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Lou Dobbs Tonight

Economic Stimulus Package; Pre-debate Analysis; al Qaeda Official Killed; Border Crossing Rules

Aired January 31, 2008 - 19:00   ET


Tonight Senate Democrats continue to demand major changes in the economic stimulus package. Senate Democrats apparently putting their own partisan interests before the interest of our middle class. We'll have that, also a preview of tonight's Democratic presidential debate, much more straight ahead tonight.

ANNOUNCER: This is LOU DOBBS TONIGHT: news, debate, and opinion for Thursday, January 31st. Live from New York, sitting in for Lou Dobbs, Kitty Pilgrim.

PILGRIM: Good evening, everybody.

Senate Democrats tonight are on a collision course with Republicans and members of their own party. Senate Majority Leader Harry Reid seems determined to impose his own version of the economic stimulus package on the American people. Within the hour, the two remaining Democrats in the presidential race will debate the economy and other issues in Los Angeles. That debate right here on CNN comes five days before Super Tuesday. Kate Bolduan reports on the confrontation in the Senate. Kate.

KATE BOLDUAN, CNN CORRESPONDENT: Hi there, Kitty. That confrontation could come the day after Super Tuesday. Senate Democrats and Republicans are now preparing to face-off on the stimulus package and it seems every vote is going to count.

BOLDUAN (voice-over): Acknowledging they don't have the votes they need for their version of the economic stimulus package, Senate Democrats today abruptly put off a vote on the $200 billion measure until next week. Senate Majority Leader Harry Reid says he wants his two campaigning colleagues, Barack Obama and Hillary Clinton back in Washington.

SEN. HARRY REID (D-NV), MAJORITY LEADER: As you know next Tuesday is Super Tuesday, and they're both very busy, as is Senator McCain. So I probably can't get them back here until Monday, but I do need them back.

BOLDUAN: Senate Democrats are pushing to include rebates for an estimated 20 million seniors and 250,000 disabled veterans. They also want to extend unemployment benefits, changes they say greatly improve the stimulus package passed by the House.

SEN. MAX BAUCUS (D), MONTANA: Let us assure that these greatest Americans receive their fair share of any economic stimulus. That's what's at stake here.

BOLDUAN: But Republicans are pushing back, accusing Democrats of piling on unnecessary spending proposals and wasting time.

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: Apparently the temptation for giveaways was too great for some to resist. As soon as the bill hit the Senate, it started to look a lot like Christmas over here.

BOLDUAN: Democrats insist their proposals are much-needed additions and will really jump start the economy. Now they're vowing to force Republicans to take difficult votes on other measures such as food stamps, food banks and low income energy assistance. While the final tally remains uncertain, one thing is becoming clear. The bipartisan spirit behind the stimulus package may be fading.


BOLDUAN: Now, Senate Democrats do say if they don't get anything else passed they will get behind the House-passed version of the stimulus package. They are still confident that they will have something on the president's desk by February 15th -- Kitty.

PILGRIM: All right, thanks very much, Kate Bolduan.

A major loophole in the House version of the stimulus package could allow illegal aliens to collect tax rebates. Well Senator Chuck Grassley says the Senate will take action.


SEN. CHARLES GRASSLEY (R), IOWA: The simple fact of the matter is that the House bill allows illegal immigrants to get rebate checks, plain and simple. It is important for us to fix that. The Senate will fix it. It was a mistake the Senate will fix.


PILGRIM: Senator Grassley chastised House Democrats for the way they wrote the bill saying it wasn't right and it wasn't fair.

The stimulus package is certain to be a top issue in tonight's Democratic presidential debate. Now, as we reported, Senator Barack Obama and Senator Hillary Clinton will face-off off in Los Angeles. It is their first one-on-one debate of the entire campaign and in the last few minutes, Senator Hillary Clinton arrived for the debate. Senator Obama has not yet arrived. Jessica Yellin reports from the Kodak Theatre in Los Angeles.


JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT (voice-over): It's one-on-one now and it's clear Senator Obama is primed for a fight.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: There are those who will tell us that our party should nominate someone who is more practiced in the art of power. When I am the nominee, the Republican won't be able to make this election about the past because you will already have chosen the future.

YELLIN: So far, Senator Clinton is not taking the bait, saying of Obama's swipes, "That certainly sounds audacious but not hopeful. I would certainly hope we could get back to talking about the issues." It's a play on the title of Obama's book "The Audacity of Hope." Both candidates are going all out with ads up in Super Tuesday states courting key constituencies including the prized Latino vote.


YELLIN: Lately President Clinton has been unusually quiet, while his wife has been put in the awkward position of answering questions about her husband's news making comments, prompting this on ABC's "Nightline."

H. CLINTON: This campaign's about me. It's about what kind of president I will be, what I will do as president.

YELLIN: She was also asked whether she could control her husband in a possible Hillary Clinton White House.

H. CLINTON: Oh, of course. You know, there's only one president at a time.


YELLIN: Now, Kitty, expect both candidates to do everything they can to try and woo John Edwards supporters tonight and try to break through to Super Tuesday voters. But with John Edwards out of the mix, it's a brand new dynamic. We're missing the so-called grownup, the adult in the Democratic Party, so expect these two to go at each other tonight -- Kitty.

PILGRIM: Jessica, it's pretty loud there, quite a run-up to this debate, isn't it? What's it like there?

YELLIN: The energy is incredibly high. We have a lot of supporters of both Obama and Hillary tonight. And of course we're at the location of the Academy Awards, the Oscars, so you have got Hollywood and politics colliding in one place this evening.

PILGRIM: That sounds very exciting. Thanks very much, Jessica Yellin.

Well joining me for more on tonight's debates senior political correspondent Candy Crowley. Candy, what do the candidates have to do to win this debate tonight?

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Well, I think Hillary Clinton has to keep her cool. What they have found out in the Clinton campaign is that when she goes aggressive or her husband goes aggressive, it works against them. What Barack Obama has to do is start to make some inroads into her basic constituency. He generally attracts Independents, some Republicans, new and young voters, and sort of better educated and higher income Democrats. We call that a wine Democrat. She is a beer Democrat. She gets the working class, slightly less educated, lower income. You cannot win a Democratic primary without a big portion of that group.

She has always performed better in the beer crowd. So he needs to start moving into that in some way without kind of going over the top. I think we've seen them kind of testing their roles over the past couple of days on the campaign trail post Florida where she's been pretty -- backed away from going after him and he's doing some very not so veiled assaults on her and, in particular, on her electability -- Kitty.

PILGRIM: Candy, there's one other candidate still in this Democratic race and that's Mike Gravel. Now why is Gravel not taking part in tonight's debate?

CROWLEY: Well, there were criteria set up and he does not meet the criteria for that. If he had a certain percentage in some other rounds that we've already had so far. So, you know, this is mano-a- mano (ph). I mean it's really hard at this point to overestimate how critical this particular debate is, because it's the last one before Super Tuesday. And Super Tuesday is by far the most critical primary day we've had so far.

PILGRIM: And we look forward to it. Thanks very much, Candy Crowley. That debate begins at 8:00 p.m. Eastern right here on CNN. You really don't want to miss it.

Following last night's Republican debate in California, front- runner John McCain today won another major endorsement. Governor Arnold Schwarzenegger of California said he's endorsing Senator McCain because McCain, quote, "reaches across the aisle" as he put it. Dana Bash reports from Los Angeles.


DANA BASH, CNN CONGRESSIONAL CORRESPONDENT (voice-over): Getting an endorsement from the governor of the biggest Super Tuesday state is one thing. When that governor is Arnold Schwarzenegger, it's another.

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: He's a great American hero and an extraordinary leader. This is why I'm endorsing him to be our next president of the United States.

BASH: Schwarzenegger's sky high approval rating, 75 percent among California Republicans, is sure to help McCain in the GOP primary. But the governor said his support for McCain is about Democrats.

SCHWARZENEGGER: The people out there that talk about reaching across the aisle, that he has shown the action over and over again. Now, is this the size of the panels?

BASH: The setting, a company that makes solar panels, reflects their bond over fighting greenhouse gases. But it's controversial amongst some Republicans. And although McCain's famous new supporters, Schwarzenegger and Rudy Giuliani, have wide appeal, their moderate views on social issues don't sit well with some GOP voters.

(on camera): Is there a downside to this image that you have given the appeal that you're trying to make to conservatives?

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: I could never, never ever be anything but honored by the presence of these two great American heroes. I'm prepared to lead our party in the nation and I am prepared and am succeeding in uniting it.

BASH (voice-over): Meanwhile rival Mitt Romney set around a kitchen table in suburban Los Angeles talking economy. Outside he admitted Schwarzenegger's endorsement will help McCain.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: Governor Schwarzenegger obviously is a big figure in California and I'd love to have had his support.

BASH: And he stepped up criticism of McCain for asserting again at Wednesday night's debate that Romney had supported a timetable for troop withdrawal from Iraq.

ROMNEY: Something reminiscent of the Nixon era, and I don't think I want to see our party go back to that kind of campaigning.


BASH: Mitt Romney had a major meeting with his campaign aides this morning and he personally approved spending several million dollars on new TV ads here in California and select Super Tuesday states across the country. And we saw one of the ads that he is already starting to run here in California, Kitty.

And despite those tough words against John McCain, the ad actually talks about Mitt Romney's experience and his rival's lack of experience. But it wasn't John McCain. In this ad he's hitting Hillary Clinton. The message here clearly to Republican voters here in California is he thinks he is by far the most electable Republican, so he's already thinking about the General Election. That's who he is trying to get, Republican votes -- Kitty.

PILGRIM: Interesting point. Thanks very much, Dana Bash.

Still to come, new evidence how middle class is under siege and Christine Romans will have the report -- Christine.

CHRISTINE ROMANS, CNN CORRESPONDENT: Kitty, consumers are fearful of spending, banks are fearful of lending, credit card delinquencies are rising, jobs growth has slowed dramatically. At the heart of it all is the mortgage crisis and there may be more to come -- Kitty.

PILGRIM: Thanks, Christine.

Also, a shocking example of visa abuse and the federal government's complete failure to secure our borders. Stay with us.

Also, a top al Qaeda leader is killed possibly by a U.S. missile. We'll have the very latest on that. Stay with us.


PILGRIM: New concerns tonight about the lack of oversight on foreign workers in this country. More than 100 workers from Nepal working in Huntsville, Alabama have disappeared. Now, the incident raises national security concerns. It also raises questions about the growing problem of foreign workers in this country, this at a time when more and more Americans are looking for jobs. Bill Tucker has our report.


BILL TUCKER, CNN CORRESPONDENT (voice-over): Approximately 100 guest workers from Nepal at this Cinram plant in Huntsville, Alabama, have abandoned their jobs and their apartments. No one knows for sure where any of the workers have gone. The owners of the apartment complex where the workers were living say they left without notice and claim that they stripped the furnished apartments of furniture and TVs.

MARY SNOPL, LANDLORD: I don't know if they're living in Huntsville or somewhere else. I just know they aren't living with us and they aren't working at Cinram.

TUCKER: The initial news of the disappearance touched off security concerns. One local county official who had been opposed to the company bringing in the workers raised concerns of a terrorist threat.

MO BROOKS, COUNTY COMMISSIONER: Cinram insisted that there were long background checks and Cinram was vouching to the citizenry of Madison County that they had this program under control, when apparently they did not.

TUCKER: Cinram dismisses those concerns, noting that each worker underwent a background check by the Department of Homeland Security. The company issued the following statement:

Quote, "All of the H-2B Visa applications must be screened by the Department of Homeland Security, the U.S. Department of Labor, the U.S. Counselor in their local country as well as the U.S. Embassy in their local country."

A spokesman for the United States Citizenship and Immigration Service confirms DHS does do background checks, but that doesn't answer the questions of where those 100 workers went or why. A company spokesman says he believes as work slowed down, the workers just decided to sightsee the country rather than work.


TUCKER: And it also doesn't answer the question why the company needed to hire 1,141 workers from five foreign countries to work in its plant in Alabama instead of hiring Americans. The company says there weren't enough locals to fill the jobs. They pay around $8.50 an hour so they went to Nepal. And while the terms of the H-2B Visa do allow travel, there's no way to know to where these workers went and Kitty (INAUDIBLE) there's no way to know if in fact they will leave when their visas expire.

PILGRIM: There are so many open questions on this entire story, it's almost preposterous.

TUCKER: I know. You would think that Cleveland, for example, might be a little closer than Nepal, so that if workers there needed work, they could go there. But then Kitty they'd probably have to pay them more.

PILGRIM: Unbelievable. Thanks very much, Bill Tucker.

Well new border crossing rules went into effect today. U.S. citizens and Canadians entering the country must now show proof of citizenship. It's a big change for the informal crossings along our northern borders and some question whether the new rules will actually improve border security. Jeanne Meserve has our report from Derby Line, Vermont. It is on the U.S./Canadian border.



JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT (voice-over): Traffic appeared to flow normally across the northern border today, despite the new document requirements. Canadians and Americans who arrived at border crossings without the required proof of identity like a license and proof of citizenship, such as a birth certificate were merely given a warning. But the secretary of Homeland Security says enforcement will get tougher.

MICHAEL CHERTOFF, HOMELAND SECURITY SECRETARY: It doesn't mean we're going to on day one forbid you from reentering the country, but it does mean we're going to gently but firmly move people into compliance with the new rules.

MESERVE: Jay Peak, a ski area near Vermont's northern border, fears the long-term impact on its business.

UNIDENTIFIED MALE: About half of our skiers come from Canada.

MESERVE: Jay Peak cultivates its Canadian clientele, accepting Canadian currency.


MESERVE: Advertising heavily north of the border. But there is worry that Canadians will stay home if, when the U.S. steps up enforcement, it creates backups at the border.

BILL STENGER, JAY PEAK RESORT: How many times do you go through that and say, well, you know, I'm not going back.

MESERVE: And they have options.

STENGER: They have lots of options.

MESERVE: With seven million U.S. jobs in tourism and industry dependent on U.S./Canadian trade, the new rules are setting off alarm bells from Maine to Washington State, particularly in the travel industry.

ROGER DOW, TRAVEL INDUSTRY ASSOCIATION: It's going to have an impact. Every day $1.5 billion worth of trade goes across the Canadian border, 40 million Canadians visit the United States.

MESERVE: The Bibers (ph) from Ottawa are among them. They believe the new rules will keep some Canadians away.

CHRIS BIBER, CANADIAN TOURIST: It's not just that they don't have documents. People just don't know which documents are...


BIBER: ... required and so some people just say, I couldn't care less, right, I just stay home. And don't travel.

MESERVE: Up until now, Americans and Canadians could simply announce their citizenship and enter the U.S., an honor system that Homeland Security says left the country vulnerable. The new document requirements are supposed to tighten up security. But will they?

(on camera): There are thousands of kinds of birth certificates. They could be counterfeited. They could be stolen, leading some to question whether these changes will improve security. That is, after all, the point.

Jeanne Meserve, CNN on the U.S./Canadian border.


PILGRIM: Well the Department of Homeland Security is expected to receive more money to secure our border. The Department of Homeland Security Secretary Michael Chertoff says President Bush's new budget includes $775 million for border fencing and technology. Now, DHS has built just under 300 miles of border fence so far. This budget includes more than 440 million to hire and train 2,200 new border patrol agents. It will also expand efforts to crack down on employers who hire illegal aliens.

A court victory today for communities taking action on their own to deal with the illegal immigration crisis. A federal district court upheld a Valley Park (ph), Missouri law barring employers from hiring illegal aliens. Now the St. Louis suburb passed that law in 2007. It was challenged by local business interests with the support of national advocacy groups. Chris Coback (ph), an attorney representing Valley Park (ph) said the court's decision would have implications for other communities dealing with the same issues. Time now for tonight's poll. Do you think that requiring proof of citizenship at our borders is long overdue? Yes or no. Cast your vote at We'll bring you the results a little bit later in the broadcast.

And it is time now for some of your thoughts. Nancy in New York wrote, "Lou, every time I hear illegal aliens must come out of the shadows I'm thinking we must have a lot more sunshine here on Long Island. These guys are hanging around every 7-11, every morning right out in the open."

Felicia in Florida wrote, "Dear Lou, I'm a housewife, mother and grandmother. I wish our government leaders would hold themselves accountable for the damage they have done to our country. I have faith in America, but no faith in the ones who are in charge."

Wally in Florida wrote, "My New Year's resolution is complete. I'm now an Independent. Thanks, Lou."

And we'll are more of your e-mails a little bit later in the broadcast. Each of you whose e-mail is read here receives a copy of Lou's new book "Independents Day: Awakening the American Spirit". Now this book is a book that Democrats, Republicans and corporate America do not want you to read.

The Democratic presidential debate begins in Los Angeles at the top of the hour. Senator Barack Obama arrived just a few minutes ago. Senator Clinton arrived a little earlier than that. It's the first one-on-one debate between Senator Obama and Senator Clinton of the entire campaign. It's also the last debate before the critical Super Tuesday contest next week. We will have live coverage of the debate from the Kodak Theatre in Los Angeles. It all begins 8:00 p.m. Eastern right here on CNN.

Coming up next, a top al Qaeda leader is killed in Pakistan, possibly by a U.S. air strike. We'll have that story.

Also, millions of middle class Americans may lose their homes to a foreclosure. We'll have a report on how long the housing crisis could last.

Stay with us.


PILGRIM: News tonight that one of al Qaeda's top leaders has been killed, possibly by a U.S. missile strike. Sources tell CNN that Abu Laith al-Libi was killed in Pakistan. The U.S. military said al- Libi had been operating in the border region of Afghanistan and Pakistan. Kelli Arena has the report.


KELLI ARENA, CNN JUSTICE CORRESPONDENT (voice-over): The news hit Jihadi Web sites in waves. Abu Laith al-Libi, an al Qaeda commander, is dead. One site hailing him as a martyr proclaims, "May God accept him". Intelligence officials describe al-Libi as a senior field operative, most recently blamed for orchestrating a suicide bombing outside Bagram Air Base in Afghanistan while Vice President Cheney was visiting.

PETER BERGEN, CNN TERRORISM ANALYST: From al Qaeda's perspective the attack was a propaganda victory but it certainly wasn't a military success.


ARENA: Perhaps more important were al-Libi's efforts to recruit in Libya where he was born and where it's estimated at least 20 percent of foreign fighters in Iraq come from. As leader of the now defunct Libyan Islamic fighting group his connections there ran deep.

BRUCE RIEDEL, FORMER CIA OFFICER: The al Qaeda central leadership, Osama bin Laden and his key lieutenants see North Africa, what they call the Meagher (ph), as a great opportunity for their future expansion.

ARENA: It's important to note that knowledgeable sources say al- Libi was killed in North Waziristan (ph), in Pakistan. He's the first senior al Qaeda official captured or killed there since 2005.

RIEDEL: The U.S. has been pressing Pakistan very hard. Our senior intelligence leadership was there in January and pushed Musharraf very hard to do something about this resurgence of al Qaeda. And we may be seeing a result today.


ARENA: Al-Libi was killed by an apparent U.S. missile strike. Intelligence officials will not publicly comment on any U.S. involvement, but this wouldn't be the first time that the CIA has fired missiles against terrorist targets inside Pakistan -- Kitty.

PILGRIM: Kelli, you know, Pakistan has been very clear they don't want U.S. ground troops in the area, but they do have over flights of drones, don't they?

ARENA: Well they do. I mean ground troops are very politically sensitive. As you know, most Pakistanis are totally against that. But if flights, you get some cover. You don't say anything. You don't say who is doing the flying and who was doing the dropping of missiles and it's not as controversial. And don't forget, you do have an election coming up in Pakistan, Kitty.

PILGRIM: All right, thanks very much, Kelli Arena. Thank you, Kelli.

Our troops in Iraq, they're also continuing their offensive against al Qaeda. And one of those troops was killed by a roadside bomb today. Thirty-eight of our troops have been killed in Iraq this month. That is 15 more than last month; 3,942 troops have been killed since the war began; 29,038 were wounded; 12,982 of them seriously. Meanwhile, military officials say there will be a pause in the troop drawdown in Iraq in July. That pause will give commanders an opportunity to examine the potential impact of additional troop reductions.

Coming up, the economic crisis is worsening for our middle class. And it may be just the beginning. We'll have a special report.

Also, outraged members of Congress accuse the world's largest toy brand of breaking promises on safety.

And California could determine the outcome of the battle for the Republican and Democratic presidential nomination. We'll tell you why.

We're just a few minutes away from the beginning of the Democratic presidential debate at the Kodak Theatre in Los Angeles. It's a critical battle between Senators Obama and Clinton. That debate begins 8:00 p.m. Eastern right here on CNN.


PILGRIM: The Super Tuesday contest next week could determine who will be the Republican and Democratic presidential candidates. The State of California could play a pivotal role in that contest. It could be the big decider. Bill Schneider has the report.


BILL SCHNEIDER, CNN CORRESPONDENT: How long has it been since California was the big decider in presidential nominations?

PHIL MATIER, "SAN FRANCISCO CHRONICHLE": The last time it made a difference, no. The last time, God, I can't -- I'm serious, I can't remember the last time.

SCHNEIDER: For Republicans, it was way back in 1964 when Barry Goldwater beat Nelson Rockefeller. For Democrats, 1972 when George McGovern beat Hubert Humphrey, a long time ago. This time, we've got two close races and one state with 14 percent of the delegates needed to win the Republican nomination.

MITT ROMNEY, (R) PRESIDENTIAL CANDIDATE: Big state, a lot of delegates, I got to be fighting in California.

SCHNEIDER: And 18 percent of the delegates need to win the democratic nomination.

SEN. HILLARY CLINTON, (R) PRESIDENTIAL CANDIDATE: California will have the most delegates and the biggest primary on February 5th.

SCHNEIDER: California could be the big decider in both races. Mitt Romney is trying to rally California's sizable conservative base. This is Ronald Reagan's state, after all. But look who John McCain just got. GOV. ARNOLD SCHWARZENEGGER, (R) CA: Talking about a great future, this is the very reason why I am endorsing Senator McCain to be the next president of the United States.

SCHNEIDER: Hillary Clinton's got strengths here.

MATIER: Early on momentum, good operation. Plus, a pretty -- looks like a pretty sizable lock on the Latino and women vote.

SCHNEIDER: But Barack Obama is the next new thing in a state where Hollywood and Silicon Valley are always after the next new thing. And talk about stars, Bill Clinton for his wife and Ted Kennedy for Obama are as big as they come.

MATIER: California is one of the biggest states in the union, and I'm still not sure if it's big enough to handle both the size of those guys' egos and their personality.

SCHNEIDER: "Bill and Ted's Excellent Adventure," the political remake.


SCHNEIDER: Two pairs of heavyweight contenders battling for titles in a heavyweight state. That's heavy, man.

PILGRIM: You've been in California a little long there, Bill. There's been a lot of struggle for tone especially in the last few days from both campaigns. What's the big -- what is the tone that we're likely to see out of both Barack Obama and Hillary Clinton tonight? What will they try to hit?

SCHNEIDER (on camera): Well, both of them have to be very careful because she's the first woman candidate, he's the first African American. Not the first candidate but the first front-runners for their -- for these groups. So they have to be very sensitive about what they say, the implications of what they say. I have a feeling this debate may be -- this debate may be a lot more civil and polite than a lot of people are expecting. If you're expecting a real prize fight, you may not see it tonight.

PILGRIM: What are we looking for as the key issue here, Bill?

SCHNEIDER: Well, they're going to -- the economy is the key issue here. That's what the voters want to hear about. That's what -- they want to talk about what are these candidates proposing to do about the nation's economic crisis. And there of course Hillary Clinton will talk about her husband's record and when she was in the White House in the 1990s. A lot of people want to hear what is Barack Obama proposing to do, what are his credentials on economic issues?

PILGRIM: With the economy aside, are we likely to hear much about Iraq or do you think that will be way down on the list of topics?

SCHNEIDER: You will hear about Iraq. The problem with the Iraq issue is they're basically in agreement. Oh, they have differences, differences of detail about when they're going to pull out troops, how quickly, how many they're going to leave. They could debate that. And they might do that.

But the fact is the differences between these Democrats are not profound. The differences between the Republicans last night were not profound. But they had a pretty good argument about timetables even though they didn't disagree very much in principle. They will find ways of making distinctions even if those distinctions are not very big.

PILGRIM: Well, we look forward to it. We hear the excitement building. Thanks very much, Bill Schneider.


PILGRIM: Tonight's Democratic presidential debate begins 8:00 p.m. Eastern right here on CNN, takes place at the Kodak Theater and the moderator will be CNN's very own Wolf Blitzer. It's the first one-on-one debate between Senators Clinton and Obama and that debate begins in less than half an hour. Audience members all in their seats. You don't want to miss it. It's really building here.

Senator Obama and Clinton are certain to face questions on their economic policies tonight as Bill Schneider just mentioned and millions of middle class Americans are facing financial ruin despite late efforts by the federal government to ease the crisis.

New employment numbers show a softening job market. The number of people out of work for six months or more rose dramatically, up 22 percent for the year. People across the country are cutting back. Consumer spending was flat in December. This is normally a busy shopping month. And as Christine Romans reports, more and more Americans face losing their homes to foreclosures.


CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): Before the Senate Banking Committee today, the chairman of the FDIC scolded mortgage servicers.

SHEILA BAIR, FDIC CHAIRMAN: Too many people are losing their homes. Mortgage lenders and servicers must aggressively pick up the pace of subprime loan modifications and do it systematically.

ROMANS: And a top treasury official said foreclosures for the next two years will remain high as housing prices plunge and foreclosures soar, the government says some 4,000 new callers every day are dialing into a special hot line for distressed homeowners, part of the so-called Hope Now initiative led by the Treasury Department with the voluntary cooperation of lenders.

ROBERT STEEL, TREASURY UNDERSECRETARY: Just beginning in January we begin the efforts and should see results.

ROMANS: That program allows a five year rate freeze for some homeowners, those who are still current in mortgage payments. Critics say the program helps too few.

WADE HENDERSON, LEADERSHIP CONFERENCE ON CIVIL RIGHTS: Homeowners simply can't afford to wait for an industry that collectively created this mess and is now being devoured by it to take the lead in cleaning it up.

ROMANS: A mess it is. Regulators and mortgage experts say some 2 million families could lose their homes. The latest figures on spending show the consumer is strapped. Food and energy prices are eroding the value of the weekly paycheck.

SEN. CHRIS DODD, (D) CT: Our economy is clearly facing more than uncertainty. It's facing significant challenges.

ROMANS: From Congress to Wall Street, fear grows that the mortgage crisis is just beginning.

JOHN TAYLOR, NATIONAL COMM. REINVESTMENT COAL.: Imagine how bad things have gotten just with the last year and a half of this foreclosure crisis. Imagine if we have two full-blown years of additional foreclosures, 200,000, 175,000, 200,000, 300,000 a month, it will devastate us.

ROMANS: He's concerned about continuing subprime foreclosures and says there are more than a million risky prime loans that reset starting next year.


ROMANS (on camera): That will be tough. The banks already have lost about $100 billion from their bad bets on risky mortgages. Rating agency Standard & Poor's says the losses could be far worse, exceeding $265 billion as more banks, credit unions and overseas financial institutions, Kitty, tally up their losses. We don't even know the magnitude of this yet and the rating agencies don't really even have a grip yet how deep it goes.

PILGRIM: That's a frightening issue. Thank you very much. Christine Romans.

Coming up, the remaining Democratic contenders, Senator Barack Obama and Senator Hillary Clinton and face off just a few minutes from now.

We now have a preview of our distinguished panel of political analysts.

Also Mattel, the world's largest toy brand, accused of continuing to sell toys that contain dangerous levels of lead. We'll have a special report on that.

We're also minutes away from the beginning of the democratic presidential debate at the Kodak Theater in Los Angeles.

(COMMERCIAL BREAK) PILGRIM: Mattel continues to market itself as one of the most trusted brands despite millions of toy recalls. But the world's largest toy maker has not nationally recalled a popular toy that's been found to contain high levels of lead and now members of Congress are demanding the toy be pulled from store shelves.


PILGRIM (voice-over): Fifty-six Members of Congress wrote to the head of Mattel this week saying, "Please stop selling this toy medical kit. We have both written to you in the past expressing our alarm over the presence of lead in toys being produced by Mattel and we're both disappointed by your company's responses to our correspondence."

In response to the growing concern last fall over millions of toys recalled for lead paint, Mattel, which markets itself as the world's premier toy brand, ran ads in major newspapers pledging to increase vigilance.

Mattel pulled the medical kit from the shelves in Illinois because of strict state regulations, but it has not been recalled nationally. Lead has been detected in the blood pressure cuff that comes with the kit.

DONALD MAYS, CONSUMERS UNION: "Consumer Reports" tests have shown that the lead can rub off on to a child's hands, so it poses a nature. There's no reason to make this product that has lead, so why not take it off the market and recall it from consumers' homes?

PILGRIM: Mattel says the toy meets federal standards although it admits the lead levels were, quote, "higher than anticipated" but the company argues federal standards of lead in paint does not apply to the toy because the toy is plastic. There are no federal standards for lead in plastic. Another congressional letter complains, "If this product is too dangerous for the children of Illinois, it is too dangerous for children in the rest of this country."

REP. ELIJAH CUMMINGS, (D) MD: Children are playing with these toys as we speak. And we would hope that he would move with the utmost urgency to recall these toys, number one, and number two, to cease and desist, allowing toys to be created with lead embedded in the plastic.

PILGRIM: Mattel maintains it acted responsibly by accepting returns of the toys from all over the country even though it did not put out a national recall, adding that it, quote, "responds to unsatisfied customers."

A reminder now to vote in tonight's poll. Do you think that requiring proof of citizenship at our borders is long overdue? Yes or no. Cast your vote at We'll bring you the results in just a few minutes.

Coming up, Barack Obama, Hillary Clinton face off in their first one-on-one debate in less than 15 minutes. It's the last debate before Super Tuesday. You can see it only here on CNN. And another big endorsement for John McCain today, but does it help or hurt McCain with conservative voters? We'll talk with three of the best political analysts in the country. All of that and more straight ahead. Stay with us.


PILGRIM: Joining me now are three of the best political analysts in the country. Here in New York we have "New York Daily News" columnist Errol Lewis. Keith Richburg of bureau chief of "The Washington Post" and at L.A.'s Kodak Theater, which is the site of tonight's debate, Mike Allen, chief political correspondent for

Thank you all for being with us. Let's go to Mike. He's in the loudest place, definitely. Mike, what do you expect for tonight's debate? Clinton/Obama, the first real face-off.

MIKE ALLEN, POLITICO.COM: That's right, this is their chance to go one-on-one. This is the chance for Senator Clinton to disrupt this amazing momentum that Senator Obama has going with all these endorsements, most notably of course Senator Kennedy. Kitty, it's so much fun out here. The contrast to last night at the Reagan Library, which is manicured, quiet, there were a few kids with Romney signs out on the street but that's it. Here it's an amazing street party on a plaza up just above us.

They have whistles, horns. My favorite is there's a handwritten sign "Momma for Obama." But all kinds of chants on both sides. The Obama force is much heavier out here. And Kitty you see the difference between the insurgent movement and the establishment. The Obama people are chanting "Si, se puede," doing their movement thing. Whereas you have bricklayers for Hillary, different unions for Hillary.

PILGRIM: Sounds like a fascinating environment. I'm sorry we're not there. Keith, let's go a little bit to the tone of the campaigns. Now we had Barack Obama calling Hillary Clinton a polarizing figure. We've seen him stepping up a little bit. Do you think it's smart that he's a little bit more on the offensive in terms of tone?

KEITH RICHBURG, "WASHINGTON POST": Well, I think coming into Super Tuesday, he's behind. There are 22 states at stake. He's really only leading in his home state of Illinois, in Georgia, which has a large African American population, and in Colorado where it's very, very close. But she's leading in some of these big states. California wide lead, her home state New York, New Jersey where I just spent the day today, Massachusetts. He's got to be aggressive out there on the stump. I don't know if this new line of attack he's using, that she is the establishment and the establishment will do or say anything to keep power, I'm not sure that is going to translate into the cool format of debate when they are sitting next to each other. It's good on the stump before crowds. I think you might see him tone it down and try to be a little bit more chivalrous in the debate. PILGRIM: This is interesting for the Clinton campaign because Hillary Clinton was definitely on message in Atlanta, speaking in Atlanta today, economy, the jobs, calm measured tones, maybe distancing herself a bit from the negative tone of the campaign that it took last week and the fallout from that. Errol, do you think that is going to be her approach tonight?

ERROL LOUIS, "NEW YORK DAILY NEWS": It would be wise if she were to do that because every time she does try to attack, it comes off -- it's awful. It just comes across negative and obviously loses her votes. It certainly doesn't gain her very much. She's also I think though in a difficult position because she's trying to stave off this sort of surge coming from Obama. If you look at the trend lines in the polls, she's trending downward, he's trending upward. Some recent national polls since Edwards dropped out, some of the first show Obama closing to within six or seven points. And that's not good news. So she's going to have to figure out how to keep her cool and at the same time sort of fend him off.

PILGRIM: There is a danger in appearing too mellow, too measured in the fray of this. I guess the big question is where is Bill Clinton in this equation in the Hillary campaign? Keith ...

RICHBURG: I think she's kind of keeping him under wraps a little bit. She doesn't want any kind of Clinton eruptions out there shouting at CNN reporters or anything else.

LOUIS: He's in a hotel suite under heavy Secret Service protection no doubt tonight.

RICHBURG: Undisclosed location.

PILGRIM: Let's talk about money. I want to bring Mike in on this. Barack Obama raised $32 million in January. That is a -- he's a force in terms of campaign raising, fund-raising. What does that mean for Super Tuesday and going forward in terms of his war chest?

ALLEN: Kitty, what it means is he has the luxury of advertising heavily everywhere. You just mentioned 22 states at stake on Tuesday, which will be the largest nominating contest in U.S. history. Senator Clinton on the air in 12 states. He's on the air in 20. So he has this amazing amount of money.

Kitty, this announcement of the money, which his campaign made ahead of Senator Clinton's, is designed to add to this idea of momentum. So I agree with your other guests that Senator Clinton doesn't want to be mean tonight. I think they looked at how Senator McCain came off last night. They don't want to be that way.

And yet, she needs to break through, get a message. This may be the largest audience for a presidential debate in history because of the one-on-one format. It certainly may be one of the most interesting in history. And she certainly wants to capitalize on that.

PILGRIM: The electricity coming out of that arena right now is amazing. A big week for endorsements. Let's talk about the Democratic endorsement, the Kennedy endorsement of Obama. Any visible effect in the campaign or is this cosmetic?

RICHBURG: It's interesting, I spent the day in New Jersey in a sports bar just talking to working class folks who were naturally the Hillary supporters, these are the people she's been getting on the lower end of the economic ladder. And a couple said to them Kennedy's endorsement made them think twice. They said Caroline Kennedy's endorsement was more interesting because she's somebody who has never really stepped forward before.

Those two together had a lot of people in this demographic that's normally for Hillary Clinton saying they're giving Obama another look now and I think that could be repeated elsewhere.

LOUIS: The interesting thing with Obama throughout, being biracial and scrambling our traditional categories around race and ethnicity, if you think back to Oprah, Oprah was brought in to sort of line up white women. The Kennedys in some ways I'm starting to see are being used as cover by, say, black ministers and others who say normally I'd go with the Clintons, they've done favors for me in the past, I have a relationship. On the other hand, who can tell you that you're being disloyal to the Democratic Party if you go along with the Kennedy clan?

PILGRIM: That's an interesting point, Errol. We're going to take a quick break. We still have to discuss the Republican side of this equation and we'll have more with our panel, the results of tonight's poll, more of your thoughts. Stay with us. We'll be right back.


PILGRIM: We're back with Errol Lewis, Keith Richburg and Mike Allen. Gentlemen, the momentum is building in this arena. We can hear the excitement coming off the walls. Is this a turning point, do you think, in this entire -- we've had so much coverage for so long over the last few months. It seems that -- it feels like this is a very, very important moment. Keith?

RICHBURG: I think it very well could be. I won't say it will be. It could be -- Hillary Clinton would love to just run out the clock. I mean, she's got a small lead. As you said, Obama is surging. She's like the New England Patriots, if they get a couple of touchdowns in the first half, she wants to sit on the ball, not make any mistakes and go into Tuesday with her lead.

So Obama needs to kind of keep that surge going, do something dramatic. If she is comes out of Super Tuesday having won a lot of these states it could be basically over.

PILGRIM: This is an interesting moment because you have this debate tonight and then you go to Super Tuesday. There's an entire weekend for the talk show hosts to dissect this and absolute parse every word, every gesture, slow down the tape. I mean, this is an unforgiving moment for these candidates. Errol? LOUIS: That's right. And we've seen in a number of cases, in particular in New Hampshire and also South Carolina, late breaking voters. There's a large percentage of voters who are going to make up their mind at the last minute, especially first-time voters.

And so what happens in the next few days, this is the time frankly where there's room for a lot of mischief for robocalls to go out, false accusations that can't be rebutted on national television to go out. Hopefully these campaigns will be on their best behavior.

And we had a report from our correspondent Bill Schneider saying California such an important state. It's no accident this is happening right here right now, is it?

LOUIS: Not at all. This speaks to its importance. And in a way, as the report says, that hadn't been true in a generation.

RICHBURG: And that's the importance of the Latino vote out there, too, the Kennedy endorsement. So that's why Kennedy's endorsement coming now right before that is very influential.

PILGRIM: Very interesting. Mike, you wanted to add one last thought, didn't you?

ALLEN: One thing to listen for tonight is who is more aggressive in pandering to the John Edwards supporters. Today Senator Obama was talking poverty as the mission of his life. Does that sound familiar? Look for that tonight. The other thing, people say race is like the economy, don't watch one day's movements -- look at the fundamentals. What we should look for is you look at Senator Obama's money, look in the endorsements. Are the fundamentals changed or is this still Senator Clinton's to lose?

Watch who is showing confidence.

PILGRIM: All right, thank you very much, Mike Allen, Keith Richburg, Errol Louis. Thank you all for helping us set up this debate. It is going to be very fascinating.

And we'll tell you now the results of tonight's poll. Ninety-six percent of you think requiring proof of citizenship at our borders is long overdue. We do have time for some of your thoughts so let's read an e-mail.

Dennis in Texas wrote, "Bush's legacy will not only be about the Iraq War, but about the damage to middle class worker by his faith- based trade policy. The rise of Communist China will haunt this Republican president for decades."

John in Illinois. "Lou, this stimulus check is not a shot in the arm, it's a slap in the face."

Ed in New York writes, "I am a registered Democrat and last November, I voted for change. As of this date there is no change so I am changing. I'm registering as an independent." We love hearing from you. Send us your thoughts at Each of you whose e-mail is read here receives a copy of Lou's new book, "Independents Day, Awakening the American Spirit, the Book Democrat and Republican Parties, Corporate America Don't Want You to Read."

Well, thanks for being with us tonight. CNN's Democratic presidential debate begins right now.