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Lou Dobbs This Week
More Concerns about the Bailout; Both Campaigns Try to Capitalize on Debate
Aired September 27, 2008 - 19:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LOU DOBBS, HOST: Tonight: Lawmakers on Capitol Hill are still working on that massive Wall Street bailout. Republicans now say that they will only support measures that directly affect the financial crisis.
And tonight: Rising concern that this bailout of Wall Street would benefit foreign banks, banks blaming the United States for the crisis, three of the world's leading economic thinkers join me here tonight.
And: The Obama and McCain campaigns both on the offensive after last night's debate. Both campaigns -- believe it or not -- are claiming victory in the first presidential debate. We'll be cutting through most of the partisanship, most of the spin and a lot of the blah there. We'll be joined with three of the sharpest political minds in the country.
All of that and all the day's news and much more from an independent perspective: straight ahead here tonight.
ANNOUNCER: This is a special edition of LOU DOBBS THIS WEEK: News, debate, and opinion.
Here now: Lou Dobbs.
DOBBS: Good evening, everybody.
Tense negotiations on Capitol Hill tonight as lawmakers are struggling to complete their work on what would be a $700 billion bailout of Wall Street. House Republicans say they will not be held to any artificial deadlines, House Minority Leader John Boehner, in fact, saying, quote, "We should not be bailing out Wall Street on the backs of American taxpayers."
House Speaker Nancy Pelosi said lawmakers won't leave Washington until legislation is passed, nonetheless.
Brianna Keilar has our report from Capitol Hill -- Brianna.
BRIANNA KEILAR, CNN CORRESPONDENT: Lou, negotiations continuing here on Capitol Hill on the phone, in person, between the four key players in Congress -- the Democrat and Republican from each of the House and the Senate, and Treasury Secretary Henry Paulson.
We've heard some optimism from the Senate Republican negotiator who says he's looking toward an agreement sometime this weekend. We heard that as well from House Speaker Nancy Pelosi. She actually said there was a possibility of a vote on Sunday, perhaps Monday. But you really need to listen to those House Republicans, who have not jumped on board with this $700 billion bailout, using taxpayer funds. What they would like to see instead of that is to have some of this bailout funded instead by private funds. What they would like is corporations buying government-backed insurance so that it's not just taxpayer funds, it's funded as well by private investment.
So, as you said, Lou, you're hearing optimism from some Democrats, congressional Democrats, even Senate Republicans, but you're not hearing that from House Republicans who are really minimizing expectations, and again saying, they're not going to commit to an artificial deadline on this, Lou.
DOBBS: Not commit to an artificial deadline. Is there a sense this bailout will in fact now happen?
KEILAR: I think there's been a sense for, I would even say a couple of days now. I've been saying I feel there's a sense that it will definitely happen. There is a great fear among almost every member of Congress about what they will do if there is not an action. I mean, you've seen obviously, there's an ideological difference between Republicans and Democrats on spending taxpayer money, but we've seen, even in the Senate, some Republicans being able to get past that, essentially because they're so afraid of what will happen if they don't step in.
So, yes, the sense, Lou, is that there will be an agreement. We're just waiting to see exactly what it looks like, especially with all of the ups and downs that we've seen over the past week.
DOBBS: All right. Brianna, thank you very much. Brianna Keilar from Capitol Hill.
As those negotiations on the Wall Street bailout intensify and continue, lawmakers adding more and more pages to the proposed legislation, more and more interests are being represented in what is supposed to be a legislation dealing with a crisis. There have been so many additions in fact, that what was once a three-page proposal has now ballooned into a document of more than 100 pages.
We're told that the document could be even longer by the Congress ultimately finishes its work. But as of right now, we have absolutely no idea what is in this legislation, no specifics, no details at all as to how it would in fact reverse what has become a crisis in our financial system.
Also on Capitol Hill tonight, a stunning defeat for the Democratic leadership on another issue, offshore oil drilling. The Senate has passed a $600 billion spending bill that allows a ban on offshore drilling to expire. Top Democrats had originally refused to allow any vote on offshore drilling, despite high gasoline prices, overwhelming support in opinion polls for drilling.
But Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi eventually backing down, as I predicted they would, back in July. Also on that spending bill, an extension of the federal government E- verify program for another six months. E-Verify is the most successful and efficient and effective federal effort to stop the hiring of illegal aliens in this country. But it is in danger of being killed.
Democrat Robert Menendez of New Jersey tried and failed to include a provision in E-Verify that would have admitted about 500,000 new legal immigrants into this country as a condition for his re-lifting his hold on the legislation.
President Bush has strongly defended the Wall Street bailout. In his weekly radio address, he was calling for an end to this crisis by putting at least $700 billion on the table. President Bush said families all across the country would be affected by this crisis if he allowed every irresponsible Wall Street firm to fail. But that was apparently all the president was saying or doing about the financial crisis today, in point of fact, you wouldn't even know there is a crisis judging from the president's weekend schedule, as Ed Henry now reports.
(BEGIN VIDEOTAPE)
ED HENRY, CNN WHITE HOUSE CORRESPONDENT (voice-over): As the president continued to warn the entire U.S. economy could get buried, he and his family planted trees at the White House. Mr. Bush ignored a question about whether he's worried about further legislative delays on the Hill.
UNIDENTIFIED REPORTER: Are you concern that there may not be a vote until Thursday or Friday on the rescue plan, sir?
HENRY: After two trees were safely planted -- the president changed into some aqua workout clothes and went on a two-hour bike ride, while the nation heard a dire weekly radio address.
(BEGIN AUDIO CLIP)
PRES. GEORGE W. BUSH, UNITED STATES OF AMERICA: If it were possible to let every irresponsible firm on Wall Street fail without affecting you and your family, I would do it. But that is not possible. The failure of the financial system would mean financial hardship for many of you.
(END AUDIO CLIP)
HENRY: For the past week, though, the president has had trouble proving he still has enough juice to win over his Republican colleagues.
BUSH: We will rise to the occasion. Republicans and Democrats will come together and pass a substantial rescue plan.
HENRY: But, all around him, signs the White House is on bended knee, literally. Two Democratic sources say, in a closed door meeting Thursday night, Treasury Secretary Henry Paulson got down on one knee to half-jokingly beg Speaker Pelosi not to use the TV cameras on the White House driveway to blast (ph) the stalled talks. Paulson said he was worried it would further rattle the markets. But Democrats say the real problem is House Republicans balking at the president's $700 billion bailout.
SEN. CHARLES SCHUMER, (D) NEW YORK: This is a plea to President Bush. For the sake of America, please get your party in line.
HENRY: Last Friday, the president began his case.
BUSH: This is a pivotal moment for America's economy.
HENRY: Last Saturday, more promises.
BUSH: And we'll work to get something done as quickly and as big as possible.
HENRY: Monday, a written statement warning, "A failure to act would have brought consequences." Tuesday, Vice President Cheney is dispatched to the Hill to twist arms. Wednesday, a primetime address.
BUSH: That without immediate action by Congress, America could slip into a financial panic.
HENRY: Thursday, the president's attempt to jump-start talks by inviting Barack Obama and John McCain to the White House ended badly, sparking Paulson's plea to Pelosi. A week of lobbying has still not won over Republicans. So White House aides have fallen back on a familiar refrain. The president is willing to take on bold fights, even if it's not always popular with fellow Republicans.
DANA PERINO, WHITE HOUSE PRESS SECRETARY: He has led on important issues like Social Security, immigration, and now this one where we try to help drive to a conclusion.
(END VIDEOTAPE)
HENRY: Now, at this hour, the president's treasury secretary is still on Capitol Hill, meeting with those four lawmakers, hoping to get a deal, but there's no guarantee that they're going to come out of that room with an actual agreement. Even if they do get an agreement this weekend, there's absolutely no guarantee that House Republicans are going to ratify it.
So, even if they got some sort of agreement on paper this weekend, Lou, it's still no guarantee the president is going to get that approved in Congress.
DOBBS: And the two references to the president's bold ability to defy his party and take on the instances of Social Security and comprehensive immigration reform, he lost both of those battles. Why would the White House bring those two forward as examples?
HENRY: They like to use examples like that to say that in their estimation, the president has a spine, he's someone who's willing to take on tough battles even if he's going to lose. But you're right, in those cases, he spent a lot of political capital fighting on immigration and Social Security reform, but at the end of the day, did not win those battles, Lou.
DOBBS: And Henry Paulson down on his knees. Any discussion there amongst the White House staff that the Democratic leadership on Capitol Hill and this president and his staff should get down on their knees and apologize to the American people, if people are going to get down on their knees in the nation's capital?
HENRY: I have not heard that discussion, Lou.
DOBBS: All right. I'm shocked. But, perhaps, we will pick that up. Stay alert for that.
HENRY: I will.
DOBBS: Thank you very much.
HENRY: Thank you.
DOBBS: Ed Henry from the White House.
Well, the campaigns of the men who are fighting to replace President Bush, well, they're on the offensive after last night's presidential debate. Both campaigns are making new efforts to sell the candidates' messages and to claim victory in the debate.
Bill Schneider has our report from Memphis, Tennessee.
Bill, well, in your judgment, which of these two candidates won the debate?
WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well, in my judgment, Barack Obama showed himself a match for John McCain. John McCain needed a real knockout because Obama went into the debate with some momentum -- the momentum coming from the nation's financial crisis which did not produce a surge of confidence in him, but it did create a real decline of confidence in the administration and the Republicans.
So Barack Obama had the momentum. He was picking up support in the polls. John McCain had to do something to break that momentum and there is no real indication that he did.
There were some overnight polls, including our own, which showed that most viewers thought that Obama won the debate. However, I should caution you, in those polls, it turns out that most of the people watching the debate or at least the larger number were Democrats.
DOBBS: You're cautioning me or are you cautioning yourself? I mean...
SCHNEIDER: The viewers -- cautioning all of us. And we really won't know until we look at polls taken over the weekend which look at the entire electorate.
DOBBS: Well, and I think it's good of you to point out that most of those people responding are Democrats and that tilts things a bit heavily in that direction in terms of the outcome of the debate. Do you want to know what I thought of who won the debate?
SCHNEIDER: What did you think, Lou?
DOBBS: Well, I didn't think the country came off particularly well as a result of the debate, perhaps we'll do better in the weeks ahead.
Thank you very much, Bill Schneider.
SCHNEIDER: Sure.
DOBBS: Up next, much more on the impact, if any, of that debate on independent voters. Three of the best political minds join me to give us their assessment of what happened.
And: Will foreign banks be major beneficiaries of an almost $1 trillion bailout of Wall Street? You probably won't like the answer. Nonetheless, it's part of our special report coming up next. Stay with us.
(COMMERCIAL BREAK)
DOBBS: Well, the federal government wants you and me to pay for that $700 billion bailout of Wall Street. What our government isn't talking about, however, is the fact that we, taxpayers, will also be bailing out foreign banks and investors.
As Louise Schiavone now reports, those foreign banks and investors are more than happy to let and you me pay for this bailout.
(BEGIN VIDEOTAPE)
LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): Is the rest of the world prepared to participate in a financial rescue? Analysts say, in an era of globalization, the current crisis is guaranteed to affect markets overseas.
DAVID SMICK, ECONOMIST: I am arguing that there needs to be a global solution to this problem. That it can't all be the U.S. is the main engine for the world and it can't be the U.S. doing the reforms. The European banks have the same toxic waste, the same ugly situation, but they're all hiding it. The rest -- China's hiding it, everybody's hiding it. We're going through the agony.
SCHIAVONE: Last year, 57 percent of U.S. treasury bonds were owned by overseas investors. China, for one, holds more than a quarter of a trillion dollars in mortgage-backed debt, much of it from now-seized mortgage giants Fannie Mae and Freddie Mac. From inflationary pressures in Europe to the deflation of China's export bubble, the threat of contagion is real.
ROY SMITH, NEW YORK UNIVERSITY: We have a global marketplace. I don't think it's possible to slice out and say, well, the Europeans did this or the Americans should have had it all to themselves. It doesn't work like that. It's all one big integrated marketplace and they participated in it. SCHIAVONE: And now say analysts, they are feeling the effects. Great Britain has its own housing crisis and there's some talk the U.K. is already in recession. Around the world, central banks have responded to shore up their own economies, but not nearly to the degree of the $700 billion rescue Americans are being asked to shoulder.
Louise Schiavone for CNN, Washington.
(END VIDEOTAPE)
DOBBS: A growing number of Americans are flatly rejecting this bailout proposal. Many citizens gathered in Washington this week telling their elected representatives simply, don't vote for this bailout of Wall Street.
And as our Lisa Sylvester now reports, the more some taxpayers hear about this Wall Street bailout, the more they want to kill it.
(BEGIN VIDEOTAPE)
LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Art Sullivan is so mad about the bailout he dropped everything and traveled from his home in Westerville, Ohio, this week, to tell his elected representatives just how he feels. The former software engineer has two adult children and he worries they will have to pay an unfair share to clean up Wall Street's mistakes.
ART SULLIVAN, ANGRY TAXPAYER: If you reward bad behavior, you get more of the same. Any parent, any teacher knows that. So, I think, it's that aspect of rewarding reckless behavior on the part of these corporations that really upset me the most.
SYLVESTER: In Washington, as lawmakers march toward a $700 billion bailout deal, protesters gathered on Wall Street this week.
Senators Obama and McCain are leaning toward voting for the bailout. But during the debate, both candidates spoke of only general principles.
OBAMA: This is a final verdict on eight years of failed economic policies promoted by George Bush, supported by Senator McCain.
MCCAIN: People who will lose their jobs, and their credits, and their homes, if we don't fix the greatest fiscal crisis probably in -- certainly in our time.
SYLVESTER: Main Street will likely end up paying the price, but there's no doubt the crisis was the making of Wall Street -- a culture of excess and excessive risk. Even as the corporate giants are toppling, CEOs are walking away with golden parachutes. The CEO of Washington Mutual, Alan Fishman was on the job only three weeks. His takeaway pay could be $18 million.
MIKE FRANZ, THE HERITAGE FOUNDATION: There is absolutely zero sympathy for the folks who work on Wall Street. Their perception is that they're quote, unquote, "smart guys" who got a little too smart. (END VIDEOTAPE)
SYLVESTER: And the public is very skeptical about any bailouts. CNN/Opinion Research Poll finds 65 percent of Americans, that's nearly 2/3, do not believe any new program to deal with the crisis will treat the taxpayer fairly -- Lou.
DOBBS: Yes, and that's probably an optimistic group at that. The idea that this bailout is being pressed through without a single hearing; there's been no public involvement, no public hearing, and a culture of fear. You know, it was Nancy Pelosi and Harry Reid, I recall, who were talking about and criticizing George Bush for promulgating that culture of fear and his leadership on the war in Iraq, for example, and now they are doing precisely the same thing on the Wall Street bailout. It's disappointing to say the very least.
SYLVESTER: Yes, you know, Lou, you are absolutely right on that. That's the refrain we keep hearing again and again and again which is -- we have to do something or else. And not many people are saying or taking a look at what this is going to mean for future generations or what the larger implication of this is. And that's why people are so upset because of the sheer, the price tag of this and how little debate that they've had on this issue, Lou.
DOBBS: And that's why our elected officials on Capitol Hill are being inundated from their constituents. And the numbers, as you and I both know, running, they're running at least 50 to one against this bailout. And, you know, so we'll see. Thank you very much, Lisa Sylvester.
Up next, who wins? Who loses? If there are any winners in this Wall Street bailout -- I'll be talking with three of the sharpest economic thinkers in the nation about that and a great deal more.
Also: A new anti-American alliance dangerously close to our shores. Russia and Venezuela have joined forces against the United States. That report and a great deal more, still ahead. Stay with us. We'll be right back.
(COMMERCIAL BREAK)
DOBBS: We'll be going to Washington to update you on this bailout, and the progress or whatever you would like to style it as of the negotiators on Capitol Hill. We'll also be bringing you more on the debate, who won, who lost -- if anyone -- here in just a moment.
But first, there is new evidence tonight that Russia and Venezuela are strengthening their anti-American alliance. Venezuelan President Hugo Chavez is meeting with Russian leaders in Moscow. Chavez and the Russian president reaching a number of agreements, all of them apparently designed to challenge American influence all around the world.
Russia will lend Venezuela $1 billion to buy Russian weaponry. Venezuela has already signed contracts to buy Russian weapons worth more than $4 billion over the past three years. Russia and Venezuela are also strengthening their ties on energy and economic ties as well. These include, of course, sharing technology for nuclear power in Venezuela.
That Venezuelan/Russian alliance is only one example of Moscow's rising anti-Americanism and its geopolitical policy after Russia's invasion of Georgia last month. Moscow is stepping up its military presence and influence in Latin America as a clear threat to our national security.
Jamie McIntyre has the report.
(BEGIN VIDEOTAPE)
JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT: Russia's Peter the Great battlecruiser is undeniably impressive, three times as big as any American Navy cruiser and bristling with all manner of weaponry. The behemoth is leading a small flotilla of Moscow's best warships to the Caribbean for a first-ever exercises with America's arch- antagonist, Venezuela
It's the largest display of Russian military might in the western hemisphere since the Cold War.
But it's also a Potemkin (ph) Armada, a facade, says Kremlin watcher John Pike, who believes Moscow just wants to irritate the U.S.
JOHN PIKE, GLOBALSECURITY.ORG: It's a lot more of a show than it is a show of force. These are old ships. They have obsolete technology on them.
MCINTYRE (on camera): And why is Russia coasting up to Venezuela?
PIKE: Well, I think that Venezuela and Russia have one thing in common, the United States. Anything that would annoy the United States, both of them are interested in doing, through on get together, they can possibly be tremendously annoying.
MCINTYRE (voice-over): Russia is retaliating in America's backyard for what Moscow sees as U.S. interference in its so-called "Near Abroad." That includes U.S. missile defenses in Poland, the Czech Republic and potential NATO membership for former Soviet states Ukraine and Georgia. Russia has thousands of nuclear warheads but the Pentagon still considers its conventional forces a paper tiger.
ROBERT GATES, DEFENSE SECRETARY: Russia's conventional military remains a shadow of its Soviet predecessor in size and capability.
MCINTYRE: Venezuela is the world's ninth biggest oil producer and its anti-American president, Hugo Chavez, hopes Russia will build a big new refinery to end Venezuela's reliance on U.S. refineries, as well as become a supplier of modern weapons.
But the Pentagon professes to be unperturbed.
GEOFF MORRELL, PENTAGON SPOKESMAN: You should be known by the company you keep, they wish to hang out with the Venezuelan navy, that's their business.
MCINTYRE (on camera): Sitting on a pile of oil and gas wealth and emboldened by its unchecked attack on Georgia, Russia is sending a clear signal -- that for now, at least, it's more interested in challenging the U.S. than in cooperating.
Jamie McIntyre, CNN, the Pentagon.
(END VIDEOTAPE)
DOBBS: Up next: Foreign banks and investors could receive hundreds of billions of dollars of your tax money if the Wall Street bailout goes ahead. Just what in the world is the Bush administration and the Democratic congressional leadership thinking? I'll be joined next by three of the top economic thinkers.
And a critical national security issue the presidential candidates didn't discuss in their debate -- this country's utter failure to secure our borders and ports.
We'll have that, and a great deal more -- next. We'll be right back.
(COMMERCIAL BREAK)
ANNOUNCER: This is a special edition of LOU DOBBS THIS WEEK: News, debate, and opinion.
Here again: Mr. Independent, Lou Dobbs.
DOBBS: Well, the presidential debate was supposed to be all about foreign policy, and national security. But Jim Lehrer, apparently, the moderator, didn't get that memo. The candidates all but ignored critical security issues and the government's failure to secure our borders and ports and the consequences of that failure weren't even discussed.
Casey Wian has our report.
(BEGIN VIDEOTAPE)
CASEY WIAN, CNN CORRESPONDENT: Friday's long-awaited presidential debate lasted nearly 97 minutes, or put another way, more than 5,800 seconds. Although the debate's topic was foreign policy and national security, the two candidates combined spent a grand total of 18 seconds talking about our nation's insecure borders and ports. Here's Senator Obama's 11-second contribution.
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: We haven't done enough in terms of ports. And the biggest threat that we face right now is not a nuclear missile coming over the skies, it's in a suitcase.
WIAN: Senator McCain took even less time, seven seconds.
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: But we still have a long way to go before we can declare America safe and that means doing a better job along our borders. WIAN: Nowhere was there a mention of the fact that according to border patrol estimates more than a million illegal aliens still cross our nation's borders every year. Or that Mexican drug cartel violence is out of control, all along our southern border, and with increased frequency, it's spilling over to the United States. Or that attacks on border patrol agents are up 31 percent this year. Or that 60 drug tunnels have been found underneath the border that could have been used to smuggle terrorists or weapons components. Or that only six percent of the cargo containers entering our ports are physically inspected. Or that the southern border remains the main gateway for most of the illegal narcotics entering the United States. But it would have been difficult to say all that in just 18 seconds or 0.3 percent of the time spent on Friday's debate.
(END VIDEOTAPE)
WIAN: The second presidential debate in 10 days is scheduled to be about all topics and include questions from the audience in a town hall format. Perhaps then the candidates will be persuaded to discuss the border security and the illegal immigration crisis. Lou.
DOBBS: Casey (inaudible), thank you very much. Casey Wian.
Well, these candidates were highlighting their differences or at least trying to do so in their foreign policy. But as Kitty Pilgrim now reports, neither of these candidates offer many specifics on how they would address the foreign policy challenges that do face this country.
(BEGIN VIDEOTAPE)
KITTY PILGRIM, CNN CORRESPONDENT: John McCain came right out and challenged Barack Obama's foreign policy experience.
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: I honestly don't believe that Senator Obama has the knowledge or experience and has made the wrong judgments in a number of areas.
PILGRIM: His often-repeated phrase.
MCCAIN: I'm afraid Senator Obama doesn't understand.
Senator Obama doesn't seem to understand.
Senator Obama still doesn't quite understand.
PILGRIM: Obama repeatedly pointed out that past foreign policy has not worked.
OBAMA: The next president has to have a broader strategic vision about all the challenges that we face. That's been missing over the last eight years. That sense is something that I want to restore.
PILGRIM: On the issues Iraq was the biggest point of disagreement.
MCCAIN: Senator Obama refuses to acknowledge that we are winning in Iraq. OBAMA: John, you like to pretend the war started in 2007. You talk about the surge. The war started in 2003.
PILGRIM: On Iran's pursuit of nuclear weapons, both agreed the situation was dangerous.
MCCAIN: I have no doubt that the Iranians continue on the path to the acquisition of a nuclear weapon as we speak tonight.
OBAMA: Senator McCain is absolutely right. We cannot tolerate a nuclear Iran.
PILGRIM: But McCain challenged Obama's previous statement that he would meet with Iranian President Ahmadinejad, another adversary.
MCCAIN: We're going to sit down without precondition across the table to legitimize and give a propaganda platform to a person that is espousing the extermination of the state of Israel.
PILGRIM: Obama bridled.
OBAMA: That doesn't mean that you invite them over for tea one day. What it means is that we don't do what we've been doing, which is to say, until you agree to do exactly what we say, we won't have direct contacts with you.
PILGRIM: McCain called Obama naive on a number of issues, including the Russian invasion of Georgia.
MCCAIN: His first statement was, both sides ought to show restraint. Again, a little bit of naivete there.
PILGRIM: Obama toughened his statement on Russia.
OBAMA: Our entire Russian approach has to be evaluated because a resurgent and very aggressive Russia is a threat to the peace and stability of the region.
(END VIDEOTAPE)
PILGRIM: On the all-important question, has U.S. policy made the United States safer since 9/11, both candidates said we have a long way to go securing the country but McCain definitively said the country is safer since 9/11. Lou.
DOBBS: Kitty, thank you very much. Still ahead, we'll have more on the presidential debate. Barack Obama and John McCain, they both got mixed reviewed. We'll be talking about that with our panel of political analysts.
And the bailout of Wall Street, that proposal swelling from three to more than 100 pages. Stay with us. We'll be examining what's going on there on Capitol Hill. We'll tell you what's about to happen to your taxpayer dollars and how many of these runaway banks we're going to be supporting. We'll be right back.
(COMMERCIAL BREAK)
DOBBS: Well, joining me now are three of the nation's top economic thinkers, I, Professor of the Robert A. School of Business at the University of Maryland. Good to have you with us, professor.
Well, let's start with what every, I would guess, every American is thinking right now. Why should I be bailing out foreign banks and investors, CEOs and top executives of Wall Street firms that have been ripping off the system for a very long time? David, would you like to take a shot?
DAVID CAY JOHNSTON, AUTHOR "FREE LUNCH": Well, I'm a real skeptic about all of this. We have a system where we've artificially inflated these assets and they have to come down. And there is no escaping the pain of doing this. Instead of trying to figure out how to perhaps mitigate the pain and deal with it most efficiently with the least damage, you want to cut off the toes if that's all have you to do or the leg below the knee, and you don't want to kill the whole patient, they're proposing what? To pump more money in to try to keep these assets inflated? That just doesn't make sense. It may not work and it could lead to more expenditures like this.
DOBBS: What is shocking to me, Professor Joseph Stiglitz, is we don't really know the details of this plan right now. There hasn't been a single public hearing. We're talking about a third of the federal deficit. Excuse me, budget. Here to be just appropriated apparently at the whim of the Treasury Secretary. Paulson may in some previous life been a smart fellow. He has not behaved as such over the last couple of years. And to have Barney Frank, Chris Dodd, Roy Blunt, and Judd Gregg as the arbiters of what makes sense right now in these times, does this all make sense to you? Should the taxpayer be comforted?
PROF. JOSEPH STIGLITZ, COLUMBIA UNIVERSITY: They should be worried. They should be worried. But to go back to your first question, the argument is that unless we do something, the whole house of cards will come down and financial - the financial system is very important to our economy. You need a flow of credit. The question is.
DOBBS: Wait a minute, if I may. If it's so important, why weren't we regulating it? Why weren't we being more measured on why we were committing such excess and irresponsibility? I mean -
STIGLITZ: You're exactly right.
DOBBS: I accede to the idea that it's important but I just wonder why it hasn't been treated that way.
STIGLITZ: Oh, I agree with you. And now, to let the very people who didn't do the regulation, who didn't see the problem coming, all of a sudden they say, trust us, we're the experts, let us take care of all of this, and don't worry, we know that there's not a lot of details here. We know that there's a lot of things that are going to be filtered out, but trust us, we're going to be working for you and not for Wall Street, I - I understand why a lot of people are concerned. Quite frankly. DOBBS: And Professor (), for the life of me, Pelosi and Reid making political hay about the politics of fear when talking about the Bush White House, and I think, by the way, that's a pretty good charge against them, they are now - they're fellow travelers in the trafficking of fear, and they're not offering anything in the way of a public discussion or transparency about what this money would be used for. What the parameters are of its use and how it would be effective in dealing with the crisis that they say has a date certain for - of Monday for absolute climax.
PROF. PETER MORICI, UNIVERSITY OF MARYLAND: Well, from what they've told us, this thing isn't going to work very well, that's for sure. This was a bipartisan mess in the making and it seems like they're going to make it worse. It's not going to free up credit. It's not going to break the log jam with regard to businesses getting money. It's going to reward the perpetrators of this mess. It's not going to help middle class homeowners, because it won't lift those asset values as promised, and it's not going to help people in distress very much. I mean, there will be a little bit of help here and there, by in large, the big New York banks are going to have $700 billion to play with. That's not a very good thing from where I sit.
STIGLITZ: Peter is absolutely right. And basically this is a trickle down theory once again. You pour money at the top, and it's supposed to solve the problem. The problem is the bleeding is at the bottom. The bleeding is the foreclosures. Very little being done about that. And the other problem is the banks made loans that were very bad. They've created what we call a hole in the balance sheet. And you don't fix a hole by a shell game. What is needed is -
DOBBS: Does Washington know anything but shell games? Does Wall Street know anything but shell games here, David?
JOHNSTON: Not for a long time. When you think how long we've gone, every time there's a little dip in the stock market, we have alarm. The government needs to step in and - let's let the market do its work. This is the problem that the market will solve. It's going to involve a lot of pain. And by the way, be very skeptical of two things. They're not asking, what are the alternatives? Congress, hasn't held hearings. Let's hear from other experts on what to do. Is there a better, cheaper or market way to do it?
STIGLITZ: And there are.
JOHNSTON: And there are other solutions. Right. And secondly, don't rely on the anecdotal news accounts that this company is having trouble raising money. And I'll give you, a good example of the counter anecdotal. McClatchy is in the newspaper business, certainly one you want to be in these days. They just renegotiated all of their loans, and the terms are not extraordinarily different. Pay attention not to anecdotal stuff but to fundamentally what's happening in the markets.
DOBBS: In the real economy.
JOHNSTON: Going back to the real economy, what our economy needs is a stimulus. We're --
DOBBS: My god, how can we need more stimulus. You've written a book called "The $3 trillion war." We've got -
JOHNSTON: This has to work itself out. Stimulus alone isn't going to do it.
DOBBS: Not alone but -
MORICI: These banks said they wanted the markets to regulate them, so now it's time for the market to regulate them. A lot of these banks are badly run. It's not just the subprime loans, it's the (inaudible) activities they've gotten involved in so they can pay themselves these outrageous sums of money. And as a consequence, many of their businesses are in trouble. That's why their stock values are falling so much. It's not just the subprime mess, that's these banks aren't worth very much right now because they're not very well run.
STIGLITZ: Right. But still, there is the fact is our economy is going to slow down, unemployment is going to increase.
DOBBS: That has happened before in our history, hasn't it?
STIGLITZ: And it's important to have, for instance, better unemployment insurance. We have the worst unemployment system of any of the --
DOBBS: A trillion dollars at a bailout of Wall Street. Wouldn't we be better served to hold that money in reserve for unemployment benefits for those that are going to lose their jobs?
STIGLITZ: Certainly we should have - and the president has threatened to veto a bill to provide better unemployment insurance when he's offering $700 billion to Wall Street. I just don't understand the balance of values and the =balance of priorities.
DOBBS: Yes. Well, gentlemen, from your perspective, let me just ask you. In terms of the leadership here, whether we're talking about the economic leadership, the financial leadership on Wall Street, the political leadership, whether you're talking about McCain, Obama, or Bush, or Pelosi or Reid, any of them. Wouldn't the intelligent thing to be, the responsible thing to be for our political leaders, our economic leaders to stand up and say, we have a crisis. And this is going to require sacrifice. And it means as of right now we're going to have to change the culture on Wall Street. Excess has ended. Greed is going to be curtailed. We're going to ask each of you who's being saved here to step back and voluntarily give up your compensation, because you're fabulously wealthy to begin with. But we're not hearing that discussion or talking about sacrifice. We're talking about more excess, more capital going into a rat hole that is Wall Street. It may not be a hole but it's filled with rats. I'm going to call it a rat hole.
MORICI: Actually Lou, Lou, we have heard about sacrifice. Paulson gave a speech this winter where he said people upside down on their mortgage who owe more than the house is worth, even if they could pay it, they should. They need to sacrifice, he said. You know, this is absolutely absurd. But the people on Wall Street, who create less value than they take out in pay so their banks are failing, they shouldn't sacrifice. Instead we should give them $700 billion, 5 percent of GDP. Like, you know how far $700 billion would go to repairing middle America? Or, you know, making better automobiles? All kinds of things.
DOBBS: You get the last word, David.
JOHNSTON: Well, I think what we ought to be talking about alternatives. We should be talking about letting the market do its work and we should be looking at creating a new chapter of the bankruptcy code. Because bankruptcy courts are courts that are practical, allow people to bring in their mortgages to a bankruptcy court and I think we could inexpensively deal with a lot of this problem very quickly.
STIGLITZ: That's right. It's beginning at the bottom, which is the source of the problem, the foreclosures.
DOBBS: Yes. We talk about it being the bottom, it's nearly all of middle class America live, so I kind of think - I look at that as the top, and the rest of these suckers - anyway. Thank you very much, Professor Morici, thank you very much. Professor Stiglitz, good to have you with us. David, thank you very much.
Up next, the first presidential debate of this campaign has ended. Oh, that was exciting. Now, what's next? I'll be joined by three of the nation's top political minds. We'll be right back.
(COMMERCIAL BREAK)
DOBBS: Joining me now are of the best political minds in this country. CNN contributors all. And that includes, well, that's actually led by Republican strategist Ed Rollins, who has served as White House political director under President Reagan, chairing Mike Huckabee's presidential campaign, great to have you here.
ED ROLLINS, REPUBLICAN STRATEGIST: Thank you.
DOBBS: And Michael Goodwin, Pulitzer prize winning columnist "New York Daily News." Democratic national committeeman Robert Zimmerman. Gentlemen, thanks for being here.
I have to start - we just heard - I think three of the smartest folks I know in economic public policy basically say that this government, this Congress, this president is out of his cotton-picking mind to be going down the path that is and we are watching, you know, this tick tock moving and a clock moving closer to a climax that is supposed to come apparently Monday when they have to turn over a trillion dollars of taxpayer money to Wall Street banks. It's crazy.
ED ROLLINS, REPUBLICAN STRATEGIST: We're being black mailed by the Asian markets. And the idea that we have to by 3:00 tomorrow afternoon or all the Asian markets are going to crash on Monday is absurd. And I think the reality is when you are spending this kind of taxpayers' money, a) you don't know what fixes the problem and equally as important we're supposed to do everything publicly. This is public money. This is public officialdom and there is no public hearings. And I think to a certain extent, we have to stop the rush to judgment. We can say to Wall Street, we're going to try to fix the problem the minute that you tell us the full extent of the problem and then go forward.
DOBBS: Robert, your thoughts?
ROBERT ZIMMERMAN, DEMOCRATIC NATIONAL COMMITTEEMAN: Well, clearly both parties have done a dismal job in trying to convey to the nation what's at stake here. This looks like the Wall Street issue as opposed to a Main Street issue. And I think what's most critical here is that these public officials -
DOBBS: Are you saying that $700 billion now is going to go to Main Street?
ZIMMERMAN: I'm saying -
DOBBS: I'm pretty excited now.
ZIMMERMAN: I'm saying, if the Congress and the administration believes it's going to help save retirement, help save retirement benefits, going to help save small businesses, they better make that case. They have not done that effectively.
DOBBS: They haven't done effectively. We just heard a Nobel prize- winning economist which in should be in my mind just say what should be Peter Morici, Professor Morici, David Cay Johnston. If you are talking about tax policy, talking about this economy and government and public policy. I mean, why would you have those three people at the center of this discussion? I mean, it makes no sense.
MICHAEL GOODWIN, "THE NEW YORK DAILY NEWS": Lou, we have a presidential debate where the men who want to be president, one who's going to be president in four months, neither one of them would take a position on the bail out. They said probably, maybe they would vote for it. But where are they? I mean we know that George Bush is a lame duck, but one of these guys is going to be running the country and implementing this program. This is the biggest issue and they wouldn't take a position.
DOBBS: Now, the lameness we hope will end with George W. Bush. I'm not particularly hopeful. We're going to be right back with our panel in just one moment. We'll be taking up the issue of the debate and what in the world are the folks in Washington thinking about turning over the Treasury to Wall Street. Isn't this how we got here. We'll be right back.
(COMMERCIAL BREAK)
DOBBS: We are back with Ed Rollins, Michael Goodwin and Robert Zimmerman. Who won the debate?
ZIMMERMAN: It's interesting when you ask that question because the honest answer is both sides. It's resecure their base, reinforced their base. And I think ultimately when you look at this debate and how it was conducted, I think it's premature to say who won. The question is going to be who wins the spin over the next several days?
DOBBS: I asked a premature question? I'd rather try this way then? OK. Who won the debate, Michael?
GOODWIN: McCain. However, the big (inaudible) I think if you look at two debates. There was the foreign policy debate and there was the economic debate.
The foreign policy debate I think -
DOBBS: I got confused about which were we having?
GOODWIN: Right. I would give McCain the foreign policy on points, but I think they both screwed up big time on the economic part. That they would not take a position on the bailout but they wouldn't reassure Americans. They wouldn't touch the issue.
DOBBS: (Baffle) leaders. This country is in great shape.
GOODWIN: They are afraid of this.
ROLLINS: We were challenged on obviously you got to cut back if we're going to do this. What would you cut back? They couldn't go there. I think the bottom line is this.
DOBBS: I think -
ROLLINS: Go ahead.
DOBBS: Couldn't go there. These men are supposed to be demonstrating capacity and character and courage and didn't have the guts to say that - well -
GOODWIN: It's almost as though they hadn't thought of it. Like they started their campaign -
DOBBS: Now you are really scaring me.
GOODWIN: They started their campaign a year and a half ago and they haven't really change. This program, this problems have grown and grown and they haven't dealt with it.
ROLLINS: And the lack of knowledge on the economic. I thought that was given to them when the first questions were about foreign policy but when the question was about the economic which is the subject of the week and the day and neither of them basically could articulate where their positions were.
ZIMMERMAN: Right. Another thing to observe is as the debate unfolded was that on the one hand Barack Obama was able to show when it was supposed to be McCain's topic, he was able to hold himself well and be able match him on the stage. And I think likewise for McCain, I think he was able to show the grasp of knowledge. I think for McCain he stopped I think for the moment his campaign from free falling, but his behavior this past week was ludicrous and contentious to the voter. And I think ultimately Barack Obama maintained his momentum. So I think there are political wins on both sides here.
ROLLINS: For one thing, McCain proved at 72 that he was an old man. You know, even though it's somewhat condescending, but he proved that as commander in chief, he was still tough enough to do that job.
DOBBS: And by the way -
(CROSSTALK)
DOBBS: I was impressed by them and maybe it's because it's one of my great failings that I often cannot pronounce a foreign leader's name and haven't been able to for my entire broadcasting career, but I kept it on the table. But I mean, when McCain went through all of the Latvian leaders, the Eastern block leaders and their names and didn't even take it a breath, I can almost see Obama registering the same facial expression I had with one of envy and astonishment that anybody could do that.
GOODWIN: Well, remember when the late Tim Russert asked Obama and Clinton who the prime minister of Russia was, they both kind of looked at each other and Clinton finally said Medvedev or whatever or something like that. Now we know.
ROLLINS: Remember eight years ago - eight years ago -
DOBBS: That was actually the president of Russia. Medvedev and the new prime minister is Putin whom -
ROLLINS: Eight years ago in the debate the president incumbent, the incumbent president for the last eight years couldn't pronounce Musharraf. He didn't know Musharraf was -
GOODWIN: Maybe it's the foreign policy that we got.
ZIMMERMAN: That's what I'm saying, maybe pronouncing the names ought to -
What I'm concerned about is not just that they can pronounce the names but what kind of foreign policy they are going to articulate.
DOBBS: Are you worried about what kind of leaders they're going to be? Because I have to tell you, I watched as I said, earlier, I mean, this to me, the American people didn't win last night. Neither one of these men stood up the way I would expect a man or woman who is going to lead this nation to talk about the broader perspective to serve as you suggest confidence and confidence that can rally the American people and the leaders on Wall Street and business and all walks of life. Neither one of these two men, these two men were running from leadership rather than asserting and that troubles me deeply. But that's just one reporter's opinion.
Robert, thank you very much. Michael, thank you. Ed, thank you.
And we thank you for being with us tonight. Please join us tomorrow. For all of us, we thank you for watching. Good night from New York.
