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Lou Dobbs Tonight
Show us the Plan; Help for Homeowners; Obama and the Border; Threat from China Investments; FDA's new Office
Aired November 20, 2008 - 19:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KITTY PILGRIM, CNN CORRESPONDENT: Thanks, Wolf. Tonight, Congress issues a blunt challenge to the automakers. Show the American people a plan for restructuring before taxpayers show you any money. We'll have complete coverage of that.
Also President-elect Obama chooses a border governor, Janet Napolitano, to be homeland security secretary. Will she support the president-elect's pro-amnesty agenda?
Also a Catholic leader calls President-elect Obama's language apocalyptic. The president of the Catholic League William Donohue will be here to give his opinion of that, all the day's news, much more straight here -- straight ahead here tonight.
ANNOUNCER: This is LOU DOBBS TONIGHT: news, debate, and opinion for Thursday, November 20th. Live from New York, sitting in for Lou Dobbs, Kitty Pilgrim.
PILGRIM: Good evening, everybody. Top congressional Democrats today refused to give the big three automakers an immediate government bailout. They said the carmakers must present a plan for accountability and viability, before they receive any money. Democratic leaders saying the automakers have failed to convince the American people or the Congress that they need government help, the Democratic leader's announcement coming despite two days of fearmongering by auto executives on Capitol Hill -- Dana Bash reports.
(BEGIN VIDEOTAPE)
DANA BASH, CNN CONGRESSIONAL CORRESPONDENT (voice-over): A hastily arranged news conference to announce that struggling auto companies will get no federal assistance until they present viable business plans.
REP. NANCY PELOSI (D-CA), HOUSE SPEAKER: Until they show us the plan, we cannot show them the money.
BASH: Well aware that they risk blame for leaving Washington and doing nothing, Democratic leaders emerged from a closed-door meeting determined to put the onus on Detroit, a December 2nd deadline for auto companies to present a business plan. Congress will return in mid December, only if lawmakers deem the big three's proposal is acceptable.
SEN. HARRY REID (D-NV), MAJORITY LEADER: Yes, we're kicking the can down the road because that will give us the opportunity to do something positive. But that will only happen if they get their act together.
BASH: Lawmakers are frustrated that auto CEOs spent two days pleading for help, but could not answer key questions.
RICK WAGONER, GENERAL MOTORS CEO: Availability against that facility of GM of 10 to 12 billion.
UNIDENTIFIED MALE: Maybe I'm dense or so, Mr. Wagoner. I don't quite understand what the hell you just told me.
BASH: And executives undermined their request for taxpayer money by flying to Washington on private jets.
UNIDENTIFIED MALE: I know it wasn't planned, but these guys flying in their big corporate jets doesn't send a good message to people (INAUDIBLE) Nevada or Las Vegas or Reno or anyplace in this country.
BASH: The decision to reject an auto bailout now undercut lawmakers pushing a compromise idea to help the industry immediately.
SEN. GEORGE VOINOVICH (R), OHIO: We don't get this done and they do go under, I believe that we're going to have a deep recession and quite frankly from what I can pick up, we may just go over the cliff.
BASH: But Democratic leaders said because of skepticism towards Detroit, no compromise could pass.
UNIDENTIFIED MALE: What kind of a message do we send to the American people by having a bunch of failed votes here?
BASH (on camera): Auto companies released statements saying they welcome the chance to address Congress' concerns. But one thing that's murky is how lawmakers will determine they are getting what they want, viable business plans. One Democratic leadership aide simply said we'll know it when we see it -- Kitty.
(END VIDEOTAPE)
PILGRIM: Thank you -- Dana Bash reporting from Capitol Hill.
Now the president of the United Auto Workers, Ron Gettelfinger repeated his demand for immediate assistance for Detroit He said the Bush administration and the Congress must act now to prevent a national catastrophe.
(BEGIN VIDEO CLIP)
RON GETTELFINGER, PRES., UNITED AUTO WORKERS: It just seems odd to us that we can help the financial institutions in this country. That we can offer incentives to our competitors to come here and compete against us, but at the same time, we're willing to walk away from an industry that is the backbone of our economy.
(END VIDEO CLIP) PILGRIM: Now Gettelfinger though is strongly opposed to any changes to the health care benefits for the car industry retirees. In point of fact, Gettelfinger wants the government to make sure those programs remain fully funded.
Well, the continuing uncertainty over the automobile industry helped push the stock market lower, the Dow industrials down 440 points, just over 750 -- 7550. In the past two days, stocks have lost $1.3 trillion of market value. And that is the worst two-day return in two decades, according to Wilshire Associates.
More evidence today the rapidly weakening job market in this country. First time unemployment claims soared to their highest level in 16 years, there were 542,000 new claims last week. That is an increase of more than 25,000 and after the announcement, the Senate passed legislation to extend unemployment benefits for up to 13 weeks of additional payments. The White House today said President Bush will sign that legislation.
Rising unemployment is adding to the financial distress of the middle class families struggling with the housing crisis. The Bush administration is sharply divided over how to help mortgage owners who are in danger of losing their homes. Today, Fannie Mae and Freddie Mac said they will suspend all foreclosure sales of occupied homes until next year. Ines Ferre reports.
(BEGIN VIDEOTAPE)
INES FERRE, CNN CORRESPONDENT (voice-over): In Cleveland, Ohio, over 300 homeowners came to this foreclosure prevention workshop, trying to save their homes.
UNIDENTIFIED FEMALE: I just didn't know what else to do. You know I tried to -- I tried to get help with the foreclosure. It's been very hard. You know not knowing if I'm going to keep the house or lose the house.
UNIDENTIFIED FEMALE: We basically came because we needed help. Once I had lost my job a couple of months back and it was hard catching up.
FERRE: Four million homeowners are behind in their payments and moodyseconomy.com says up to five million homeowners will lose their homes between 2008 and 2010. Most of the current mortgage modification plans extend the terms of a loan or reduce interest rates, but they do little to help people who lose their jobs or those with underwater mortgages where they owe more than the home is worth.
LYNETTE KHALFANI-COX, AUTHOR, "ZERO DEBT": By some estimates, as many as a third of all homeowners out there are, in fact, under water. So even if you got a loan modification and you owe $400,000 on your mortgage, but the house is only worth 350, the loan modification isn't going to help you with that.
FERRE: Some banks have their own plans, but mostly cover only the loans they own. For example, JPMorgan's latest plan applies to about 23 percent of the $1.5 trillion of mortgages it services. The rest are tied up in agreements with third parties and investors.
DEAN BAKER, CTR. FOR ECON. & POLICY RESEARCH: Many servicers are reluctant to step forward and say we're going to do modifications without having everyone on board. And of course it's very hard. You might have 10, 15 parties who have a claim on a mortgage.
FERRE: Which makes it that much harder for homeowners seeking help.
(END VIDEOTAPE)
FERRE: And relief to some homeowners. Fannie Mae and Freddie Mac announced today that they will be temporarily suspending foreclosure sales of occupied homes and evictions until January 9th to give borrowers time to modify their loans, but this is expected to affect only about 16,000 borrowers with foreclosure sales. More and more housing advocates are asking for a nationwide modification plan, one that will cover everyone -- Kitty.
PILGRIM: What about -- Ines, what about the mortgages that have been bundled? What's going on with that?
FERRE: Right. Well those are so difficult, because investors own those mortgages and so I spoke to Citi and JPMorgan Chase and they said that they will try and reach out to those third parties to see if they can modify those over time. But, of course, those are the ones that you know these banks own -- or they service those. They don't own those, so those are the ones that are in problems.
PILGRIM: That's the real problem. Thanks very much, Ines Ferre.
Well that brings us to the subject of tonight's poll. Do you believe either the Bush administration or the incoming Obama administration have any idea how to end our economic crisis? Yes or no. Cast your vote at loudobbs.com and we'll bring you the results a little bit later in the broadcast.
Crude oil prices today plunged to their lowest level in more than three years; crude oil prices ending the day just below $50 a barrel. That's a $4 barrel lower than on Wednesday and crude oil prices are down more than 60 percent from the price in July.
Pirates who hijacked a giant oil tanker off the coast of East Africa tonight are demanding $25 million to release the ship and the crew. Now this tanker was hijacked off of Kenya. It's now off the coast of Somalia. The world is struggling to come up with a solution to the piracy problem. And today Russia said it will send more warships to the area.
Still to come, rising concerns that communist China could use its surging economic strength to take over strategic assets in this country, also President-elect Obama, former Senate Majority Leader Tom Daschle and the lobbying industry, we'll have a special report on possible conflicts of interest in the Obama team.
Also, the president-elect chooses a border governor to be homeland security secretary. Well tell you what that means for our illegal immigration crisis. Stay with us.
(COMMERCIAL BREAK)
PILGRIM: CNN has learned Arizona Governor Janet Napolitano is President-elect Obama's top choice for secretary of homeland security, but there concerns tonight about Napolitano's inconsistent record on illegal immigration and border security. Casey Wian reports.
(BEGIN VIDEOTAPE)
CASEY WIAN, CNN CORRESPONDENT (voice-over): Janet Napolitano has spent six years as governor of Arizona, a state the border patrol calls ground zero for illegal immigration and drug trafficking. She has consistently sought a middle ground between strict border security advocates and business and Latino leaders favoring amnesty for illegal aliens. Here is what she told Barack Obama at a meeting in Chicago.
GOV. JANET NAPOLITANO (D), ARIZONA: We've got to have as part of our economy an immigration policy that makes sense. That understands the labor flow that underlies the bulk of the immigration into this country, but also understands really sensible and smart law enforcement.
WIAN: Back home, Napolitano has a mixed record on border security and illegal immigration. She first opposed Proposition 200, a 2004 Arizona initiative, requiring proof of citizenship to vote and denying illegal aliens some state social services. After it passed, she fought for implementation of only part of the law.
RANDY PULLEN, ARIZONA REPUBLICAN PARTY CHMN.: She was opposed to that initiative, so I think that she only has enforced or been with enforcing the law when it was to her benefit. Otherwise, she's kind of had a problem with enforcing the law across the board.
WIAN: In November 2005, she opposed sending National Guard troops to help secure the border, but six weeks later, she joined other border state governors in supporting the deployment. Napolitano now credits the move for reducing illegal immigration in Arizona.
NAPOLITANO: I think it's the single most important one -- is the National Guard and the press about the National Guard going to the border in Mexico. I think that was a terrific deterrent.
WIAN: Last year, Napolitano signed one of the nation's toughest laws penalizing employers of illegal aliens, but also successfully fought for pro-employer modifications of the law. In May, she pulled state funds from Maricopa County Sheriff Joe Arpaio to deter his aggressive sweeps of neighborhoods with large illegal alien populations and diverted the money to a state task force targeting illegal alien fugitives. Napolitano says state and local crackdowns on illegal aliens smuggling, drop houses, kidnapping and identity theft have helped cut Arizona's illegal alien population an estimated 18 percent in the past year.
(END VIDEOTAPE) WIAN: Of course the slowdown in the construction industry has also played a major role in that. Already at least one group, America's Voice, advocating comprehensive immigration reform and what it calls an earned citizenship program, what a lot of others would call amnesty says Napolitano would be a quote, "superb choice" to lead the Department of Homeland Security -- Kitty.
PILGRIM: All right. Thanks very much, Casey Wian. Well President-elect Obama's apparent choice of Senator Tom Daschle to be health and human services secretary drew praise today from health care reform advocates. But Senator Daschle is currently employed by a firm that lobbies for the health care industry. And his appointment could be an early test of Obama's conflict of interest policy.
(BEGIN VIDEOTAPE)
PILGRIM (voice-over): News that Tom Daschle might be the next health and human services secretary was met with enthusiasm, simply because of his experience in the field.
SEN. MAX BAUCUS (D), MONTANA: Great promise we have to get (INAUDIBLE) health care (INAUDIBLE) this year. I think it's a terrific choice.
PILGRIM: Also quick to applaud the choice was the National Community Pharmacists Association with its roster of 23,000 pharmacies, and Families USA, an advocacy group for improved health care. Daschle does have considerable experience in the field. This year launching a bipartisan policy center project on health care with former Senate Republicans Howard Baker and Bob Dole.
But some worry Daschle's ties to the health care industry may be too cozy. His current job title is a so-called public policy adviser, with lobbying firm Alston and Bird, which has many health industry clients.
MASSIE RITSCH, CENTER FOR RESPONSIVE POLITICS: Tom Daschle is not a registered lobbyist and so we don't know who his clients have been, who he has been advising. He does sit on the board of the Mayo Clinic, a major health care provider that certainly has a stake in any health care reform efforts. And he probably has been advising drug companies and perhaps insurers and hospitals and nurses.
PILGRIM: OpenSecrets.org reveals that so far this year pharmaceutical company Roche paid $90,000 to Alston and Bird. Mylan Labs paid $150,000 and Life Scan $90,000, Care Mark RX paid $170,000. The same source finds during the 2004 campaign health care professionals were the six largest donors to the senator with contributions of some 824,300. The house sector contributed a total of $1.5 million. Daschle's wife is a registered lobbyist. Her work has been primarily in the airline sector.
(END VIDEOTAPE)
PILGRIM: Now the Obama transition team says quote, "Daschle's work at Alston and Bird does not present a bar to his service in the transition. He was not a lobbyist and he will recuse himself from any work that presents a conflict of interest. If he is asked to serve in the Obama administration, he will represent the interests of the president-elect and not his former clients and while we are still in the process of restructuring the ethics rules for an Obama administration, they will meet every commitment made during the campaign."
President-elect Obama today sent his chief of staff, Congressman Rahm Emanuel to Capital Hill to ask Republican lawmakers to support Obama's agenda. Now Emanuel said it's vital for people of both parties to work together. He did not say how he plans to deal with left-wing members of his own party and meanwhile, a close ally of House Speaker Nancy Pelosi, Congressman Henry Waxman, today won a major power struggle on Capitol Hill.
Congressman Waxman seized control of the powerful Energy and Commerce Committee from Congressman John Dingell. Waxman is a California liberal and an outspoken environmentalist.
Coming up, Congress tells the auto industry, if you want the money, give us a plan. We'll have a lot more on that.
And communist China's massive investments here could give Beijing undue influence over U.S. business and government policies. We'll have a special report. Stay with us.
(COMMERCIAL BREAK)
PILGRIM: A scathing new report tonight shows the dangers of communist China's massive investments in this country. The lack of transparency could allow China to exert a powerful influence over U.S. businesses and government policies. Lisa Sylvester reports.
(BEGIN VIDEOTAPE)
LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Thanks to its vibrant export industry, China has amassed nearly $2 trillion in foreign funds, money that the government is turning around and using to invest in U.S. financial institutions through its Sovereign Wealth Funds. China has already invested in private equity firm Blackstone and Morgan Stanley. A new report by the U.S. China Economic and Security Review Commission says China could quietly buy up companies critical to the U.S. economy.
LARRY WORTZEL, U.S. CHINA ECON. & SECURITY REVIEW: We're worried that controlling interests could be gained in an accumulative way so that some agency or authority in China in the end has 10, 15 percent of a U.S. company.
SYLVESTER: Analyst estimates Sovereign Wealth Funds controlled by countries including China and the Gulf States, could grow from roughly $2.5 trillion worth of assets today to $12 trillion in the next four years. Unlike Japan that went on an investment buying spree in the early 1980s, lawmakers say China is different because it's a non-democratic communist country whose interests may not always align with the United States. SEN. RICHARD LUGAR (R), INDIANA: Sovereign Wealth Funds are not ordinary investors. They are ties to foreign governments and create the potential they will be used to apply political pressure, manipulate markets, gain access to sensitive technologies or undermine economic rivals.
SYLVESTER: And the Sovereign Wealth Funds are not beacons of transparency, particularly China's state administration for foreign exchange or SAFE (ph) Sovereign Wealth Fund, an arm of the Chinese Central Bank.
MICHAEL MADUELL, SOVEREIGN WEALTH FUND INST.: They don't report their holdings. They don't report their true asset size. They don't have a presence. You can't contact them. They are very secretive.
SYLVESTER: Concerns are greater now as money-strapped financial firms look for quick cash infusions.
(END VIDEOTAPE)
SYLVESTER: And the reports highlights one example of China actually using a Sovereign Wealth Fund to exert political influence. The report mentions that China's SAFE (ph) Sovereign Wealth Fund bought Costa Rican government bonds as a way to persuade Costa Rica to shift its diplomatic recognition from Taiwan to China -- Kitty.
PILGRIM: That's a very important example. Thanks very much. Thanks very much, Lisa Sylvester. High-ranking U.S. officials are in communist China today as the Food and Drug Administration opens its first office there. A staff of about a dozen will be responsible for ensuring the safety of Chinese food and drugs that are headed to the United States. But there are questions about just how affective those new inspectors will be. Eunice Yoon reports.
(BEGIN VIDEOTAPE)
EUNICE YOON, CNN CORRESPONDENT (voice-over): U.S. Health Secretary Michael Leavitt is examining fish at this Chinese factory to help keep America's food safe. Secretary Leavitt is in China to open the Food and Drug Administration's first international offices ever.
MICHAEL LEAVITT, HEALTH & HUMAN SVCX. SECY.: The United States now imports an enormous amount of the food, the drugs, the devices. Having people on the ground to conduct those person-to-person relationships is critical.
YOON (on camera): If it's so critical to have these kinds of relationships, why didn't you open the offices earlier?
LEAVITT: This is an issue that is only emerging now. What we are seeing is the maturing of a global marketplace. We've begun to see problems.
YOON (voice-over): Problems ranging from last year's pet food scandal, tainted blood thinner Heparin and now a poisonous chemical deliberately added to China's milk. LEAVITT: There are 400,000 processors of food in this country. It is a complex society to govern. However, it's in our interest to help them.
YOON: Eight FDA officials, including four inspectors, will work in Beijing, Shanghai and Guangzhou.
(on camera): Four inspectors, it sounds like a very, very small number.
LEAVITT: We don't intend for these four people to inspect everything that comes from China. Those people are here to build relationships that will allow the Chinese to have a more robust inspection that we can have confidence in.
YOON: Fish like these are going to end up on dinner tables all over America. Businesses here want to make sure that Americans have faith in the made-in-China brand.
(on camera): Yet, it's a tough sell since China has had difficulty policing its own food supply. The FDA says progress will depend on cooperation from the often secretive Chinese government.
LEAVITT: Do I expect that we'll see inspectors from the FDA going into Chinese plants? Absolutely. Do I think they'll go hand in hand with Chinese -- with their Chinese counterparts? Yes, I do. Do I expect this is going to be perfectly smooth? No. Are we going to have to learn from each other? Yes.
Eunice Yoon, CNN, Guangzhou, China.
(END VIDEOTAPE)
PILGRIM: Communist China is working to repair its image as an exporter of contaminated food. The Chinese government today announced a wide range of food safety rules and the rules are aimed at China's dairy industry. Many dairy products made in China have been contaminated with melamine, which is an industrial plastic and some of those contaminated products were found in stores here in the United States.
We have time now for some of your thoughts and we received hundreds of e-mails regarding last night's poll question. We asked about your confidence in our government's ability to stop Mexican drug cartels from infiltrating the border patrol.
So Katie in Alabama wrote, "I'm completely confident in the ability of our government to stop the Mexican drug cartels from infiltration our Border Patrol. However, the real issue is whether or not they will choose to."
Sherri in California, "Let's face it; border security in this country is a joke. Until anyone in Washington gets truly serious about it, we will see things continue to worsen."
And Bob in North Carolina, "Lou, this is a really difficult question. I say the answer is for a fact yes, the government has the ability to stop the problem. The truth is they do not have the will."
We will have more of your e-mails later in this broadcast and each of you whose e-mail is read here receives a copy of Lou's new book "Independents Day: Awakening the American Spirit", now available in paperback.
Coming up, a Catholic Cardinal accuses President-elect Obama of using apocalyptic language. The president of the Catholic League will join me to give us his reaction.
And the Congress refuses to give the big three automakers an emergency loan for now. Three top economic thinkers will tell us what, if anything, should be done for Detroit.
(COMMERCIAL BREAK)
PILGRIM: Congressional Democrats say they will not support a government bailout of the auto industry. At least not until Detroit can prove it will be money well spent. For more on what this means for Detroit and the U.S. economy, I'm joined by three of the best economic minds in the country. In North Carolina, we're joined by Eugene Flood, CEO of Smith Breeden Associates. In our DC bureau, Professor Peter Morici of the Robert H. Smith School of Business at the University of Maryland, and in New York, Pulitzer Prize-winning journalist David K. Johnston, and David is also the author of "Free Lunch, How the Wealthiest Americans Enrich Themselves at the Government's Expense."
And thank you, all, for being here.
Let's start with the auto industry. As long as we started with that in Big Three automakers left Capitol Hill without their $25 billion. They had two days of testimony. I'm not sure they convinced very many people and they have to come up with a detailed plan now to actually reopen this discussion. David, thoughts on this?
DAVID K. JOHNSTON, JOURNALIST: Well, I don't like the idea of bailing out companies at all if you want to help the auto industry, get them out of the health care business. When GM builds a truck in Ontario they don't have that cost of that attached to the truck. That's number one. Secondly, they've got to address the UAW promises, where when you don't work, you're still getting 96 percent of your pay. The UAW fought years to get that, it is going to be very hard for them to give it up. But we're going to have to address that. Other American workers don't get that.
But fundamentally, the auto companies have to build cars people want to buy at the end of the day. Boy, the politicians cannot help with that one.
PILGRIM: And you've also pointed out they haven't done much to improve their sales. They are selling a product, are they not?
JOHNSTON: Yes, they absolutely are. And auto companies have had years and years and years to prepare for the future that's coming, and they haven't. They've let Toyota get ahead with electric hybrid vehicles when they were in the front at GM.
PILGRIM: It's absolutely incomprehensible. Gene, let's get your thought on this. And today both House Speaker Nancy Pelosi and Senator Majority Leader Harry Reid highlighted accountability and how important that is.
For any of the bailouts, the $700 billion taxpayer bailout, the auto bailout, accountability is a very important word in Washington right now and we're seeing very little of it. Gene, thoughts on this?
EUGENE FLOOD, SMITH BREEDEN ASSOCIATES: With a plan like this, what the government really needs, is they need to get the best bang for the buck that they can get. So they need policies that both to create jobs or preserve jobs or get spending that they can count on.
Now, the auto industry actually has a very good case to make, where they've got 3 million jobs and a million retirees so they've got an annual bankroll -- payroll that's over -- well in excess of $100 billion.
So they have a good case to make, but they've got to convince people that it's not going to be we'll put in $25 billion and in one quarter have to come back and do that again or the whole thing collapses. And they haven't been able to make that case to Congress and they haven't been able to make that case very forcefully to the private sector as well. And Congress has a lot of alternatives, because they could put money into building infrastructure, they could choose other companies, they could just give people money through tax rebates, so if this were just going to be a short-term fix, they might as well just do tax rebates.
What we need is a plan that really explains to us how this is going to be a long-term solution that gets us -- people on a payroll that is producing $100 billion to $200 billion in spending a year.
PILGRIM: That is exactly right. You know, Peter, you actually testified before the Senate Banking Committee alongside of the automakers, and you have some thoughts about putting off Chapter 11. You think perhaps that's not the way to go. Explain your theory to us.
PROF. PETER MORICI, U OF MARYLAND: Well, my feeling is if we give them money now, they did not demonstrate yesterday that they would not be back for money again. They really maneuvered a lot when asked, will $25 billion to it? They said they really didn't know. In fact, they didn't even have a clear plan on how the $25 billion would be divided among the three of them. Which was very embarrassing.
They did acknowledge implicitly that their labor costs are too high, because they are not as low as the transplants operating here and did not really present a plan to profitability. They couldn't show Congress that if you give us money now, we will indeed be for sure be profitable in six months. So they really left not convincing anyone. Creating more uncertainty than was in the room when they started. And so my feeling is they have a lot of proving to do. Just saying there will be a lot of unemployment in Detroit or Michigan doesn't seem to be enough to move the senators. They want a clear plan and that was absent.
PILGRIM: We know it's absolutely striking about this entire situation is the number of jobs that are at stake at this point and no one can deny this. And I would like to play a comment from the president of the United Auto Worker's union, Ron Gettelfinger, and he point out this is a lot of jobs.
(BEGIN VIDEO CLIP)
RON GETTELFINGER, PRESIDENT, UNITED AUTO WORKERS: It just seems odd to us that we can help the financial institutions in this country, that we can offer incentives to our competitors to come here and compete against us, but at the same time we're willing to walk away from an industry that is the backbone of our economy.
(END VIDEO CLIP)
PILGRIM: Now, in the context of the broader economic decline, David, it is a reasonably compelling argument he makes.
JOHNSTON: Oh, I think he makes a very compelling argument from day one, I have been saying why are we bailing out the guys on Wall Street who asked not to be regulated. Now that the cars are crashing because we took away the traffic lights, they suddenly want us to bail them out.
We've had a long time attack on fundamental manufacturing and we've been rewarding companies to move jobs offshore, we've been subsidizing companies to come here who are foreign-owned this is not sound economic policy and we need to be fundamentally revisiting the way we've set up rules in our economy.
PILGRIM: Gene, do you have some thoughts on this?
FLOOD: I do. Think I we're dealing with two very different industries. The financial services industry is really the lifeblood for the U.S. economy. We need it for all types of different things. Manufacturing is also important, but it's not the same thing as finance for our country, any developed country like the U.S. or any other one so I think they are two different issues.
Now, the point shouldn't we be supporting the auto industry if it's going to get us jobs and if it's going to get us spending, the answer is yes, as long as there is a plan that keeps us from having to go back and do it again and again and again. That's the important point. No one is arguing with the importance of the industry.
PILGRIM: Peter, I know you've done a lot of work on this. What are your thoughts on this?
MORICI: My feeling, they have to bring their labor costs in line with the Japanese transplants and they are going to have to accelerate their product development. It takes them way too much time and too much money to develop new products. That's one of the reasons a Lincoln looks so much like a dressed up Ford. Ford just spends too much money developing its Fords and it has no money to deal with its Lincolns. It's not just labor cost, it's also development time and cost. If they don't get those things down there, really is no viability plan. Therefore, Chapter 11 makes sense so that we get new management. And the courts force new rebrokering of the labor agreements. Get rid of for example that 95 percent wages you get if you're laid off and things of that nature. And the work rules which are so cumbersome.
But also it would change the management where it needs to be changed, a way that Congress could not do effectively in tying strings.
PILGRIM: Thank you very much. David K. Johnston, Peter Morici and Gene Flood. Thank you very much for being with us.
A reminder to vote in tonight's poll. Do you believe that either the Bush administration or the incoming Obama administration have any idea how to end our economic crisis? Yes or no. Cast your vote at loudobbs.com. We'll bring results in a few minutes.
Still ahead, new evidence of liberal media biases and the role it played in the election.
And the Catholic Church severs ties with ACORN after accusations of voter registration fraud and we will talk with William Donohue of the Catholic League about religion and politics. Stay with us.
(COMMERCIAL BREAK)
PILGRIM: President-Elect Barack Obama won more than half the Catholic vote. But some Catholic leaders are highly critical of the president-elect and are blasting him for his stance on abortion. Joining me now for more on this and other issues is William Donohue, he is the president of the Catholic League. And thank you for joining us.
WILLIAM DONOHUE, CATHOLIC LEAGUE: Thank you.
PILGRIM: It seems the entire campaign was dominated by discussions of religion. It still seems to be going into the early days of the transition. Let me -- first of all, I'd like to start with a comment we've heard in a recent speech. Cardinal James Francis Stafford says that Barack Obama's rhetoric was apocalyptic. Let's listen for a moment.
(BEGIN AUDIO CLIP)
JAMES FRANCIS CARDINAL STAFFORD, CATHOLIC CARDINAL: His rhetoric is postmodernist and marks and agenda and ambitions that are aggressive, disruptive and apocalyptic. Catholics weep over these words. We weep over the violence concealed behind the rhetoric of our young president-to-be. What should we do with our hot, angry tears of betrayal?" (END AUDIO CLIP)
PILGRIM: That's fairly strong language but you also have a Catholic priest in South Carolina who actually told his parishioners voted for Barack Obama that they should do penance before they receive Holy Communion. This is harsh judgment from the pulpit on Barack Obama for his pro-choice stance. What's your reaction?
DONOHUE: Well, you know what's driving this thing is basically one thing and that's the Freedom of Choice Act, FOCA. Barack Obama told Planned Parenthood last year if he gets this bill passed by the Congress, he's going to sign it. This is the most radical, comprehensive, sweeping piece of legislation, restricting every state law which has a restriction on abortion, would overturn parental consent and the like.
It also would require Catholic hospitals and doctors to perform abortions. I will tell you right now, the Catholic Church will shut down every single hospital in this country and will cripple the poor and it will cripple Obama before they are ever going to be told by the government that you have to perform abortions.
PILGRIM: Why did so many Catholics vote for Barack Obama? And why is this coming out after the campaign? Why all this discussion now? It seems incredibly intense for someone who just won the election with half of the Catholic vote.
DONOHUE: Right. Eighty percent of those Catholics who voted for Obama said it was the economy. So I understand that's a legitimate concern. The socio-cultural issues were not prominent.
The concern really is that Obama is, without question -- I think the pro-abortion people, NARAL, will tell you the same thing. Is he the most aggressive defender of abortion rights to go into the White House, so certainly there's a concern, particularly with the religious autonomy, though. If you try to tell Catholic hospitals and doctors that you are going to perform an abortion, they will tell you what you can do with your ideas. And Obama will be the loser on this.
If he's smart, and I think he is, I think he'll be pragmatic and won't try to push this. But we'll know, won't we? Because two days after he's sworn in, you have the Right to Life March. Bill Clinton stiffed Catholics and overturned every executive order on this. Is Obama going to go out there and say to Pelosi, bring forth FOCA because I'm going to sign it? I don't know.
PILGRIM: Well, it sounds like this is firing a shot across Obama's bow. That you are actually you raising stakes on the discussion to the point of this level, to actually make a point about this legislation now, is that right?
DONOHUE: I think they should have done it earlier. I think that's a legitimate criticism of the Catholic Church. It should have been more vocal. I don't think enough Catholics know about the Freedom of Choice Act and how draconian it really is.
PILGRIM: But honestly it has not been out in the mainstream press at all. We really haven't seen it very much.
DONOHUE: It never passed the Congress. That's just it.
All I know is this. Obama pledged to Planned Parenthood last year if this comes to my desk and I'm president of the United States, I'm going to sign it. That's what people are looking at this and saying this. There is no question the economy trumped this. There is no question. Now that he is going to be president - and look, I think he's a reasonable man. We'll find out. Hopefully he won't be the ideological person that he presented himself to Planned Parenthood.
PILGRIM: It is ideological to say that parishioners can not receive Holy Communion if they voted for ...
DONOHUE: This priest, Father Newman (ph), I checked in with some people down in South Carolina.
He said if you come to Communion I will give you Communion. This has been reported by some people in the press.
What he did say is this. It's a material cooperation. If you voted for Obama because you voted for him knowing he's pro-abortion, you should consider penance before you go. But he also said explicitly if you come to -- first of all, you question people when they come to Communion? The people have to answer this like Pelosi and Biden who intentionally misrepresented Catholic teaching on abortion. They told the press that the Catholic Church wasn't really against abortion. Somebody ought to send them a copy of the Catholic Cathecism.
Actually I did send Pelosi a copy of the book "Catholicism for Dummies." Hopefully she's read it.
PILGRIM: All right. William Donohue. Thank you very much for coming on the program. This is an important debate. We don't mean to make light of it. This is an extraordinarily important debate and thank you for ...
DONOHUE: Thank you for having me.
PILGRIM: OK.
Please join Lou on the radio Monday through Friday for the "Lou Dobbs Show." Tomorrow guests include North Dakota Democrat Senator Byron Dorgan and former Michigan Governor James Blanchard. Go to loudobbsradio.com to find the local listings for the "Lou Dobbs Show" on the radio.
Well, there are new efforts tonight to expose the "liberal media's" role in the presidential election. John Ziegler, a former radio talk show host and documentary filmmaker interviewed 12 people who voted for Barack Obama and he asked what they learned from the media coverage of the campaign.
Well their answers revealed a clear trend. They believed negative reports about McCain and Palin, but not Obama. (BEGIN VIDEO CLIP)
JOHN ZIEGLER, CONSERVATIVE TALK SHOW HOST: Which said they could see Russia from their home?
UNIDENTIFIED MALE: That would be Palin.
UNIDENTIFIED MALE: That woman, Sarah Palin.
UNIDENTIFIED MALE: Sarah Palin.
UNIDENTIFIED FEMALE: Palin. Sarah Palin.
ZIEGLER: Which one their first election by getting three opponents in their own party kicked off the ballot?
UNIDENTIFIED FEMALE: I don't know. It sounds like something Sarah Palin would do. But I don't know.
UNIDENTIFIED FEMALE: Oh, my God. I don't know. Who?
ZIEGLER: Obama!!!!
UNIDENTIFIED FEMALE: Are you serious?
(END VIDEO CLIP)
PILGRIM: Well, in point of fact, Sarah Palin never said she could see Russia from her house it was Tina Fey on "Saturday Night Live" who said that.
For more scientific results, Ziegler said he also commissioned a Zogby poll of more than 500 Obama voters and the poll found 58 percent of them did not know which party controlled Congress this comes as a new study finds most Americans lack basic knowledge of American history and economics. The Intercollegiate Studies Institute found more than half of the people surveyed scored 49 percent, that's an F.
But perhaps even more disturbing, elected officials scored even lower than the general public with an average score of 44 percent.
Coming up, a tax shelter scheme backfires and taxpayers may have to bail out transit systems around the country. We have a special report, next. Stay with us.
(COMMERCIAL BREAK)
PILGRIM: Coming up at the top of the hour, Campbell Brown's show, NO BIAS, NO BILL. Campbell, what are you working on?
CAMPBELL BROWN, CNN HOST: Hey, there, Kitty. In a few minutes we have a unique vantage point on the fight over bailing out America's auto industry or letting it go broke. We're going to go to an Ohio town where a GM plant and the parts plant that supplies it will both be closing for good by Christmas. We are also taking a NO BULL look at a radical strategy for struggling homeowners to qualify for help should people intentionally default on their mortgage payments. We have Gene Chatzky (ph) here to talk about that. And with the country's economic woes, our political panel looks at some complaints that President-Elect Obama may be keeping a too-low a profile at the moment. We'll talk about that as well. Kitty, back to you.
PILGRIM: We look forward to it. Thanks very much, Campbell.
Tonight, a tax scheme gone bad. What makes this scheme particularly outrageous, transit authorities of major cities attempted to manipulate the U.S. tax code. And now that scheme has backfired and those agencies want to use more of your tax dollars to get them out of a mess of their own making. Drew Griffin has our report.
(BEGIN VIDEOTAPE)
DREW GRIFFIN, CNN CORRESPONDENT (voice-over): Transit agencies from New York to San Francisco are in a panic, trying to figure out how to survive a go-go financial scheme of the '90s that now threatens to derail their trains just as they are seeing record ridership.
BEVERLY SCOTT, AMERICAN PUBLIC TRANSIT ASSN.: Thirty one of the nation's largest transit systems, including my own, MARTA, would be financially crippled in the coming months if nothing is done to resolve this crisis.
GRIFFIN: It's a crisis of their own making, deal making, that had transit agencies playing with the U.S. tax code. How? Just like a shell game. Public transit agencies that pay no taxes started selling tax shelters to banks that needed a tax break.
(on camera): It worked like this -- banks would buy railcars from transit agencies like these at Metro in DC the banks would immediately lease the railcars right back to the transit agencies but now could depreciate the investment.
Accounting terminology for getting a huge tax break. And they'd split the tax break with the agency.
(voice-over): The problem is to the IRS it looked and smelled like a tax dodge.
CAROL KISSAL, CFO, WASHINGTON METRO: It does look like that. I mean, to some extent I think that's why Congress made the ruling.
GRIFFIN: he first ruling banned U.S. banks from participating in the tax dodge. No problem. The transit agencies then went overseas. Metro in DC sold some railcars to a Belgian bank. Then in 2003, Congress killed the whole scheme, which was fine for transit agencies. They still had long-term leases and their share of the tax shelter was in their pockets.
But the banks got burned. They were leasing back railcars they now owned but could no longer write off. Now the twist of unintended consequences -- the deals were almost exclusively backed by the teetering insurance giant and bailout beneficiary AIG.
JOSEPH HENCHMAN, TAX FOUNDATION: A lot of these deals had a clause that said that if AIG's credit rating ever dropped, then the banks would either -- the transit agencies would have to either find a new endorser or terminate the agreement and pay huge termination fees. And transit agencies went ahead and signed these agreements anyways, fully knowing they would never be able to pay these termination fees. They thought they would never have to, but now they do.
GRIFFIN: And now the transit agencies say they need a bailout, too. Just don't call it that.
JOHN CATOE, GENERAL MANAGER, WASHINGTON METRO: This is not a bailout request. This is not a request for a loan of money. This is a request for the federal government and the process of working with various institutions to support public transit.
GRIFFIN: So, they are heading to Capitol Hill with their hand out, hoping for hundreds of millions of dollars in taxpayer money to cover what the IRS already called an abusive tax scheme. Joe Henchman with the Tax Foundation says it would be a reward for a really bad deal.
HENCHMAN: If Congress and the administration want to spend more money on transit, they should do it through the appropriations process, not through the tax code.
GRIFFIN: Drew Griffin, CNN, Washington.
PILGRIM: Still ahead, the results of tonight's poll and more of your thoughts. So stay with us.
(COMMERCIAL BREAK)
PILGRIM: We have tonight's poll results. Eighty eight percent of you do not believe that either the Bush administration or the incoming Obama administration have any idea how to end the economic crisis.
We have some time now for some of your thoughts, and V. in Massachusetts wrote to us.
"I am a single mom struggling to make ends meet and it upsets me to see the way all these multimillion dollar companies are asking for a bailout. Who's bailing mothers and fathers out like me?"
And Patricia in Oregon wrote to us, "A lot of people voted for change but from the looks of all the old names and faces, what kind of change is that?"
Jeanie in New York wrote, "Lou, I thoroughly enjoy your program because you do not bite your tongue. You ask all the right questions without being mean or nasty."
We love hearing from you. Send us your thoughts at loudobbs.com. Thanks for being with us. Please join us tomorrow. For all of us here, thanks for watching. Good night from New York. CAMPBELL BROWN, NO BIAS, NO BULL starts right now.
