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Lou Dobbs Tonight
The Wall Street Bailout Plan; Economic Mess; New Hope for America
Aired September 25, 2008 - 19:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LOU DOBBS, HOST: Thank you, Wolf.
Tonight the $700 billion bailout for the Wall Street facing rising opposition in Congress. We'll have complete coverage for you and one of the most outspoken opponents of that bailout is Congressman Brad Sherman, the House Financial Services Committee member. He joins me and tonight Senators McCain and Obama join President Bush and congressional leaders at the White House for emergency talks on this Wall Street bailout. Is it political or is it actually something concrete?
We'll be talking about that with three of the best political analysts and tonight communist China has launched its first space walk mission in history as Beijing faces new charge that it stolen America's most sensitive space secrets and military technology. We'll have that special report, all of the day's news and much more from an independent perspective straight ahead here tonight.
ANNOUNCER: This is LOU DOBBS TONIGHT: news, debate, and opinion for Thursday, September 25th. Live from New York, Lou Dobbs.
DOBBS: Good evening everybody. A high stakes meeting today on the proposed bailout for Wall Street between President Bush and Senators McCain and Obama, and they were joined by congressional leaders as well. The White House meeting coming as congressional leaders tried to come up with a deal on that $700 billion bailout.
Reports saying the draft plan includes limits on executive compensation but those limits far from specific and some kind of government stake in the companies that would be participating in the bailout. But no one is providing details. No one is providing specifics. President Bush saying it's essential that Congress pass this legislation.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: One thing the American people have to know is that all of us around the table take this issue very seriously. And we know we've got to get something done as quickly as possible. And this meeting is an attempt to move the process forward. My hope is that we can reach an agreement very shortly.
(END VIDEO CLIP)
DOBBS: Congressional leaders earlier agreed to what they call fundamental principles saying they are optimistic that Congress will eventually approve this deal.
(BEGIN VIDEO CLIP)
SEN. CHRISTOPHER DODD (D), CONNECTICUT: We believe that we're prepared to act expeditiously on a package to our colleagues that will allow us to send a message to the markets that the Congress heard the message.
SEN. ROBERT BENNETT (R), BANKING COMMITTEE: And now expect we will indeed have a plan that can pass the House, pass the Senate, be signed by the president and bring a sense of certainty to this crisis.
(END VIDEO CLIP)
DOBBS: Well, tonight a rising number of congressional Republicans say they oppose this bailout. One of the lawmakers is the top Republican on the Senate Banking Committee, Senator Richard Shelby. He was in that meeting at the White House.
(BEGIN VIDEO CLIP)
SEN. RICHARD SHELBY (R), ALABAMA: We hadn't gotten an agreement. There are still a lot of different opinions. Mine is it's flawed from the beginning. I said that the other day at the Banking Committee.
(END VIDEO CLIP)
DOBBS: And a lot of House Republicans agree with the senator. Voters and advocacy group oppose to that bailout today holding protests on Wall Street and more than 200 locations across the country. Despite the opposition, the stock market making big gains today. The Dow Jones Industrials up almost 200 points amid rising optimism about the possibility of that $700 billion bailout.
We have extensive coverage tonight on those talks at the White House, the bailout proposal and its progress or lack of it and whether or not in fact there will be a presidential debate tomorrow night. Ed Henry at the White House, Jessica Yellin on Capitol Hill, Dana Bash also on Capitol Hill with the McCain campaign, Candy Crowley following the Obama campaign. She's in Clearwater, Florida tonight.
We begin with Ed Henry at the White House. Ed, where do these negotiations stand at this hour?
ED HENRY, CNN WHITE HOUSE CORRESPONDENT: They're stalled at this hour, Lou. It was high drama in the cabinet room today. They all started with smiles. You heard those positive optimistic comments from the president. He said he felt that a deal was very close.
But I'm told that it blew up pretty quickly in that room. It started with President Bush going around the room and suggesting there was broad agreement between he, House Democrats, Senate Democrats and Senate Republicans. But then when it came around to Barack Obama, he started going back and forth a little bit with John Boehner, the House Republican leader and Treasury Secretary Henry Paulson. I'm told that John Boehner raised concerns that conservatives have in the House. House Republicans deeply concerned that taxpayers will be too much on the hook, that there's not enough accountability for companies who have bad debt out there and these conservatives don't just want the debt gobbled up by taxpayers.
They want to find some sort of insurance vehicle so it's not just taxpayers that are on the hook. I'm told that when Obama started pressing on this, Boehner basically suggested he needed a little more time to bring along some of his House Republican colleagues because they want more specifics from the Democratic leaders and they want more specifics from the White House, so Boehner headed back to Capitol Hill as did the Democratic leaders to try to re-gauge support for some of the agreement -- some of the principles that Democrats are trying to bring towards a deal.
The bottom line is that they went into it feeling very optimistic. They left not knowing really where they go. There have been high hopes they could get this deal done by this weekend. They're nowhere near that close now, Lou.
DOBBS: And at this point the House Republicans apparently in their last meeting only four members of Congress were supporting this idea. This looks like a very, very questionable outcome now when as earlier the White House it seemed and the congressional leadership were trying to make it look like a done deal.
HENRY: That's right. And part of the problem for the White House at this hour is they don't really have a clear idea of where Republican Senator John McCain is. I'm told that in the room John McCain sort of kept his cards close to the vest. The Democratic and Republican officials in the room say he really didn't say that much. Did not say as much as Barack Obama did, so the White House and the Democratic and Republican leaders don't have a clear handle on where John McCain is.
If McCain were all of a sudden to come out in support of this bill, that would provide a lot of political cover to some of those House Republicans who have deep concerns about this bailout package. On the other hand, if McCain came out against it obviously it would be clear that a lot of those conservatives would not come along, so he's kind of the key to this deal at this moment -- Lou.
DOBBS: Well you say political cover. I think we need to remember that in the most recent polls that I've seen more than two- thirds of Americans in the most recent poll oppose this bailout. It looks like it may be the folks behind this bailout that need the political cover. Ed, thank you very much -- Ed Henry. Appreciate it.
Let's go over to Jessica Yellin. Jessica, the House Republicans, the uncertain apparently, the uncertain understanding as to where John McCain really stands on this. What's going on?
JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Well the House Republicans, Lou, are saying now that there never was an agreement. That they were never signed on and they've had concerns all along. They just circulated what they're calling an economic rescue -- list of economic rescue principles that would essentially allow for a bailout that's not funded by taxpayer dollars but through private investment, an entirely different version of this package than is currently envisioned.
So they are on a very different page at least that's what they're saying is where they're going right now. And a very, very different position Congress finds itself in at this moment than they did earlier today when you saw Democrats and Republicans from both the House and Senate come out and give the impression at least that they were in agreement that this thing is on track to be signed off on and to start drafting legislation overnight.
And now what's happened is that both sides are trading blame on who has derailed this. The Democrats alleging that look John McCain came to town and he threw a whole wrench in this thing and it was going to through smoothly until then and you can imagine the Republicans saying give me a break we were never there. I will tell you something...
DOBBS: Well and point of fact, the House Republicans were never there.
YELLIN: They're -- well, John Boehner last night issued a joint statement with Nancy Pelosi saying that they were determined to get this thing done. They had some agreement on an overall vision for this thing and they did seem to be at least closer to working together than they are right now.
DOBBS: So it seems to be that Democratic strategy right now is to blame John McCain for the failure to come together on this. I mean that's pretty strong stuff. Particularly when Barney Frank, the chairman of the House Financial Institutions Committee, when Harry Reid and Nancy Pelosi all saying that it really wasn't necessary. They already had a deal. I mean do any of these people know what they're doing down there?
YELLIN: Well, this has become very politicized right now and it seems that everybody is acting as a proxy for you know a larger mission, their presidential candidate. But there was much more sense of consensus this morning. That's for sure than there is right now.
DOBBS: All right, Jessica. If you will, can you stand by because we're going to want to come back with you. Let's go over to Dana Bash. Dana, weigh in on this.
DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well I can just basically say what Ed and Jessica just reported about the contentiousness inside that meeting is definitely what I'm hearing from my sources, Republicans and Democrats and I'm hearing the same thing they are about each side pointing fingers at who is to blame.
But with regard to those House Republicans, from the perspective of John McCain, Lou, he came here today and when he arrived, the negotiations were already actually wrapping up in the House and Senate Banking Committee. They were already done. You played that sound bite from Senator Bennett who came out -- Republican Senator Bennett who came out and said it looks like we have a plan.
As he was doing that basically, John McCain was arriving from the campaign trail here to the Capitol to his office, but he definitely had a different mission. It wasn't to be involved in those negotiations. It was to talk to those House Republicans, those frustrated and angry House Republicans. In fact, he spent some time over in the House, Republican leader's office John Boehner talking to them about some of their concerns and so talking to some of the McCain aides -- Senator McCain's aides who were with him here during the day.
We heard throughout the day about the fact that you know everybody was saying oh we're close. We're going to have a deal, but the fact that these House Republicans simply are not there primarily because many of them just have major philosophical differences with many of these folks who are talking about this idea, about the idea of bailing out Wall Street.
DOBBS: Do we have a sense as to where John McCain is? Is he aligned now with those House Republicans who are in the minds of many I must say being responsible and constrained and cautious and many would say that that is precisely the temperament and the approach that's required here rather than this brash dash, if you will, for 36- hour answer to a crisis.
BASH: They're keeping their cards very close to their vest in terms of where they stand. However, I will tell you just knowing what John McCain did all day frankly -- what he did is he focused a lot on these House Republicans, listening to their concerns. I talked to some of the House Republicans he talked to. They said that they felt that he was in sync with him -- they were in sync with one another on this idea that they wanted to slow the trains down, talk about other ideas like perhaps having some kind of insurance proposal and that that's why...
(CROSSTALK)
DOBBS: So based on what you've heard, you think that there's a very strong likelihood that Senator McCain and the House Republicans opposing this bailout have aligned themselves?
BASH: To be honest, Lou, it's really hard to tell because McCain is being very, very cautious in what he's saying in terms of how he stands right now. He has said -- you know he put out a joint statement with Barack Obama yesterday. He has said that moving fast with this is of the utmost importance, but he's basically being -- trying to be careful politically here. This is about as dicey as it gets for him trying to make it clear that he understands the concerns, that he's in sync with these House Republicans and yet understands the need to do this and to do this fast, so...
DOBBS: All right, thank you very much, Dana.
BASH: ... pretty hard to tell where he is.
DOBBS: Dana Bash over at Capitol Hill. Let's go to Candy Crowley in Clearwater, Florida. Candy, you're on the campaign trail without a candidate.
CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: I know. And you know on a beach and here I am talking to you. But nonetheless, Barack Obama you know got this call from the president and knew that he had to go up to Washington to sit in on that meeting. In fact, he has now decided before they thought he would come back here and continue with debate preps, but now what he's doing is he's going to stay in Washington to monitor things.
So -- but I will say that in an interview earlier he said he is still planning on going on that debate Friday. He refused to take any shots at John McCain, although he doesn't really need to because all of the Democrats on Capitol Hill are taking their shots at McCain and saying this is a big photo opportunity. He's messed things up.
DOBBS: I love the fact that those congressional leaders and voices are saying all of this now is John McCain's fault. He's been in town a few hours and he's ruined everything.
CROWLEY: But you will not hear that directly from Barack Obama.
DOBBS: Right.
CROWLEY: He was given a chance to take a shot at him, but I can tell you that his campaign is sending out memos saying you know this is bogus. He didn't suspend his campaign. He's just trying to bolster his chances, not help out the economy, so there's that definite strong undertow that Obama is riding on...
DOBBS: You mean to tell me that...
CROWLEY: ... while he sort of stays above the fray.
DOBBS: You mean to tell me, Candy, that there are politics at work here?
CROWLEY: Always. Always. On both sides. I mean you know look, it's a political year. I mean there's always politics on Capitol Hill and to put a -- you know 40 days away from a presidential campaign not to mention every member of Congress and the third of the Senate, there's just no way to take politics out of this.
DOBBS: Do you think this would be an appropriate point for me to tell our audience tonight that according to the Gallup tracking poll, these two men, Senator Barack Obama and Senator John McCain are all tied up again?
CROWLEY: Feel free to say that.
DOBBS: All right. Thank you very much, Candy. We will take...
CROWLEY: Thanks, Lou.
DOBBS: We will take note. Thanks very much. And we hope you either catch up with your candidate or your candidate catches up with you soon. Thanks, Candy Crowley, in Clearwater, Florida. Time now for our poll question. The question is straightforward. Do you believe for a minute that any bailout would really limit executive compensation as both sides have suggested that it would? Cast your vote at loudobbs.com. We'll have the results for you here later.
Do you believe for a moment that any bailout would effectively limit executive compensation? We'll have much more on these bailout negotiations. I wish I could tell you what the bailout is about and what the details are, what it would do, what it would cost, what would be the impact but I can't. Perhaps a leading opponent of this bailout will be able to do so.
Congressman Brad Sherman of the powerful House Financial Services Committee joins me and troubling new evidence of the economic crisis facing this nation and our middle class is in fact worsening. We'll have that report and amid all the gloomy news about this economy, we have tonight a story of innovation and hope from one of the most economically depressed parts of the country and it's all about automobiles. How about this? We'll be right back.
(COMMERCIAL BREAK)
DOBBS: Well no one knows better the dimensions of our economic crisis than working men and women and their families. Unemployment is rising. The latest home sale figures show that they are at the lowest level in almost two decades. Home foreclosures in the month of August were up 12 percent over July. Washington officials who have well led us into this mess seem to have absolutely no idea on how to lead us out. Louise Schiavone has our report.
(BEGIN VIDEOTAPE)
LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): Measured by jobless benefits, the economic climate is now as bad as the weeks following 9/11. Almost half a million Americans seeking unemployment help. Factories are taking fewer orders. And home sales are still sliding. The rate of new home sales last month at its lowest pace in 17 years.
MARK VITNER, SR. ECONOMIST, WACHOVIA: I think there is very good reason for people to be worried about the economy today. Domestic demand here in the United States, purchases of consumers and businesses is weaker today than any other time since the '81-'82 recession and that was a very severe recession.
SCHIAVONE: Among the toughest new realities, the tightening of credit as reflected in declining sales of homes and big ticket items like cars.
DAVID SMICK, AUTHOR, "THE WORLD IS CURVED": We're going to feel this on Main Street by 2009 and it's going to be a rough year ahead. The cost of money is going up and the availability of money is becoming more difficult. That means there is going to be less investment and that -- it will mean less jobs, fewer jobs in 2009 and it's not going to be pretty. SCHIAVONE: In Michigan where auto industry jobs have been evaporating, GM announced a new plant that would mean more than 300 jobs. Sometimes despite that it already feels like a depression. Economists believe that pain will spread.
HEIDI SHIERHOLZ, ECONOMIC POLICY INSTITUTE: Even after the economy starts growing, even after the official recession ends, we will see continued job loss, continued increases in unemployment for even longer than that.
(END VIDEOTAPE)
SCHIAVONE: And Lou, the economists we spoke with say that even though the $700 billion rescue plan translates into a cost of almost $3,000 for every American, it's just only a start -- Lou.
DOBBS: Well, it may be a non starter of a start because obviously there's a long ways to go before we have such a plan put forward and it appears there's political opposition that is strengthening within Capitol Hill, particularly amongst House Republicans. One of the things that I feel like we should point out is despite all of the troubling and concerning statistics which you shared with us in that report, and I believe the focus was entirely correct, we do have a Dow Jones Industrials, a stock market that has managed to withstand most of the downward pressure, the headwinds that have been obviously racing across Wall Street.
We also have an economy that grew 3.3 percent at least according to the most recent Commerce Department report in the second quarter. So there are some contra bailing influences that we need to consider when we talk about this economy. There are as you suggest many negatives and as you correctly reported, there are also some positives. And I know that this is not a time in which anyone in this country wants to hold competing concepts in their minds at the same time because of the partisanship, but the reality is this is not a simple economy to describe right now, is it?
SCHIAVONE: That's right and economists that we spoke to have different points of view as to exactly how really bad it is. And I spoke with someone yesterday who said while there was discussion years ago about irrational exuberance, there's now some question is there irrational pessimism? But the question is are the financial markets so worried that the credit that is available to Main Street is going to freeze up.
And that's the real concern, not so much what the Dow is doing up or down, but whether or not you can send your kid to college and get money for your child to borrow to go to college or buy a home or buy a car. That's what people are really worried about.
DOBBS: Yeah and if that's what they -- our policymakers are worried about, one wonders why they wouldn't just start writing out checks for about $20,000 for every household in the country. That'd be a rather direct way to deal with that issue. Just a thought. Just something for somebody to consider down in Washington, D.C., maybe. Thanks a lot. Louise Schiavone down at Washington D.C. Well as our crisis continues, the working men and women in this nation's industrial core face some bleak, bleak influences. The "Detroit Free Press" today reported that one in four Michigan voters now say this country is in a depression. Not a recession. A depression. About three in four of those polls say we're in a recession at the very least.
Michigan's unemployment rate, by the way, for the month of August was almost nine percent, well above the national rate of 6.1 percent. The unemployment rate is even higher in some cities in Michigan. Flint, Michigan, for example, one of the highest unemployment rates in the nation in July, 12.3 percent. But there is some very positive news for Flint's working men and women and their families.
General Motors today announcing a new engine manufacturing plant will be constructed in Flint. The plant will produce four cylinder engines and the onboard generators for Chevrolet's brand new electric car, the Volt. Bill Tucker has our report from Flint.
(BEGIN VIDEOTAPE)
(APPLAUSE)
MAYOR DON WILLIAMSON (D), FLINT, MICHIGAN: This is a good morning. It's really a fantastic day for everybody in America.
(APPLAUSE)
BILL TUCKER, CNN CORRESPONDENT (voice-over): The crowd of politicians, auto executives and union members couldn't have agreed more. In Michigan the answer to America's economic woes are apparent.
UNIDENTIFIED MALE: Politicians, it's jobs.
(CHEERING AND APPLAUSE)
TERRY EVERMAN, UAW LOCAL 599 SHIP CHMN.: Jobs in America, jobs in Michigan, and jobs in Flint, Michigan, will take away the financial woes that they're so seeking the answers to.
TUCKER: A message Michigan politicians or at least the governor doesn't have to hear twice.
GOV. JENNIFER GRANHOLM (D), MICHIGAN: All of our jobs Michigan by the end of this year we will have lost 400,000 manufacturing jobs especially related to the auto industry. The question is where is it going to be built? Is it going to be built over there and shipped over here or can we build it here and can we make it competitive?
TUCKER: Hard negotiations between the UAW and GM resulted in the union conceding on some issues yielding a commitment from GM to build here.
CAL RAPSON, VP, UNITED AUTO WORKERS: We don't expect them you know to build a product here they can't make some money on. And they may argue yet they could make more money if they built it somewhere else, but we're really working with them to the point if you're making money build it here.
TUCKER: The excitement was not laborers alone.
RICK WAGONER, GM CHAIRMAN & CEO: I couldn't be more excited. Actually I feel great about our team coming up with these ideas. People really do want to move ahead to these new technologies and it's really fun to come out today and announce a piece of it and see how the people that will be putting the new engines together are excited about their role in it.
TUCKER: One of the members of that team, the Volt's chief engineer is excited that the advanced technology of the car, which is homegrown, will now be home built.
ANDREW FARAH, GM "VOLT" CHIEF ENGINEER: Here's some -- you know a great opportunity both for the state and again my hometown to get the positive side of some of this new technology and I think you know this is the first in many opportunities like that in the industry.
(END VIDEOTAPE)
TUCKER: Now over the past decade GM has invested $9 billion here in the state of Michigan, 42 billion in plants in the United States. And yes, Lou, I know there have been layoffs during that period as well. But the good news for today is that GM is investing $370 million in this plant here behind me to build a new engine plant that will create somewhere between 300 and 700 jobs -- Lou.
DOBBS: And talk about welcome news and good news. It's terrific that we're seeing innovation. We're seeing environmentally inspired responses on the part of manufacturing specifically the automobile industry and General Motors. That's worth a lot to obviously to Flint, Michigan, the state of Michigan and this country. Bill, thank you very much. Bill Tucker reporting from Flint, Michigan.
Up next, communist China launching its first space walk mission. Could they have done it without stolen American technology? No way. We'll have the report.
And there's enough blame to go around for this country's financial crisis and economic mess but one culprit has gone almost unmentioned. We'll fix that next.
And one of the toughest opponents of this bailout is Congressman Brad Sherman. He's my guest here next. Stay with us.
(COMMERCIAL BREAK)
DOBBS: There's plenty of responsibility for this country's financial crisis, but very little has been said about the role of the rating companies responsible for determining the stability of financial institutions and the products that they create and trade. Those rating companies should have accurately and independently analyzed those securities and instruments, but they failed and they failed miserably. Lisa Sylvester has our report.
(BEGIN VIDEOTAPE)
LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Three letters made all the difference, AAA, the three-ratings companies, Moody's, Standard & Poor's, and Fitch, gave the top-notch rating to many mortgage-backed securities. Banks, pension funds and insurance companies, in turn, bought those bundled mortgage deals based on their credit rating. But critics say those securities turned out to be anything but secure.
STEPHEN MOORE, "WALL STREET JOURNAL": If you want to look at the real bad actors and the people who fell asleep on the job, the credit rating agencies have to be at the very top of the list. They're the villains here.
SYLVESTER: Ratings companies made piles of money rating the exotic mortgage vehicles, much more than they did rating your garden variety bonds. Critics say the ratings companies shared a cozy relationship with the banks whose securities they rated.
JOSEPH STIGLITZ, NOBEL LAUREATE ECONOMIST: The fundamental problem is that the rating agencies would be paid by the financial institutions, the investment banks, that were creating these crazy products.
SYLVESTER: The ratings companies have now had to downgrade thousands of mortgage securities. Fitch Ratings had no comment. Moody's did not return phone calls. Standard & Poor's responded, saying it's not as bad as critics paint it out to be, saying only 12 percent of their securities have been downgraded.
Quote, "Independence integrity and quality remain the cornerstones of everything we do and everything we stand for. Earlier this year, we announced a series of actions designed to improve transparency and the rating process. Since then, we have made significant progress in achieving those goals."
But Jim Kaitz, with the Association for Financial Professionals, isn't buying that explanation.
JIM KAITZ, ASSOCIATION FOR FINANCIAL PROFESSIONALS: We've seen the result of the ratings, and we've seen what the underlying assets -- and we've seen the results of everything that's happened here. And clearly, for them to kind of walk away from their culpability in this is inexcusable, in our mind.
(END VIDEOTAPE)
SYLVESTER: Now, the credit rating companies were supposed to be looking out for the investor and the public. But as one source said, they were the watchdog that never barked.
Now, these credit rating companies have enjoyed a virtual monopoly, but legislation recently passed by Congress would allow for more competition -- Lou.
DOBBS: And where do they stand in what are now the beginnings and widening of an investigation into what happened here, by the FBI and by other agencies including the SEC?
SYLVESTER: There is an investigation that's looking into these. The SEC, for instance, has been able to look at these credit rating companies to see what some of their actions are. And I should tell you that they've actually had a number of hearings that have been going on for quite some time on this.
And there were groups that were saying, "Hey, you've got to take a look at these rating companies." But it wasn't done then and certainly not with any type of scrutiny. And so hopefully, that will be happening now.
DOBBS: And we should point out that, in that instance, in terms of hearings that oversight on the part of Congress again was absolutely miserable and a failure.
Thank you very much. We appreciate it, Lisa Sylvester.
Up next, communist China's new space mission, made possible by stolen secrets from America? We'll have that report.
And one of the most outspoken opponents of this Wall Street bailout is Congressman Brad Sherman, who's my guest here next. Stay with us.
(COMMERCIAL BREAK)
ANNOUNCER: This is LOU DOBBS TONIGHT. News, debate and opinion. Here again, Mr. Independent, Lou Dobbs.
DOBBS: Treasury Secretary Paulson and Fed chairman Ben Bernanke faced tough questioning on the bailout from the House Finance Committee last week. Some of the toughest questioning coming from Congressman Brad Sherman of California, one of the bailout's biggest opponents. Congressman Sherman joins us now from Capitol Hill.
Congressman, good to have you with us. What is the -- what is the basis of your opposition to this Bill? I mean, we've heard from the Democratic leadership it's just -- it's just boffo. We've heard from the White House that it's just boffo. What's the problem?
REP. BRAD SHERMAN (D-CA), FINANCIAL SERVICES COMMITTEE: I'd like to see a Bill that I could support. This Bill has three major problems.
The first is that Paulson gets the $700 billion, goes up to Wall Street and gets to hand it out to whomever he wants for whatever toxic assets they choose to sell without any control.
Now, the White House will agree that he will be subject to a control board but made up exclusively of Bush cronies. They'll be the only ones that can tell him to stop.
There will also be a review board, but that one just issues press releases. It can't stop anything. The second problem is the current Bill they're saying, "We're going to limit them to only 200 or 300 billion dollars." The fact is, he gets all $700 billion. We could pass a resolution to stop the second 350, but he can veto that resolution, so it would take two- thirds of both houses to...
DOBBS: So the treasury secretary gets a veto over the United States Congress?
SHERMAN: The president gets the veto. I don't know -- I don't really draw a distinction between. My view is, you know, Hank Paulson is George Bush, you know, without the hair.
DOBBS: Well...
SHERMAN: I mean, Hank knows more about the financial services industry, but they are part of the same administration, and they're going to try to achieve the same values.
DOBBS: Well, at this point it looks like, after some rather optimistic statements by Democrats and Republicans on Capitol Hill and the White House earlier today, it looks like this negotiation is far from near any kind of successful resolution.
SHERMAN: Bush could have had a Bill on his desk today if he'd agreed to some controls on his power and agreed to real controls on executive compensation for the bailed-out firms.
DOBBS: What is the -- there have been very. And there's no sense of what the heck they mean when they say controls on executive compensation. Are we going to do as Senator McCain suggested: limit that CEO's salary to $400,000 or what?
SHERMAN: Well, they're deliberately hiding the ball. The only executive compensation that Bush will tolerate, limits on certain types of esoteric bonus formulas. But he draws the line at the million-dollar-a-month salary. In other words, if an executive is staying with the firm, and he's getting paid a million a month, maybe they want to give him a raise to a million and a half a month, his position is we can't stop that. And as long as he takes that position, he's probably not going to get a Bill passed.
DOBBS: Congressman Sherman, let me just say to you, if the president of the United States arrogantly and willfully would say such a thing and would demand such a thing, if there is anyone who supports that -- that bailout, the American people will revolt.
I mean, who -- who are these people? Who is Henry Paulson? Who is your leadership, Nancy Pelosi and Harry Reid that they would accommodate this kind of nonsense?
SHERMAN: They're reacting to the big fear machine that is saying the markets will drop.
DOBBS: Is anybody afraid of the culture of excess and greed and absolute indifference to the -- to the welfare of this nation, the national interests that's been created on Wall Street and in corporate America? Is anybody afraid of that culture?
SHERMAN: They're more afraid of voters getting mad if the market drops tomorrow. And now Wall Street -- there will be a few on Wall Street who will realize that the way to scare Congress again is to make sure the market drops precipitously tomorrow.
And then they can say, "Look, we noticed that the deal isn't going through quickly, and look what happens to the market. You guys have to go in on Saturday and pass the deal the way we want it."
And we have to stand up to that and recognize that, if we're going to do a Bill, it's got to be a Bill with adequate controls.
DOBBS: Brad Sherman, thank you very much for being with us. congressman Sherman, appreciate it. Good luck.
SHERMAN: Thank you.
DOBBS: Up next, words of praise for Senator McCain and Governor Palin from former president Bill Clinton. We'll hear what the former president has to say.
And the new communist Chinese mission to space. Thank you, America. We'll be right back. Stay with us.
(COMMERCIAL BREAK)
DOBBS: Communist China today launched its first manned mission that will include a space walk. While China still lags decades behind the U.S. space program, Chinese spies are routinely stealing U.S. technology to close that gap.
Kitty Pilgrim has the report.
(BEGIN VIDEOTAPE)
KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Today a Chinese space walk. A three-man crew, including an astronaut, who will make the country's first space walk.
Western experts warn every Chinese space launch is partly a military exercise.
RICHARD FISHER, AUTHOR, "CHINA'S MILITARY MODERNIZATION": The previous six missions have conducted military surveillance missions, either electronic or imagery surveillance missions.
PILGRIM: Last year China shocked the world by firing an anti- satellite weapon into space.
MICHAEL LEVI, AUTHOR, "ON NUCLEAR TERRORISM": Well, here's the danger. You don't need to equal U.S. capabilities in space to cause big problems for U.S. capabilities in space. All you need to be able to do is knock out U.S. capabilities to have a significant effect in a conflict. PILGRIM: The director of national intelligence testified before Congress last year that China's foreign intelligence service is "among the most aggressive in collecting against sensitive and protected U.S. systems, facilities and development projects, and their efforts are approaching Cold War levels."
This year alone there have been more than a dozen cases of alleged espionage to steal defense and technological secrets for China. On Wednesday a physicist in Newport News, Virginia, was arrested on charges of illegally exporting space launch data to China.
A former professor at the University of Tennessee was convicted earlier this month of illegally exporting to China plasma technology for military drones.
In February the FBI arrested a Pentagon official and two Chinese- born spies for allegedly passing defense secrets to China.
(END VIDEOTAPE)
PILGRIM: Then there's the most famous Chinese spy case, Chi Mak, involved in transfer of U.S. military technology for U.S. warships and submarines -- Lou.
DOBBS: Does the White House get a thank-you card from -- from the Chinese government?
PILGRIM: You know, we never...
DOBBS: From the Communist Party?
PILGRIM: When you go through this list, you cannot believe the technology that's flying out of this country.
DOBBS: Yes, we can believe, because we've been reporting on this issue for literally a decade. Thank you very much, Kitty Pilgrim.
Coming up at the top of the hour, "THE ELECTION CENTER" with John Roberts tonight sitting in for Campbell Brown. John, what are you working on?
JOHN ROBERTS, CNN ANCHOR: Lou, good evening to you.
Coming up at the top of the hour tonight's dramatic breaking news with talks on bailing out Wall Street. Apparently go off the rails after a surprisingly contentious meeting at the White House. We'll tell you what happened and what they're trying to do right now to get back on track. The Fed chairman, the treasury secretary headed back up to Capitol Hill.
Also, we're going to have an update on whether there will be a presidential debate tomorrow. The Obama campaign reports they are still inclined to go; the McCain campaign not for sure about that. A lot going on. We're going to have it for you at the top of the hour -- Lou.
DOBBS: Thank you very much, John.
A reminder now to vote in our poll. The question is, do you believe for a minute that any bailout would really limit executive compensation? We'd like to hear from you. Yes or no. Cast your vote at LouDobbs.com. The results will be here in just a moment.
And a reminder to join me on the radio Monday through Friday for "The Lou Dobbs Show." Among my guests tomorrow, House Financial Services Committee Chairman Barney Frank will have the latest on the bailout. Politico's chief political correspondent, Roger Simon, joins me, as well as Dean Baker from the Center for Economic and Policy Research on the impact of any proposed bailout. Go to LouDobbsRadio.com to get your local listings for the show. Please join me tomorrow.
Up next here, Bill Clinton's words of praise for Senator McCain and Governor Palin. How did these remarks go over with some Democrats? Well, we'll tell you.
And more curious comments from vice-presidential candidate Joe Biden. This is turning into quite a campaign. We'll hear what two leading Democrats have to say about that. I'll be joined by three leading political analysts, as well. Stay with us. We're coming right back.
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DOBBS: (AUDIO GAP) ... and good guys. Republican strategist Ed Rollins, he served as White House political director under President Reagan and recently chaired Mike Huckabee's presidential campaign. "New York Daily News" columnist Errol Louis, also the host of the WWRL morning show here in New York, a member of the editorial board at the "Daily News," as well.
They're keeping you busy, Errol.
And Robert Zimmerman, Democratic National Committeeman, Democratic strategist, Senator Barack Obama supporter. Rabid partisan.
Good to have you with us.
ROBERT ZIMMERMAN, DEMOCRATIC STRATEGIST: Thanks for that warm introduction.
DOBBS: You know, things are just going boffo down in Washington today. Is there going to be a bailout? Should there be a bailout?
ZIMMERMAN: One, there should be a bailout. Two, I believe it will take place. My feeling is, by this weekend.
DOBBS: Do you believe, as a Democratic National Committeeman, that it's John McCain's stopping the bailout at this point?
ZIMMERMAN: Well, let's look at this it this way, Lou. On Wednesday, Senator Richard Shelby, the senior member of the banking committee, was saying there would be a deal. And of course, the deal -- there was a bipartisan agreement with the White House in place before John McCain's plane touched down. And now, of course, we're seeing political theater.
DOBBS: Hmm.
ZIMMERMAN: And that's -- so I think -- so I think...
DOBBS: Very, very rare occurrence in Washington, D.C.
ZIMMERMAN: No, but the stakes are very high and this is perhaps...
DOBBS: But how -- you know, this -- how high are they, Ed? Should there be a bailout?
ED ROLLINS, REPUBLICAN STRATEGIST: I think there's a serious question about that, and it's not John McCain. It's the House Republicans. And the House Republicans who basically, most of them, sit in safe seats and don't think they -- think they spent way more money than they should have and feel no obligation to this president, who's going out the door in 116 days. Don't know Paulson. He doesn't know how to negotiate with them.
And all of a sudden they have this crisis in which, for the next two or three terms, they're going to be forced to give up everything else that they had because of this bailout for a bunch of people on Wall Street. And I think they want to be at the table and I think what happened was the Democrat leadership and some of the Republicans who were negotiating got ahead of the troops.
DOBBS: Well, the troops. And when we think of the troops, I mean, should we be thinking of congressman and women as troops in this thing? Because there are very real concerns here, aren't there, Errol?
ERROL LOUIS, RADIO TALK SHOW HOST: Absolutely. Beneath it all, sure. I've interviewed a number of -- I've been trying to interview economists from across the spectrum, and there's an almost unanimous feeling that what we -- what we don't know is so much greater than the pressure that's being applied politically, and it just doesn't make sense to leap in there and to start making decisions that we're going to be paying for and dealing with for generations.
And nobody knows what the true worth is of these -- these toxic mortgages. There's -- there hasn't been any serious negotiation about how to discover that. What there really has been is an almost exclusively political discussion that does not -- and the people who aren't at the table are the homeowners who are still marching down the road to foreclosure and the people in the real economy and the real world.
DOBBS: It seems, Errol, very little effort on the part of people who otherwise would be rigorous intellectually to create discrete lines of information here. How many sub prime mortgage homeowners are there who are facing default and who have been -- who have been foreclosed upon? And how much money did they lose as a result of that home? Did they actually have money invested, that is, in a down payment? And if so, they've lost a home but not a House or their investment, and that creates a different category of, if you will, a victim in this.
How many people are looking at a house in which they have home -- equity. They have put their life savings into it and are -- that's a different category. A discrete, different category.
And it seems that if we're worried about what's happening in the credit markets, as I talked with people this morning who are very worried about it and who are very knowledgeable.
But the reality is, we're not seeing these discrete categories and traunches, if you will, of thinking and issues and a relationship amongst them, and the American people are being treated as if we're all some kind of great unwashed, un -- not deserving of the attention of these -- these elected officials and these treasury secretaries and these Fed chairmen and we're really too stupid to understand quite what's going on. I'm a little sick of it.
And when you tell me we need a bailout, I have sort of a chemical reaction and I say, not until you explain to me why you're going to spend $700 billion of taxpayer money are you going to get a dime. And I don't respect any elected official who is up there pushing for this bailout right now without knowing what the heck he's talking about or she's talking about and not explaining it to the American people.
ZIMMERMAN: Well, as an American citizen and a taxpayer, and one who's going to be burdened with the debt of this bailout, I'm particularly sensitive, too. I think all Americans are.
And I've got to tell you, I spent of good part of today on the phone with a great many members of Congress. And I have a lot of respect for many of them for how profoundly they're studying this issue and how they're trying to resolve this. But the reality is -- but the reality is, we are facing a crisis due to a stunning lack of -- stunning irresponsible policies.
DOBBS: ... anybody at this table by saying, OK, tell me precisely what the issue is that we're going to resolve with $700 billion. Tell me specifically how the bottleneck and the credit markets is going to be broken with $700 billion.
Maybe somebody should also explain why, with half a trillion dollars being injected into the banking system by the Federal Reserve, have we not solved the liquidity issue. Why have we not been able to resolve it?
ROLLINS: No disrespect to the troops who are members of Congress, and no disrespect, I know you meant, to the unwashed of the American taxpayers, but at the end of the day, there are certain people trying to put this together.
DOBBS: When I talk about the unwashed, I'm talking about the attitude of condescending elected officials and these treasury officials talking about you, me and everybody else in this country.
ROLLINS: I'm not being condescending to the members of Congress. What I'm simply saying, though, is it's a very complicated process and in an entire year, they have 13 appropriation bills to pass, and they can't get it passed.
DOBBS: They don't read them.
ROLLINS: All of a sudden -- all of a sudden, you have a two and a half page document that is going to basically allocate half of the federal budget. Half of the federal budget, and no one knows whether it's going to fix the problem. Nobody knows if it's the beginning of the problem.
And as I've said repeatedly on this show, these things take time. And what everybody is saying, "Trust me, trust me, trust me" -- no. Just let me finish. Trust me, trust me, trust me. And the president last night said doom and gloom is coming. To ordinary people out there, they're not sure it's doom and gloom. What they're sure of is if you spend half a trillion of my money the gloom is coming back to me.
DOBBS: I want to bring up the issue that underlies all of this, and when the president of the United States goes on prime-time television, speaks to the American people and, as you suggest, basically, advances a reason for everyone to go into a dark corner and suck their thumbs...
LOUIS: Or take their money out of a bank.
DOBBS: Whatever. When Congress makes its great statement, none of these -- or John McCain or Barack Obama says a thing on this, the fact is the American people don't have a reason in the world to trust a single one of these elected officials.
We're going to be back in just one moment. We're going to discuss how anything can get done and whether or not anything should be done with a government none of us trusts right now. Or at least not many of us. We'll be right back.
(COMMERCIAL BREAK)
DOBBS: You wanted to respond to what I had said about the failure -- the reason we don't trust this government, these elected officials.
ZIMMERMAN: On this one, we're going to plead agreement. No one holds the Bush administration in more contempt than I do, to the point that I think they're a criminally negligent White House.
DOBBS: Democrats and Republicans.
ZIMMERMAN: But I'm talking about the White House for a moment. And I think -- but the bigger issue here, Lou, is either we accept...
DOBBS: You were responding to what I said. ZIMMERMAN: The big -- correct. The bigger issue is either we accept the fact that we're facing a crisis in our fiscal -- in the markets or we're not.
DOBBS: Tell me what the crisis is.
ZIMMERMAN: The crisis is we run the risk of credit drying up.
DOBBS: Says who?
ZIMMERMAN: Well, apparently, there are a great many experts and economic experts who have come forward. There are a great many fiscal experts and congressional...
DOBBS: A hundred economists wrote a letter to Congress saying don't move too fast because this is...
ZIMMERMAN: That's different from not -- that's different from not acknowledging there's a crisis here.
DOBBS: OK. I surrender.
LOUIS: Look. There are crises to could be fixed in 48 or 72 hours or whatever it is the White House has been pushing. And then there are crises that -- like this, that I think can actually be resolved over weeks, with open hearings, you know, with economists brought in to actually talk, to educate the public.
ZIMMERMAN: What timeframe would you put on this crisis, Errol?
(CROSSTALK)
LOUIS: ... interrupting the debates is a huge mistake.
DOBBS: Dare I say that I really resent the idea and not what you're saying, but the implication by -- in this entire process is, A, that the American people aren't smart enough to know what the heck is happening. B, that it's unnecessary for elected officials to communicate what is happening to them. Thirdly, that the people who presided over the creation of this crisis are suddenly smart enough to know what to do about it?
I mean, this is an absurdity. And we talk about political theater. The national media plays into it because now the question is, is whether there should be a bailout, the national media has made the question how will the bailout be configured, when will it take place. And we put our cameras and our reporters surrounding this political theatrical stage and buy into this process.
ROLLINS: But there's so much misinformation. Everybody says we put this in, we think we fixed the problem. Ed Gillespie, the counselor to the president, walks out tonight and says we may even make money on this $1 trillion we're investing. We don't even know how much -- we don't know how much we're going to make for this. Don't think we are just putting money in, we may be taking money out. That is just total BS. And I think what Errol is talking about, why is there a rush to judgment? Because the market may drop a little bit tomorrow? If it drops a little bit tomorrow, it will be back up on Monday. This's the way it's been going...
(CROSSTALK)
DOBBS: You heard Congressman Brad Sherman say his great concern is that Wall Street will manipulate the market to create the climate in which there would be rapid movement on this quote/unquote bailout.
Gentlemen, I have to leave it there. We're out of time. Thank you very much. Robert Zimmerman, Errol Louis, thank you. Ed Rollins, thank you.
Our poll -- 96 percent of you do not believe for a minute that any bailout would really limit executive compensation.
Thanks for being with us. Pleas join us here tomorrow. For all of us here, we thank you for watching. Good night from New York. "The Election Center" begins right now with John Roberts -- John.
