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Lou Dobbs Tonight
Grim Jobs Report; Bush Admits Recession; Detroit's Final Appeal; Bleak Jobs Outlook; States in Distress; Promising new Task Force
Aired December 05, 2008 - 19:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LISA SYLVESTER, CNN CORRESPONDENT: Thanks, Wolf. Tonight new evidence the economy is plunging deeper into recession. Employers cut more jobs last month than anytime since the mid-1970s. We'll have complete coverage.
Also President-elect Obama says he has a plan to create two and a half million jobs, but will his plan work? Three of the nation's best economic thinkers will join us.
And the worsening economy is taking a heavy toll on the finances of states. We'll tell you how the recession could affect state spending, taxes and you. All that, all the day's news and much more, straight ahead here tonight.
ANNOUNCER: This is LOU DOBBS TONIGHT: news, debate, and opinion for Friday, December 5th. Live from New York, sitting in for Lou Dobbs, Lisa Sylvester.
SYLVESTER: Good evening, everybody. Tonight, the worst jobs report in decades. Employers are slashing jobs at the fastest pace since 1974. The unemployment rate is the highest in 15 years. Employers cut 533,000 jobs in November.
The unemployment rate rose to 6.7 percent. And the economy has lost nearly two million jobs so far this year. President-elect Obama says he has a plan to save or create 2.5 million jobs, but he warned there are no quick or easy fixes to our economic crisis. Candy Crowley reports from Chicago.
(BEGIN VIDEOTAPE)
CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT (voice-over): November brought the worst monthly job loss figures in more than 30 years. Barack Obama's transition office issued a written statement with the usual warning. The economy, Obama said, is likely to get worse before it gets better. But now is the time to respond with urgent resolve.
But for Obama, now is in 46 days when he can begin to implement his plan to create jobs. That includes pumping federal money into states for road and bridge and public school projects, offering a temporary $3,000 tax credit to companies that add jobs, and eliminating the capital gains tax for investments in small businesses.
On Capitol Hill there is a growing fear that 46 days will be too late to solve the most urgent business at hand, what to do about the Big Three. The president-elect says the auto industry cannot be allowed to go under, but Democrats want more.
SEN. CARL LEVIN (D), MICHIGAN: I hope that the president-elect would also take a more forthright, positive and public stand, now that these hearings are over.
CROWLEY: This is as much about politics as policy. Obama's support for the plan could provide some cover for lawmakers who see the polls. In the latest CNN/Opinion Research Corporation poll, six in 10 Americans oppose federal assistance for the auto industry. But Obama's politics are different, if he were to put his stamp of approval on a plan it could fail, a loss of political capital before he ever takes office.
SEN. CHRISTOPHER DODD (D), CONNECTICUT: I don't think he necessarily wants to get drawn in. I wouldn't blame him. To a situation he cannot really effectuate.
CROWLEY: Still, Capitol Hill sources say the Obama team at many levels have discussed the bailout, including talks between the president-elect and the congressional leadership.
(END VIDEOTAPE)
CROWLEY: And, as far as the economy at large is concerned, the Obama economic team has been working closely with the Treasury Department as Secretary Paulson oversees that $700 billion fund to help the financial markets. But as for Barack Obama taking a more public, more aggressive stance on specific programs, he has been content, so far, to remain behind the scenes.
SYLVESTER: Yeah, and, Candy, that means that we essentially we have sort of a gap in leadership on the executive level. You have Obama, reluctant to take the reins. You have President Bush who lacks the clout. So what are you to do here?
CROWLEY: Well, they think, at least in the Obama campaign that President Bush and Congress ought to do something about the auto industry. I mean they -- you know again, they are working behind the scenes, at least, with people. It's unclear to me how far they're pushing anything specific rather than just sort of highlighting how urgent this is, what they think is acceptable perhaps and what they think isn't.
But the fact of the matter is that that's how the Constitution is set up. And you've heard Barack Obama say time and time again there's only one president at a time. But it also sort of removes him if there's going to be some disaster here with the car industry, which at this point, at least from our reporting up on Capitol Hill, is looking a little bit better today than it did yesterday.
SYLVESTER: OK, Candy, thank you very much for that report.
New evidence today that the housing crisis is worsening. One in 10 homeowners are now in foreclosure or behind in their mortgage payments. The number of foreclosures soared 76 percent in the third quarter to a record 1.35 million, according to the Mortgage Bankers Association.
President Bush today acknowledged for the first time that our economy is in recession. The president saying the worsening economy is reflected in today's jobs data. But President Bush added he's committed to ensuring our economy succeeds. Elaine Quijano reports from the White House.
(BEGIN VIDEOTAPE)
ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT (voice-over): It was a remarkable statement coming from an American president. Underlining the bleak economic conditions in the United States.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: My administration is committed to ensuring that our economy succeeds.
QUIJANO: But that commitment did not stop the U.S. economy from shedding 533,000 jobs last month. A far cry from success as the president publicly acknowledged what a panel of economists officially declared this week, that the United States is in a recession.
BUSH: Today's job data reflects the fact that our economy is in a recession.
QUIJANO: With Congress considering a bailout plan for U.S. automakers, the president said he is concerned about the Big Three and their employees, but...
BUSH: Likewise, I am concerned about taxpayer money being provided to those companies that may not survive.
QUIJANO: The president urged Congress to act next week on a plan to redirect $25 billion in loans meant to help Detroit develop more fuel-efficient vehicles. But he insisted Ford, Chrysler and GM will have to make tough business choices to prove they deserve taxpayer dollars.
BUSH: And it's important to make sure that taxpayer money be paid back if any is given to the companies.
(END VIDEOTAPE)
QUIJANO: Well, Democrats and Republicans continue debating a bailout for U.S. automakers. Attention is also focused on the possibility of another stimulus package. But today a White House spokesman said that's something officials here expect...
(AUDIO GAP)
QUIJANO: Lisa.
SYLVESTER: Elaine, Democrats have been pushing and pressing the White House to tap into that $700 billion part of that financial bailout to help the automakers, but the White House seems to be pushing back. Any kind of give, any indication that they might change their mind on that?
QUIJANO: Certainly no sign of that. And we heard that from President Bush today, insisting that Congress should first look to the $25 billion that the White House feels can perhaps be redirected to help these troubled U.S. automakers. But on dipping into the $700 billion, set aside for the financial services industry, officials here aren't showing any signs of moving on that point -- Lisa.
SYLVESTER: OK, Elaine Quijano from the White House -- thank you very much for that report.
CEOs of the big three automakers today made a final appeal to the Congress for up to $34 billion in aid. But many lawmakers still remain skeptical and there are deep divisions about where the money for any of the bailout should come from. Dana Bash reports from Capitol Hill.
(BEGIN VIDEOTAPE)
DANA BASH, CNN CONGRESSIONAL CORRESPONDENT (voice-over): Auto executives returned minutes after news broke of the worst unemployment report in three decades. And the committee chairman called it evidence why Washington cannot let Detroit fail.
REP. BARNEY FRANK (D), FINANCIAL SERVICES CHMN.: In the midst of the worst economic situation since the great depression, it would be an unmitigated disaster.
BASH: Skepticism still dominated about whether 34 billion taxpayer dollars can really put struggling auto companies on the road to profitability.
REP. DONALD MANZULLO (R), ILLINOIS: We need to encourage Americans to start buying cars again. And that is not in any of the plans.
BASH: It's concerned that an estimated three million more jobs could be lost if the Big Three collapsed yielded signs lawmakers may finally be ready to seriously look for compromise.
REP. PETER KING (R), NEW YORK: The fact is, I think the time for posturing is gone, the time for partisanship is gone. We have to address this very, very seriously.
BASH: One idea gaining traction among Democrats, condition any loan on the government restructuring the auto companies by either an oversight board or individual appointed by the president. But leading Republicans say they'd only go for that if auto unions gave concessions on wages and benefits. And the United Auto Workers opened the door to that.
RON GETTELFINGER, UAW PRESIDENT: Yes, sir, we are willing to go back to the bargaining table, providing everybody else comes to the table as well.
BASH: But it could be near impossible for deeply divided lawmakers to quickly agree on major restructuring in Detroit. So one veteran Democrat suggested a short-term bridge loan to GM and Chrysler to avoid collapse. But along with his idea, a lecture.
REP. PAUL KANJORSKI (D), PENNSYLVANIA: Time is running out and it almost looks to me like you hope that with that target coming down on us, you're going to get us to do something and just throw the money out there and say, go ahead and do with it as you will.
(END VIDEOTAPE)
BASH: And there is a significant development here tonight that could open the door to compromise talks on an auto bailout. And that is two congressional officials tell CNN that the House speaker, Nancy Pelosi, has backed down on her opposition to bailing out the auto industry by using some money for -- from a fund that was intended to make the cars there more fuel efficient.
Now one official said that she basically reversed herself because, quote, "everything changed" after today's devastating jobs report. And this official told me, Lisa, that basically after seeing what happened today, they simply cannot let Detroit fail. Washington has to figure out a way to do something.
SYLVESTER: Yeah, you know, Dana, the problem is that two out of three people in this country, they don't want to see an auto bailout, but everyone on Capitol Hill is saying look, we can't afford to allow these -- the Big Three to fail here. Somehow they have to bridge that difference.
BASH: They do. And you know it's very interesting. That's why you saw some real frustration from lawmakers aimed at the CEOs, saying, you have to help us better make our case to our constituents why you need this money today. So that was -- it's certainly a dynamic that is very real.
Because these lawmakers know all too well what it's like to get call after call after call from constituents saying "what are you doing with our money?" That's why you know they basically feel like they need evidence as to why Detroit needs it. And unfortunately perhaps they feel like they got it with that horrible jobs report today.
SYLVESTER: All right, Dana Bash from Capitol Hill, thank you for that report.
Another confrontation with Detroit today on the issue of outsourcing and exporting American jobs to cheap overseas labor markets. Today, Congressman Don Manzullo challenged Ford's CEO Alan Mulally on this issue.
(BEGIN VIDEO CLIP)
REP. DON MANZULLO (R), FINANCIAL SERVICES CMTE.: Based upon this statement on page 17, that you're not going to be increasing purchases from Chinese and other overseas suppliers of tools and dyes and fasteners. ALAN MULALLY, FORD CEO: Yes, what we meant by that, part of our strategy is to make them the same standard, not necessarily where we buy them. Our plan is to grow our business in the United States.
MANZULLO: You didn't answer the question. Are you going to use U.S. taxpayer dollars to resource -- or to source more tool and dye equipment and fasteners from overseas facilities for American manufacturers?
MULALLY: No. No.
(END VIDEO CLIP)
SYLVESTER: Yesterday, General Motors CEO Rick Wagoner made the same commitment before the Senate Banking Committee under questioning by Senator Jon Tester.
New questions tonight about the government's $700 billion bailout of Wall Street. A bailout that, by some estimates, could ultimately cost taxpayers more than $8 trillion. The Associated Press says one part of the government's program for banks has already lost about one- third of its value.
The AP says stock options that were worth $27 billion are now only worth $18 billion. And this is the same bailout that has been championed by Treasury Secretary Hank Paulson. He declared the bailout would benefit the American people.
Paulson's main cheerleader at the Treasury Department, Neel Kashkari, today said quote, "we're not day traders and we're not looking for a return tomorrow." That question of course is whether this massive bailout will ever make money for taxpayers or will it simply run up huge losses.
Still to come, states are reeling from the impact of the recession. We'll tell you what that means for services you depend on and your taxes. And president-elect Obama says he has a sweeping plan to revive our economy. Three leading economic thinkers will tell us if that plan will work. Stay with us.
(COMMERCIAL BREAK)
SYLVESTER: Today's jobs report shows the economy has lost nearly two million jobs so far this year. Corporate America is cutting more jobs every day. The question now is how many more jobs will be lost before this economy recovers? Louise Schiavone reports.
(BEGIN VIDEOTAPE)
LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): November saw the deepest monthly job loss in 34 years.
JOHN CHALLENGER, CHALLENGER, GRAY & CHRISTMAS: We know it's been bad. But we didn't know how bad. This is a tsunami of job losses.
SCHIAVONE: And it's not over yet. Some economists warn the real unemployment rate, factoring in discouraged job seekers and part-time workers who want to work full time, could hit 20 percent within months.
PROF. PETER MORICI, UNIVERSITY OF MARYLAND: President-elect Obama relies on the stimulus package alone. He won't correct the fundamental problem. And the U.S. economy will require larger and larger and larger federal deficits and more and more federal -- foreign borrowing until the line of credit runs out and the economy ultimately crashes.
SCHIAVONE: Morici and others want a fundamental review of trade policy.
ROBERT MANNING, ECONOMIST, RIT: The big question is going to be how are we going to come out of this recession? We can't wait for the market to dictate where the jobs are because those jobs could be outsourced a few months later.
SCHIAVONE: Taking a toll on jobs, the nation's vast import bill. Including $195.5 billion deficit with China, 71.25 billion with the European Union. The U.S. even has a trade deficit with Iraq of more than $16.5 billion. In the U.S., meanwhile, the expectation is for more job cuts.
UNIDENTIFIED MALE: AT&T, for example, with 12,000, isn't in banking or housing or automotive, so you can see that the pressures are now spreading into other areas of the economy.
SCHIAVONE: One business survey found two-thirds of American employers and recruiters will pull back on hirings in the next six months. Almost a third of those surveyed say reductions will be severe.
(END VIDEOTAPE)
SCHIAVONE: When will it be over? Lisa, the forecasts are mixed. The hope is that the bottom of the recession will not extend beyond next summer. But the expectation is that even if that is the case, the economy will not be robust for at least another year -- Lisa.
SYLVESTER: And that means a lot of hard times ahead. Thank you very much, Louise, for that report.
Working men and women already struggling through the financial crisis could soon face a new burden. Many states are now faced with huge budget gaps. And they're joining the line for federal bailout. But even with help, states may be forced to raise taxes or cut services. Bill Tucker reports.
(BEGIN VIDEOTAPE)
BILL TUCKER, CNN CORRESPONDENT (voice-over): State governors met with President-elect Obama in Philadelphia this week to push for an economic stimulus package and beg for help from the federal government. There's no question their finances are in dire straits. This report from the National Conference of State Legislatures makes that much plain. Thirty-eight states are now struggling to close nearly $32 billion in budget gaps that have appeared since the beginning of fiscal year 2009. Only five months old. More disturbing are the projections, 45 states are concerned or pessimistic about their outlooks.
CORINA ECKL, NAT'L CONF. OF STATE LEGISLATURES: We're early, very early, in fact, I think, in a multiyear state fiscal crisis that the numbers we're seeing today, the big budget gaps of 32 billion that have opened since July 1st, the 65 billion states already are projecting for fiscal year 2010, those may pale in comparison to the numbers we see in 2011.
TUCKER: In some ways the states problems are simple, at least on paper. Lower revenue means spending has to be cut or taxes have to be raised. Raising taxes in a recession is not generally a good idea, but just where do the cuts come from is the million-dollar question. Education, law enforcement, health care, Medicaid?
GOV. TIM PAWLENTY (R), MINNESOTA: One of the biggest cost drivers of state budgets is health care and the federal government basically prohibits us from changing those programs very quickly or in some cases changing them at all.
TUCKER: Many of the governors feel that the federal government could be a better partner by granting flexibility in how the states administer their programs. Those who cast a critical eye say not only could the feds be a better partner, so could the state employee unions.
CHRISTOPHER THORNBERG, BEACON ECONOMICS: Where are the state unions in this mess? The state unions not only are not coming to the plate and helping out, but they're actually asking for raises in the middle of this mess.
TUCKER: Thornberg notes even the United Autoworkers Union has stepped up to the plate to help the automakers.
(END VIDEOTAPE)
TUCKER: Yet, state and local employee unions have been resistant to yielding on issues like increasing their pension or health insurance contributions. And that means, Lisa, it leaves it up to the taxpayers to pick that up and the only way they can do that is through either increased fees or increased taxes.
SYLVESTER: Yeah and many of these state, in fact, most of the states, have some kind of balanced budget amendment so they don't have a choice but to balance the budget. It's not like the federal government where they can say oh well...
(CROSSTALK)
TUCKER: ... borrow against. They have to balance their budget and like a lot of the governors I spoke with today said everybody wants to cut spending until it's their spending that gets cut and then everybody is unhappy.
SYLVESTER: All right, Bill Tucker, thanks for that report.
Coming up, more than half a million Americans lost their job last month. What will it take to turn this crisis around? Three of the country's top economic thinkers will join me here.
And you won't believe what a Customs and Border Protection official has been accused of. We'll have that story next. Stay with us.
(COMMERCIAL BREAK)
SYLVESTER: A Customs and Border Protection official was arrested today for hiring illegal aliens. Yes, a CBP official whose job it is to keep illegal aliens out of the country is accused of hiring three illegal aliens from Brazil to clean her home. Lorraine Henderson, Boston area Port Director was arrested after a co-worker reported her to a supervisor.
The co-worker acted after seeing an official memo advising CBP employees not to hire illegal aliens. And yes, Customs and Border Protection, the agency charged with keeping track of who enters this country, apparently felt it's necessary to tell its employees they can't hire illegal aliens. Henderson faces up to 10 years in prison if convicted.
And that brings us to tonight's poll, does it surprise you that Customs and Border Protection employees had to be reminded with an official memo not to hire illegal aliens? Yes or no. Cast your vote at loudobbs.com and we'll bring you the results a little later in the broadcast.
Federal authorities seven years after 9/11 still don't have a strategy to secure our nation's ports. Only five percent of the cargo coming into this country by ship is inspected. But a new law enforcement task force is having some success. It is now operating in one of the nation's busiest ports. Casey Wian has our report from the Port of Los Angeles.
(BEGIN VIDEOTAPE)
CASEY WIAN, CNN CORRESPONDENT (voice-over): More than 50 weapons including assault rifles and a grenade launcher seized at the Port of Los Angeles. Authorities say the weapons were on their ways to Mexico and its drug cartel war. One hundred and forty pounds of cocaine shipped from Mexico through the LA port and headed to Australia.
Customs and Border Protection seized the drugs. Three Mexican nationals were arrested in Australia and charged with drug trafficking. Just two success stories credited to a multi-agency law enforcement effort operating at the giant Los Angeles Port complex for less than five weeks.
The border enforcement security task force, known as BEST, is staffed by officers from ICE, Customs and Border Protection, the ATF, Secret Service, Coast Guard, as well as state and local law enforcement. Ten previous BEST units have been deployed along the U.S. borders with Mexico and Canada. This is the first at a U.S. port.
ROBERT SCHOCH, ICE SPECIAL AGENT IN CHARGE: Simply put, the arrival of BEST is a worst case scenario for criminal organizations and individuals who are attempting to take advantage of the nation's busiest seaport.
WIAN: At a news conference, officials displayed seized weapons and proclaimed a new era of interagency cooperation. Converts include local law enforcement leaders once skeptical of federal homeland security programs.
CHIEF WILLIAM MCSWEENEY, LA COUNTY SHERIFF'S DEPT.: Prior to the launch of this BEST program, I, for one, and I think many in this country felt similarly, were very concerned in many ways about weaknesses in the homeland security effort at this port. And I think those weaknesses have been largely plugged by this program.
WIAN: BEST includes no new tactical manpower or technological innovations. However, officials say closer cooperation among law enforcement agencies using existing resources will improve security at the port.
KEVIN WEEKS, CUSTOMS & BORDER PROTECTION: Given our mission objectives, the sheer volume of trade activity, the expectation by the business community that imported goods expediently get to market, I would be the first to admit that our mission is a tough balancing act and a huge mandate.
WIAN: Five hundred thousand cargo containers pass through the Los Angeles port complex each month, each one carrying the potential for profit or a potential threat.
(END VIDEOTAPE)
WIAN: Now port officials would not disclose what percentage of these containers are actually physically inspected. They say that information is law enforcement sensitive. Officials do say they expect this new task force, however, to result in more physical inspections of what they call suspicious cargo -- Lisa.
SYLVESTER: Yeah and Casey, it would be very nice if they expanded that to some of the other ports.
WIAN: Absolutely. And they have plans to do that to at least three other ports right now. They're constrained by budget issues. They're rolling these out as fast as they can, as quickly as Congress gives them the money -- Lisa.
SYLVESTER: OK, thank you very much, Casey.
Time now for some of your thoughts. Bill from Colorado, "Lou, I have to say that I trust the Detroit CEOs more than I trust the Wall Street bankers, but it feels sort of like saying that I trust the burglar more than I trust the purse snatcher!"
Stanley from South Carolina, "Lou, there are lots of smart people in D.C. Unfortunately, none of them are in Congress."
Peter in New York, "I am glad that there is someone left in this country that discusses the issues that matter to Americans the most. I love your show and have enjoyed reading your books. Keep up the good work."
We love hearing from you. 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.
And coming up, President-elect Obama's band of brothers, how more than 20 of his Harvard classmates are advising the president-elect. And the recession worsens. Job cuts are the highest in more than three decades. Three of the nation's best economic thinkers will tell us how to fix our broken economy.
(COMMERCIAL BREAK)
ANNOUNCER: This is LOU DOBBS TONIGHT, news, debate and opinion, an independent view. Here again, Lisa Sylvester.
SYLVESTER: Joining me now, three of the nation's best economic thinkers. Peter Morici, professor at the Robert H. Smith School of Business at the University of Maryland. David Cay Johnson, Pulitzer- prize winning journalist and the author of "Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense." And the Professor Susan Wachter from the Wharton School at the University of Pennsylvania.
We can jump right into it. This has not been a good day when you look at the jobs picture, 533,000 jobs lost last month. Peter, let's start with you, your thoughts on this.
PETER MORICI, UNIVERSITY OF MARYLAND: Well, that's a terrible number. The real unemployment rate is not 6.75 percent, but if we factor all the folks that are working part time that would like to work full time, those who have been discouraged and left the labor force, it's closer to 13 percent. And what we're seeing the legacy of the huge trade deficit and breakdown of the banks. We have to fix those things. We have to fix our trade with China; we're going to have to continue to bleed jobs and not just any jobs, some of the best-paying jobs in America. This is becoming a terrible situation.
SYLVESTER: You know, President Bush, for many months, he was reluctant to even acknowledge that we are in a recession. Now for the first time, he came out today and said, okay, we are in a recession officially. David, we want to play some sound for you from President Bush first. Take a listen and I want to get your reaction to that.
(BEGIN VIDEO CLIP)
GEORGE W BUSH (R), UNITED STATES PRESIDENT: Today's job data reflects the fact that our economy is in a recession. This is in large part because of severe problems in our housing, credit and financial markets, which have resulted in significant job losses.
(END VIDEO CLIP)
SYLVESTER: OK, David, so we are late taking the first step. We are admitting, at least, we've got a problem, we've got a recession. But what happens next?
DAVID CAY JOHNSTON, AUTHOR, "FREE LUNCH": Well, first of all, the president doesn't take any responsibility there. You know, it just happened somehow. Not -- doesn't have anything to do with policies apparently of the administration to not regulate, to allow this awful lending to go on, and things are going to get worse.
You know, we had 300,000 jobs lost in September, 400,000 jobs lost in October, 500,000 jobs in November. It's going to get worse before it gets better. And 600,000 of the 1.9 million jobs, one out of three jobs that we've lost in the last year, were in manufacturing. That's really going to hurt a lot. People are not buying durable goods.
And the practices of all of this off shoring, of replacing people who had decent-paid jobs in America, with people who get a dollar, a few dollars a day overseas, are really, now, taking their toll on our economy.
SYLVESTER: Yeah, Susan, you know, we had a report earlier from Louise Schiavone and she was reflecting that same point, that until you address some fundamental issues, like the trade deficit, problems in the real economy that we're not going to be able to turn this thing around. What are your thoughts?
PROF SUSAN WACHTER, THE WHARTON SCHOOL: Well, we're certainly going to need economic stimulus, even larger than has been thought to this point. And the real concern is that housing took us into this problem. Normally, we get out of recessions through housing as interest rates decline, but that option may not work this time because who's buying housing as prices continue to plummet? And, also, as jobs are lost, how are you going to be able to pay your mortgage? So, we have these two problems now that are worsening each other.
SYLVESTER: Yeah, Peter, I want to turn to the auto bailout. And it is obviously related because we could see potentially tens of thousands of people losing their jobs there. House Financial Services Committee chairman, Barney Frank, speaking about this today. We want to spelisten to a little bit of sound that he had -- what he said earlier today.
(BEGIN VIDEO CLIP) REP BARNEY FRANK (D), FINANCIAL SERVICES CMTE: A failure, to some extent, of three of our major domestic manufacturing entities would be very serious problem in any case. In the midst of the worst economic situation since the Great Depression, it would be an unmitigated disaster.
(END VIDEO CLIP)
SYLVESTER: Peter, the problem that many people have when it comes to the auto bailout is that they don't want to throw money down a sinking hole that we could give the auto industry billions of dollars and they could still go under. Is there any way that we can essentially help out the auto bailout, but still get a guarantee that, look, one, jobs are going to stay in this country, and at the same time, that it's actually going to work that, it's going to produce some kind of an effect?
MORICI: Well, there's a lot of things we could do. For one, we could impose condition on the money and require the UAW to get reasonable about their wages and benefits, they could still be paid quite well, like steelworkers. But, there's other things we can do to encourage the domestic car industry to become an export juggernaut, and that's to accelerate the build-out of these hybrid vehicles and electric vehicles, so forth, by creating a market for the us for these products and by subsidizing.
I'll be frank about it, subsidizing the development of these products, whether they're made by the Detroit three or the transplants, as long as they all agree to share their patents with each other for fair fees. Much as the Japanese did in the '70s and '80s when they were developing their manufacturing industrials and that they do their first production runs right here in the United States. Let's create command for these high-tech components right here with smart industrial policies.
SYLVESTER: Now David, a lot of people -- two out of three Americans surveyed say, look, the auto companies do not deserve this bailout. But on the other hand, we're hearing if they don't get some kind of financial help, from the federal government, that they will not survive, they could possibly go under by the end of this month. What are your thoughts? Do you think that a Congress will and should do something for the auto companies?
JOHNSTON: Well, I think members of Congress are very skeptical about this. But, the collapse of all three of the domestic auto companies would be a real disaster. You would see unemployment spread very rapidly around the country. You need to have a manufacturing base if you're going to be a country of substance.
And so while it's awful we're in this predicament, there are some things the government can do that are relatively inexpensive. I mean, the first thing we do is, let's get equal completion with Canada and get the auto companies out of the healthcare business. When you build a truck in Canada, you don't have $1,500 of health care costs built into it. Let's find some way fix the pension problem. The reason the cost is so high for UAW workers is that GM, Ford and Chrysler did not properly fund their pensions. Congress let them not do that. So, let's find some way to approach that.
Maybe it's by taking stock in these companies and by having the workers take some risk as to whether they will actually get paid off, preferred stock. But, if we took care of those two problems, I expect it would do a great deal to help.
And I still think that we need to hear an argument as to why bankruptcy wouldn't work since lots of companies, airlines among others, have gone through bankruptcy repeatedly. Nobody was afraid to fly United Airlines because it was in bankruptcy. Why would you be afraid to buy a GM car because it's in bankruptcy?
SYLVESTER: Yeah, Susan, you get the last word here, if you can sum it up for us.
WACHTER: Well, what this all tell us is we're going to need economic stimulus and it's not just the automobile industry, it's going to be across the board. And if we had the dollar declining, well, that's good news/bad news and in the absence of that, we really have one force standing, and that's the government.
SYLVESTER: Susan Wachter, David Cay Johnston, Peter Morici, thank you very much. Thank you very much for your thoughts, there.
Coming up, what do you get when you put 20 Harvard law grads in a room? Our team of top political analysts will have the answer to that question and much more.
And the tough choice for Louisiana voters this weekend: Send an indicted incumbent back to Congress or a challenger who supports amnesty for illegal aliens? We'll have the report next, stay with us.
(COMMERCIAL BREAK)
SYLVESTER: Voters in Louisiana's 2nd Congressional district go back to the polls this weekend. The incumbent is Democrat William Jefferson, under indictment on federal corruption charges, the challenger, a new comer who supports amnesty for illegal aliens. Sean Callebs has a report from New Orleans.
(BEGIN VIDEOTAPE)
SEAN CALLEBS, CNN NEWS CORRESPONDENT (voice-over): Louisiana will either be remembered for electing the first Vietnamese American to Congress, Joseph Cao, or returning his opponent, indictment Congressman, William Jefferson to the seat he has held since 1991.
Cao says couple this race with the recent election of Bobby Jindal as the first en Indian-American governor in the nation and it sends a strange message.
JOSEPH CAO (R), LOUISIANA CONG CANDIDATE: We can get away from the image of David Duke and some of the other politicians that have given Louisiana a bad name.
CALLEBS: Jefferson is under indictment on bribery charges. After $90,000 of federally marked money was found in his freezer back in 2005. His trial is slated to start soon. We tried to talk to Jefferson about the race, but calls weren't returned. Analysts say Jefferson's troubles are Cao's platform.
SILAS LEE, POLLSTER; I am not William Jefferson, I will not embarrass this district.
CALLEBS: Jefferson has been popular among African-Americans in the past, helping Katrina victims and the elderly. The indictment has hurt his popularity and earned the local nickname of "Dollar Bill." It's expected to be a tight race. Cao says if he's going to win in this mostly black, mostly Democratic district, he needs African- American support.
CAO: Jefferson still has his strong core of supporters who will vote for him no matter what.
CALLEBS: And experts say turnout will be key.
LEE: I don't think we will have a 10 percent turnout, if that much. A few thousand votes can determine who will win this election.
UNIDENTIFIED FEMALE: Vote for Joe!
UNIDENTIFIED FEMALE: December 6.
CALLEBS: Cao, an immigration attorney, has widespread support in New Orleans' vibrant and growing Vietnamese community. He calls himself a moderate Republican, agreeing with John McCain on the issue of immigration, saying it's unrealistic to deport an estimated 12 million illegal aliens. So, Cao wants to find a way to make them productive citizens in the U.S.
CAO: I know the struggles that families who are separated go through, so I believe that with my own personal experience and with my knowledge of our immigration system, I can contribute tremendously to that issue in the Congress.
(END VIDEOTAPE)
CALLEBS: The reason Louisiana's voting tomorrow, because Hurricane Gustavo washed out the primary and everything had to slide. And it's worth pointing out, Lisa, if you think about it, what Silas Lee said, this is going to be decided by turnout, a few thousand votes. Not a few thousand votes separating the two candidates, because so many are fatigued, perhaps 10 percent of the people could vote, meaning a few thousand votes will decide who ends up on Capitol Hill.
SYLVESTER: Yeah, that is a fascinating race. Thank you very much, Sean Callebs, for that report. We'll be keeping an eye on the results on that. A reminder now to vote in tonight's poll. Does it surprise you that customs and border protection employees had to be reminded by an official memo not to hire illegal aliens? Yes or no? Cast your vote at loudobbs.com. We'll bring you the results in just a few minutes.
And please join Lou on the radio Monday through Friday for the LOU DOBBS SHOW. Monday's guest includes Bill Isaac, former head of the FDIC and chairman of the Secure Group, and syndicated columnist Miguel Perez. Go to loudobbsradio.com to find local listing for the LOU DOBBS SHOW on the radio.
Coming up, Detroit takes its plea for a government bailout to the House of Representatives. Three top political analysts will tell us if the Congress will help the car makers.
(COMMERCIAL BREAK)
SYLVESTER: Joining me now are three best political analysts in the country. Pulitzer-prize winning columnist for the "New York Daily News," Michael Goodwin. Michael is also a CNN contributor. Democratic strategist and CNN contributor, Robert Zimmerman. And in our D.C. bureau, Beth Frerking, senior editor at Politico.
Well, Robert, let's start with you. This has not been a very good day when you take a look at the jobs numbers, 533 million -- or rather 533 -- yeah it seems that much, right? -- 533,000 jobs lost last month, a total of 1.9 million for the year. President-elect Obama is essentially getting this dropped in his lap. What is he to do at this point?
ROBERT ZIMMERMAN, DEMOCRATIC STRATEGIST: You know, staggering as these job loss numbers are, as heartbreaking as they are, and if you go behind the numbers, if you look at the growth of the job loss since September it just bodes very discouragingly for the New Year. What's encouraging to observers is that this might very well rally America together. And I think that's what's worth noting.
And we saw this, certainly, in Franklin Roosevelt's an, beginning it is his administration, with Ronald Reagan, when he took office. Of course, it wasn't as dire then in many respects. But the point is, we're facing the worst economic crisis since the Great Depression. We have an energized new president with a new Congress. And I believe there's really going to be a coming together. No longer, I think, will it be the debate between the Republican philosophy of tax cuts creating an environment for job growth, versus the idea of government helping to produce jobs. I think they'll be a focus on government creating jobs.
SYLVESTER: Yeah, but Michael, you know, as we all well know, there are a lot of people who are so fatigued with the spending that has been going on and Democrats are preparing to ask the country for -- for $500 billion stimulus plan. We're talking money here to create these jobs.
MICHAEL GOODWIN, NEW YORK DAILY NEWS: Right.
SYLVESTER: Do you think the political will is there?
GOODWIN: Well first, let me just say, my friend Pollyanna here, I don't see the silver ling just yet. I think what is going on is that the job losses are accelerating and we've already seen a lot of layoffs this month. A lot of major corporations are announcing layoffs, some of them even just anticipating the down -- so you get this kind of fear, this contraction a lot driven by fear, driven by anxiety, driven by lowered expectations and so the job losses mount that way, people restrict their spending, retails go out of business, that sort of thing.
But, we haven't hit bottom, so it's very hard, I think, to kind of project how we're going to get out of it because we don't know - I mean, Obama, for example, said he wants to create or retain 2.5 million jobs.
Well, that would just about get us back to where we were a year ago if he were to do that in one day. So, the plans are not yet anywhere near the scope of the problem and that's just going to -- say, get out of it because we don't know -- Obama for example said he wants 5 million jobs. That would just about get us back to where we were a year ago if he were to do that in one day. The plans are not yet anywhere near the scope of the problem and that's just going to -- say, take an enormous amount of spending which the government doesn't really have, ultimately.
SYLVESTER: Yeah, Beth, I want to draw you into the conversation, here. I mean, this is a real problem because on one hand you have people who are saying we are driving up this deficit and we don't have the money on the other hand, you have people, real people, who are losing jobs, worried about their next paycheck, where their next paycheck will come from.
BETH FRERKING, SR EDITOR, POLITICO: Right. I think that this pressure will continue to build. I think that it was interesting today, when you heard Barney Frank on the Hill talking about, you know, he used these job losses as sort of pressure and proof to say, we can't not do anything, we have to do something. There are people that are pulling off the employment roles, here, they're going to be losing health benefits.
You know, it's not just about the job itself, it's about losing benefits. It's the trickle down to the other companies that supply, for example, the automakers. But I don't -- one thing that I think has not changed, and may in fact be increasing, is I think the public still wants accountability in how this money is spent, particularly after the bailout to the banks.
ZIMMERMAN: But you can do both. One does not exclude the other. Obviously, I think the Congress has failed...
FRERKING: I'm not saying that one does exclude the other, but I'm saying they need both. Right.
ZIMMERMAN: The Congress has clearly failed, though, in their, accountability so far, I think they have got to do a much more aggressive job in terms of their oversight of the loan program. They've been very short on that.
But the point here is, obviously, there is a great deal of despair, but the same psychology that can drive the market down, also can change. And by that I mean Barack Obama laying out a program which is getting bipartisan support for a job growth programs that includes, for example, an energy infrastructure program, to develop the green job concepts and an infrastructure that's going to be -- help lead us to energy independence. That's a strategy that produces, I think, a great -- positive response, both in terms of long-range plans and that's the way to look at this issue. Can short stimulus lead to long-range strategy?
GOODWIN: Can I offer another point, too, I think that also you have to look, I think, that there are implications around the world to what's happening here in weakening in America. The "Wall Street Journal" had a fascinating piece the other day. Henry Paulson, treasury secretary in China, getting lectured by the Chinese about our declining economy. I mean, talk about the embarrassment of having to be lectured by a communist government about power-free system. I mean it's just - it's galvanizing. It should be, but in fact, we don't -- as I said, we're not at the bottom. There will be other concerns and other countries trying to take advantage of this, as well. So this is a worldwide problem now, for America.
SYLVESTER: Yeah. You know, everything seems to be sort of topsy-turvy, today. I mean, two out of three Americans, they're saying we don't want to see a bailout. On the other hand, as Beth mentioned, Barney Frank, Congressman Frank saying there are consequences to this. We've got some sound bites here we want to play for you and then we'll have you respond.
(BEGIN VIDEO CLIP)
FRANK: I think, all of always remember in school, the teachers we hated most were the teachers who said if one person misbehaved the whole class would get extra homework. I don't want to give the whole country extra homework because automobile executives in the past misbehaved. We have to separate out unhappiness and anger over things not done in the past from the consequences, now.
(END VIDEO CLIP)
SYLVESTER: Michael, I see you chuckling, there.
GOODWIN: I thought it was a strange metaphor for Barney Frank to be use being homework and punishment. But look, it is clear that the country -- everybody feels pincnched in the motion that somehow Detroit is going to be bailed out because it failed is not something that sits well with people who are struggling to do their own mortgages, their own college education, that sort of thing. But, on the other hand, everyone now seems to agree that if they go bankrupt, sort of without a protection plan in place, it will be -- it will make a bad situation far, far worse.
SYLVESTER: Yeah, we're running out of time, here. And there is another issue that I want to get to, although, this is the talk, jobs and the auto bailout. But there is something that's also on the political radar, and I will address this question to you, Beth, because there was a piece on politico.com where it was reported that Obama is essentially has hired 20 or so of his college buddies to be part of his transition team.
Now, you know, President Bush was criticized for the cronyism and the like. What are we seeing, here, Beth?
FRERKING: Well, you know, that is a very interesting story and most of these people went to Harvard Law School together. You know, it looks like what he was doing was tapping a network that he feels very comfortable with and trusts. These people...
(CROSSTALK)
ZIMMERMAN: And they're accomplished people.
FRERKING: Right. Let me finish.
ZIMMERMAN: OK, please.
FRERKING: These people are -- have worked with him, they know him well and as someone who still keeps up with the network of newspaper folks that I worked with at the University of Texas, you know, 25 years ago, I sort of understand it. I mean..
ZIMMERMAN: You know, NYU...
SYLVESTER: We got 10 seconds and then we're done.
ZIMMERMAN: New York University professor (INAUDIBLE) did this study pointing out almost half of his senior appointments are women, a third of people of color. The point is here it's different from cronyism when you appoint your buddies who aren't qualified versus educated individuals without the skills and the dedication to the jobs. Let's give him a break. There are worse things than appointing educated people to these positions of importance.
SYLVESTER: OK, we've to go at this point. And it was a great discussion, but I got to tell you, the time. Robert Zimmerman, Michael Goodwin, Beth Frerking, thank you very much for joining us and giving us your insight. Never enough time.
Well, coming up at the top of the hour, Campbell Brown, NO BIAS, NO BULL. Campbell, what are you working on?
CAMPBELL BROWN, NO BIAS, NO BULL: Hey there, Lisa. Just a few minutes, we're going to talk a little bit about this bizarre story before the Supreme Court. Will the U.S. Supreme court actually have to decide if Barack Obama is not a natural born citizen and cannot be president? The story involves, among others, Justice Clarence Thomas, very peculiar. We'll explain.
We're also going to hear from O.J. Simpson for probably the last time and a very long time. Plus, NO BIAS, NO BULL look at the suddenly changing political climate for a bailout auto loan. The big three may drive off with at least part of what they want -- Lisa.
SYLVESTER: All right, thanks Campbell, for that report.
Up next, "Heroes."
(COMMERCIAL BREAK)
SYLVESTER: In "Heroes," Army Reserve Chief Warrant Officer William Grinley awarded the Bronze Star for inventing a system to save soldiers trapped in armored vehicles. Philippa Holland reports.
(BEGIN VIDEOTAPE)
PHILIPPA HOLLAND, CNN NEWS CORRESPONDENT (voice-over): The name on the front door says it all. In May of 2007, Chief Warrant Officer William Grinley left behind his small business and his family to serve his country in Iraq. Grinley was deployed to Tulile (ph) in Southern Iraq, where he ran a shop of 28 mechanics, welders and machinists called the "Frag 5," that maintained armored security vehicles. It was there he learned of an issue that could threaten the lives of American soldiers.
CWO WILLIAM GRINLEY, U.S. ARMY RESERVE: The vehicles were so large and top-heavy that when they did encounter an IED, they were likely to roll over. And, you know, of course, the first thing you want to do is get the soldiers out, bring the soldiers to safety. And if you can't get in the vehicle, it makes that task very difficult.
HOLLAND: The vehicles, by design, were difficult to access from the outside. So, Grinley and his team tackled the problem head on, developing and fabricating an extraction device from a Humvee handle that could be attached to the outside of an upturned vehicle to open a side porthole.
GRINLEY: Worked round-the-clock some days to be able to build up, you know, an inventory of these. Because, literally, there were days where they were lined up outside the gates to get these installed on their vehicles. They all wanted one and they all wanted to be first in line.
HOLLAND: Grinley and his team fabricated more than 300 of these devices. For this and other contributions, the army awarded Grinley the Bronze Star. The Army called the device, quote, "simple and expedient" as well as "vital to soldiers' safety."
Grinley's commander says the Army is making these modifications to vehicles throughout Iraq.
GRINLEY: I don't like to think about, you know, fellow soldiers suffering, you know, especially when there's something that we can do to help them.
HOLLAND : All in the days work for a citizen soldier.
Philippa Holland, CNN.
(END VIDEOTAPE)
SYLVESTER: Thanks for being with us tonight. NO BIAS, NO BULL starts, right now.
