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Lou Dobbs Tonight

Pushing Public Option; Good News, Bad News; Salary Slash; Swine Flu Fears; Illegal Immigration

Aired October 22, 2009 - 19:00   ET


LOU DOBBS, CNN ANCHOR: You're Reverend Jackson, Wolf. Thanks very much.

Breaking news on health care tonight -- Senate Democrats emerging from the White House, they're resurrecting the government health care plan, the so-called public option is back in business.

Also tonight, the Obama stimulus plan, hundreds of billions of dollars spent. We were told the massive spending would fix the ailing economy. Now, the government says it has done all it can do, yet Americans are still suffering.

Unemployment at an all-time high, home foreclosures persist, also at an all-time high.

And the White House pay czar cutting Wall Street salaries -- he says executives at the companies that took the most taxpayer bailout money are being targeted. Will it work? How tough is the plan? Is Wall Street getting off too easy?

Also, major swine flu concerns tonight, the potentially deadly virus spreading all over the country. What areas of the country have been hardest hit? What can you do to keep your family safe?

Also, three of the brightest medical minds on the swine flu join me to talk about the vaccine against the swine flu. How safe is that vaccine? How effective? Who should be taking it -- all of that, all of the day's news and much more, next.

ANNOUNCER: This is LOU DOBBS TONIGHT; news, debate and analysis for Thursday, October 22nd. Live from New York, Mr. Independent Lou Dobbs.

DOBBS: Good evening, everybody. Breaking news tonight -- it now looks as though Senate Democrats will not allow the public option to die. Sources now telling us that Senate Majority Leader Harry Reid is leaning toward inclusion of a government-run health care plan in the Senate health care legislation. Dana Bash reports now from the Capitol. Dana what is the latest?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: The latest is that two Democratic sources, Lou, are telling me that that is exactly the way the Senate majority leader is leaning right now, towards putting a public option in that Senate bill, but -- but, what it would have is an opt-out measure meaning that states, states around the country, all 50 states would be able to opt out of the public option, if they so choose.

Now this is something that has actually been gaining some traction among conservative Democrats in the Senate over the past couple of days and that really is the name of the game for the senator and for the White House right now and that is to make sure that there are enough Democrats to get to that magic number of 60 in order to actually pass a health care bill. So, what is going on right now is that that is being discussed.

Actually at the White House just a short while ago, there was a meeting called by the president to discuss this, whether or not this is the right way to go. And here is the reason why there is a big question mark right now. And that is because of the one Republican who has signed on to a Democratic plan, Olympia Snowe. Lou, she has made it very clear that she does not like this idea of a public plan, allowing states to opt out of it. She says it's just the wrong way to go.

She, of course, has advocated the idea of a so-called trigger no public option at all until down the road if other market reforms don't work. So that is I think what Democrats and the White House are grappling with, whether or not they go ahead and put a bill that has this public option allowing the states to opt out on the Senate floor and risk losing Olympia Snowe or not.

DOBBS: Dana, there seems to be a peculiar dynamic at work here. Yesterday, we see 13 Democrats cross party lines to vote against their leadership on the -- just about a quarter -- $250 billion of -- on health -- on Medicare and today we've got a public option. What is going on?

BASH: Well we don't have a public option yet and that's what I am being told is being underlined and underscored by these Democratic sources I'm talking to. There is no decision made yet and I'm told that there wasn't (ph) a firm decision at all made even at this meeting just a short while ago at the White House with the president. It is simply the way -- the way that Harry Reid, the Senate majority leader is leading.

Look, the White House in the Senate, leadership in the Senate, leadership certainly in the House, in fact, a majority of Democrats in the House they all want a public option. The question has always been whether or not they have the votes to pass it. And that is what they have been grappling with behind those closed doors over the past two weeks what to do and this has been a compromise idea that has sort of percolated to the top. But again, the question is whether or not they can do this, get the 60 votes and whether or not it's worth risking the one Republican that they know they had on board and that's Olympia Snowe.

DOBBS: All right, Dana thanks very much -- Dana Bash from Capitol Hill.

BASH: Thank you.

DOBBS: The hundreds of billions of stimulus dollars designed to jumpstart the economy to create and save jobs has done all it can, according to the top White House economic adviser, Christina Romer. Romer told a Joint Congressional Committee today that the almost $200 billion spent to date will not likely help grow the economy next year.


CHRISTINA ROMER, WHITE HOUSE ECONOMIC ADVISER: Most analysts predict that the fiscal stimulus will have its greatest impact on growth in the second and third quarters of 2009 and by mid 2010 fiscal stimulus will likely be contributing little to further growth.


DOBBS: Romer went on to say unemployment will remain high and that any effort to suspend the stimulus program would be misguided. Not surprisingly, more Americans are pessimistic about the economy and White House efforts to stimulate it. But it's certainly not all bad news. More people are beginning to think that the worst of the recession has passed -- Candy Crowley with our report.



CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT (voice-over): A week ago, Wall Street rang out a day above the 10,000 mark. There are economic predictions the final quarters of this year will show economic growth, chiming in now without celebration, the American people. For the first time since December the percentage of Americans who describe the economy as very poor has gone up to 42 percent.

On Main Street, forecasts of economic growth and Wall Street milestones do not speak as loudly as other figures. The jobless rate is still high. Some people are beginning to come to the end of their unemployment benefits and small businesses continue to struggle. The unknown is also a powerful thing. Martin Bailey once served as chairman of President Clinton's Council of Economic Advisers.

MARTIN BAILEY, BROOKINGS INSTITUTION: What I think many people are sensing is a fear that this -- this recovery may not be as strong as the typical one, and in fact, may be more like a jobless recovery.

CROWLEY: Overall, the latest CNN/Opinion Research Corporation poll shows 84 percent of Americans think the economy is either poor or very poor. In the glass half-full column, more than two-thirds believe the worst is over and the economy has stabilized or is improving.

UNIDENTIFIED MALE: The main thing that makes it better is that we've sort of taken the great depression off the table.

CROWLEY: So far, the public's assessment of the economy does not seem to be taking much of a toll on the president's policies.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: There's no question that the steps we've taken have improved the overall climate for small business across the country. But there's also no question that we have got a long way to go.

CROWLEY: In general, Americans seem to share that view. Fifty- six percent say the president's policies have or will improve the economy. In short, beyond Wall Street, outside the wonky world of economic predictors, most Americans believe the president has made things better, the worst is over, but increasing numbers say it is still very bad out there.

Candy Crowley, CNN, Washington.


DOBBS: And the president's overall approval rating continues to fall. According to Gallup, the president's job approval slipped to 53 percent in the third quarter in office. That is down sharply from 62 percent the previous quarter. In fact, that nine-point decline is the largest ever measured for a president in the same time period and that dates back to 1953.

The administration's pay czar today officially announced plans to cut the salaries of 25 top executives at seven firms that received exceptional amounts of government bailout money. Kenneth Feinberg (ph) said those executives will see their pay slashed an average of 90 percent from last year. And the Federal Reserve will now oversee bank compensation to make sure employees aren't able to put banks at risk by taking large financial gambles.

Dan Lothian has our report from the White House now. Dan, how is the president reacting to the pay czar's plan?

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, Lou, the president praised the Treasury Department in particular, Ken Feinberg (ph) for what he said was striking a balance between protecting the taxpayers while at the same time helping to stabilize the financial system. You know, the president has been saying all along that this kind of excessive risk-taking on Wall Street should not be rewarded. So, what we saw today was in direct correlation to that and to public pressure.


OBAMA: I've always believed that our system of free enterprise works best when it rewards hard work. This is America. We don't disparage wealth. We don't begrudge anybody for doing well. We believe in success, but it does offend our values when executives of big financial firms, firms that are struggling, pay themselves huge bonuses, even as they continue to rely on taxpayer assistance to stay afloat.


LOTHIAN: Now, President Obama says that much more needs to be done and he is calling on Congress to come up with legislation that will give shareholders a say in executive pay, Lou.

DOBBS: Dan, any indication that there will be any problem in cutting the pay of those top executives?

LOTHIAN: Well no, they don't really have a choice. I mean these are companies that right now have received the billions of dollars in this TARP money and until they get out from under that, they have no choice. They have to cut the pay of these executives.

Now the question is you know will this cause some of these executives to go elsewhere? That is the complaint that you are hearing on Wall Street. That these are people who are used to making tens of millions of dollars and don't like their pay being cut. What the White House response to that is simply that hey, listen, they wouldn't even have a bank to be working at if it weren't for the taxpayer money in the first place, so they should be thankful for that.

DOBBS: We will see the depth of their gratitude. Thanks very much, Dan.

LOTHIAN: That's right.

DOBBS: Dan Lothian from the White House.

Several senators today questioned the number of czars now advising the president. There are more than 30 such czars in the Obama administration -- the Homeland and Governmental Affairs Committee today hearing testimony on the right of the president to appoint policy advisers who are not subject to congressional approval.

Up next here, a new poll finds more and more Americans fed up with illegal immigration. They want action. The Obama administration still supports unconditional amnesty.

And the alarming spread of swine flu taking a heavy toll among children -- we will have a special report and we will ask a panel of leading medical experts whether anything can be done to control the outbreak. What we should be doing to protect our families.


DOBBS: Deadly drug cartel violence reaching a disturbing new milestone in Juarez, Mexico, just across the border from El Paso, Texas. There have been more than 2,000 drug-related killings in the city so far this year. That's 400 more murders than in all of last year, which was a record year. Juarez is a city of 1.5 million people. The surge in drug cartel murders in Mexico raising serious concerns in the United States, as more of that violence spills across the border into this country.

The Justice Department today said it struck what it calls a significant blow to the U.S. operations of one of the dangerous Mexican drug cartels. Attorney General Eric Holder announcing that over the past two days, federal and local authorities have arrested more than 300 people in 19 states, members of Mexico's la familial (ph) drug cartel. These latest raids the result of a four-year-long investigation and in that time authorities seized more than $32 million in cash, 2,700 pounds of methamphetamines, 2,000 kilograms of cocaine, 16,000 pounds of marijuana, 29 pounds of heroin.

Nearly 50 members of a drug-dealing street gang were arrested today in a series of raids in South Los Angeles. More than 1,100 FBI agents and police officers hit 47 different locations in the predawn raid. The action, aimed at the rolling 40 Street Gang (ph), one of the most violent gangs in Los Angeles. Authorities have been cracking down on street gangs in southern California. More than 500 people have been arrested just since May in the anti-gang sweeps.

Turning to the safety of our nation's food supply -- the government wants sweeping new powers that would overhaul the country's food safety system. A Senate bill would give the FDA mandatory food recall authority, step up food facility inspections, and issue new rules for imported foods, like fresh produce. The United States has been hit by a series of serious food scares in recent years.

An estimated 5,000 people die every year from food-borne illnesses. No official estimates yet on how much the bill would cost, but the Bush administration devastated the agency and cut its budget significantly over an eight-year period.

We have reported extensively on the widespread outbreaks of swine flu and the chaos caused by shortages of vaccine. States across the country struggling now to fight the potentially deadly virus, and health officials have had little success staying ahead of the spreading crisis -- Kitty Pilgrim reports.


KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Since the beginning of the school year, swine flu has spread rapidly across the country. It is now widespread in nearly all but a handful of states.

DR. ANNE SCHUCHAT, CDC: There's a couple of places in the southeastern part of the U.S. where things look like they are downward trending. In most other areas, it's upward trending, and so I think it's too early for us to know, you know, whether those downward trends will be sustained.

PILGRIM: For the past two flu seasons, the number of people who sought medical help for influenza was relatively constant this time of year. This year there has been a distinct spike. The CDC says 99 percent of current flu cases are reported to be swine flu.

The childhood death rate is alarming, even though this flu season is just starting. Eighty-six children have died so far this year from swine flu, compared to three years ago when it was 46 childhood deaths due to seasonal flu, 78 the following year and 88 last year. Dr. Paul Offit is a pediatrician at Children's Hospital of Philadelphia.

DR. PAUL OFFIT, CHILDREN'S HOSPITAL OF PHILADELPHIA: This is the winter virus. It spreads much more easily during the winter because during -- because the virus does much better at lower temperatures and lower humidity, so you know, we can only expect more deaths.

PILGRIM: The CDC will not predict expected death rates for this year. However, a report to the president by a scientific advisory panel is much more straightforward. The report, published in August, says a dire outbreak is plausible, saying swine flu could "produce infection of 30 to 50 percent of the U.S. population this fall and winter, 1.8 million hospitalizations, 300,000 in intensive care and 30,000 to 90,000 deaths, concentrated among children and young adults." If the high-end death rate proves to be accurate, swine flu could prove to be much more deadly than seasonal flu, which the CDC says causes 36,000 deaths a year, mainly among people over the age of 65.


PILGRIM: Now, the CDC recently said it is looking at historical data to determine if there could be two waves of this disease, swine flu, one now and another in the spring. They say nobody can predict what is going to happen but they are taking that possibility very seriously. Lou?

DOBBS: And that's one of the issues that I will be taking up with our panel of physicians dealing with the swine flu outbreak as to where the peaks are and what is happening. Because, if we look at the outside of that -- let's hope it's the outside of that projection -- at 90,000 deaths, along with the seasonal flu, now we are talking about 125, 130,000 people dying through this year.

PILGRIM: Sure. The cumulative numbers are really daunting.

DOBBS: Kitty, thank you very much -- Kitty Pilgrim.

The government will now release more respirators from the national stockpile to help satisfy what is overwhelming demand now because of the swine flu. The move comes after we reported last night on the nationwide shortage and the fact that most of that equipment is manufactured overseas, most of it in China.

Manufacturers of surgical masks and respirators have been running at full capacity. Most have depleted all of their supplies. The CDC released 25 million of the masks used by health care workers back in April.

Coming up here next, the swine flu virus spreading at an alarming rate -- public health officials say it is now in nearly every state. We will be talking with leading infectious disease experts about the rapid spread of the virus and we'll tell you what the majority of Americans say about illegal immigration now. We'll have the results of CNN newest poll.


DOBBS: New evidence that the American public wants action on the illegal immigration crisis in this country. A new CNN poll finds the vast majority of the American public wants illegal immigration stopped and most want illegal immigrants now in the country to leave -- Lisa Sylvester with our report.

(BEGIN VIDEOTAPE) LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Three quarters of Americans now say the number of illegal immigrants in the country should be decreased, that according to a new CNN/Opinion Research poll. That is the highest number in four years since CNN started asking the question. Thirty-seven percent or more than one in three Americans say illegal immigrants should all be deported. That number is up 11 percentage points since last year. What's changed?

KEATING HOLLAND, CNN POLLING DIRECTOR: I'm fairly confident that it has a lot to do with the economy. When economic conditions are good, people are much more willing to share the pie, so to speak. The bigger the pie, the easier it is to share. When the pie starts to shrink, people start scrapping for every little bit of it.

SYLVESTER: People over 50, those who live in rural and suburban areas and in the Midwest and South feel most strongly that illegal immigrants should be deported, but groups advocating on behalf of illegal immigrants say deporting at least 12 million illegal immigrants is not realistic and would tear apart families. Bishop Minerva Carcano is with the United Methodist Church and wants comprehensive immigration reform, which would allow those here illegally to apply for legal status while controlling the influx of new illegal immigrants.

MINERVA CARCANO, UNITED METHODIST CHURCH: Comprehensive immigration needs to be a priority. We can't continue with an economy that depends on the immigrants and oppresses the immigrant.

SYLVESTER: But Mark Krikorian with the Center for Immigration Studies, which favors tougher immigration law, says if anything, these polling numbers show that comprehensive immigration reform is going to be a tough sell.

MARK KRIKORIAN, CENTER FOR IMMIGRATION STUDIES: Clearly, it's not happening any time soon and these poll results really just underline that reality.


SYLVESTER: But President Obama still is insisting and committed to signing a comprehensive immigration bill, but with Congress tied up on health care that's not going to happen this year and next year will be even tougher politically for Democrats to get the votes they need because of the midterm elections. Lou?

DOBBS: All right. These are really very strong numbers against illegal immigration. It will be interesting to see what the impact of this poll is on the thinking, particularly on Capitol Hill and the House of Representatives. Thanks very much, Lisa. Lisa Sylvester.

The consequences of the rather cozy relationship between Wall Street and Washington -- Andrew Ross Sorkin (ph), the author of the important new book "Too Big To Fail" will be here and will the government's relaxation of marijuana laws in California open flood gates to illegal drug use in this country? That is the subject of our "Face off" debate here tonight. And the swine flu spreading all over the country, 86 children have already died. Is our government doing enough to protect you and me and our families? We'll be right back.


ANNOUNCER: Here again, Mr. Independent Lou Dobbs.

DOBBS: The swine flu virus is now spreading at an alarming rate, taking a heavy toll among children. The Centers for Disease Control reports the swine flu is now in every state. It is widespread in 41 states.

Joining me now, Dr. Yoko Furuya who is the Medical Director of Infection Prevention and Control at New York Presbyterian Hospital -- good to have you with us, Doctor -- Dr. Gary Kalkut who is chief medical officer at New York's Montefiore (ph) Hospital -- good to have you with us -- and Dr. Donald Low who is Medical Director of the Public Health Lab at the Toronto Ontario Agency for Health Protection and Promotion, one of the world's leading infectious disease experts. It is good to have you back with us, Doctor. Let me begin with something that Janet Napolitano said to me earlier this week about the controversy regarding the lack of vaccines in the United States, if we could, this is Secretary Napolitano.


JANET NAPOLITANO, HOMELAND SECURITY SECRETARY: This is a delay. It is not a shortage. There ultimately is going to be vaccine for everyone who wants to be vaccinated and we think we will be caught up by the manufacturers will be caught up somewhere around December.


DOBBS: Dr. Furuya, do you agree?

DR. YOKO FURUYA, NEW YORK, MEDICAL DIRECTOR OF INFECTION PREVENTION AND CONTROL: Yes, I think that the delay and the vaccine shortage is certainly a concern and we are just waiting to hear when we are going to get some, but ...

DOBBS: It is sort of interesting government-speak, if I may say, a delay results in a shortage, doesn't it?


Are you at all concerned after listening to the homeland security secretary?

DR. GARY KALKUT, MONTEFIORE HOSPITAL, SENIOR VICE PRESIDENT: I think the effort to produce the H1N1 vaccine has really been remarkable over time. The vaccine, the virus started in the United States in April of '09. So we are talking about six months, five to six months. The groups that need to be vaccinated in the United States are 159 million people. The secretary says that vaccine will be available by December. It is slowly being released over time but it is obviously a concern.

DOBBS: All right. Dr. Lowe in Canada, do you have plenty of a vaccine ready? I know you're -- the disease is spreading somewhat slower than here.

DONALD LOW, MEDICAL DIRECTOR, TORONTO ONTARIO AGENCY FOR HEALTH PROTECTION AND PROMOTION: Well, we are just starting. The last week, we have seen a real upswing, and so our vaccination program is going to start, you know, on Monday next week. We are fortunate in that federal government bought adjuvented (ph) vaccine, so were getting four times the amount of the vaccine from the same hit. That is a real advantage, because this is a difficult virus to grow in eggs and that has been part of the reason that there hasn't been a lot of vaccine around.

DOBBS: Why didn't we do that?

FURUYA: I think that there was some concern initially about the safety of adjuvented vaccine and that's why the decision was made.

DOBBS: Can you say that little slower for those of us slower so we can sort have keep up with these fancy medical terms.

FURUYA: Sure. So vaccines with adjuvents or adjuvented vaccine are vaccines that have extra materials added to it in order to boost the efficacy and effectiveness of the vaccines. So, you don't have to have quite as much of the virus strain material in there in order to get immunity.

DOBBS: Now, one of the concerns in this country, as all of you know, were saying, a large number of people who are not sure -- they're going to get their children the vaccine, they are not sure -- they will take it themselves because of concerns about the safety of the vaccine. Suggestions, Dr Low.

LOW: More creating some element of the vaccine.

DOBBS: Are these concerns bona fide, first of all?

KALKUT: I think you have to think about, when you start, about the potential lethality of flu. In the United States, 36,000 people die every year from influenza. That is potentially preventable in many people with the vaccine, the seasonal vaccine. The H1N1 vaccine is developed in the same way as the seasonal vaccine, same technique, technique that's been used for about 60 years to develop seasonal vaccines. In fact, next year it will be in the seasonal vaccine, we just couldn't get it ready for this year. Kids are at particular risk, pregnant women are at risk to not take the vaccine I think is a tough decision to make.

DOBBS: A tough decision, the risk reward.

KALKUT: Right.

DOBBS: But in assessing the risk, how much risk is there, Dr. Low, in your judgment in this vaccine? LOW: Oh, I think the vaccine is completely safe for this is a vaccine that has been noted has been used for decades now and it's been looked at from every angle and shown to be a safe and effective vaccine which protects you against what can be a disease that can make you very sick and sometimes kill.

DOBBS: Now, both of you are -- your hospitals are waiting for the vaccine. Have you received Dr. Furuya, any indication when you are going to have it?

FURUYA: We really haven't, I think we are waiting to hear every day and we don't really have much information.

KALKUT: The same for us. We are in contact with the New York City department of healthily distribute it in the city every day and I don't have a firm date when we will get the inject able vaccine. We have small amounts of the intranasal vaccine.

DOBBS: What should we expect, Dr. Low, and I would like each of you to address this as best you can, of -- what should we expect as the peak here in the swine -- with the swine flu outbreak? In New York, across the country, as we just reported, widespread outbreak in 41 states. Dr. Low, what should we expect as we progress through the season here?

LOW: We are going to be looking at some tough times over about the next four weeks. That is when we are going to see -- probably we will see the peak in the United States in a couple of weeks and then we will start to be on the downside of it. But -- and that's the question is will the vaccine be out in time before the major part of the wave has gone through?

DOBBS: That has got to disturb you deeply and assume you agree with Dr. Low about the peak, but I mean, we can't possibly -- it takes what, two weeks for the vaccine to be effective right?

KALKUT: Two weeks to develop immunity after getting the vaccine.

DOBBS: So, we are going to miss -- I'm sorry, doctor?

LOW: Lou, I think the important point to make, the CDC is making this point as we have good anti-viral drugs thought that we should be using to treat patient that are high-risk, that are hospitalized, patients that aren't getting better. I think what happened in the first wave, there was this reluctance not to use these drugs because we worry about resistance that hasn't been the problem.

DOBBS: Tamiflu? The CDC telling our pharmacist to Dr. Furuya to just stretch it, to compound so that the vaccine will be available to more children, the highest risk for it -- is there enough to be your best assessment here, as we have to wrap up, is there enough Tamiflu available in this country for what we need?

FURUYA: We hope there's enough Tamiflu. I think that right now, it seems like we are being told that there is a good supply of it and we will just have to see, but I do think it's important for people to seek medical care early and get the opportunity to get treated with Tamiflu when it's really important.

KALKUT: Most people who get the flu don't need to be tested for it and don't need Tamiflu. There are certain risk groups you just mentioned, with our children, clearly one that does if it's used according to the guidelines, certainly in our hospital, we have enough Tamiflu and there is reserves, city, state and federal level that could be released if there was a shortage locally.

DOBBS: So, we have stockpiles that are available? People, and again this is what I want to get to as we wrap up, families with young children, if they are symptomatic, they need to get to the doctor and get an anti-viral, even if there is no vaccine, correct?

FURUYA: Yes, again, certain risk groups are, especially younger children, children under the age of two, children with asthma need to seek medical care if they are sick and get treated early.

DOBBS: I'm kind of partial to those kids. Dr. Low, your final thought on this?

LOW: No, I think that's the message out there is people have to be aware that we do have some good drugs to treat this, because I'm afraid, you know, you may be seeing a lot of more sick people before the vaccine is available, so we should be aware there are drugs out there that we can use to treat these patients with.

DOBBS: All right. You get the last word, Dr. Kalkut.

KALKUT: Thank you. There are clear guidelines out there for who to treat and how to treat. Tamiflu is an effective drug, has a low toxicity profile. I think use appropriately in risk group patients should do well.

DOBBS: Doctors, I thank you all for being here and I appreciate it. And I know everybody watching and listening appreciates it. Thank you.

KALKUT: Thank you.

FURUYA: Thank you.

DOBBS: Up next, has the justice department's ruling on marijuana undermined the nation's war on drugs? A panel of medical experts joins us and political advocates.

Also, how Wall Street in Washington work to save themselves. Andrew Ross Sorkin, the author of the important new book "Too Big to Fail," is that American, too big to fail? Doesn't sound very capitalistic, does it?

We will be right back.


DOBBS: My next guest is the author of a provocative and I think important new book, "Too Big To Fail," the inside story of how Wall Street and Washington fought to save the financial system and themselves. Andrew Ross Sorkin, financial writer, New York times," joins me now. I love the subtitle and themselves.

ANDREW ROSS SORKIN, AUTHOR, TOO BIG TO FAIL: It is as much about really and themselves as it is about the system. And you know, when you think about "Too Big To Fail," you think about the institution but it is really about people who frankly, at that point, thought that day were "Too Big To Fail".

DOBBS: Let's get to the order of the day.


DOBBS: And that is compensation. The Pay Czar has, Mr. Fineberg, has decided that it is absolutely essential that these seven banks with 25 executives each be the standard bearers for rational, not excessive compensation. Is this the way to go?

SORKIN: You know, it sends the right signal to the extent that it fulfills the blood lust that the public has for Wall Street at the moment, but it also creates this conundrum, which is we're shareholders in this companies as taxpayers now. And so, what you worry about is that to the extent these are talented people inside these firms, they will going to get plucked out and firms across the street that can still pay whatever bonuses they want are going to take our best people. So, that is actually a worry that I think is real.

DOBBS: So unintended consequences and perhaps the problem with calling them unintended consequences, it's a likely outcome that is quite visible.

SORKIN: But the good news -- the good news by the way is the other announcement by the federal reserve today, which is important, which is that they are actually going to be monitoring for the first time compensation in a real way and they will be minding the store. And that may actually take a little bit of pressure off of this issue. The idea you will be able to walk across the street and go to Goldman Sachs, for example, and make a bajillion dollars and make it more difficult.

DOBBS: I hate to be constrained in my excitement and enthusiasm about the Fed's oversight, but weren't they in charge before?

SORKIN: They were. So, I don't want to get -- don't get yourself too excited.

DOBBS: I'm holding myself back. Your eat one who seems to be ex -- exuberant.

SORKIN: I'm hopeful that some lessons were learned and you know, you can look at Tim Guyer (ph) and say he was at the scene of the crime the first time but I'm hoping that there were some lessons learned and those should be in a forward now.

DOBBS: And there are some people who believed there should be investigation of the scene.

SORKIN: Yes, and frankly they probably should.


DOBBS: And there -- I have got the -- I don't know if we have this, but I have to show you this license plate, which is sort of the essence of the thing. Can we see this? I'm asking, this license plate reads Too Big To Fail on a obviously on the back of a very fancy car. I mean, my God, one of the things you look at these seven banks that the pay czar's elected. These are monstrous institutions, for the most part, if it's too big to fail it's too damn big, right?

SORKIN: And that is clearly the problem and by the way, not some it too big to fail, now we have firms too too big to fail, because we have mushed a lot of these guys together and they are still a tinnier element, inside all these firms, you look at the driver's license -- that license plate, it was done as a joke by a banker, actually, at Morgan Stanley, but there is an element where people aren't appreciating the responsibilities beyond to the shareholder but to the community.

DOBBS: And what has happened to the interest on the part of the regulators? We have an SEC that was derelict in nearly every -- every aspect of its responsibilities.

SORKIN: Right.

DOBBS: You mentioned the Federal Reserve, all of the other regulatory agencies, or whether futures trading, who go through the list?

SORKIN: Well, that's part of the problem with this, it's alphabet soup of regulators and no - none of them were minding the store. My only hope, actually, having now lived through this as a writer for the past year, is that we actually have a systemic - we have one person or one group that's actually following what's happening. Yes, you know, there was an argument to be made that you get competition between these regulatory agencies, but instead everybody looked the other way and nobody took responsibility.

DOBBS: And it seems that markets always have a way of outwitting regulators no matter what.

SORKIN: And that's, by the way, what I think we need to worry about with this new compensation scheme, because you're going to get big compensation packages but now you're going to get them in stock.

DOBBS: Yes. And restricted stock and somewhat - somewhat, how - how can we said that (ph)? It could be managed too.

SORKIN: It could be managed. But I'll tell you one thing on comp, which is important. You know, Richard Fold, who was the CEO of Lehman Brothers, had more skin in the game than just about anybody on the planet. He had $1 billion of stock and he rode it all the way down to $65,000, when it was all said and done. So the argument on comp that somehow if you have the skin in the game you're going to make all the right decisions doesn't always hold true.

DOBBS: Yes. My argument has never been skin in the game. My argument has always been what form that compensation takes and how - what the true alignment is with both the ownership and the employees. By the way, the employees I've always considered to be management as well.


DOBBS: You outlined what you think are some of the steps to avoid a repetition of history. Very quickly, just a couple of thoughts that you think are primary.

SORKIN: I think the most important thing we need to do is increase what's called capital standards, which means you're going to have a certain amount of money in the bank before you lend it out, and we let those standards get to a very low point. There was zero cushion. And, by the way, if we increase the standard, all those profits you're hearing about the banks making these days that they're giving out as bonuses, they have to put back in the bank and that would make the system less risky.

DOBBS: Glass-Steagall.

SORKIN: That's one of them. That means - that means breaking the commercial banks, the investment banks, and that means taking the casino outside of the bank, and that's important.

DOBBS: As you can tell, Andrew Ross Sorkin's new book is something I could talk about here for quite some time. I've got producers yelling at me.

SORKIN: Sorry.

DOBBS: Listen, we're talking about that - that business stuff, and that's (INAUDIBLE) stuff. "Too Big to Fail." Good to have you with us.

SORKIN: Thank you so much. Appreciate it.

DOBBS: Up next, the Obama administration's new rules on pot - what they mean for the war on drugs and all of the good folks in California. We'll be right back.


DOBBS: The Justice Department this week announced it will not prosecute pot smokers and dealers who aren't breaking state medical marijuana laws, but does that new policy weaken the country's war on drugs?

Joining me now, retired Army general Barry McCaffrey. General McCaffrey served as drug czar under President Clinton. He's now an adjunct professor at the US Military Academy. Good to have you with us, General. Tim Lynch, director of the Project on Criminal Justice at the Cato Institute. Good to have you with us. And Professor Peter Moscos, John Jay College of Criminal Justice in New York City. Good to have you with us, Professor.

Let's - let's turn to the issue of relaxing drug enforcement for medical marijuana users. I mean, is there a real and present danger that that could weaken the effort to fight drug use?

PROF. PETER MOSKOS, JOHN JAY COLLEGE: It's going to strengthen the effort to fight drug use. I mean, I do hope it's an effort to - to fight the war on drugs, because I'm against the war on drugs. The idea that the federal government is going against the will being of the people and threatening and arresting dying cancer patients, I mean, it's - it's indefensible, that action. The people want something, the current policies don't work. We can better lower drug use through regulation, and then California is going in the right direction.

DOBBS: OK. Do you agree?

TIM LYNCH, CATO INSTITUTE: Yes, I do. I mean, basically, Lou, some states have changed their marijuana laws to allow patients who are suffering from cancer and AIDS, people who want to use marijuana for medical reasons. They're exempt from the law, but there's been a clash between the laws of the state governments and the federal governments.

The federal government has still come in and said we're going to threaten people with federal prosecution, bring them into federal court, and what the memo does this week is change federal policy, and basically Attorney General Eric Holder is saying, look, for people - genuine patients, people who are suffering from cancer, suffering from AIDS, these people are now off-limits to the federal prosecutors. It's a very small step in the direction of reform.

DOBBS: General, they made perfect sense for someone suffering from any one of these diseases to have that opportunity. What's your reaction?

GEN. BARRY MCCAFFREY (RET.), US ARMY: I think there's a bit of intellectual dishonesty in the entire thing. There is zero truth to the fact that the drug enforcement administration or any federal law enforcement ever threatened caregivers or individual patients. That's fantasy. It doesn't happen.

More importantly, if we were talking about medical use of marijuana or THC or cannabinoids, I'd be 100 percent for it, but in Los Angeles, we're talking about 900 pot shops open all over the city, and the caregivers are Mexican criminal organizations with giant gross. That's a lot of the money that's murdered 14,000 people in Mexico.

It's legitimate to debate the legalization of marijuana. Congress can change the law, but, in the meantime, two Supreme Court decisions affirmed there is no diminution of the federal government's responsibility to uphold the Controlled Substance Act nor any minimization of their ability to restrict interstate commerce of marijuana. This is complete nonsense.

And by the way, Lou, Marinol, which is approved for medical use, is available in pharmacies. A doctor can write a prescription for it right now. It's synthetic cannabinoids. It's available for patients, not much used. It's not a very good drug.

DOBBS: What do you think?

MOSKOS: Look, as a former police officer - I mean, me and my - I'm a part of an organization called Law Enforcement Against Prohibition. We know first hand how bad drugs are. We're not trying to create this drug free for all. Earlier - and in your show you reported on the FBI raiding - conducting - arresting gang members in L.A. I bet you not one of those gang members was running a dispensary.

L.A. wants to reduce the number of dispensaries? Great. That's what regulation is all about. I know as a cop that it's a lot easier to close a store than it is to close an illegal drug shop on the corner with guys hanging out. That's what's hard to do. Better to get it under our control so we can regulate selling, we can prevent sales to minors - do all the things that - that bar owners and tobacco sellers do. They're not shooting each other.

DOBBS: And the Cato position - the Libertarian position is that this should be a matter of individual choice without - without regulation.

LYNCH: Yes. I mean, when it comes to somebody's health, they should be making decisions in consultation with their doctor, not with bureaucrats in Washington DC. But I have to go back to something General McCaffrey said. After California changed its laws to allow the medical use of marijuana, he was the drug czar at the time, and he came in taking a very hard line.

The Clinton administration's position was that they were going to threaten doctors simply for discussing the pros and cons of using marijuana with their patients. Now, this was...

MCCAFFREY: Oh, that's nonsense.

LYNCH: ... fought - this was fought in the courts, and his policy was declared illegal and unconstitutional for violating the free speech of doctors and interfering with the doctor-patient relationship.

MCCAFFREY: Oh, that's all nonsense.

LYNCH: This was ruled by the 9th Circuit Court of Appeals in a case called Conant - C-O-N-A-N-T.

DOBBS: In the ninth circuit? It's true?

LYNCH: Yes it did (ph). DOBBS: All right, General.

MCCAFFREY: There - there's no question the Supreme Court's ruled on this twice - and by the way, Congress passes the laws, not the Department of Justice. The DOJ implements them.

Look, the bottom line is the American Medical Association has never supported use of smoked medical marijuana, neither has the Food and Drug Administration. There's hundreds of research projects on it. I think the door is wide open to any use of cannabinoids, any - any possible use that does not actually help MS...

DOBBS: General, thank you very much. We got just a minute here. I want to give - you get the last word.

MOSKOS: There's no sign that regulating drug use does anything but - but decrease deaths and decrease usage rates. The question - there - there are millions of Americans smoking marijuana.

DOBBS: Now you're talking about beyond marijuana. You're saying drug use, period.

MOSKOS: But let's - let's just stick with marijuana for now. The question now...

DOBBS: Well now, let's stick with what I just asked you. Are you talking about marijuana? Are you talking about all drugs?

MOSKOS: If you want, I can talk about all drugs. I believe in regulating drugs.

DOBBS: I'm asking what is your intent as you made that statement, are you talking about all drugs being unregulated?

MOSKOS: Currently all illegal drugs are unregulated, and that - that's horrible. It's horrible for cities, it's horrible for lives.

DOBBS: All right. We thank you, gentlemen, for being with us. Appreciate it.

MOSKOS: Thanks.

DOBBS: Thank you. Thank you, General.


DOBBS: Up to the top of the hour none other than Campbell Brown. Campbell.


Tonight we are just getting in details of a pretty incredible story about a Northwest Airlines jet that overshot the Minneapolis airport by 150 miles. Its pilots apparently failed to make radio contact with controllers for over an hour. Well, now federal officials are trying to find out what was going on with the crew. We're going to have a whole lot more on that coming up in just a moment.

We're also just a little over an hour away from "LATINO IN AMERICA." Soledad O'Brien, John Leguizamo and Sheila E are all going to be here and answer your questions about issues effecting Latinos and all of us - Lou.

DOBBS: Look forward to it. Thank you, Campbell.

And we'll be right back.


DOBBS: A reminder to join me on the radio Monday through Fridays for the Lou Dobbs Show, 2:00 to 4:00 p.m. each afternoon on WOR, 710 Radio in New York, and please go to to get the local listings in your area for the show, sign up for our free broadcast - or free podcast.

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Thanks for being with us tonight. Join us here tomorrow, and for all of us, we thank you for watching. Good night from New York.

Up next, Campbell Brown.

ANNOUNCER: CNN PRIMETIME begins right now.