Return to Transcripts main page
Lou Dobbs Tonight
Illinois Governor Blagojevich Report; Obama's Stimulus Report; Housing Collapse; New Year, new Taxes; Port Insecurity; Amazing Rescues
Aired December 23, 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 very much, Suzanne.
Tonight no discussions of a deal between the Obama team and Illinois Governor Rod Blagojevich. That's according to a new report from the Obama team. We'll have complete coverage.
And tonight, paying more for the pleasures of life. States desperate for cash are now taxing the things that make you feel good. We'll have that story.
And tonight, dramatic rescues as a wall of water traps stunned motorists on a Maryland road. We'll have that story, all that, all the day's news, and much more from an independent perspective straight ahead here tonight.
ANNOUNCER: This is LOU DOBBS TONIGHT: news, debate, and opinion for Tuesday, December 23rd. Live from New York, sitting in for Lou Dobbs, Lisa Sylvester.
SYLVESTER: Good evening everybody.
President-elect Obama's team did nothing wrong in its contacts with Illinois Governor Rod Blagojevich. That's the conclusion of a report compiled by Obama's team. The Obama team, turning from the Blagojevich distraction to the critical issues facing the country, the worsening economy. Joe Biden takes the reins as the incoming administration's middle-class czar. Ed Henry reports from Honolulu. Ed?
ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Lisa, there was one huge surprise in this report. The president-elect, we are learning from this report, and two of his top aides last week, were interviewed by prosecutor Patrick Fitzgerald in this whole criminal matter. Extremely rare, obviously, for an incoming president to be interviewed in any sort of criminal investigation. But they told the prosecutor that they were involved in absolutely no wrongdoing.
(BEGIN VIDEOTAPE)
HENRY (voice-over): Team Obama, eager to try and turn the page on the controversy over its contact with embattled Illinois Governor Rod Blagojevich.
SEN. JOSEPH BIDEN, (D-DE) VICE PRESIDENT-ELECT OF THE UNITED STATES: It's been clear that the president-elect has had no contact with Blagojevich and/or anyone of his team, that he's asserted, and you'll soon find in the reports released today that there's been no inappropriate contact by any member of the Obama staff or the transition team with Blagojevich.
HENRY: This matters because of the lingering questions about whether top Obama aides like Rahm Emanuel had any role in the so- called pay-to-play scandal, allegations the governor tried to auction off President-elect Barack Obama's seat in the Senate. Democratic officials say their internal investigation shows there was limited contact and no wrongdoing, leaving Vice President-elect Joe Biden to suggest there's no "there" there.
BIDEN: I don't think there's anything to exonerate.
HENRY: On the same day of the report's release, the transition team scheduled a Biden event on the economy. Not that they're trying to change the subject or anything.
BIDEN: We need a robust and sustained economic recovery package. There's virtually no disagreement on that point. The economists from left to right agreeing that the greater threat to our economy lies in doing too little, rather than not doing enough.
HENRY: He issued a warning to the Democratic Congress about not loading the package, which could reach $775 billion with pork projects that may do little to stimulate the economy.
BIDEN: You will not tolerate business as usual in Washington. There will be, let me say it again, there will be no earmarks in this economic recovery plan. I know it's Christmas. I know it's the Christmas season. But President-elect Obama and I are absolutely, absolutely determined that this economic recovery package will not become a Christmas tree.
(END VIDEOTAPE)
HENRY: Now, this report does confirm that Rahm Emanuel did have one or two phone conversations with Governor Blagojevich, and he had several phone conversations with the governor's then chief of staff, but the report, the internal report stresses that there was no quid pro quo in these conversations, that Blagojevich's staff never said they wanted anything of monetary value or anything for the governor in exchange for the you know the person who is going to be appointed to the Senate seat -- Lisa?
SYLVESTER: Ed, as you point out, this is an internal report that was done by the Obama camp. So is this it? Does this settle the whole issue then?
HENRY: It's not the final word. As you point out, I mean, this is -- it's not a surprise, obviously, that Obama's chief counsel, Greg Craig (ph) put together a report that basically says there's no wrongdoing by Obama people. You have to have an outsider look at it to have the final word.
In that case it will be Patrick Fitzgerald who I mentioned the president-elect sat down with last week for an interview. And his case is open, ongoing, and we might not know for months, really, the final word. But it's important to stress that in these early days the prosecutor has given absolutely no indication that there was any wrongdoing. Criminal or otherwise, by the president-elect or anyone else on his staff. Lisa?
SYLVESTER: Yes, Ed, thank you very much for that report. I know that the Obama team is eager to turn the page, as you mentioned, to the economy. The pressing issue of our time. All right, thanks, Ed, for that report.
Well our troubled economy continues to take a toll on the country's housing market. Home sales are now at record lows. The number of existing homes sold in November plummeted 8.6 percent, even as home prices continue to fall. Home sales are now at the lowest levels since 1997.
The average home sold for $181,300 last month. That's down more than 13 percent from last year. The average price last year was $208,800. And that's the worst price decline since the great depression. Sales of new homes were down 2.9 percent in November.
With economic numbers like those, it's no surprise many Americans believe the economy is the most important issue facing the country. The American people favor a stimulus plan, but remain skeptical that Washington has the means to turn things around. Bill Schneider reports.
(BEGIN VIDEOTAPE)
WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST (voice-over): The economy overwhelms all over issues. Three-quarters of Americans say it's their biggest concern. No other issue, Iraq, health care, terrorism, is even in double digits. Look at just the last six months.
In June, 39 percent described the economy as very poor. It reached the majority by November. Now, two-thirds feel that way. There's a sense of crisis. For a new administration, crisis means opportunity.
BIDEN: This is a place where every successful administration in our history has taken crisis and turned it into an advantage.
SCHNEIDER: An $800 billion economic stimulus package? The public says OK. Republicans are concerned...
REP. ERIC CANTOR (R), VIRGINIA: What I'm concerned about, when we hear these staggering numbers, close to $1 trillion right now, in spending, where is that going to take us over the long run?
SCHNEIDER: There's no evidence the public's view of government has changed. They're still skeptical. They continue to believe the government is doing too many things that people should do for themselves. And distrust of government has gone up in the past two years. The success of the economic stimulus plan depends on the private sector.
BIDEN: Eighty-five percent of these jobs will be private sector jobs. We're not out there looking for make-work projects.
SCHNEIDER: The program will work only if Americans gain confidence in the economy and start spending and investing again. There's some good news on that. Most Americans believe economic conditions in the country will be good a year from now. Not just better, good.
(END VIDEOTAPE)
SCHNEIDER: And that is where politics comes in. Democrats are much more likely than Republicans to say that the economy will be in good shape next year. A new administration brings hope, and hope may be the key to economic recovery -- Lisa?
SYLVESTER: Bill, I want you to stay with us for a moment and join our discussion now. We have more on the economy with Peter Morici, professor at the Smith (ph) School of Business at the University of Maryland. Welcome, Peter.
Now, we just heard Bill's report. You saw those really dismal numbers, where a large number of the American people really feel that the economy is in poor shape. You've got home values dropping 13 percent. The largest amount since the great depression. How do you turn things around, Peter?
PROF. PETER MORICI, UNIVERSITY OF MARYLAND: Well you've got to need to do two things. You got to get people spending money again. The stimulus package is a great idea, put people to work, give them income, they spend money. The second thing you need to that we haven't heard a lot about is fixing what's structurally broke. Getting the banks repaired in New York so they start lending money as they should, and fixing the trade deficit because it's a terrible trade on demand for U.S. goods and services, so it's a two-pronged approach, a quick fix, a boost, the stimulus spending and fixing the structural issues.
SYLVESTER: Bill, there's a lot of talk of getting this stimulus package. By some accounts that they're talking over $700 billion. You know, it was a tough sell to try to get Congress to approve $25 billion for the auto companies. So how do you get them to approve another $700 billion here?
SCHNEIDER: One word -- crisis. Even Republicans are saying they're not just going to stand up and say no. They all have suggestions, they'll have modifications. They'll have some alternative ideas. But they're not just going to stand in the way.
There's too much in a sense of crisis. You know in our system, when there's a sense of crisis, things happen, and they often happen very, very quickly.
SYLVESTER: And this idea of, Bill, of having Joe Biden be a middle-class czar. Is that going to help or is that all just window dressing here? SCHNEIDER: Well, he's the vice president. Of course, everything really centers on the president. He's got to set the vision. He's got to lead the country. But the vice president can play a crucial role for one reason in particular, Joe Biden knows Congress.
He's been in the House and for a long time, over 30 years he's been in the United States Senate where things can get blocked. He knows how Congress works. So if anyone can get this program through, all those intricacies and blockages in Congress, Joe Biden should know how to do it. It is Obama who has to lead public opinion.
SYLVESTER: Yes, Peter, really quickly, your thoughts on this middle-class czar, is this going to work?
MORICI: Biden is going to do it for this administration on domestic policy where change start to do on security policy. He's absolutely critical. New presidents without a lot of congressional experience, Carter, Clinton, and now Obama, really need someone who can work the shoals (ph), work the beaches and get things done in Congress.
Biden's just the man. He may become the most powerful person in America in the first six months, just after the president. And that may be a good thing for all of us.
SYLVESTER: OK, thanks, Bill, thanks for hanging with us. Peter, we're going to join you back a little later in the show.
Now turning to other news, President Bush today issued 19 pardons and commuted one prison sentence. Some of those pardons have been convicted of serious drug offenses. But in a continuation of a miscarriage of justice, former border patrol agents Ignacio Ramos and Jose Compean were not on the president's pardon list.
The two former agents are serving lengthy prison terms for shooting and wounding an illegal alien drug dealer. Hundreds of thousands of Americans have called for Ramos and Compean to be released and President Bush can issue pardons right up to the moment that he leaves office.
Coming up, is the federal government doing anything to tighten security at our ports?
Also, state governments are also taking the joy out of life, or at least putting a tax on it. We'll have a report.
And the nation's banks, now owners of thousands of foreclosed homes are neglecting those properties. We'll tell you what that means for neighborhoods across the country next. Stay with us.
(COMMERCIAL BREAK)
SYLVESTER: The country's growing housing crisis means banks are requiring more and more properties. But industry experts say banks are not only bad lenders, but they're even worse property managers, and that can have a devastating effect on entire neighborhoods. Louise Schiavone has our report.
(BEGIN VIDEOTAPE)
LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): The news from the real estate world keeps getting worse, whether it's new homes, selling at their slowest pace in almost two decades, with prices dropping like a rock, or existing homes, sales now down by almost nine percent.
LAWRENCE YUN, NAT. ASSN. OF REALTORS: Prices are continuing to fall. Inventory remains high. And the housing market is struggling to get back on track, and therefore, I think it really requires a government intervention to bring the buyers back into the marketplace.
SCHIAVONE: There's been an 11-month inventory of homes on the market. Nearly half of which are bank-owned distressed properties. And therein lies the problems, say those on real estate's front lines, banks make terrible landlords. Home inspectors walking into foreclosure properties get the first view.
BRION GRANT, AM. SOC. OF HOME INSPECTORS: Banks aren't in the business of taking care of buildings. They're in the business of selling and mortgaging buildings. So what we're finding is that through general neglect or deferred maintenance, that homes are not in that good of condition.
SCHIAVONE: In some real estate markets, especially in the west, southwest and Florida, once a paradise for property flippers, neighborhoods have been laid waste by vandals, even arsonists, even as overwhelmed financial institutions struggle with inventory.
WILLIAM PROCIDA, REAL ESTATE TURNAROUND EXPERT: They've got books this thick that say how to sell a house. I mean we're talking about selling a house. Why do you need a manual this thick?
SCHIAVONE: This real estate veteran says it's time to take the mystery out of the housing crisis and get back to basics.
PROCIDA: Toxic acid (ph), it's just a mortgage and it's just a house and it has a story. And the faster somebody deals with it and deals with it face-to-face, the quicker it will get resolved.
(END VIDEOTAPE)
SCHIAVONE: Lisa, inspectors and agents say there's no science to selling property. There's just common sense, fix the windows, cut the lawn, empty the garbage, paint the house and price it to sell -- Lisa?
SYLVESTER: Yes, you know, and a big part of this is, you know, people are out there and they're not working. And so they can't afford to buy these new homes and so they're just sitting there at the same time. I mean the government has been trying to do something, but it doesn't seem like it's been working.
SCHIAVONE: Well, what people are saying is they've got to take this out of the hands of people who are sitting on huge inventories and these central call-in locations, and move it back to the localities. Have this be a locally resolved issue. Have the banks look at it locally, have the real estate agents deal with it locally, take the hit if you have to on a piece of property to keep someone inside a house, because that is what is what is going to maintain a neighborhood.
SYLVESTER: Yes, I think you're absolutely right on that, Louise. All right, thank you very much for that report.
Well here's something not to look forward to in the New Year, new taxes and there are dozens of them across the country. There's even one for downloading music to your iPod. Kitty Pilgrim has more.
(BEGIN VIDEOTAPE)
KITTY PILGRIM, CNN CORRESPONDENT (voice-over): New York Governor Paterson's package of 88 separate tax increases includes a soda tax, massage tax, movie tax, tax on downloaded digital music. New Yorkers are not happy.
UNIDENTIFIED MALE: I know so many people, in all types of jobs, blue collar, white collar who are being laid off and the last thing you need to worry about is taxing soda. You know what I mean? I just think it's kind of silly.
UNIDENTIFIED FEMALE: People don't have money to get what they need, why would they be able to pay taxes?
PILGRIM: Tax policy experts say adding sales tax to things like movie tickets and massages is legitimate. But targeting specific goods like an 18 percent tax on soda. New higher taxes on beer and wine and cigars punishes a select group of consumers.
JOSH BARRO, TAX FOUNDATION: It doesn't look like they looked at New York's tax code and said well how can we build the perfect tax code. It's what changes can we make to raise more revenue and so you've got a mixed bag of changes that are good policy and changes that are bad policy.
PILGRIM: In Chicago, the government is privatizing their parking meters to raise $1 billion. But it's also going to cost more to park. South Carolina wants a new tax on landfill dumping, a $3 per ton. Florida's Governor Crist is proposing a new cigarette user fee. California's Governor Schwarzenegger is trying to put new taxes on liquor.
But not all taxes stick. In Maine, a new tax on bottled beverages to fund health care was repealed by referendum last month. Seattle voters rejected a 10 cents tax on espresso to fund indication. Coffee shop owners complained they had no way to ring up whether a drink contained espresso or not.
(END VIDEOTAPE)
PILGRIM: Tax experts say the real way to tell if a tax is good or bad is to see if it tries to punish a certain politically unpopular group like say drinkers. They say a good policy is to try to get the broadest possible tax so one group is not targeted -- Lisa?
SYLVESTER: Now they're taking all the fun taxing espressos even. So how effective are these narrow taxes?
PILGRIM: Well the narrow taxes really aren't that good in policy terms, because they say for a broader thing like education, you need a broader tax. Something that everyone can pay into. Because it's not fair to tax one specific group for something like education.
SYLVESTER: OK, thank you very much, Kitty, for that report.
Well following up on the story that we brought you last night about companies dropping their commitment to 401(k) contributions, tonight we hear that Unisys (ph) is also cutting its contributions to employees' 401(k)s. The company is also laying off 1,300 workers.
Coming up, the Coast Guard's new plans to keep our ports and borders safe. We'll have a special report.
An amazing rescues in Maryland after a massive water main breaks sent millions of gallons of water down a suburban road.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: I actually, for a minute thought I was just dreaming, because it was just like I was in the middle of a river, a muddy river.
(END VIDEO CLIP)
SYLVESTER: Yes, you're not going to want to miss those pictures and we will hear more from survivors of those raging waters, next.
(COMMERCIAL BREAK)
SYLVESTER: A warning tonight from the Food and Drug Administration about dangerous diet pills from communist China. The FDA says nearly 30 weight loss products contain unlisted ingredients including high doses of an anti-obesity drug and a suspected carcinogen. The ingredients can pose serious health risks such as heart attacks and strokes. The products are marketed as natural fat busters and are sold mainly over the Internet.
The United States Coast Guard is taking new steps to protect our ports and borders. The Coast Guard wants to implement new regulations to reduce the risk from terrorists aboard vessels in U.S. waters. Homeland Security correspondent Jeanne Meserve has our report.
(BEGIN VIDEOTAPE)
JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT (voice-over): The attackers slipped into Mumbai undetected on small inflatable boats. We all know what happened next.
(SOUNDS)
MESERVE: It underlined a security challenge for the U.S.
THAD ALLEN, COMMANDANT, U.S. COAST GUARD: I don't think there are adequate resources in the Coast Guard or the country, for that matter to completely guard 95,000 miles of coastline.
MESERVE: But to lower the risk, the Coast Guard is proposing that all vessels arriving from outside the U.S. be required to give advance notice. A more controversial measure would require mid-size ships like some ferries and fishing vessels to carry an automatic identification system, or AIS, which acts like a transponder, so they can be identified and tracked.
DEBBIE GOSSELIN, WATERMARK CRUISES: I cannot envision how that will enhance security for our country.
MESERVE: Debbie Gosselin's firm conducts boat tours in Annapolis, Maryland. If the new proposals are adopted, she predicts she will have to install transponders on five boats at a cost of 10 to $20,000 apiece. She questions how that will reduce the risk on a summer day when thousands of recreational boats are on the water.
GOSSELIN: All these little white dots are recreational vessels. None of these boats will be required to have an AIS.
MESERVE: And any one of them could pose a threat. But at Coast Guard sector Baltimore, the view is different.
UNIDENTIFIED MALE: You'll see that's that the Lady Tramp (ph) which is a bulk carrier, carried sugar, which is either -- which is offloading in the port of Baltimore.
MESERVE: AIS gives the Coast Guard a virtual view of large ships like the Lady Tramp (ph) in the harbor. If more mid-sized vessels carry transponders, security patrols can spend more time looking at small vessels and other possible threats.
AUSTIN GOULD, COMMANDER, U.S. COAST GUARD: What it will enable us to do is identify what we refer to as the anomaly, what's unusual in the port, what doesn't belong. Who's not broadcasting AIS that should be.
MESERVE (on camera): There are an estimated 17.5 million recreational boats in the U.S. The Coast Guard has suggested they be more tightly regulated. But there's been a lot of pushback. The proposals on midsize ships don't ensure security, but they may take us a step closer.
Jeanne Meserve, CNN, Washington.
(END VIDEOTAPE)
SYLVESTER: Eight years after the September 11th attacks, security at our ports is still a major concern. Less than five percent of the cargo containers at our ports are inspected.
Time now for some of your thoughts. Michael in Tennessee: "Mr. Dobbs, I enjoy your show and appreciate your effort to hold the politicians accountable no matter their party. I hope you keep the pressure on to find out where the bailout money is going."
John in Maryland: "Not only should the American people know where the bailout money is being spent, it should be returned to the people with interest."
Ed in Florida: "How can Congress just give money to the banks? Don't the banks background check us?"
We love hearing from you. Just send us your thoughts, go to loudobbs.com and each of you whose e-mail is read here receives a copy of Lou's new book, "Independents Day: Awakening the American Spirit", now available in paperback.
Coming up, two whistleblowers help to put a stop to double billing by a national pharmacy chain. We'll have a special report.
And an amazing rescue as Maryland drivers find themselves trapped by a rushing wall of water. We'll have that story and the incredible pictures, next. Stay with us.
(COMMERCIAL BREAK)
ANNOUNCER: This is LOU DOBBS TONIGHT: news, debate and opinion, an independent view. Here again, Lisa Sylvester.
SYLVESTER: It was a dramatic scene today in Maryland after a five-foot water main broke causing a violent whitewater rapid to form on a busy street filled with rush hour traffic. It happened in Cabin John (ph), Maryland, just outside of Washington. Brian Todd has this report.
(BEGIN VIDEOTAPE)
BRIAN TODD, CNN CORRESPONDENT (voice-over): This video tells it all. Water slams a rescuer's boat as he tries to pull a woman from her car with virtually no time to spare. Moments later, time runs out on him. The boat is engulfed and park police have to save the rescuer.
LT. PAT MITCHELL, WATER RESCUE TEAM MEMBER: A current like that can kill instantly.
TODD: A current triggered when a five and a half foot wide water main burst open during the morning commute. A wall of water rushed down a steep incline trapping several people in their cars. Helicopter rescues were very dangerous. As a woman climbs out of her car and grabs for a basket, the wind slaps white-capped water all around her. Victims describe a harrowing sequence that came in an instant.
SHARON SCHOEM, RESCUED FROM CAR: All of a sudden I just saw a bunch of muddy water and rocks and parts of trees and coming toward me. And I tried to turn around, but as I turned around, I was unable to turn around because the force of the water was just too high. TODD: Another woman scribbles a note for rescuers to contact a family member. Officials say some victims were treated for hypothermia, but all were rescued.
(on camera): We're right at the edge of River Road where the water main break really was at its worst earlier today, about four to five feet deep behind me when it was at its worst point. You can see the water still gushing down the road. These are two of the cars that were stranded. People had to be air lifted out of these cars.
We're going to go down the hill this way and you can see four other cars that were stranded, one of them still has the windshield wipers going. And we're told by rescuers that the depth of the water hit about four or five feet at its worst point this morning. But, the depth was not the problem, it's the speed with which the water is going downhill.
(voice-over): Veteran rescuers said they'd never encountered anything like this.
CAPT FRANK DOYLE, MONTGOMERY CO. FIRE & RESCUE: We train for river rescues every day and we train for flood rescues on a road, but you never expect to find something like we found today with the amount of water coming down River Road with multiple cars stuck.
TODD: All of those cars were later extracted. It took responders hour to get to the main valve that burst because it was underwater, but they eventually did shut that water off and life returned to normal.
Brian Todd, CNN, Bethesda, Maryland.
(END VIDEOTAPE)
SYLVESTER: Well, that is pretty amazing.
Well, late this afternoon, the fire and rescue service in Montgomery County, Maryland released the 911 tapes from the incident. Listen to this one woman who was trapped in her car.
(BEGIN AUDIO CLIP)
OPERATOR: How many people are in your car?
UNIDENTIFIED FEMALE: Just me.
OPERATOR: Just you?
UNIDENTIFIED FEMALE: Yes.
OPERATOR: And you can't get out of your vehicle?
UNIDENTIFIED FEMALE: No, I can't. The water's going to drop me all down.
OPERATOR: OK, how high is the water in your car, ma'am? Where is the water to now?
UNIDENTIFIED FEMALE: It's getting all over my car. Please, I can't...
OPERATOR: OK, ma'am. Ma'am, listen to me, OK? We have help on the way. I need you to try to stay calm, OK? Where is the water in your vehicle? How high up is it in your car?
UNIDENTIFIED FEMALE: It's all the way. It's going all the way.
OPERATOR: OK, I understand you're saying all the way. Can you give me a reference? Is it up to your knees? Is it up to your waist?
UNIDENTIFIED FEMALE: I can't see. I just need some help, please.
(END AUDIO CLIP)
SYLVESTER: That woman and eight others were rescued from the rushing water. At its peak, it was flowing down that road at 150,000 gallons per minute. And we are happy to report that everyone made it out safely.
Well, one of the most, the biggest and most admired companies in this country has been overbilling the federal government for years. And it was two enterprising Walgreen's employees who blew the whistle. Drew Griffin, from the Special Investigations Unit, has this report.
(BEGIN VIDEOTAPE)
DREW GRIFFIN, CNN NEWS CORRESPONDENT (voice-over): They were co- workers first, then friends. And it wasn't long before they realized they were unwittingly involved in massively overcharging Medicaid. Their own company overbilling for hundreds of thousands of prescriptions.
NEIL THOMPSON, FORMER WALGREENS PHARMACIST: I saw these reimbursements coming up higher, because they actually printed out and you actually saw a hard copy come out of the computer as to how much it should be and I knew that wasn't right.
GRIFFIN: Neil Thompson and Dan Biuerance worked at this Walgreens not far from downtown Minneapolis. And as they worked here, they say store managers used an internal billing system automatically double charging Medicaid for prescriptions. Troubling enough to Neil Thompson, but even more serious when he saw it happening all over the state.
THOMPSON: I floated that 97 different Walgreens pharmacies in the Minnesota area and identified these claims starting to get done wrong all over the place.
GRIFFIN: Both say they alerted their superiors. Dan Biuerance was alerted by e-mail from one of them that it was basically none of his business. DAN BIUERANCE, FORMER WALGREENS PHARMACIST: You need to do it this way, do not ever change this cash price, period. And so it was three times which I went to my immediate supervisors and each time I got kind of the door slammed saying, no, you just do it this way.
GRIFFIN: Now the twist, while Walgreens was double billing, and ignoring warnings from its own pharmacists, one of those pharmacists, Neil Thompson, was studying law. He graduated with a law degree, and his first case, you might say, was blowing the whistle on his own company.
THOMPSON: Dan produced most of the evidence. We had paper copies of all of these overbuild claims. We carefully redacted them to make sure there was no patient information on them and turned those over to the government officials.
GRIFFIN: It took nearly three years working with the FBI and the U.S. Attorney's Office, undercover, you might say, because Dan and Neil were still working on the inside. Then Walgreen's found out. So, early in 2005, the two pharmacists filed their own suit, a false claims act that would give them some of the money, if Walgreens had to pay up.
BIUERANCE: It may be $3 here, $10 here, But at the end of the day, we're talking millions of dollars.
GRIFFIN (on camera): It actually turned out to be $10 million. That's how much Walgreen's had to pay back the U.S. government, and four states for the overbilling. Walgreen's never admitted any guilt, and said it had already fixed the internal billing problems, which it called "inadvertent."
(voice-over): The company claimed the errors "happened because of their unique requirements when Medicaid is build as a secondary insurer and resulted in both underbilling and overbilling." But, this wasn't the only time Walgreen's had run afoul of the government. Just last June, the drugstore chain paid far more in fines, a total of $35 million to the federal government and 42 states, all because of disputes over Medicaid reimbursements. Again, it called them "inadvertent" billing errors.
THOMPSON: They know more about pharmacy billing than anybody and if anybody can get it correct, it should be somebody like them.
GRIFFIN: Overall, for the fiscal year that ended last October, the government says a total of $358 million was falsely build to Medicaid nationwide and that's only the amount they know about.
Drew Griffin, CNN, Atlanta.
(END VIDEOTAPE)
SYLVESTER: Both men received about $450,000 each as their payment under the false claims act. And Neil Thompson actually stayed on Walgreens' official payroll until about a month ago. Still ahead, the Obama team's report on its dealings with the embattled governor of Illinois. We'll talk about all of that and more with three of the nation's best political analysts. And job one for the incoming vice president, looking out for the middle class. Economist Peter Morici joins me here, next. Stay with us.
(COMMERCIAL BREAK)
SYLVESTER: New York City police are investigating the death of a man with ties to Bernard Madoff. Madoff is accused of running a $50 billion Ponzi scheme. Today police say one of Madoff's clients, a French investment fund founder, apparently killed himself in his Madison Avenue office.
(BEGIN VIDEO CLIP)
RAY KELLY, NEW YORK CITY POLICE COMMISSIONER: There was no suicide note. It appears that there were cuts made to his arm, to his wrist, and also to his bicep area, with a box cutter. There were pills present, unknown if those pills were ingested and there was no suicide note.
(END VIDEO CLIP)
SYLVESTER: The man's company had lost $1.5 billion in the fraud.
For more on our troubled economy, joining us once again from our D.C. bureau, Dr. Peter Morici of the Smith School of Business at the University of Maryland.
Peter, I want to start off first, and I want to show a graphic for our viewers. It's a CNN Opinion Research Corporation Poll and it shows you the state of the economy and what Americans think. Ninety- three percent of Americans polled believe that the economy is in poor shape, 93 percent. Only seven percent said it was in good shape. What do you make of that?
MORICI: Well, this fourth quarter, we expect GDP to contract somewhere between four percent and 6.5 percent, depending which forecast you ask. The American people are right on, they're seeing their jobs and income disappear around them.
SYLVESTER: You know, we don't really have to tell people, you know, they see these statistics, but they're feeling it, I mean, they're losing their jobs, they're seeing companies scale back on 401(k) contributions. What is it going to take, though, to turn the economy around?
MORICI: Well, right now we've got to get people spending again, so we need that stimulus package, a tax cut, infrastructure spending. But, we need a fundamental fairness in the economy. We have the huge bonuses being paid out of Wall Street, tens and twenties and thirties of millions of dollars that people like John Thain at Merrill Lynch. People are saying, hey, this is broken. They're not going to regain confidence until they see the new president clean up the mess on Wall Street, which means some of thinks insidious practices. SYLVESTER: You know, here's the problem, though, Peter, and you know this, you've got -- we're sort of in between administrations. You've got President-elect Obama, he doesn't officially take over the reins until January 20. He's on vacation right now in Honolulu. On the other hand, President Bush is still the official president of this United States, so it seems almost like we're in this leadership gap at this point.
MORICI: Absolutely. President Bush, Secretary Paulson have been silent, to speak of, on these bonuses. Yet, President-elect Obama is Hawaii, he should have been at the Bears-Packers game freezing with everybody else last night and doing business from Chicago. Greatest sense of confidence that he's on the job looking at things. Don't just send out the new vice president as the middle class czar, but that he's on the job. And they should be saying something about all these bonuses.
SYLVESTER: Yes, you know, Biden really has been the point man this week when it comes to the economy and we have some sound we want to share with our viewers, if we can take a listen from LARRY KING LIVE.
(BEGIN VIDEO CLIP)
BIDEN: The most important thing that I want the taxpayers to understand, though, is that we -- these jobs that we are going to be creating are designed for, not only the immediate impact and the creation of that job, but for the future prosperity of the country.
(END VIDEO CLIP)
SYLVESTER: Peter, help me out, here. I mean, they're talking about three million new jobs. Where are they going to create these jobs? I mean, infrastructure jobs? What are we talking about? Are we talking construction jobs? What -- for people who are losing their jobs, right now, losing their paychecks, what can they look forward to?
MORICI: Well, merely doing infrastructure, that's going to help, but that's not going to do the job alone. If they want to get serious about creating three or four million new jobs, then they're going to have to do something about the huge trade deficit and the problems of the auto patch. They'll negotiate something fair to get the Big Three going again and do something about that huge growing trade deficit with China.
You know, China subsidizes the exports to the United States, blocks our products from entering. We need to finally recognize that free trade has failed America. We don't have a free trade policy with China, we have a dumb trade policy and it's wreaking havoc from Western Pennsylvania all the way to Minnesota, down in to Missouri, destroying all these manufacturing and middle class jobs. Put those jobs back, America will get back to work and we'll be prosperous again.
SYLVESTER: I know, Peter, a lot of people are hoping and waiting for that to happen and we'll have to see if that happens under the new incoming Obama administration and with the new Congress. Peter Morici, thanks for your great insight, it is always a pleasure and Merry Christmas and happy holidays to you, Peter.
Well, coming up at the top of the hour, Campbell Brown, "NO BIAS, NO BULL." Erica Hill is in for Campbell.
Erica, what are you working on?
ERICA HILL, CNN ANCHOR: Lisa, in just a few minutes, a little holiday glimmer of hope in all of this economic gloom. There's actually a new report out that finds consumer confidence is looking up, even if it's only slightly.
Tom Forman spent the day rubbing elbows with all the last-minute shoppers to see if the optimism will carry into the New Year. He'll let us know. Also tonight, we have a NO BIAS, NO BULL look at the Obama transition team's hot off the presses report on the corruption scandal over Obama's vacant U.S. Senate seat. We are digging into those details, we have insiders from both the left and the right. We're going to get to the real story.
Plus, the Obama picture that everyone is talking about, Lisa, but almost no one in the mainstream media is showing. We'll dissect that and the potential problems, ahead.
SYLVESTER: OK, thank you very much, Erica, we'll be tuning in.
Well, coming up, the Obama transition team issues a report saying, well, what else, it had no improper contact with Governor Blagojevich.
And is Hillary Clinton pushing for more power when she becomes secretary of state? Three of the best political analysts in the country join me for those stories and more, next.
(COMMERCIAL BREAK)
SYLVESTER: Joining me now are three of the best political analysts in the country, all CNN contributors. Pulitzer Prize winning columnist with the "New York Daily News," there he is, Michael Goodwin. Syndicated columnist, Miguel Perez. Miguel is also a journalism professor at Lehman College. And Democratic strategist and Democratic national committeeman Robert Zimmerman. You certainly have a long title from there.
Thank you all for join us. We appreciate it. Well, first, obviously, this is the thing everyone's talking about, the internal report. We have been waiting for this report to come out. Now it finally has. Any big surprises in there - Robert.
ROBERT ZIMMERMAN, DEMOCRATIC STRATEGIST: Well, I think the only surprise, not even a surprise, the only point that worth noting is I think Rahm Emanuel is due an apology. Because the real surprise in this report is there are no surprises. This has been an Illinois scandal from the beginning and despite every effort by pundits and analysts to try to make this a national scandal, we're seeing by the U.S. attorney's comments, by Governor Blagojevich's rather obscene comments, with attacking Barack Obama, and by this report, that in fact there was no misconduct, no impropriety at all by President-elect Obama or any of the lieutenants.
SYLVESTER: Yes, Michael, in your mind, does this settle it? I mean, can we move on to other things at this point?
MICHAEL GOODWIN, NEW YORK DAILY NEWS: Well, obviously I think this is still a side light and I think it will continue, however, because we have the Blagojevich case itself, along with his chief of staff, John Harris, they likely will be indicted by a grand jury, according to everyone from Chicago. So, that's still going on.
But to the question of surprises today, for me, there was one. And that was that Obama himself, Rahm Emanuel and Valerie Jarrett were all questioned by the U.S. Attorney's Office, as part -- just the other day, just last week, actually, and earlier this week, some of them. So, I was surprised by that. What we don't know from the report, and I tried to find out and couldn't, whether that was under oath.
SYLVESTER: Oh, that's a good point.
GOODWIN: And we also don't know whether any of Rahm Emanuel's phone calls, apparently there were at least six, or say about six, they say -- were captured by the U.S. Attorney's Office in the wiretaps. So, there are still some questions out there, I think, that aren't clear. And then, of course, this report is an internal report, means it's one-sided.
SYLVESTER: But, everything that we've heard so far, I mean, isn't it that what we've heard essentially is all they were offering is appreciation and that seems to give Obama's camp some clearance, here.
(CROSSTALK)
GOODWIN: I mean, we have no evidence to the contrary, yet. But, Blagojevich's defense is that he did nothing wrong and so how his defense will work in conjunction with this, and what else does the U.S. attorney have on wiretaps. There's still a lot we don't know. But you're right, I mean, so far, there's nothing terrible about the Obama group, but there's still some unanswered questions.
SYLVESTER: Miguel, are we just all chasing this because it's a slow news cycle, it's a holiday season and that's what we do in the media because it's a fresh new cycle?
MIGUEL PEREZ, SYNDICATED COLUMNIST: I hope so, because I don't really think it's that a big deal. I mean, this report today, I think, sort of confirms the fact that we shouldn't be worried about Obama's involvement, too much. I mean, Michael made some great points, and there's still things that need to be seen. But Obama and the country has much bigger problems to worry about. And we sort of have been paralyzed by this whole thing coming out of Chicago for awhile now, or Illinois. And I think we really need to move on, and we really need to give Obama some space. He has been doing great, until this fiasco. And I really think it's unfair, at this point, for the new administration to be dealing with this problem.
GOODWIN: Can I make one point? I think really in Obama's favor here, is that apparently he didn't push anybody on Blagojevich or that whole staff. He was not backing it -- he submitted a list of four or five people and said he would be fine with any of them, plus others. So, I think that's actually rather admirable for him to do that, because he clearly could have leaned and said look, I want Jarrett or I want this one, but so far there's no evidence that he did any, which I think is admirable.
SYLVESTER: Yes, they're saying that Rahm Emanuel really was the one who was pushing Valerie Jarrett.
ZIMMERMAN: Well, I don't know. I think it's unfair to say he was necessarily pushing, I think clearly it was a point of discussion. I think it's thoroughly an appropriate discussion for Rahm Emanuel to have with the governor or his representatives and clearly nothing improper about it. But I think the point here is, to go to Miguel's point is that the media is focused on this, but I think the nation, and I think to the credit of the Obama new transition team and their new administration, they're focused on the larger issues and solution- based issues which the country is calling for.
SYLVESTER: And on that note, we actually have some sound from vice president-elect Joe Biden from LARRY KING LIVE in which he's talking about the issue of the economy and whether or not what the expectations are as we head into the new year.
(BEGIN VIDEO CLIP)
BIDEN: Domestically, I wasn't so worried about that, but internationally I am. I've been contacted by so many world leaders, their expectations for Barack's presidency is overwhelming. They are so hungry to have an American leader who they think has a policy that reflects our stated values as well as one they can talk to.
(END VIDEO CLIP)
SYLVESTER: Miguel, what do you think? Do you think expectations are very high? I mean, we obviously have a financial crisis, we have everything that's going on right now.
PEREZ: Americans have great expectations for President-elect Obama, but even for the rest of the world, I think even more. In Latin-America, I've been following Latin-America, I just wrote a column about related to Latin-America and the expectations are huge.
Now, you have the new secretary of state talking about special envoys that may be dedicated to certain parts of the world. I think that's a great thing because I think Latin-America, for example, should have a special envoy. What has happened under the Bush administration is that he had concentrated so much on Iraq and Iran and the Middle East that he's ignored the rest of the world.
SYLVESTER: Yes, Michael.
PEREZ: And we really need to pay attention to that.
SYLVESTER: Michael, do we need to go back to using the special envoys, perhaps you know, former President Clinton?
GOODWIN: Well look, frankly, I mean, that's a process that I don't fully understand the significance one way another. I mean, I think administrations want to do things differently. I think for Obama the issue is going to be the economy, and not just domestically, but globally. And if the United States can lead its way out of the economic woes that we're in now, any time in a reasonably short period and the world follows, that would be a great achievement for Obama and that will really sets the tone for a very successful presidency.
ZIMMERMAN: You know, I think one of the great achievements and prides that Lou Dobbs can take, at the team at LOU DOBBS TONIGHT, is to now see the middle class agenda take a formal role of the White House. Because certainly this program has been a champion of the middle class agenda and I think that's very encouraging to see it get the national and White House recognition it deserves.
But, I'm very encouraged by seeing the enthusiasm and the expectations in the world community. And I think it's very important because clearly it shows the rest of the world wants to work with the United States of America and they have a leader they can trust. Obviously, there are going to be difficulties along the way, but that spirit of high expectations will lead to great cooperation.
SYLVESTER: Yes, but you know, they are certainly walking and they've got a lot on their plate, a really tall list on their agenda that they're going to have to work through and very quickly because people are, by definition, they are going to be expecting a lot and very soon.
We've got to take a break here, but we'll have much more with our panel when we return.
(COMMERCIAL BREAK)
SYLVESTER: And we're back with our panel. Thank you very much gentlemen for joining us.
Robert, I want to start with you, we were talking about expectations and this idea, where do you think the biggest cause for concern is as the Obama camp moves forward when it comes to expectations?
ZIMMERMAN: Well, I think on the international front, the leadership of the world community understands the difficult challenge Barack Obama has and I think there's an understanding that it's going to take time.
On the domestic front, that's where it's very important to manage the populous' expectations, because clearly we are inherent -- this president is inheriting the greatest economic crisis since the Great Depression and that can't be said enough because it's important for people to understand what the president-elect is confronting in the process of turning the economy around.
So, I think keeping -- while I think, Congress and both parties understand what we're facing, keeping the country focused on the time it will take and the need to stay unified to solve this is the challenge.
SYLVESTER: Yes, we all know that Obama has this team of -- this wonderful team that he's assembled. I mean, you've really have got some heavy hitters on his cabinet to try to fix some of these pressing problems. Now, secretary of state, soon to be, Hillary Clinton, assuming that she is actually approved by the Congress, but she wants to expand that role as secretary of state. Miguel, what do you think of that, having an expanded role for the secretary of state?
PEREZ: Well, I already mentioned earlier the special envoys, but you know, when she expands, there's a concern where she expands whether it overlaps with the duties that other cabinet members may have. I mean, if all of a sudden she starts overlapping with the Commerce Department or overlapping with the Trade secretary, that may lead to some friction. So, you know, it's great that she's already onboard and she's trying to do -- I think she's trying to do wonderful things with the State Department and for this country's image in the rest of the world. I think that, you know, and we should support what she's doing, but at the same time, let's avoid the friction.
SYLVESTER: You know, during the Bush years, you had this tug-of- war, essentially, between the Pentagon and you had the State Department and Colin Powell and Rumsfeld. Do you think that the State Department needs to have a greater role as we move forward?
GOODWIN: Well, I would turn it around this way. What does the president need to do? And I think the president always, whoever the president is, needs to set the agenda and it's got to be one or two big things, and I think when you get into these agencies kind of running those their own shop and trying to create a fiefdom, that I think is a danger for the president.
The president really needs prioritize, and very quickly. I think, every president, every chief executive, mayor or governor, they learn that there are really just a few things you can do, and if you don't do those well, nothing else matters. So, I think for Obama, it's going to be economy, economy, economy, economy. Now, economy as a part of foreign policy is an important part of it too, but I do think the economy is going to define his presidency for at least four years.
ZIMMERMAN: Michael makes a very important point. Because you had in the Bush administration a great philosophical divide. You had a vice president that wasn't there as a confident of the president, as much as he was there leading his own philosophical movement with Donald Rumsfeld and the neocons. And you had Colin Powell really being isolated to secretary of state. So, I think what you have here is a greater philosophical unity amongst the foreign policy team security team. But it's interesting to note that both Secretary of Defense Gates and the national security advisor designee, Gerald Jones, both support what Senator Clinton wants to do as secretary of state, because I think we all recognize the need to elevate the diplomatic mission of the United States. And special envoys, I think, is proven to be an effective tactic, George did it, George Mitchell did it very well in Northern Ireland. Richard Holbrooke could do it very effectively too.
SYLVESTER: All right gentlemen, we're going to -- we're out of time, there. So, we're going to have to stop there, but thank you very much for your insights. It is always a pleasure having all of you here. We appreciate it.
And thanks for being with us, tonight. Please join us tomorrow. From all of us here, thanks for watching. Good night from New York. Campbell Brown, "NO BIAS, NO BULL," starts right now. Erica Hill is sitting in for Campbell.
