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Lou Dobbs Tonight

Orderly Bankruptcy; Fight to Save Detroit; Backlash against Obama; Conflict of Interest?; A Charity Scam; States and Taxes

Aired December 18, 2008 - 19:00   ET


Tonight for the first time the Bush White House says what it calls orderly bankruptcy is one way to solve the crisis of the automobile industry. We'll have complete coverage.

And tonight, you won't believe how much pork is in a $73 billion infrastructure plan by mayors. We'll have that special report.

And tonight, unusual winter storms are dumping snow in unusual places across western states and a huge snowstorm is headed toward the northeast. This is global warming? We'll be talking with meteorological experts. We'll have a special report for you on that. All the day's news and a great deal more from an independent perspective here next.

ANNOUNCER: This is LOU DOBBS TONIGHT: news, debate, and opinion for Thursday, December 18th. Live from New York, Lou Dobbs.

DOBBS: Good evening, everybody. The Bush administration today tried to break the deadlock over how to save our automobile industry from collapse. The White House declaring it is now considering what it calls quote, "orderly bankruptcy" as a way to help Detroit.

President Bush also spoke out about the crisis in the auto industry, saying, these aren't normal circumstances as he put it. The president's remarks come one day after Chrysler said it is closing all its manufacturing plants for at least a month. Kate Bolduan has our report from the White House.


KATE BOLDUAN, CNN CORRESPONDENT (voice-over): Very close, but not there yet, the latest word from the White House on its plans to help the struggling auto industry.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I think that under normal circumstances, no question the bankruptcy court is the best way to sort through credit and debt and restructuring. No question. These aren't normal circumstances. That's the problem.

BOLDUAN: The White House said it is not only considering dipping into the Troubled Asset Relief Program, but now President Bush, a staunch free market advocate, may turn to some type of prepackaged bankruptcy to offer automakers a lifeline.

DANA PERINO, WHITE HOUSE PRESS SECRETARY: Disorderly collapse would be something very chaotic that is a shock to the system. If there is an orderly way to do bankruptcies that provides for more of a soft landing, I think that's what we would be talking about.

BOLDUAN: A slight nuance with a potentially big impact.

ANNE MATHIAS, SANFORD GROUP: I think what they're saying is, we're going to take a half step. We're not going to just bail them out, but we are not going to let these companies just completely flail around, go off the cliff, shed employees Willie Nillie (ph).

BOLDUAN: While the White House continues to weigh its options, the latest numbers for unemployment claims dropped, but remained near a 26-year high. Just one signal the pressure to act is mounting.

BUSH: Lost 533,000 jobs last month. What would another million jobs lost do to the economy?


BOLDUAN: House Speaker Nancy Pelosi today used those jobless claim numbers to demand action. In a statement saying that the White House must act quote, "to prevent the imminent insolvency of the domestic auto industry." Now for the White House's part, Lou, they say nothing likely, no likely announcement this evening only that they're getting closer.

DOBBS: Kate Bolduan, thank you very much, reporting live from the White House.

The president today also tried to explain why he bailed out Wall Street, a bailout that, by some estimates, could eventually cost taxpayers more than $8 trillion. President Bush said at the time he was concerned about the risk of a depression that could, in fact, be worse than the great depression of the 1930's.


BUSH: And decided I didn't want to be the president during a depression greater than the great depression or the beginning of a depression greater than the great depression. So we moved and moved hard.


DOBBS: His remarks come one year after he first acknowledged that our economy face difficult challenges.


BUSH: There is definitely some storm clouds and concerns. But the underpinning is good. We'll work our way through this period.

(END VIDEO CLIP) DOBBS: This period taking up a little more time than many people thought. The president made his comments just as the recession was beginning, something we didn't know at the time. This recession is now one of the longest slowdowns since the great depression. President Bush now says he's abandoned, as he put it, free market principles to save the free market system.

As we reported here earlier, the White House may support some form of what it calls orderly bankruptcy for the automobile industry. Such a process could force members of the United Autoworkers Union to accept significantly lower wages and lower benefits. For decades, union members have been among the most highly compensated middle class workers in the country. Lisa Sylvester has our report.


LISA SYLVESTER, CNN CORRESPONDENT (voice-over): The United Autoworkers for years negotiated generous contracts for their members. The average total labor cost to Chrysler going into the 2007 labor negotiations, factoring in paid vacation and benefits, was $75.86 an hour per worker. By comparison, Chrysler says Toyota's workers cost the company $47.60 an hour.

The average U.S. worker's labor cost, $28.87 an hour. And while many other U.S. workers saw their wages slashed over the years, car companies agreed to give UAW workers generous pensions and in some cases health care for life. Conservative Heritage Foundation says it is unfair to now ask taxpayers to cover these costs.

JAMES SHERK, HERITAGE FOUNDATION: You would be asking every American to pay money to support a lifestyle that they and their families do not have and do not enjoy. It is not fair. And it is not the way Washington should be running.

SYLVESTER: After talks with Congress to would approve a bailout fell through, the UAW said it has already made numerous concessions but could not ask its workers to give back even more.

RON GETTELFINGER, UNITED AUTO WORKERS PRES.: But we could not accept the effort by the Senate GOP caucus to single out workers and retirees for different treatment and to make them shoulder the entire burden of any restructuring.

SYLVESTER: Several Republican lawmakers want the Big Three's compensation to be more in line with Honda and Toyota's U.S. plants. They say any federal dollars being spent to rescue the auto industry must be coupled with a strategy for the industry to dig its way out of debt.

SEN. BOB CORKER (R), TENNESSEE: I think that our citizens understand that if taxpayer -- taxpayer money is put into a company like GM that has $62 billion in debt, and cannot pay it back, that it is just good money after bad.

(END VIDEOTAPE) SYLVESTER: Many analysts believe that the auto industry is trying to stretch their finances as long as possible until next month when a new Congress is sworn in and with more Democrats on Capitol Hill, that they might be able to receive a bailout from Washington and perhaps with fewer strings attached. Lou?

DOBBS: It is remarkable the reference from Gettelfinger, by the way, to the Republican Congress, the Republicans have traditionally and historically resisted any kind of price control, but now they apparently are willing to put controls on the price of labor. That's strikingly contradictory.

SYLVESTER: Yes, it is an interesting twist. I mean with the financial crisis going on, you see all sorts of obviously President Bush being a prime example of how positions have changed on this, what many Republicans' members say is look, if you're going to ask the taxpayer to shoulder some of this burden here, you've got to be willing to do something and that starts with some of these legacy costs.

DOBBS: The legacy costs, obviously, and a rollback on the part of Gettelfinger is I think, being somewhat unrealistic if he thinks there won't be a significant reduction in compensation. But at the same time, it is striking that the president, the Treasury secretary and indeed the Democratic leadership in Congress did not demand rollbacks of a compensation of CEOs and the end of bonuses for executives of Wall Street companies that were bailed out with as much, let's say, energy as they are demanding that of the United Autoworkers Union.

That is also a remarkable contradiction in approach and it is frankly a dishonest approach. I think most Americans would believe. Thank you very much, Lisa Sylvester. And as I say that about most Americans would believe, let me repeat, the latest polls show that most Americans, 60 percent of Americans, oppose the bailout of Detroit.

It brings us to the subject of our poll tonight. With trillions of dollars in government bailouts and stimulus plans now, will our economy, in your judgment, rebound in 2009? Yes or no. We would like to hear from you on this, get just a sense of the feelings of our audience. Go to and cast your vote, please. We'll have the results for you here later.

New developments tonight in the Blagojevich scandal, the governor's attorney, Ed Genson (ph), today told an impeachment committee in Springfield, Illinois that it should not consider evidence from federal wiretaps. Genson (ph) told that committee that the wiretaps were obtained illegally. Governor Blagojevich faces charges he tried to sell President-elect Obama's former seat in the Senate to the highest bidder.

President-elect Obama today strongly defended his decision to invite evangelical Pastor Rick Warren to deliver the invocation at his inauguration on January 20th. The president-elect's comments follow strong criticism of his decision from gay advocacy groups and left wing activists. Jessica Yellin has our report from Chicago. Jessica, what did the president-elect say about all of that criticism today?

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Lou, he said he had a prior relationship with Rick Warren. He did not mean this invitation as an insult to his gay and lesbian supporters, he said, but as a way to include diverse points of view in the inauguration. Obama, as you'll recall, made an effort to reach out to the evangelical community during his campaign and clearly plans to continue that during his presidency. This was Obama today.


BARACK OBAMA (D-IL), PRESIDENT-ELECT OF THE UNITED STATES: I think that it is no secret that I am a fierce advocate for equality for gay and lesbian Americans. It is something that I have been consistent on and something that I intend to continue to be consistent on during my presidency. What I've also said is that it is important for America to come together, even though we may have disagreements on certain social issues.


YELLIN: Still, Lou it would be hard to overstate how outraged the gay and lesbian community is over this choice of Warren. The people I'm speaking to say it comes in as an additional insult to them after he -- Obama so far has not chosen a gay or lesbian person -- an openly gay or lesbian person to serve on his cabinet. They feel that he has not lived up to the suggestive promises he made during the campaign, but Obama, for his part, is saying, look, just wait, my policies are what matters. And essentially, he's saying he's not going to be beholden to any special interest group on this pick. Rick Warren is the man he wants giving his invocation -- Lou?

DOBBS: One would think, perhaps unrealistically, that there would be an embrace of the inclusiveness that the president-elect is demonstrating so far in the selection of his cabinet, his senior staff, and obviously including an evangelical pastor, Rick Warren. And it is also worth noting, is it not, that while Rick Warren opposed proposition -- supported Proposition 8 that is, banning gay marriages in California, he has been an outstanding advocate, working to stop the epidemic of AIDS, working against poverty, and also we should point out as well that President-elect Obama himself does not support gay marriage.

YELLIN: That's true. They think, though, that picking somebody who has been so outspoken in his opposition is a slap in the face. That's where they stand.

DOBBS: All right. Well, there they are. OK, thank you, Jessica Yellin. We appreciate it.

Still ahead here, winter storm sweeping the country. Is this what you call global warming?

Also, Bernard Madoff has some high profile help in that $50 billion rip-off. We'll be telling you about that. And the secret's out. Former President Bill Clinton's list of donors raises new concerns about conflicts of interest, possibly in the new Obama administration. We'll have that story. Stay with us. We're coming right back.


DOBBS: Well, to support his wife's designation as secretary of state in the Obama administration, former President Bill Clinton today broke his silence and published a long list of donors to his foundation. Those donors include foreign governments and powerful business interests. The list raises new questions about possible conflicts of interest should Senator Hillary Clinton become Secretary of State Clinton. Dana Bash has our report.


DANA BASH, CNN CONGRESSIONAL CORRESPONDENT (voice-over): Former President Bill Clinton broke a decade of secrecy about who gave to his foundation to quell concern about conflicts with his wife as secretary of state. Yet many of the tens of millions in donations came from foreign governments Hillary Clinton would deal with as the nation's chief diplomat.

In the Middle East, at least $10 million from the kingdom of Saudi Arabia, between one and five million from Kuwait, Qatar, Oman and Brunei; big ticket donations also came from foreign business executives with keen interests in U.S. policies abroad. For example, Indian businessman Omar Singh (ph) who reportedly lobbied Hillary Clinton for help with nuclear technology, donated between one and $5 million to her husband's foundation, a revelation that could prove dicey for Clinton as tensions grow between India and Pakistan.

SHEILA KRUMHOLZ, CENTER FOR RESPONSIVE POLITICS: The Middle East and India are all going to be flashpoints that the next secretary of state is going to have to deal with early in the administration. So this is -- this is not helpful in that regard.

BASH: While a good deal of the donations went to finance the Clinton Presidential Library, Clinton associations emphasize that much of the money donated goes to fighting global AIDS and poverty. And that most of the more than 200,000 donors gave $250 or less. The former president told CNN earlier this month he hopes transparency proves there is nothing to hide.

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: Say who the donors are and let people know that there is no connection to the decisions made by America's national security team, including the secretary of state.

BASH: Still, his foundation got at least $10,000 from Blackwater, a controversial company that protects diplomats in Iraq. As secretary of state, his wife would have to decide whether to renew Blackwater's contract.

(END VIDEOTAPE) BASH: Now earlier this month, Bill Clinton's foundation and the Obama transition signed a carefully negotiated memorandum of understanding which laid out his role there, should Hillary Clinton become secretary of state and it was circulated today to senators on the Foreign Relations Committee, which, of course, will hold confirmation hearings for Hillary Clinton. We obtained a copy of this memorandum and in it among the things that Bill Clinton agrees to, Lou, is to limit his role in leading and raising money for that foundation, again, should Hillary Clinton be confirmed and be leading the State Department.

DOBBS: Yes, I think that it is -- I think the former president is exactly correct when he says this disclosure and transparency, though albeit late in coming, is certainly helpful and appropriate. But I think in addition to the conflict of interest issues, which I think are easily overstated here, potentially for Secretary of State Clinton, should she become so, is the issue of foreign governments giving money to any foreign -- any former president, for a library, for any purpose whatsoever, even with the noblest of reasons including the fight against AIDS and global poverty. This does not seem to fit in with -- well, American tradition in permitting the influence of foreign business people and foreign governments in such issues.

BASH: Yes, and on that note, I think maybe it is important to point out just to that point, Lou that George H.W. Bush also reportedly got about $1 million, maybe even more from the Saudi government as well. And who knows who else he got money from in terms of those foreign governments, so Bill Clinton isn't the first, again to that point.

DOBBS: Yes and we don't know what other presidents have gotten because they have not been as -- they have not been forthcoming in every instance. What we do know is that this -- that the involvement of foreign governments and their money in American political, social life is extraordinarily inappropriate. I think most people would agree. No law against it, but it is something that certainly deserves consideration, one would think. Dana, thank you very much.

BASH: Thank you.

DOBBS: We appreciate it, as always. Dana Bash.

There are new developments tonight in the Bernard Madoff $50 billion Ponzi scheme. A new name has emerged in the scandal, Ezra Merkin (ph), a new name because of possible implications here. Merkin made tens of millions of dollars in fees from charities and other institutions and put all of their investments with Madoff. Kitty Pilgrim has our report.


KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Ezra Merkin (ph), seen here at this charity with Israeli leaders, is now accused of charging astronomical fees to charities and institutions and then simply turning their investments over to Bernard Madoff. Institutions and charities say he never checked out the safety of those investments. Harry Susman is representing people who say they had no idea Ezra Merkin (ph) was simply passing their investments along.

HARRY SUSMAN, SUSMAN GODFREY: He would charge 1.5 percent of the value of everyone's account, which according to the audit financial statements that I've seen for 2007, came to somewhere in excess of $25 million, I believe.

PILGRIM: Some say even a cursory look at Bernard Madoff's hedge fund would have raised a red flag. For example, this tiny building supposedly housed the auditor for Madoff's multibillion dollar hedge fund. (INAUDIBLE) University invested $110 million with Merkin and its Ascot partners eight percent of their endowment. They lost it all.

Their statement reads, "The University had no investment directly with Madoff. Last Thursday night we were informed by Ascot partners, a vehicle in which we had invested a small part of our endowment fund for 15 years that substantially all of its assets were invested with Madoff."

New York Law School is now suing Merkin and his auditor in federal court in Manhattan, charging he put all of a $3 million endowment in a fund invested with Bernard Madoff. Merkin, however, says he himself is a victim and his lawyer put out this statement today.

"Mr. Merkin and his family are personally among the largest victims of the massive fraud confessed by Bernard Madoff. Like other victims and the entire financial community, Mr. Merkin is shocked by these events."


PILGRIM: The New York Attorney General's Office spoke to us today. They confirmed that the Charities Bureau was reviewing the matter. Other lawyers we spoke to say charitable trusts have a fiduciary obligation to determine if their investments are solid. Lou?

DOBBS: Now, this is going to be a mess. It is tragic for those who lost their money. But what is also becoming clear here that a lot of people failed to exercise even the smallest amount of fiduciary responsibility. And the number of people who were taking fees to funnel money into Madoff, those people are I mean they're beyond disgusting in what they have done here.

PILGRIM: You know in reporting this today, Lou, they simply pass it along without doing anything. They just collect it and then pass it along.

DOBBS: Well if you can get 1.5 percent on $1 billion, it is not a bad year, is it?

PILGRIM: Very shocking...

DOBBS: Shocking, shocking that people are so indifferent to the welfare of others and their own integrity. Thank you very much. Appreciate it, Kitty Pilgrim.

Coming up next, snow falls in the desert? So what are those folks talking about global warming? We'll find out. We'll be talking about a meltdown as well in California. But it has nothing to do with the weather, but they do want you to pay for it. We'll have all that and more next.


DOBBS: Guess what? Federal regulators today adopted new rules to protect credit card holders from unfair industry practices. Among the reforms, credit card companies will now be barred from raising interest rates without sufficient notice. And credit card customers must be given a grace period to pay their bills. Most of these new rules were proposed back in May. They won't go into effect until the middle of 2010. That's the bad news.

And why we should wait that long, well, that's probably a problem for you and for most Americans. According to the Federal Reserve, by the way, five percent of all credit cards in the third quarter of this year were delinquent. Struggling taxpayers all across this country are being forced to pick up the cost of excessive spending by state governments.

Many state governments now face massive short falls, they can't balance their budgets so they're raising taxes and they're cutting services. In the state of California alone, taxpayers there will have to pay out billions more in the New Year. Casey Wian has our report.


CASEY WIAN, CNN CORRESPONDENT (voice-over): Merry Christmas, California taxpayers. Lawmakers are preparing to make the New Year an expensive one throughout the state.

UNIDENTIFIED MALE: They're raising the gas tax, the car tax, the sales tax, the personal income tax. We figured it could be close to $1,000 of additional taxes the average family in this state.

WIAN: More than $9 billion in new taxes and fees together with more than seven billion in spending cuts ranging from school funding to medical care for low income seniors.

UNIDENTIFIED FEMALE: We have bit the bullet.

WIAN: It is all because California faces a $15 billion budget deficit, more than 10 percent of the state's total budget. And the short fall is growing by $1 billion a month. Already state finance officials have suspended nearly $4 billion in public projects, including school and road construction.

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: Now we're going to lose you know probably 200 some thousand jobs and a lot of money.

UNIDENTIFIED MALE: But this is incredibly difficult. We're going impact the lives of so many people, especially those who are going to have to suffer job losses during the holiday season.

WIAN: But they say it is necessary because otherwise, California will run out of cash by February. The nearly $17 billion in proposed spending cuts and revenue increases would close the current gap in California's $145 billion budget. But still looming, a $27 billion projected deficit for the next fiscal year and that could lead to a federal bailout.

JEAN ROSS, CALIFORNIA BUDGET PROJECT: California can't do it alone. We do need some help. I think most experts believe that there will be some amount of money coming in January with the new administration to help out not only California, but states around the country.

WIAN: For the immediate future, Ross says California will struggle to continue to provide basic services to its residents.


WIAN: Even California's stopgap budget plan could fall apart because of court challenges. The state constitution requires a two- thirds vote of the legislature to raise taxes. Opponents of the current plan say lawmakers are disguising taxes as fees to get around that requirement. Late this afternoon, Lou, lawmakers approved the budget plan. Governor Schwarzenegger has yet to say whether he'll sign it. Lou?

DOBBS: And what is going on with all of the bond issues in California? The state has been out of control for better than a decade. Where do we stand with all of that and California's credit rating? What is going on with that?

WIAN: California is in dire financial straits according to experts. Its credit rating has been lowered. It is in really, really difficult straits. People are saying that the state is, if it doesn't get this plan or some plan passed soon, it is not going to be able to pay for basic services for its residents.

We even had people complain because of the snowstorm we had out here recently that there weren't enough California highway patrol officers on duty to keep the roads open. It is an absolute nightmare, Lou.

DOBBS: All right, Casey, thank you very much. Casey Wian.

Up next here gay outrage with Barack Obama, three of the country's best political analysts join me next. Also, some politicians say polar bears can jumpstart our economy and they're serious, but they want you to pay for it. We'll tell you about that and a big freeze across the country. What's that global warming deal? We'll be talking with two meteorological experts, a special report on it next. Stay with us.


DOBBS: Welcome back. And let's talk about what is happening across this country. The weather is just unbelievable. And let's also talk about what it all means for discussion of global warming. Unusual storms and a deep freeze across much of the country tonight. An overnight storm dumped about three and a half inches of snow on Las Vegas, which broke the previous December record of two inches of snow back in 1967. The normal snowfall for Las Vegas is just about a half an inch for the entire year.

Snow even falling on the beach front community of Malibu, California. The normally sunny and balmy city hit with half an inch of snow, and snow plows cleaning up roads in Payson, Arizona, there, after a winter storm dropped several inches of snow. Snow also falling in the state's higher elevations 10 inches of snow falling in Flagstaff, Arizona. It was snow, not the usual rain, that ensnared traffic on Seattle roads this morning. There could be more snow, we're told, over the weekend, in the northwest.

Perhaps Al Gore now is considering global warming isn't such a problem, because it is unusually warm in his home state of Tennessee. The forecast there calls for a high of 64 degrees in Nashville. Mr. vice president, be careful. Joining me to talk about this bizarre weather are from the CNN weather center in Atlanta, meteorologist Chad Myers. Chad, great to have you with us. In Columbus, Ohio, Jay Lehr. He's senior fellow and science director of the Heartland Institute. Good to have you with us, Jay.

Let me start, if I may, Chad, this is really a peculiar sort of circumstance. Or is this one of those things where it just appears to be peculiar and we see this every winter?

CHAD MYERS, CNN METEOROLOGIST: You know, we really do.

DOBBS: I shouldn't have asked you that.

MYERS: The chance of getting snow in Vegas on a day like yesterday, about one in 500. That's the same chance of you getting a flush on a five-card stud. Well, it happens. I mean, five cards, people do get flushes, right? So snow does happen. The odds are the same and so it is just not all that weird.

DOBBS: Record snowfall. Wait a minute, Chad. We got record snowfall in Las Vegas.

MYERS: For one day.

DOBBS: Well, come on, it's all we got is one day.

MYERS: I guess. But, you know, you can't blame global warming or global cooling on one event. It is too short. It has to be longer than that. We're talking about climate. Not a day.

DOBBS: Speaking of climates, let's turn to the science director at the Heartland Institute. And you -- what correlation, if any, do you find, Jay, between all of these cooling trends that we have seen over this year and part of last year, in terms of so-called global warming? Any relationship? JAY LEHR, HEARTLAND INSTITUTE: Absolutely not, Lou. I agree with Chad. I used to teach at the University of Arizona in the 1960s. And I can't remember a winter where we didn't have snow and people don't think it snows in the desert. I grew up near a farming community and I started reading the "Farmer's Almanac" when I was a small child. And they have been tracking the weather since 1792. And I've gone back through my almanacs, and if there is one thing constant about the weather, it is change. And I also -- I know I share a hobby that you used to have, sky diving.


LEHR: I have jumped out of a plane in Ohio every month for 31 years, and I track the weather constantly to find out if I can make it out of a plane. And I can tell you, the weather the last ten years hasn't been significantly different than the ten years before that or the ten years before that. It has been -- it is always changes what the weather is about. And to say that it has to do with global warming is really more of a joke than anything else. Why people are so alarmed about it, I have no clue.

DOBBS: You know, that's fascinating. Chad, we're seeing weather that at least is unusual for this one day, as you point out. But let me ask you for your viewpoint. Your career, are you seeing anything here that directly is tied to something called global warming, fossil fuels, man made? Which is the dominant influence overall on weather? Is it cycles? Solar sunspots? Solar flares? The 11-year cycle? Is that dominant? What is dominant in terms of influencing weather?

MYERS: To think we could affect weather all that much is pretty arrogant. Mother nature is so big. The world is so big. The oceans are so big. I think we're going to die from a lack of fresh water or die from ocean acidification before we die from global warming, for sure. But this is like you said, in your career; my career has been 22 years long. That's a good career in TV. But in talking about climate, it is like having a car for three days and saying this is a great car. Yes, it was for three days, but maybe in day five, six and seven it won't be so good. That's what we're doing here.

We have a hundred years worth of data, not millions of years that the world has been around.

DOBBS: Jay, we have been around a little over -- by scientific estimates, about 4.5 billion years. What is your thought about the dominant influence on weather?

LEHR: Well, clearly, Lou, it is the sun. But if we go back in really recorded human history; in the 13th century, we were probably seven degrees Fahrenheit warmer than we are now. And it was a very prosperous time for mankind. If we go back to the Revolutionary War, 300 years ago, it was very, very cold. We have been warming out of that cold spell from the Revolutionary War period. And now we're back into a cooling cycle. The last ten years have been quite cool. And right now I think we're going in to cooling rather than warming. And that should be a much greater concern for humankind.

But all we can do is adapt. It is the sun that does it, not man.

DOBBS: Jay Lehr, thank you very much. Chad Myers, thank you very much. We appreciate it. Find some more unusual weather for us, Chad. We'll be back tomorrow, another day.

Up next, the backlash over the president-elect's decision to have evangelical Pastor Rick Warren give the invocation at his inauguration. Man are some folks upset.

And states want you to pay for all their special projects. A bailout for everybody when we continue.


DOBBS: This just in. California Governor Arnold Schwarzenegger on the California budget -- we have been reporting to you about the approach from the Democrats in the state legislature to come up with that solution. Now Governor Schwarzenegger just announcing he will veto that state's 18 billion dollar budget package put forward by the Democrats. Let's go back to Casey Wian in Los Angeles. Casey, was this expected?

WIAN: I think this was a bit of a surprise, Lou. Governor Schwarzenegger has been very critical of the state legislature for weeks now, since he called them back into special session to get a budget deal done. A lot of people figured that once they finally got this deal passed today, which was not a sure thing, that the governor would probably sign it into law. We have not heard why he decided to veto this legislation, but he has vetoed it and he vetoed it quickly, less than an hour after it was passed by state lawmakers, Lou.

DOBBS: All right, thank you very much. Casey Wian, reporting from Los Angeles.

Again, repeating, Governor Arnold Schwarzenegger just vetoing -- saying he will veto or not sign that budget proposal put forward by the Democratic state legislature.

Mayors all across this country, like state governments, are desperate to fight off budget cuts and layoffs. They want Congress, these mayors do, to hand over 73 billion dollars to them in emergency funds for infrastructure projects. Those mayors say the projects will create jobs and stimulate economies. But critics say that many of those projects appear to be more pork and they benefit special interests and not tax payers at large. Abbie Boudreau has our report.

ABBIE BOUDREAU, CNN SPECIAL INVESTIGATIVE UNIT: Lou, you take a look at this 800 page report from the U.S. Conference of Mayors. You'll see some of the ready to go projects include rebuilding roads, water ways and schools. But we discovered other projects that are raising red flags.


BOUDREAU (voice-over): You usually don't think a nearly five million dollar polar bear exhibit in Rhode Island would help turn around the economy. But the U.S. Conference of Mayors sure thinks so. It is one of more than 11,300 ready to go infrastructure projects proposed by 427 cities, at a total cost of 73 billion dollars.

PETE SEPP, NATIONAL TAXPAYERS UNION: To the people supporting them, these proposal aren't a joke. But to the tax payers funding them, yes, it will be a joke to them, only they won't be laughing.

BOUDREAU: Just this month, Miami Mayor Manny Diaz, the president of the U.S. Conference of Mayors, and other big city leaders, went to Capitol Hill to make the case for the list of critical projects.

MAYOR MANNY DIAZ, PRESIDENT, US CONF. OF MAYORS: Our plan calls for investments that will stimulate our economy by quickly creating jobs.

BOUDREAU: Mayor Diaz even held up the report, saying the projects weren't a bailout, but a build-out to put Americans back to work.

(on camera): Did you have a chance to even read the report?

DIAZ: Well, I read through a lot of it. Obviously, I didn't sit there and look at all 11,300 projects that were submitted.

BOUDREAU: Why is that?

DIAZ: Why is that? I didn't have time.

BOUDREAU (voice-over): If he made the time, he would have found projects like a 20 million dollar Minor League Baseball museum, 42 million dollars for improvements to zoos, three million for murals, and even a million and a half dollars for a new water park ride.

DIAZ: You can't simply say that because something sounds like it isn't right, that it isn't in fact right.

BOUDREAU: A new ride at a water park?

DIAZ: Again, I'd have to look at that particular project and try to understand why that city feels that it is an important project. But, again, we're talking about 11,300 projects, not just one.

BOUDREAU: The new ride at the water park is in your city. So, what is your response? I'm asking you as a mayor. I'm surprised you didn't know about the new ride at the water park.

DIAZ: Well, we had a number of projects and I don't know which one you're referring to. But we just built the new water park and it may be related to that water park or it may be outside of that city.

BOUDREAU: A million and a half dollars for a new ride at a water park.

DIAZ: The point is, part of investing in infrastructure also includes parks. BOUDREAU (voice-over): While there were plenty of roads and bridges and water treatment projects on the list, we also found plenty of other interesting multi-million dollar projects, like skateboard parks, museum and zoo renovations, aquatic centers, bike and horse paths, a dog park, even programs beyond infrastructure, to help prostitutes get off the street, and buy thousands of tasers for police departments. The total cost, more than 300 million dollars. And many of the proposals in the report don't create jobs.

Pete Sepp of the National Taxpayers Union says it smells like pork.

SEPP: It is impossible for any normal tax paying American to read this and not come away scratching your head and saying, wait a minute, this isn't about infrastructure. This is about political power grabs, money grabs.

BOUDREAU (on camera): To the average American, doesn't this sound like pork?

DIAZ: I don't know. You'd have to ask the average American.


BOUDREAU: Mayor Diaz says he would hope that members of Congress would read the entire list of projects his group submitted to make sure that they are legitimate before handing over billions of dollars. He also tells us there will be even more proposed projects from other cities by the end of the year. Lou?

DOBBS: Remarkable. Whether at the local, the state or federal level, the seeming indifference to detail, whether it is the U.S. Senate that fails to read more than 90 percent of the legislation before it, or Mayor Diaz, needing your instruction, Abbie, to understand there is a new ride sought for the water park there in Miami. It is remarkable.

BOUDREAU: Yes. Absolutely. We were pretty surprised that he didn't know about projects in his own city. But, I mean, that's what happens. And that's why critics are saying, we can't just turn over this 800 page report without reading it. It needs to be read.

DOBBS: Absolutely. And thank you for doing so. Terrific reporting. Thank you, Abbie Boudreau.

Up next here, the White House said an orderly bankruptcy, as they put it, could be the best way to save the auto industry. We'll have that report. And backlash from the president-elect's core constituency. What did he do to anger some of his loyalists? Three of the country's best political analysts join me here next. Stay with us.


DOBBS: Joining me now, three of my favorite political analyst, all CNN contributors, Democratic strategist Robert Zimmerman, Carol Swain, professor of political science and professor of law at Vanderbilt University, also editor of "Debating Immigration." Great to have you with us. And "New York Daily News" columnist Errol Louis, also the host of "The Morning Show" on WWRL in New York. Great to have you with us.

Let's start with -- I mean, good grief. The gay rights activists going after the president-elect just on the issue of the Evangelical Pastor Rick Warren giving the invocation at the inaugural.

ROBERT ZIMMERMAN, DEMOCRATIC STRATEGIST: It's about the issue of an Evangelical pastor using the pulpit to preach prejudice, using faith to preach fear. That's what the issue is. Let me be very clear, I morally believe in the rights of gay and lesbian Americans to marry. I think it should be protected by law.

DOBBS: Right.

ZIMMERMAN: I understand why Barack Obama is trying to reach out and build dialogue with people we don't agree with. I respect. But this minister's comments are demeaning and they're offensive, not just to gay Americans, but to all people who value human dignity and decency.

DOBBS: All right. What do you think?

PROF. CAROL SWAIN, VANDERBILT UNIVERSITY: Well, I disagree. I think that he is someone that speaks for a large number of Americans. And he's not preaching intolerance. There are some biblical principles that many Americans believe in that are guiding his words and actions. And I think that he is someone that Barack Obama should reach out and should listen to. And, especially, if he wants to win over some of those Americans who didn't support him, and are unsure of who he is. We want to know who he is. And I think that was a good gesture.

DOBBS: All right.

ERROL LOUIS, "NEW YORK DAILY NEWS": My sense is this is the wrong fight to pick and the wrong guy to pick it with. Barack Obama has been open to the gay and lesbian concerns. He's not in favor of gay marriage. But he hasn't gone out and really sort of tried to fight against it. So, you know, there's going to have to be some politics. There is going to have to be some dialogue and some conversation. This is a pretty awkward note on which to start that conversation, telling the man who he can associate with. I mean, what almost sank his campaign were complaints about him associating with a minister that a lot of people didn't like. I would think that real allies of Barack Obama would say, let's let this one sit for a little bit. Maybe we can get him behind closed doors and tell him about our concerns.

DOBBS: This president has said that he is going to be inclusive. He said he's going to be the president of all the folks, all the people. Is there some point in this country where we're going to have to say, you know, we're going to have to try to move to the center here. We're going to have to understand we're going to disagree about some issues. They're not going to be resolved and we're not going to fight to the death over them. Is there such a time possible soon?

ZIMMERMAN: I think that time is now. And I think the urgency the issues facing our nation and world are bringing people together. So I think there's no question it's happening. This, however, I can certainly respect the rights -- the leadership of the gay and lesbian community.

DOBBS: Oh, sure. I think it's not an issue of not respecting someone's views. It's an issue of proportion, I think, and perspective and the value of the inclusiveness that Barack Obama said, at least -- and I think sent a pretty strong message, both literally and symbolically, that he's going to be inclusive. We'll see if he walks the walk. So far, I don't know whether you, I'd say he is walking the walk.

LOUIS: It's worth also pointing out the closing prayer, the benediction, will be given by Joseph Lowry, a civil rights activist going back many decades, who is controversial in his own right. I'm sure there are some folks out there who don't particularly approve of him. We'll wait to see if we hear from him.

DOBBS: This wouldn't be a very interesting country, would it, if we didn't have a little spice, you know? Right? Let's turn to Caroline Kennedy, speaking of spice. I mean she's got an uproar going in New York City. Do you think somebody with the last name, whether it be Bush or Clinton or Kennedy, ought to have the easy pass to whatever they want politically?

SWAIN: That seems to be the way America works, especially when it come to the Senate. You have to have money or you have to have fame. I think that's unfortunate. And this would have been a great opportunity for the governor to appoint someone that had worked really hard for the position.

DOBBS: We're going to be back with our panel in just a moment. First, let's turn to Campbell Brown coming up at the top of the hour. What are you working on?


DOBBS: All right. Thank you, Campbell. We'll be back with our panel in one moment.


DOBBS: We're back with Robert Zimmerman, Carol Swain and Errol Louis. Errol, your thoughts on the likely ascendancy, if you will, of Caroline Kennedy to the Senate?

LOUIS: Well, she took an important step by traveling to some of these remote places upstate that a lot of politicians front he city don't really like to spend a lot of time in. She seemed to have had a good time. She is sitting down with people.

DOBBS: She had a good time?

LOUIS: She said she had a good time. Syracuse is lovely this time of year, I'll have you know.

DOBBS: She wouldn't answer the question, have you been in Syracuse before?


LOUIS: If you spend time in Manhattan, you live in Manhattan, as she does, among the wealthy and powerful, that is a long distance trip. In all seriousness, we have a chance to decide whether or not to retain her in 2010. She's got to run for the seat.

DOBBS: So you've got her already appointed? Now it's an issue of retention?

Let's go to Robert.

ZIMMERMAN: As I mentioned to you last week, very clearly, she has to demonstrate she has the leadership, the ambition and the skills to do this job. And the first way she can do this is by, in fact, getting rid of the handlers and start speaking to the issues, which she hasn't done yet. But bringing in Mayor Bloomberg's top team to help guide her campaign, also, I think --

DOBBS: Being a multi-millionaire, it doesn't hurt to have a billionaire behind you.

ZIMMERMAN: I'm worried about plutocracies. Of course, Mayor Bloomberg can see upstate New York from his town house, with apologies to Tina Fey.

DOBBS: I have to say, it's remarkable where we're headed with the power of the elites in this country. Does anybody remember when it was a democracy?

Thanks for being with us tonight. Good night from New York. Campbell Brown, "NO BIAS, NO BULL" starts right now.