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Lou Dobbs Tonight

School Speech Flap; Democrats Divided; All the President's men

Aired September 07, 2009 - 19:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

LISA SYLVESTER, GUEST HOST: Thanks, Suzanne.

Tonight, President Obama comes out fired up, as he puts it, over health care and education as he prepares to speak to the nation's school children amid ongoing controversy.

Also tonight, deeper divisions in the Democratic Party as a leading Senate Democrat reveals his own health care proposals, that's just days before the president's prime time address. And one of the president's many czars resigns after a storm of controversy over his past.

Also stunning new developments in the case of Jaycee Dugard, we will have chilling new details about her kidnapper's past victims.

But first, President Obama today pushed back at critics of his planned school's speech to the nation's school children tomorrow. The president defended the speech today before a friendly audience of union workers in Ohio. The president, he is hoping to put the controversy behind him as he prepares to deliver a major speech on health care Wednesday night -- Ed Henry reports from the White House.

(BEGIN VIDEOTAPE)

BARACK OBAMA (D-IL), PRESIDENT OF THE UNITED STATES: Ready to go -- fired up -- ready to go...

ED HENRY, CNN WHITE HOUSE CORRESPONDENT (voice-over): Fired up at a Labor Day rally in Ohio, the president also teed up Tuesday's speech to school children.

OBAMA: And yes, I'm going to have something to say tomorrow to our children, telling them to stay in school and work hard.

(APPLAUSE)

OBAMA: Because that's the right message to send.

HENRY: But aboard Air Force One, his press secretary lashed out at critics.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: It's a sad state of affairs that many in this country politically would rather start an animal house food fight rather than inspire kids to stay in school, to work hard.

HENRY: The push back came after days of conservatives whipping up controversy including radio host Mark Shannon in Oklahoma -- charging the president wanted to indoctrinate kids.

MARK SHANNON, KTOK-AM: This president is a community organizer, he is organizing Hitler youth. He's turning their minds.

HENRY: A lesson in the modern presidency, the commander in chief no longer gets the deference of office. Liberals like author Tim Wise believe the president's critics simply shoot first and ask questions later.

TIM WISE, AUTHOR, "BETWEEN BARACK AND A HARD PLACE": The problem is it's not just modern media, it's this particular president, he has been vilified from day one as un-American, subversive, dangerous, destroying the country. And when you say that, that means anything he does. If he wants to talk to kids and tell them to stay in school, it must be brainwashing.

HENRY: The administration initially helped fuelled this controversy by distributing lesson plans that appeared to be political, asking students to write about how they can help the president. The White House backtracked on those plans and has now released an advanced copy of the president's speech to show it's not so controversial. Mr. Obama will stress personal responsibility, telling kids "if you quit on school, you're not just quitting on yourself, you're quitting on your country."

(END VIDEOTAPE)

HENRY: And meanwhile top aides tell me that today's remarks on health care where the president was pretty aggressive and assertive is really a preview of what we'll see Wednesday night, in his speech to a joint session of Congress. One top aide saying the president will be quote, "very forceful in his remarks, about the need for action". Obviously he's going to have to step it up if he's going to get this done. He's facing some real difficulties in this, obviously the window is closing very fast -- Lisa.

SYLVESTER: Ed, what kind of guidance -- which way do you think the White House is leaning now on that public option? What are you hearing there?

HENRY: What I'm hearing is what top aides continue to say is the president believes that a public option is in their words a valuable tool. And then they sort of move on to other parts of reform. President himself did that as well today. He basically had one line in his speech about the public option and then moved on to other things. If you read that closely, that's suggesting that on Wednesday night, he will make the case for a public option, but it's not a deal breaker for him.

When you ask top aides is it a deal breaker -- they won't answer that. And so we have to wait obviously to see exactly what he says. But the signals we're getting from him and his top aides is that's not going to be his top priority and that he may be willing to drop it to get a deal done -- Lisa.

SYLVESTER: All right, Ed Henry reporting from the White House -- thank you very much.

HENRY: Thank you.

SYLVESTER: Well Democrats tonight remain deeply divided over health care. Senate Finance Chairman Max Baucus is proposing his own plan for health care overall. The senator is one of a bipartisan group of six senators putting together a health care bill. Brianna Keilar has our report from Washington -- Brianna, the Baucus plan does not include a public option, so tell us more. What does it include?

BRIANNA KEILAR, CNN CORRESPONDENT: It doesn't include a public option. The key element of Senator Baucus' plan is a health care cooperative system and we did expect this Lisa. These would be nonprofit co-ops governed by the patients they serve -- this according to a source with knowledge of the proposal.

And this entire plan is based on the months and months of negotiations that have gone on between key Democrats and Republicans on the Senate Finance Committee, really seen as the best chance of a bipartisan deal on health care reform, but this proposal was put together by Senator Baucus, not the entire gang of six, as they're called (INAUDIBLE) to see if this group can reach an agreement in the coming days.

And we should also tell you, Lisa, this proposal expands Medicaid, right now Medicaid covers children up to the age of 5 and also pregnant women below the poverty level and you to one-third above it. So under this proposal, Medicaid would cover everyone whose income is up to that one-third above the poverty level including more children and also some adults who do not have children, Lisa.

SYLVESTER: Brianna, how much would this plan cost and how does the senator propose to pay for this plan?

KEILAR: We don't know -- at this point, the price tag, Lisa, $900 billion. That's significant because it's about $100 billion less than any of the other plans that are before Congress at this point, so in part it would be paid for with a new tax on those so-called Cadillac health insurance plans -- we've talked about this, Lisa -- those high end insurance plans that some say encourage consumers to overuse health care.

This would be a tax on the insurance companies not on the individuals, but critics, Lisa, say that it will be passed on to everyone who has health insurance. There's certainly some debate over the merits of that tax.

SYLVESTER: All right, Brianna Keilar reporting from Washington and of course we will have the president's speech on Wednesday night (INAUDIBLE) CNN will have all those details. Thanks very much for that report, Brianna.

KEILAR: You're welcome.

SYLVESTER: Well the Tea Party Express today continued its cross country rallies. More than 1,000 people turned out today to protest big government in Joliet, Illinois. They were critical of President Obama's policies on health care and government interference in private lives. The cross country rallies will wrap up with a demonstration in the nation's capital later this week.

Well turning now overseas, three British men were found guilty today of plotting to blow up U.S.-bound airliners. It was the second trial in the United Kingdom for the men, all British citizens. In 2006 the men plotted to blow up U.S. and Canada-bound flights with liquid explosives brought aboard in soft drink bottles. The three could be sentenced as early as Thursday.

Iran tonight continues to defy international calls to halt its nuclear weapons program. The chairman of the U.N.'s nuclear watch dog agency said Iran has not suspended nuclear fueled enrichment projects. Iran claims its nuclear program is for electrical power. The United States, the U.N. and other countries have accused Iran of concealing a nuclear weapons program.

Well coming up, chilling new details about the man accused of kidnapping and holding a California girl captive for 18 years. And after the president's green job czar resigns amid controversy, new questions are raised about the vetting of White House appointees.

(COMMERCIAL BREAK)

SYLVESTER: President Obama today announced the appointment of a new czar, Ron Bloom (ph) will be the new senior counselor for manufacturing or the manufacturing czar. Bloom (ph) will continue his work with Treasury Secretary Tim Geithner on the automotive industry task force.

This appointment comes just two days after the president's green job czar Van Jones resigned amid a storm of controversy. Now many are questioning the president's use of czars -- key players who are going straight into the White House without any vetting from Capitol Hill. Mary Snow has our report.

(BEGIN VIDEOTAPE)

MARY SNOW, CNN CORRESPONDENT (voice-over): The backlash continues over Van Jones' resignation on Saturday, a special adviser for green jobs. He came under scrutiny by conservatives for controversial remarks. But the last straw proved to be questions asked about why his name appeared on a 2004 petition, asking for a probe into whether high ranking government officials deliberately allowed the 9/11 attacks to occur. Jones denied ever holding those views. Republican Senator Lamar Alexander (ph) says it's not Jones but rather czars in the administration that's the real issue as most don't face the vetting process that appointees do through Senate confirmation.

SEN. LAMAR ALEXANDER (R), TENNESSEE: So when you take all these people and make policy close to the president and the White House to people who don't go to the Congress and aren't approved by the Congress you're just adding fuel to the fire by those who think Washington is taking over everything.

SNOW: Republican Congressman Mike Pence (ph) is calling for a congressional hearing before any more czars are appointed. Historians say czars reporting to the White House date back to FDR and they extend to both parties. Richard Nixon, for example, had an energy czar. George H. W. Bush appointed the first drug czar. Some counts put the number of czars in this White House at 30, but that's under a very broad definition. A more conservative count would easily half that number. But David Gergen who has advised both Republican and Democratic president says the number is still high.

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: We have never seen anything like that before. We have seen powerful White House aides in past administrations, we have not seen this many powerful White House aides.

SNOW: But he says there's merit to having czars.

GERGEN: The president does need someone to bang heads together to coordinate a very complicated executive branch.

SNOW: Some political observers say expect Republicans to push the czar issue.

LARRY SABATO, UNIVERSITY OF VIRGINIA: It's a great argument for a party that is trying to portray a president as pushing too far, too fast on too many advanced topics.

(END VIDEOTAPE)

SNOW: And it's not just Republicans, one vocal critic has been West Virginia Democratic Senator Robert Byrd who began questioning the president's use of policy czars back in February...

SYLVESTER: ... some 30 czars already. Thanks -- all right, thanks very much for that report, Mary.

Well coming up chilling new details about the man charged in the kidnapping of Jaycee Dugard, also an Ana Bell (ph) star arrested, Sean Meriden (ph) -- he's denying charges he attacked his girlfriend. And does the federal government have the right to regulate firearms manufactured and sold within a single state -- that story coming up next.

(COMMERCIAL BREAK)

SYLVESTER: Tonight states are stepping up to protect their residents' Second Amendment rights from what they see as the long arm of Washington. Under a new state law starting next month, any gun made in Montana sold to a Montana resident and remaining in that state will be exempt from federal control. Bill Tucker has our report.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): There are few states where the right to keep and bear arms is more cherished than the state of Montana -- Governor Schweitzer (ph) easily won his bid for re- election last year as he underscored his passion for the Second Amendment in his campaign commercial. So it should be no surprise that Montana was the first state to stand and legislatively challenge the federal government's reach when it comes to guns.

(on camera): Under the Montana Firearms Freedom Act the gun must be made in Montana and stay in Montana and be made by a non federally licensed by gun maker. None of the guns that you see here would be protected under that law.

(voice-over): That's because those guns crossed or have crossed state lines. But when it comes to a gun made in the state that stays in the state...

GOV. BRIAN SCHWEITZER (D), MONTANA: The commerce clause does not apply. It's just like a radish. If you grow a radish in Montana, you sell the radish in Montana, and you eat that radish in Montana do you believe the federal government would come out here with ATF or somebody else and challenge us all the way to the Supreme Court? I doubt it. So whether you're talking about a gun or a radish, the commerce clause should not apply.

TUCKER: Montana is not alone in its endeavor. The state of Tennessee passed a similar law in June and the stage for a battle with the federal government has been set. The Bureau of Alcohol, Tobacco and Firearms has already sent letters to federally licensed gun makers in those states warning that the ATF sees the law as meaningless, quote, "the act purports to exempt personal firearms, firearms accessories and ammunition manufactured in the state and remain in the state from most federal firearm laws and regulations. However, federal law supersedes the act and all provisions of the Gun Control Act and the National Firearms Act continue to apply."

Some constitutional lawyers suspect the Supreme Court would side with the AFT, noting prior rulings have expanded interstate commerce authority and federal law does in fact take precedence. The reaction from the ATF was anticipated says one of the writers of the bill who freely admits the law is meant to be a finger in the eye of the federal government.

GARY MARBUT, MONTANA SHOOTING SPORTS ASSN.: That's the purpose of the Montana Firearms Freedom Act to be able to mount that challenge to Congress, to be able to regulate everything under the sun under the guise of regulating interstate commerce.

TUCKER: And he has a strong ally in the governor who it would seem might be at odds with the president who is very pro gun control, who is also a fellow Democrat.

SCHWEITZER: But when the federal government comes in and says we want to be your daddy. We want to tell you how to live your life, that's where we draw the line and say, whoa, not in Montana.

TUCKER: According to the Montana Shooting Sports Association, 95 percent of homes contain a firearm in Montana and the feeling among many there is that the thing to fear the most is not a person with a gun, but a government that would take that gun away.

Bill Tucker, CNN, Missoula (ph), Montana.

(END VIDEOTAPE)

SYLVESTER: And in a legal twist, the groups which helped write and pass the Montana Firearms Freedom Act plan to preempt federal challenges by testing the law in court themselves. They want to make sure the law is constitutionally defensible against any future lawsuits from Washington.

Coming up, is a bipartisan compromise on health care possible? Two senators "Face Off" next, also disturbing new details about Phillip Garrido's past as investigators search for even more crimes, and 280,000 drivers might have to find another route to work in the bay area tomorrow. We'll tell you why. Stay with us.

(COMMERCIAL BREAK)

ANNOUNCER: LOU DOBBS TONIGHT continues.

SYLVESTER: When the president returns to Washington this week, he will confront a Congress deeply divided over his signature health care plan and with an eye towards their own reelection even members of his own party remain uncommitted. Dana Bash has our report.

(BEGIN VIDEOTAPE)

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT (voice-over): Here's something you haven't seen during the summer of angry town halls.

UNIDENTIFIED FEMALE: Welcome so much for coming to my home.

UNIDENTIFIED MALE: Oh my pleasure.

BASH: A health care "house call" -- Democratic Congressman Gerry Connolly at Susan Burton's table, invited to hear her explain why she may have to cut health coverage for workers at her small business.

SUSAN BURTON, FAIRFAX, VIRGINIA: A thousand for family coverage, so that's the one we went with. That's outrageous for a group.

BASH: Connolly, a freshman, wants to back health reform but is wary because his Virginia district is fairly conservative. Afterwards the congressman lamented that deep concern he heard here about the current health care system has been drowned out.

(on camera): Why is public opinion turning against health care reform if you have stories like that?

REP. GERRY CONNOLLY (D), VIRGINIA: Well -- partly we have had a steady drumbeat of the negative playing on people's fears and anxieties and to some extent that's clearly taken hold. This is the bill.

BASH (voice-over): In a car ride through his district, Connolly blamed his own party, especially the president for losing control of the debate.

CONNOLLY: The White House candidly underestimated the passion on the other side. I think we underestimated the ability of the opposition to, you know really initially frame the issue in outlandish ways.

BASH: Connolly goes back to his district office to see Democratic groups scrambling to reframe the debate and get his vote.

DELORES GARBER, COMM. WORKERS OF AMERICA: That was the whole point of us getting people elected.

BASH: Members of a local union there to lobby him in one room and in another volunteers from the president's political group, Organizing for America, deliver a box of petitions and bring emotional stories of preexisting conditions that make insurance unaffordable.

KARIMA HIJAN, VIENNA, VIRGINIA: And I had to resign from my job because of my health issues.

BASH: Connolly says those meetings are effective, but back in the car, this Democrat with conservative constituents says what he really needs is better leadership from the president.

CONNOLLY: We need Obama to maybe put aside the cool cerebral part of himself. We need a more passionate Obama who can directly articulate to Americans why we need health care.

BASH: If Connolly's Democratic leaders change their health care proposal to better control costs among other things they will get his vote, which this freshman Democrat knows could cost him his seat unless the president and his party do a much better sales job.

Dana Bash, CNN, Annandale (ph), Virginia.

(END VIDEOTAPE)

SYLVESTER: Recently we invited Senator Orrin Hatch, Republican of Utah and Senator Bernie Sanders (ph), Independent of Vermont to talk with Lou about the viability of a bipartisan compromised health care plan, the discussion, part of our "Face-Off" series of debates show just how far we still have to go to reach a national consensus.

(BEGIN VIDEOTAPE)

SEN. BERNIE SANDERS (I), VERMONT: We have a major crisis in this country and it's not only that tens of millions of people are uninsured or under insured, we've got over 18,000 people every single year die. They die because they don't get to a doctor when they should. We have got a million people this year who are going to go bankrupt because of the very, very high cost of health care, so I think doing nothing is not an option, but my main point is we have got to get it right, that's much more important whether it's done tomorrow, next week or four months from now.

LOU DOBBS, HOST: Senator Hatch, your reaction to that.

SEN. ORRIN HATCH (R), UTAH: Well I do think we have to get it right, but I don't think getting it right is (INAUDIBLE) the federal government. They want us now set up a board of five people or a panel of five people, nameless faceless bureaucrats who determine how to ration health care because that's the only way they're going to save money the way where they're going. Otherwise we're moving right straight to a -- to everything the Democrats are asking for, at least the liberal Democrats are asking for would lead us to a single payer system or in other words socialized medicine.

SANDERS: Well -- well, first of all, a single payer system is not socialized medicine. Medicare is a single payer system and I would argue that most Americans feel a lot better about Medicare than they do about private health insurances companies who throw them off of health care if they have a preexisting condition or if they got sick the preceding year, whose CEOs have enormous salaries, and compensation packages, whose administrative costs -- you know Lou, we have got to ask ourselves why in the United States we are spending almost twice as much as any other major country on earth and our health care outcomes in most cases are not as good...

(CROSSTALK)

HATCH: Part of it is -- part of it is because of government run. The Medicare system is $39 trillion in unfunded...

(CROSSTALK)

HATCH: Now we're going to turn the rest of our health care system over to the federal government...

(CROSSTALK)

HATCH: Not on my -- not on my watch you're not going to...

SANDERS: No, that's just not accurate. I think what anyone will tell you...

HATCH: Sure it's accurate.

SANDERS: No, it's not accurate. Medicare -- you know if you're looking at the average person out there, their health insurance costs have doubled in recent years. What we're looking at is 1,300 private health insurance companies who have thousands of plans in the last few years, the last couple of decades, what we have seen for every new doctor that's come on board -- we need doctors -- we have 25 health care bureaucrats and people all over this country know how hard it is to get the health insurance companies to pay them what they're supposed to be paying.

HATCH: And the worst health care bureaucrats that we have are the government health care bureaucrats...

SANDERS: I don't think so.

HATCH: ... that are running this system into the ground. And to be honest with you, anybody believes that the federal government is going to do better than the private health insurance competitive system is wrong. Now let me just make one other point.

We have 300 million people in this country -- they claim 47 million are not covered by health insurance -- now let's just be honest about it -- an awful lot of those people are people who could afford it but won't get it. Some qualify for the CHIP (ph) Bill or some qualify for Medicaid right now.

Now what they want to do is move into a Medicaid expansion, where they move more and more people into Medicaid when we're having a rough time paying for it now and doctors don't even want to take Medicaid patients because of the way the federal government is handling it. Look, Bernie, I have a lot of respect for you, but come on, you know the dog gone federal government is half the problem here.

SANDERS: Well look, it's not right -- well then you go back and you tell veterans in this country that we should disband the Veterans Administration, which is 100 percent government-run. Is that your suggestion?

HATCH: Well I'm not telling them that.

(CROSSTALK)

SANDERS: Wait a minute. That's a government-run program.

(CROSSTALK)

SANDERS: (INAUDIBLE) Medicare?

HATCH: There are things government can do.

SANDERS: Right.

HATCH: I don't think they're doing it as well as they should do. But to throw over the whole private sector approach...

(CROSSTALK)

HATCH: ... it is competitive...

(CROSSTALK)

HATCH: But to throw it over so that we can have a bunch of bureaucrats, nameless faces bureaucrats...

SANDERS: But nobody...

HATCH: ... getting between your doctor and you, it just isn't right.

SANDERS: First of all, nobody is talking about that, what people are talking about...

HATCH: Well, I'm talking about it.

SANDERS: Well, but we're talking -- no one is talking about a government run health care system. We're talking about...

HATCH: Well sure they are.

SANDERS: No, they're not. They're talking about a public option.

HATCH: (INAUDIBLE) call the public plan? What do you call that?

(CROSSTALK)

SANDERS: A public option -- a public option that will compete and give people the choice of whether they want a public plan or a private plan. Why are you afraid of that?

(CROSSTALK)

SANDERS: If the public plans are so much better, people will go into the private plans. If the public plans are more cost effective, more reasonable, people prefer a Medicare type program, they'll go into that. Why are you afraid of the competition?

HATCH: Not afraid at all, we know there would be unfair competition because the federal government has unlimited funds to carry on whatever it wants to carry on and it wouldn't take long -- companies have to pay taxes and meet certain federal and state requirements.

SANDERS: This is a level playing field, and I think it's interesting that the health insurance people who are spending a million dollars a day lobbying congress, putting huge amounts of money into campaign contributions are afraid of that competition. I think the American people are sick and tired of the private health insurance companies who have been ripping them off for years and they want to see some competition.

HATCH: Why don't you and I work on solving some of the private health insurance problems, I admit there are some that exist but they don't exist nearly as much as the federal government run program and federal government control.

LOU DOBBS, CNN ANCHOR: We're going to have to leave it, awaiting the outcome of the Sanders-Hatch resolution. We appreciate you both being with us, Senator Orrin Hatch and Senator Bernie Sanders, thank you, gentlemen.

(END VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT: Got to love a good debate. Senators Bernie Sanders and Orrin Hatch.

And joining me now with more on other stories that we're following tonight, is Ines Fere.

Ines, what do you have for us?

INES FERRE, CNN CORRESPONDENT: Thanks Lisa.

Tonight we're looking at disturbing new details about Phillip Garrido, the man accused of kidnapping and holding Jaycee Dugard for 18 years and fathering her two children. 15 years before kidnapping Jaycee Dugard, Garrido attacked a 25 year old woman named Katy Calloway Hall. That's according to court records obtained by CNN. In 1976 Garrido asked Hall for a ride in her car and then kidnapped her and brought her to a warehouse in Reno, Nevada where he raped her for more than five hours. Garrido said he captured another woman that day but she escaped. He served just 11 years of a 50-year sentence. Garrido was also charged with raping a 14-year-old girl in 1972, but a trial was never held because the victim refused to testify.

And San Diego Chargers linebacker Shawne Merriman was arrested yesterday and accused of choking and restraining his girlfriend, reality television star Tequila as she tried to leave his home. The NFL star is charged with two felonies, battery and false imprisonment. He was released from jail late Sunday morning. Merriman's attorney says his client commit no wrong doing and he was trying to stop his girlfriend from driving drunk. A police spokesman said deputies determine Ms. Tequila had been drinking, she denies that claim.

It's a working holiday weekend for some San Francisco area transportation crews. A crack was found in the steel link holding up the eastern cantilever section of the San Francisco Oakland Bay Bridge. The Bay Bridge was shut down Thursday night for a new section of roadway to be placed. The crack was discovered Saturday. A spokesman says a monumental effort is being made to finish the repair work, but the bridge may not open by tomorrow morning's rush hour. 280,000 vehicles travel the bridge daily.

And those are some of the stories that we have been following tonight. Lisa?

SYLVESTER: That's going to be a big headache. All right, thank you very much, Ines for that.

Coming up, medical malpractice adds millions to health care costs, so why aren't malpractice caps part of the health care overhaul? That's the topic of one of our face off debates tonight.

And the federal stimulus package was pushed through with great urgency, but has it created new jobs? That face-off next.

(COMMERCIAL BREAK)

SYLVESTER: There are signs the economy is improving but the country's unemployment rate remains high at 10.2 percent. President Obama promised his stimulus package would create hundreds of thousands of new jobs but is it working? That was the topic of a recent face off between Diana Roth, senior fellow at the Hudson Institute, and Lawrence Mishel. He is the president of the Economic Policy Institute. Mishel maintains that the stimulus plan is working and has created jobs. LAWRENCE MISHEL, ECONOMIC POLICY INSTITUTE: Because the stimulus plan injected around $90 billion of expenditure to the economy during the second quarter, it's doing about the same over the summer months. We know that they have provided fiscal relief to the states which actually prevented the states from layoffs and from cutting back vendors and we know that there were $13 billion that went social security recipients, an equal amount went to unemployment recipients, businesses got tax cuts, all of this went to actually slow down the economic decline, it didn't actually create job growth, but it did slow down job loss. We were losing jobs at 600,000 a month, and now we're losing them at 300,000. That's not a victory but it's a lot better off. This summer we expect that the economy will actually start shrinking, it's not as good as a rapidly growing economy, but that's the first step on stabilization and recovery.

SYLVESTER: Diana, we have roughly 13,000 jobs were lost in July and you say the stimulus plan is actually costing jobs in this country?

DIANA FURCHTGOTT-ROTH, HUDSON INSTITUTE: Exactly. It's costing jobs because before it was passed the white house said if we spent this $787 billion then unemployment wouldn't rise above 8 percent. Now it's 9.4 percent. And by some estimates it's 16 percent. That's 14 and a half million Americans out of work, millions more who are looking for full-time employment and Larry is actually saying it helped. Here's why it doesn't help, all these big spending plans, like the big stimulus chunk of money, the potentially $1 trillion health care plan, the $400 billion budget amounts, all this is going to have to be paid for. It's going to be paid for by tax increases. And the tax increases coming down the pipe make any small business discouraged from hiring workers. In January 1, 2011, the top tax rate's going to go up to 29.6 percent since the Bush tax cuts are going to expire. House Democrats wants a 5 percent surtax brig it up to about 45 percent. Then there's the 8 percent payroll tax on employers who do not provide the right kind of health insurance for their workers and there's the 2.5 percent tax on workers who don't get health insurance. All these taxes make it very discouraging for any employer to hire anyone and also for people to work. And that is why the stimulus is having a negative effect.

SYLVESTER: OK. Larry, you hear what Diana is saying, it basically boils down to businesses is going to be uncertain, they don't know where the economy is headed and the deficit is a big drag on the economy and making employers --

MISHEL: It's really hard to hear from anybody who favored the unregulated banked system that we have, the Bush tax cuts and all the policies that actually gave us this global recession to tell anybody how to do anything about how to run the economy. These potential tax increases that she's talking about aren't having an effect on the economy right now. Right now people actually have lower taxes on account of the stimulus, and that includes businesses. When you give $30 billion to social security recipients, they actually go out and spend that money.

ROTH: But they have been saving the money.

MISHEL: There's been a much better growth in consumption --

ROTH: It's been at an all-time high than in the mast 10 years.

MISHEL: That's irrelevant.

ROTH: If they went out and spent it, it would create jobs.

SYLVESTER: Diana, do you think there should be a second stimulus package, I know some people, including Larry, they say we need to spend more money here to stimulate the economy.

ROTH: What we need to do is take the stimulus money that has been passed and unspent which is billions of dollars, give it back to the American people in tax cuts so they can spend it themselves and stimulate the economy. That's what we need to do is put it in the hands of Americans and announce that taxes are not going to go up for the next couple of years, plus we're going to have a payroll tax cut to encourage employers to hire more workers. We should have a payroll tax cut rather than telling them they're going to have an 8 percent tax.

ROTH: I let you make your point, I'm going to make mine. Listen, there's already about $70 billion of tax cuts that will be in this economy by tend of September, including lower taxes for most workers and lower taxes for business. I have no idea what you're talking about. We tried the tax cut, tax cut, tax cut the way you wanted in the early 2000s and that ended one the worst recovery, the worst business cycle on record.

SYLVESTER: Larry, I want you to respond to this, Larry, 57 percent, there was a "USA Today" Gallup poll, 57 percent of Americans say the stimulus man has not worked and it might have made things worse. How do you respond to that? There seems to be at least some resistance to the first stimulus plan.

MISHEL: Well listen, you could understand that. We have been thrown into a really deep hole. We had 8.5 percent unemployment in March, even before the recovery package started to work at all. It's not easy to make the case that things have gotten worse at a slower rate, people don't see jobs, I understand that, they need a lot more help, I think that they should be angry at the people who threw us into this god-awful global recession and the one thing that's getting us to turn it around right now is in fact the recovery package it. It is working.

ROTH: Look at the cash for clunkers program, this was supposed to last through November 1, and the money was all used up after a week then they allocated more. This is no way to run a stimulus package.

MISHEL: We're actually seeing auto production increasing after the cash for clunkers, all the economic forecasters increased their rate of growth for the rest of the year. To say it didn't work is actually ignorance.

SYLVESTER: Diana, you get the final word. ROTH: With cash for clunkers it's typical of any administration's stimulus program, we destroyed a batch of good old cars and got people to go out and buy new ones so they're not going to be buying them next year. We might as well have destroyed a whole housing neighborhood and then built more and call it stimulus. We should give it to the American people and let them go out and spends it without the federal government spending with no end in sight.

SYLVESTER: OK. Well this has been a very stimulating debate but we're going to have to end it there. Diana, thanks very much and Larry, thanks for coming on the show with us. Thanks very much.

(END VIDEOTAPE)

SYLVESTER: And coming up at the top of the hour, John Roberts is sitting in for Campbell Brown.

John, what are you working on?

JOHN ROBERTS, CNN CORRESPONDENT: Also, what it's going to take to win the war in Afghanistan? Anderson Cooper joins us from the front lines there.

Also two big newsmakers tonight, former first lady Laura Bush and Whoopi Goldberg. All coming your way at the top of the hour.

SYLVESTER: All right. Thanks very much John.

And coming up, are malpractice lawsuits killing the health industry? We'll have debate and much more next.

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SYLVESTER: We have reported extensively on the skyrocketing costs of medical malpractice and the impact it's having on the health industry. Lou spoke to two medical experts on the practice of medical malpractice and why some doctors are practicing what could be called defensive medicine.

(BEGIN VIDEOTAPE)

LOU DOBBS, CNN ANCHOR: The Congressional Budget Office found that caps on medical malpractice lawsuits could save over $4 billion over the next decade. Are malpractice lawsuits destroying the health care system? That is the subject of our face-off debate tonight. Joining us, Dr. Jeffrey Segal, founder and CEO of Medical Justice and Alan Ripka, a medical malpractice attorney.

Good to have you both with us. In numbers, medical malpractice, and let's show these numbers, medical malpractice claims and insurance premiums make up just about 1 percent of total health care costs, but the A.M.A. estimates it's so called defensive medicine, a direct result of those malpractice lawsuits costing us $151 billion.

Let me start, if I may with you, Dr. Segal. What's your reaction? DR. JEFFREY SEGAL, MEDICAL JUSTICE: My reaction is that number $150 billion may actually be an underestimate. I can tell you that next year 50,000 doctors will receive a letter stating you've been sued. Once you've been sued that will change the doctor's behavior from then on. And what is the cost? The cost is anywhere two $100 billion to $200 billion of unnecessary test just to keep the doctor from sitting in the witness chair ever again. That amount of money would allow us to purchase a health insurance policy for every American and have some change left over.

DOBBS: Alan Ripka, your thoughts?

ALAN RIPKA, MEDICAL MALPRACTICE ATTORNEY: I completely disagree. When we talk about medicine, we're talking about saving lives. They're calling it defensive medicine but what it really is doing the appropriate tests so that doctors and nurses and health care providers can be check on all the possibilities that may be going wrong with the patient. They're not going to know unless they do those tests. The reason medical malpractice exists is because those tests aren't done and people die. You're not talking about death here. You're talking about money. Obviously lives are much more important.

DOBBS: All right. You couldn't quarrel with that, could you, Doctor?

SEGAL: I think patient safety is really important. Most of the tests being done provide absolutely zero value to the patient. They keep the doctor out of the witness chair. A small amount of testing will improve the patient's condition and a small amount of testing paradoxically will make the patient worse than when they started. By and large --

DOBBS: Could you just say testing could make the patient worse off?

SEGAL: Yes, just 1,000 percent sure that you've not missed anything. Once you stick a needle in the patient's body, anything could happen. The lung can drop, bleeding, infection, he list goes on and on.

DOBBS: Alan Ripka?

RIPKA: And obviously not sticking the needle into the person's body and not drawing that blood doesn't tell you whether or not the person has an infection or has a disease or something that would be detected in a lab or blood test. Where you're going with that, you're allowing someone to die so you don't have to pay for the blood test?

SEGAL: I would never argue, let's allow someone to die. Here we can deal with facts. For example, if a person has a minor head injury, they lose consciousness, go to the emergency room. Every doctor will order a ct scan. We can ask five basic questions to make sure the patient does not go home with a blood clot in the head. Today, in this country, every E.R. physician will scan every patient that came through. One E.R. doctor said I will scan people till they glow if it keeps me from going in front of a jury.

DOBBS: It sounds like a host of issues. I was talking with a doctor in Houston recently on the air. Who said that doctors right now are really getting out of the art of examination because they are force d in defensive medicine to run so many tests they're not carrying out examinations properly. What do you think of that, Alan first?

RIPKA: I think it shouldn't be called defensive medicine. It should be called appropriate medicine. These doctors who are being sued, they've deemed it defensive medicine to put a stigma on it. Doing a lot of tests to determine something is not necessarily inappropriate. Deciding which ones are appropriate and which ones are not are left for the medical community. And they're the ones who make those determinations. If they've determined that not doing certain tests is okay, they've caused the problem and not diagnosing the issue to begin with.

DOBBS: Doctor?

SEGAL: Well, legislation is being proposed. We're a member of an organization called Center for Health Transformation. Physicians would be held to be immune, given a safe harbor if they followed practice guidelines. Would plaintiff attorneys get behind that? If a doctor --

DOBBS: Would you, Alan?

RIPKA: Right now in every court of law I've practiced in, I try medical malpractice cases regularly, if a doctor does not what they call depart from the appropriate standard of care and the jury determines that, he or she is not responsible. So it's not about us lawyers getting on board with that. The courts have made that decision.

DOBBS: There's one lawyer who says absolutely there will be no cap of malpractice suits when, as we've been examining here in this broadcast and every country that we have examined, particularly in Europe, where there is universal health care, where there's a national health care system. There's no role for medical malpractice lawsuits. And those countries where it is, it's a minimum. What's your reaction to that?

SEGAL: That's the one thing we could emulate from other countries. We could adopt the British system. There's very little to be desired in the national health service. One thing they do right is lose or pay. They do have a professional liability system. But to the extent that a person brings a case. If they get it wrong, the loser has to pay.

DOBBS: That sounds fair. Alan Ripka?

RIPKA: Our system has advantages. Just because people do it other ways doesn't mean we have to adopt those ways.

DOBBS: By the way, no one is suggesting anybody has to. We're an egalitarian operation here. We want people to decide that.

RIPKA: Because there are no caps, let's say in New York, for example, these doctors are on guard, as they should be. There are consequences to actions in every livelihood. If you don't take care of what you're supposed to do properly, there could be a penalty. You may have to pay. You cannot value someone's pain and suffering and you cannot predetermine what the costs are going to be to keep that person alive and well and taken care of.

DOBBS: One could argue, could they not, Alan, that in other countries they value life and limb so highly that they would not attempt to put a price on it?

RIPKA: Well, they may not. Maybe in those countries they allow doctors, by paying doctors, I'm all for this, the money to do all the tests that need to be done and maybe medical malpractice isn't quite as prevalent because they are doing a great job at diagnosing, examining and treating patients that are sick.

SEGAL: Whoa, whoa, whoa, are you suggesting that other countries are better at patient safety than we are in the United States?

RIPKA: No. I'm simply saying if in fact doctors are being paid for certain testing that they may not be being paid for here, maybe we can get to the diagnosis.

DOBBS: I think you're both ready for opening arguments. We thank you very much for being with us and shedding some light and some insight into this. We appreciate it. Thank you very much doctor, thank you.

(END VIDEOTAPE)

SYLVESTER: All this week Lou will have much more on the heated health care debate as congress returns to work tomorrow and President Obama prepares to address a joint session of congress Wednesday night. And we will be right back. Stay with us.

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SYLVESTER: Now, a reminder to join Lou on the radio, Monday through Friday for the "Lou Dobbs Show." Go to loudobbs.com to find local listings.

Thanks for being with us tonight. Lou will be back tomorrow. For all of us here, good night from New York.

Next, John Roberts in for Campbell Brown.