine this one bit. So you're saying if Congress had said you pay this tax unless you have already bought health insurance, but if you haven't bought the health insurance, then you pay a tax, then you would have said it's constitutional?
CUCCINELLI: No, it's a straight -- they can charge a tax. They can spend it for whatever they want. It isn't a reversal of the penalty provision they've got in this bill.
SPITZER: All right. Walter Dellinger, do you buy that distinction? Does it make any sense to you?
DELLINGER: No, I don't, because this is a regulation of one- sixth of the national economy. It is commerce that affects more states than one. It is -- the attorney general says it's not about health care, it's about liberty. There's no great liberty principle here. It just provides that you pay $65 a month if you choose not to have health insurance and therefore choose to have other people, patients who are also sick or taxpayers pay your health care bill. It's an astonishing proposition that conservatives would think that free loading ought to be the thing.
SPITZER: Walter Dellinger, let me interrupt. Let me ask you this question. What if Congress went in and bailed out General Motors? It said we want General Motors to survive. The only way it survives is if they sell 10 million cars next year. Therefore, every citizen, every taxpayer, has a choice, either you buy a General Motors car or you pay a fine of $1,000. Is that constitutional?
DELLINGER: No. I don't think they can do that because I don't think Congress can simply transfer money from consumers to makers of a product without the kind of justification you have here, which is that you can't -- cannot choose but be active in the health care market. And it's the only market where when you're active in it, when you show up at the hospital unconscious, they provide you with it, whether or not you've made any plans to pay for it or have insurance. It's just an incentive to have insurance.
SPITZER: Just so it's clear, so you're saying the fact that we all must participate in this market is a distinction of constitutional dimension?
DELLINGER: Absolutely.
SPITZER: All right. Attorney General Cuccinelli, last question to you --
CUCCINELLI: Eliot --
SPITZER: Wait a minute --
CUCCINELLI: Look at that, we all have --
SPITZER: You got 10 seconds.
CUCCINELLI: We all have to eat. If you go to Safeway, the federal government can't compel Safeway to give you food. It's more certain that I'm going to need to eat than that I'm going to need medical care. And the fact that I will someday need medical care, you can regulate me then. You can't regulate me now.
SPITZER: OK. Ten seconds.
DELLINGER: It may be this afternoon.
SPITZER: Hold on one second, last question. Attorney general, 10 seconds, name the case where the Supreme Court has overruled an economic regulation passed by Congress in the last 20 years. An economic regulation.
CUCCINELLI: An economic regulation -- we've got four commerce clause cases in the last eight years.
SPITZER: Name one. Name one.
CUCCINELLI: The ones that have ruled for the limited government side are not -- didn't involve -- well, they didn't involve products. They involved enforcement.
SPITZER: All right. I have to go, guys.
CUCCINELLI: I will tell you this --
SPITZER: No, no, next time. Next time. CUCCINELLI: The federal government is the one expanding the law here, not us. Not us.
SPITZER: Time's up.
Ken Cuccinelli, Walter Dellinger, thank you for being here. We'll continue.
DELLINGER: Thank you.
SPITZER: "PIERS MORGAN TONIGHT" starts right now.
