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Lou Dobbs This Week
Unemployment Soaring; Drug Wars in Mexico
Aired December 07, 2008 - 19:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LISA SYLVESTER, GUEST HOST: Tonight, unemployment is soaring. More people are losing their jobs than at any time since the mid-1970s. We'll have complete coverage.
And, shocking new evidence of the out of control drug war that's raging along our southern border with Mexico. Thousands of people have been killed this year.
All that and much more -- straight ahead, tonight.
ANNOUNCER: This is LOU DOBBS THIS WEEK: News, debate, and opinion. Here now: Lisa Sylvester.
SYLVESTER: Good evening, everybody.
Working men and women and their families are being devastated by this worsening recession. Families already reeling from the housing crisis are now facing job insecurity and unemployment. The jobless rate soared to 6.7 percent in November, the worst rate in 15 years. Employers cut 533,000 jobs last month, that's the highest number in more than three decades.
Christine Romans is here with more on the grim employment picture -- Christine?
CHRISTINE ROMANS, CNN CORRESPONDENT: Lisa, we knew it was going to be an ugly number. We really did. Economists were saying maybe 300,000 jobs will be lost. Instead, 500,000 jobs lost in just one month.
And the trend is accelerating. When you look at the jobs lost across the year, you can see for 11 months now it has been ramping up. September and October jobs, also ugly reports, Lisa, but they were revised to be even worse -- 1.2 million jobs lost in just the last three months.
Where are those job losses coming from? Retail -- at a time of the year when usually retailers are hiring people for the holidays, they are laying people off. Manufacturing -- no surprise there. There has been hemorrhaging of manufacturing jobs and it continues. Construction as well. Across the board, also leisure, hotels, restaurants. Anything that touches the consumer is losing jobs and losing jobs much more quickly than many people had thought.
The president making a statement about just how hard this is for the American people.
(BEGIN VIDEO CLIP, FRIDAY) PRES. GEORGE W. BUSH, UNITED STATES: I'm concerned about our workers who have lost jobs during this downturn. We work to -- as we work to address the problems of this economy, we've extended unemployment insurance benefits to those who have lost their jobs.
(END VIDEO CLIP)
ROMANS: Only a year ago, that president and his administration was saying that the underpinnings of the economy were strong and that the labor market was vibrant. Now, more people are getting unemployment checks than any other time since 1982, Lisa. So, we're going back to the '80s, we're going back to the '70s in some cases. It's the last time that we've seen this kind of action in the labor market.
SYLVESTER: You know, this is real hardship. I mean, for folks, whether you're losing your paycheck, you got a family to support, this is real hardship and real people are behind these numbers. But it seems in Washington, all we hear is a lot of talk, a lot of rhetoric. We're trying, you know, they're pumping $700 billion into banks. But a lot of people are saying they're not seeing that trickle down to them.
What are your thoughts?
ROMANS: Yes. And quite frankly, my sources are saying, next year, we're going to see more of this. We're going to see November, December, January, February -- we're going to see companies having to cut jobs, because of the credit crisis, because of the slowing economy, because of the global recession.
And the president-elect, Barack Obama, has said that he wants to have a big stimulus plan. He wants to get people out to work. He wants to save or create, he says, 2.5 million jobs over the next couple of years. Frankly, 2.5 million jobs isn't going to be enough. If we're going to see jobs lost like this, he has a really big challenge here.
Joe Stiglitz, who's a Nobel laureate, you know, an award-winning, he also says 2.5 million jobs simply isn't enough. "We have to have," he says, "1.5 million jobs created every year just to keep up with people entering the work force." So we're looking at huge job losses on top of what you normally need just to stay even. It's a really tough combination for next year.
SYLVESTER: Yes. So, where are those jobs then? Where are the jobs that people can apply for?
ROMANS: There are jobs in healthcare -- 369,000 healthcare jobs created just over the past year. Anything that touches a machine in a hospital, you know, you can make a good living on that. A lot of those jobs are at the lower end of the pay scale. We're losing high- paid manufacturing jobs and we're gaining some jobs, some of those jobs in healthcare, we are gaining, but they make much, much less money.
There are jobs in education, but, again, they make much less money. There are some fundamental structural issues going on here that go beyond this current recession for the next president is going to have to address. There are some jobs growth, yes. If the unemployment rate for people with a college degree is half what it is for the regular population, but if you graduated from college with $25,000 in student loan debt, how feasible is that for telling people just get an education, that's how you're going to get through it.
So, college affordability, outsourcing of jobs, structural problems with the kind of jobs we're creating in this economy, all of these are big, big hurdles for the next administration.
SYLVESTER: Yes, and a lot of economists have said until you address those issues in the real economy, all of this stuff, all of the rest of this stuff is just window-dressing. And until you address that or you're still going to be seeing the same kind of bleak numbers in future months ahead.
ROMANS: I mean, you've been covering it. Half a million jobs in one month is remarkable.
SYLVESTER: It's pretty staggering and pretty sad, actually. Thank you, Christine Romans, for that great report. Thanks, Christine.
Well, the chairman of the powerful House Financial Services Committee, Congressman Barney Frank, says the bleak unemployment figures make a bailout for Detroit even more urgent. The CEOs of the Big Three automakers went to Capitol Hill again, pleading for as much as $34 billion in government aid. That's $9 million more than originally requested. Many lawmakers, however, remain skeptical about any bailout for Detroit.
President-elect Obama says he's determined to stop the U.S. auto industry from collapsing. The president-elect's advisers are already examining ways to help the Big Three carmakers next year.
Candy Crowley reports from Chicago.
(BEGIN VIDEOTAPE)
CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT (voice-over): President-elect Barack Obama and his economic advisers are studying options to help the auto industry after he takes office. Only one option is off the table...
BARACK OBAMA, PRESIDENT-ELECT: We can't allow the auto industry simply to vanish.
CROWLEY: Industry and Obama sources confirm before the election and continuing after, Obama staff has been talking to auto executives. One industry source says the nature of these conversations are, "informational, about our operations, how and where we spend, our forward looking goals." An Obama source says the ongoing talks are recognition that if Congress does anything before Obama takes office, it is likely to be a stop-gap measure to keep one of the Big Three from going down.
Obama's public talk and the private work of his team are aimed at more comprehensive assistance tied to viability.
OBAMA: I've made it a high priority for my transition team to work on additional policy options to help the auto industry adjust, weather the financial crisis, and succeed in producing fuel-efficient cars here in the United States. I've asked my team to explore what we can do under current law and whether addition legislation will be needed for this purpose.
CROWLEY: Sources say there has been no talk of specific long-term legislation. In terms of the immediate future and what Capitol Hill will do, Obama has not said much, largely because he can't do much. There's risk in putting capital on the line before he becomes president.
SEN. CHRISTOPHER DODD, (D) BANKING CHAIRMAN: I don't think he necessarily wants to get drawn in -- I wouldn't blame him -- to a situation he cannot really effectuate.
CROWLEY: Still, Capitol Hill sources say the Obama team, at many levels, has discussed the bailout, including talks between the president-elect and the congressional leadership.
(on camera): Regardless of the level of Obama's involvement, one source on Capitol Hill says it's improbable Democrats would pass a package he doesn't approve of.
Candy Crowley, CNN, Chicago.
(END VIDEOTAPE)
SYLVESTER: Obama's economic team is also focusing on the worsening housing crisis. Foreclosures soared 76 percent in the third quarter to a record 1.35 million. Meanwhile, the federal government is finally considering new ways to help homeowners. The treasury is considering a plan to buy mortgage-backed securities to drive mortgage interest rates even lower.
(BEGIN VIDEOTAPE)
SYLVESTER (voice-over): The number of foreclosures continues to rise, up 5 percent in October from the month before, according to the research for RealtyTrac. Fed Chairman Ben Bernanke says jump-starting the housing market is key to solving the country's economic challenges.
BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: Despite good-faith efforts by both the private and public sectors, the foreclosure rate remains too high, with adverse consequences for both those directly involved and for the broader economy. More needs to be done.
SYLVESTER: The Treasury Department is considering a new plan to stabilize the U.S. housing market by using Fannie Mae and Freddie Mac to drive down interest rates to as low as 4.5 percent for 30-year fixed mortgage. Secretary Henry Paulson has been criticized by the members of Congress and housing groups for pumping billions of dollars into U.S. banks while not providing enough relief to Main Street. SHARON PRICE, NATIONAL HOUSING CONFERENCE: The banks, they're kind of sitting on their money like it's going to hatch and they hadn't been lending it. So now, the goal here is to get the banks lending.
SYLVESTER: FDIC Chairwoman Sheila Bair has offered a plan that would go even further than what treasury has proposed. It would grant new incentives to banks to modify home loans headed for foreclosure. But Secretary Paulson has been reluctant to use part of the $700 billion to grant homeowner relief, telling Congress that's, quote, "different than the original investment intent."
Bair told CNN, loan modifications could potentially save 1.5 million homes from foreclosure.
SHEILA BAIR, CHAIRPERSON, FDIC: I've been in Washington for a long time. And while we haven't been able to garner the political will to tackle this problem more aggressively at the borrower level, it has been somewhat mystifying to me.
(END VIDEOTAPE)
SYLVESTER: Many lawmakers say there has not been enough transparency or oversight with the $700 billion bailout program. The law called for a special inspector general to oversee the program. But as we reported, a senator had placed a secret hold on the nomination of the man tapped for that post, Neil Barofsky. That lone senator quietly lifted the hold so a vote can proceed this week.
Later in the broadcast, Lou will be talking with Bill Isaac, former chairman of the Federal Deposit Insurance Corporation about the housing crisis and the auto industry.
Also ahead, you won't believe how many toys in our stores contain toxic chemicals. We'll have a special report you don't want to miss.
And, we'll tell you how foreign governments are supporting their carmakers. Is this what you call free trade? That special report, next.
(COMMERCIAL BREAK)
LOU DOBBS, CNN ANCHOR: Carmaker CEOs making a second trip to Congress to get some more money from our lawmakers. But carmakers in other countries don't have to beg for help. They're already subsidized by the government. The French government routinely protects its industry, creating yet another uneven playing field for American business. They don't play fair at all.
Bill Tucker reports on how we play.
(BEGIN VIDEOTAPE)
BILL TUCKER, CNN CORRESPONDENT (voice-over): French President Sarkozy made a simple declaration in announcing subsidies to Renault and Peugeot, quote, "The state is ready to do everything to save the automobile industry." The French government will provide $1 billion line of credit to support the automakers financial services, more than $300 million in state aid for research and development, and incentives for consumers to buy new energy efficient cars. That's on top of already provided government healthcare insurance, which is provided by the state in many European countries.
In most global markets, foreign automakers hold a distinct advantage over America's Big Three.
ERIC MAYNE, WARDSAUTO.COM: There's definitely a greater appetite for government involvement in other regions than there is here. In the U.S., it's part of our character. We're stridently opposed to any sort of direct government action, even at a time of crisis like this.
TUCKER: Research and development is government funded in Japan. Brazil supports its auto industry with subsidies and extended a credit line of some $2 billion in October. The European Union charges a tax on imported autos and several European countries are considering a bailout of European automakers. In China, much of the auto industry is state own and foreign automakers are not allowed entry to the market unless they partner with a Chinese company. Sweden is considering R&D support of its auto industry.
SCOTT PAUL, ALLIANCE FOR AMERICAN MFG: So at every level, when we deal with economic incentives, when we deal with trade, when we deal with healthcare, or when we even deal with the attitude of the government, the Big Three are not playing on an even playing field.
TUCKER: And that competition is not limited to foreign countries.
(END VIDEOTAPE)
TUCKER: Now, in fact, earlier this week, we reported on the billions of dollars provided to foreign carmakers by the states. The states have decided foreign automakers are so important to their local economies that they had to bid against each other to creating tax subsidies and tax breaks to lure the transplants to their state to build cars, provide paychecks, and Lou, produce business in the state.
DOBBS: Well, it's kind of fun to see the United States sort of struggle with reality. It would be a lot more fun, of course, if we had any sense of reality and had any sense of what to do with it.
TUCKER: Right.
DOBBS: But to look at what we have done, public policy in this country, to subsidize foreign carmakers, to punish our carmakers, to have a big discussion about $25 billion in aid. Look, I'm against bailouts since, you know, I mean -- from the very beginning, I've been opposed to bailouts of any kind. But when it comes to this one, I'm for it. You know why? This is a cheap one. It's cheap. $34 lousy billion against $8.5 trillion we've thrown at the problem.
TUCKER: Right.
DOBBS: And they actually create jobs there in Detroit. And, you know, it's going to cost a lot more. This is an installment plan. First, it was $25 billion. Now, there's $34 billion. There's going to be another -- what -- $50 billion or $100 billion. But good grief, why not just do something intelligent for a change in this country in terms of our industrial policy?
TUCKER: That's so practical, maybe, Lou, nobody in Washington ever thought about it.
DOBBS: Well, I'm sure somebody did, because there are lots of just terrifically-brilliant people in that town.
TUCKER: You think?
DOBBS: Thanks a lot, Bill Tucker. Golly, it's hard to even imagine this is happening.
SLYVESTER: Coming up: Is help on the way for American homeowners? The former head of the FDIC will join Lou to discuss a new government plan and much more. And hundreds of thousands of toxic toys still lining in store shelves in this country. Why does our government refuse to protect us? That story -- next.
Stay with us.
(COMMERCIAL BREAK)
DOBBS: Alarming new evidence tonight of the Consumer Product Safety Commission's complete failure to protect our children from dangerous toys. A disturbing new report finds one of every three toys on store shelves this Christmas shopping season is contaminated with toxic chemicals.
Kitty Pilgrim has our report.
(BEGIN VIDEOTAPE)
KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Using a special type of x-ray device, researchers in Michigan say they have turned up medium or high levels of lead, cadmium, chlorine, arsenic, mercury, and tin in one out of every three toys on the shelves today, at major retailers. The results of those tests are on the Web site Healthytoys.org.
JEFF GEARHEART, HEALTHYTOYS.ORG: Unfortunately, it's really difficult to do this testing on your own. The testing devices we used cost tens of thousands of dollars. Individual product tests are very expensive.
So, it is a wholesale problem. We really need to have government work here and not just bend the rules every time the toy industry comes to them with a complaint.
PILGRIM: The toy industry association today issued a response to the report saying, "Healthytoys.org's statement is misleading to consumers at best. Healthytoys's statement fully admits the testing method they use is only good for screening purposes."
The toy industry association also says the Consumer Product Safety Commission is finding fewer problems over the last year. But Public Citizen is suing the government agency over what it sees as a dangerous loophole in a ban of a chemical called phthalates. That ban is supposed to go into effect February 10th.
JOAN CLAYBROOK, PUBLIC CITIZEN: They just issued a legal opinion for the industry which says that they can't manufacture after February 10th, 2009, but they can continue to sell. The public doesn't understand that, and that's in violation of the law. The agency has an obligation to protect the public. That's why it's created. And instead what it's doing is protecting the industry.
(END VIDEOTAPE)
PILGRIM: Now, the Consumer Product Safety Commission responded that Congress enacted the law to set up new standards, but it allows the products with phthalates to be sold after February 10th. So, this Christmas and well after, toxic toys will still be on the shelves, Lou.
DOBBS: Has anybody ever marched on the Consumer Product Safety -- I mean, just walk in, tell the top people, you know, that the American people would really -- I mean I can't even...
PILGRIM: You know...
DOBBS: What do you do with criminals like that? I mean, there's not a law against them, but every moral and ethical standard of this country demands that they get out of those jobs and let somebody in who cares about this country and our people.
PILGRIM: You know, it is outrageous. They say it's not a new ban. It just sets new standards. So, you can sell anything that's already...
DOBBS: What are they -- I mean, that legalistic nonsense...
PILGRIM: It's entirely legalistic and children are at risk at this point.
DOBBS: You know, how many people are still on that commission?
PILGRIM: Actually, I'm not sure.
DOBBS: Let's find out. I want their names up. I mean, I really -- and I'd like -- any one of you who has the guts to come here and I won't even ask but one question and you can have five minutes right here to explain your conduct in office and why in the world you're not protecting the American people.
If you've got the guts -- I know you haven't got the moral principle, but if you've got the guts and sheer audacity and can sleep at night doing what you're doing, you ought to have the guts to come here and sit at that -- sit right there where Kitty is and tell the American people -- explain yourself.
Thank you very much, Kitty -- Kitty Pilgrim. SYLVESTER: Coming up: President-elect Obama has already picked half his cabinet. Has the president-elect chosen the best and the brightest? Three top political analysts will give us their assessment.
Also, home foreclosures are skyrocketing. What more can be done to help struggling homeowners?
And, the Mexican government is losing its war against violent drug cartels. We'll examine concerns this war could explode in this country.
(COMMERCIAL BREAK)
DOBBS: The Mexican government tonight claiming it's cutting cartel- linked murders and kidnappings along our shared border, but the evidence, unfortunately, shows something quite different. Deadly cartel violence, in fact, is worsening all along our border with Mexico as demonstrated by the brutal events of just the past few days.
Casey Wian has our report.
(BEGIN VIDEOTAPE)
CASEY WIAN, CNN CORRESPONDENT (voice-over): The Mexican government declared progress Friday in its war against violent drug cartels. It says murders are down 7 percent and kidnappings down 18 percent since August, when Felipe Calderon's government launched an effort to crackdown on cartel infiltration of law enforcement.
PRES. FELIPE CALDERON, MEXICO (through translator): On average, we have captured a band of kidnappers every two days.
WIAN: As if on cue, cartel hitmen launched an unusually brutal killing spree, even by Mexican standards, over the next four days. Forty-three murders were in Tijuana, just across the border from San Diego. Some victims were beheaded. Others included the teenage nephew of a government official, a 13-year-old and a four-year-old boy.
Juarez, adjacent to El Paso, suffered 40 suspected drug cartel hits in the past week. Eight victims were killed inside an upscale seafood restaurant. The mutilated bodies of seven others found near a school soccer field.
Experts on drug cartels say the Mexican government's claims of progress should be put into perspective.
PROF. BRUCE BAGLEY, UNIV. OF MIAMI: The problem is so large. It's so pervasive. Corruption is so widespread that any suggestion that a decline over the last three months in killings or an increase in the weeding out of corrupt officials is premature and quite arbitrary. Mexico has a systemic problem.
PROF. GEORGE GRAYSON, COLLEGE OF WILLIAM & MARY: While Mexico's economy is suffering as we're suffering in the U.S., the one sector that's booming is the funeral industry, and the mortuaries in Tijuana and in Ciudad Juarez are just filled to capacity.
WIAN: Calderon says he will not back down in the war on drug cartels, although more than 4,000 of his countrymen have lost their lives in the fight this year.
(END VIDEOTAPE)
WIAN: Some help is now arriving from the United States which this week released the first $200 million of three-year $1.4 billion aid package. Its goal is to supply Mexico with military equipment and law enforcement training to better fight the drug war -- Lou?
DOBBS: Casey, thank you very much -- Casey Wian.
Joining me now with more on Mexico's drug wars are the co-authors of an extensive investigative report published this week in "Newsweek" magazine, entitled "Bloodshed on the Border." It's in the current edition of the magazine.
Arian Campo-Flores, "Newsweek's" Miami bureau chief joins us tonight from Miami. Good to have you with us.
ARIAN CAMPO-FLORES, NEWSWEEK: Thank you. Good to be here.
DOBBS: And correspondent Monica Campbell joining us tonight from Mexico City. Thank you both for being with us.
This is, I think, a stark report that shows in detail that we have not seen, frankly, in any of our national newspapers, our national news magazines before of the level of just gruesome, grisly violence that is taking place south of our border. In fact, more people are dying in this drug cartel violence than there are casualties currently in the war in Iraq each day.
CAMPO-FLORES: Yes. Well, I mean, that's the thing that we really wanted to highlight in the piece, is the fact that there's this really mayhem that's occurring just south of the border that, as one of the investigators that I spoke to in El Paso noted, a lot of Americans really aren't necessarily aware of, at least the extent of the assassination and bloodshed that there is there.
And so really what we're facing at our nation's doorstep is what has all the markings of a failed state. I mean when we think of failed states, a lot of times people think places like Afghanistan or Pakistan. But what we have just south of the border is really quite a lawless territory where many of these criminal organizations operate largely with impunity.
LOU DOBBS, CNN HOST: Focusing as you did on Juarez, just south of El Paso, I mean, a million and a half people - the number of murders over this past weekend, I believe was 23 murders. The Mexican police now tell us at least three were U.S. citizens are killed there over the past three weeks. I mean what - what was your reaction when you first saw what was actually happening in Juarez?
MONICA CAMPBELL, "NEWSWEEK" CORRESPONDENT: Well, there's definitely a chilling effect in Juarez. What you have is a war for that city and the drug smuggling corridors that run through or around it and the average people in Juarez are not feeling safe going out at night. They're keeping their kids at home. You had the press that has been threatened. We had a journalist killed there last month. People are genuinely frightened to leave their homes and there really is no solution in sight.
DOBBS: No solution in sight. Felipe Calderon who I complimented as he took office for his declaration that he would take on the drug cartels and win that battle. The most recent public opinion survey in Mexico, as you know, Monica, shows that most Mexican citizens believe that the Mexican government is losing this war against the drug cartels.
CAMPBELL: Right. Well, the feeling along the border, and I would say throughout Mexico, is that the government has lost control of major parts of the country. And it's very evident in a city like Juarez. If something is happening to you, if you are the victim of a crime, you're not going to feel safe going to the police, because the police - the law enforcement authorities are so corrupt. They're in collusion with the criminals themselves. So there's really nowhere to go. There's no one to turn to in this type of situation, and the confidence that people have in the government to protect them is at rock bottom.
DOBBS: Arian, as you and Monica describe the stark contrast between Juarez and to the north obviously El Paso. El Paso, just about a third the size of Juarez, perhaps a little smaller than that actually. You describe the contrast. Juarez, you write looks like a failed state with no government entity, capable of imposing order and a profusion of powerful organizations that kill and plunder at will. It's as if the United States faced another lawless Waziristan except this one happens to be right at the nation's doorstep. Why - let me ask it this way. How is it that El Paso has so far, even though there has been at least two deaths in the last month in El Paso related to the violence in Juarez, how is it that El Paso has managed to this point to be relatively unscathed with the madness that is Juarez?
ARIAN CAMPO-FLORES, "NEWSWEEK" MIAMI BUREAU CHIEF: Well, I think it's probably a couple of things. One is that it's not really in the cartel's interest to really unleash that same level of violence on the U.S. side, because obviously on the U.S. side they face a far different law enforcement infrastructure than they do in Mexico. I mean you've got - as we note in the piece, you know, El Paso is crawling with federal law enforcement agencies. You've got DEA, FBI, customs border protection, a whole host beyond the local and state. So it's really not in their interest to invoke the wrath of U.S. law enforcement. And the other thing is that, I mean, there is - there is a lot of vigilance on the part of U.S. authorities. I mean they're watching this like hawks. I mean this is just at the nation's doorstep, and they're - they're monitoring it very closely, and they have, you know, a number of task forces, multi-agency task forces they've created to combat it.
DOBBS: Monica Campbell, you've been reporting from Mexico, from the region for some number of years. It seems that the people of Mexico are putting up with something they've never had to. They've dealt with incompetent and corrupt governments before. They've dealt with poverty. They've dealt with a failing economy, but this level of corruption and this dimension of drug violence adds something entirely new for the - our neighbors to the south. What is the sense, the mood in that nation right now and the prospect for the Calderon government?
CAMPBELL: Well, the Calderon government just turned two years in office and I have to say that your average Mexican is not feeling terribly positive about the situation. I mean you open up the newspaper and the headlines are blaring about the level of violence and the type of violence. I think that's what's important to note here is we're seeing a range of violent acts that have never been seen before in Mexico. We're seeing decapitations. We're seeing skyrocketing kidnapping rate. Every week these cartels seem to up the ante. And whether or not people have confidence that Calderon is actually trying to fight this war, the solution is not there. The results aren't there.
DOBBS: OK. Thank you very much.
CAMPBELL: And that's what has people worried.
DOBBS: Thank you very much. Monica Campbell. And I will close by pointing out again that as this violence rages and you know and as Arian and Monica pointed out, Mexico remains the principal source of methamphetamines, heroin, marijuana and cocaine entering the United States. And it seems to be the policy of the United States to accept the collateral damage here and to fund the cartels there. A sad, sad statement, but unfortunately a factual one. Thank you, both, for a terrific report in "Newsweek" magazine. "Bloodshed on the border."
CAMPBELL: Thanks.
DOBBS: Monica Campbell.
CAMPO-FLORES: Thank you.
DOBBS: Arian Campo-Flores. Thank you both so much.
SYLVESTER: Coming up, President-elect Obama moves quickly to assemble his economic team. But does he have a plan to pull this nation out of recession? Three of the nation's top political thinkers will join me. And homeowners may finally get some help from the federal government. We'll hear from the former chairman of the FDIC. He sits down with Lou next. Stay with us.
(COMMERCIAL BREAK)
DOBBS: While our government has pledged trillions of dollars to bail out our economy and particularly Hank Paulson's buddies on Wall Street, little has been done to help struggling homeowners. Well now the Treasury Department says it is, finally considering a new plan that they think would stabilize the country's housing market as they put it. Bill Isaac is former chairman of the Federal Deposit Insurance Corporation. He says it's time for the government to begin helping homeowners. It's good to have you with us. WILLIAM ISAAC, FMR. FDIC CHAIRMAN: It's nice to be here, Lou.
DOBBS: Let's turn first, $8 by whatever the measure, $8 trillion, $7 trillion, whatever the number. When are we going to see some evidence that some of this money is having a positive effect on reversing a weakening economy?
ISAAC: Well, I mean, I guess we'll never know what the economy would be like without it. So it's hard to prove that. But I think over the next - I hope over the next several months we'll start to see some effect from the Fed's efforts in particular plus the money that's being pumped into the banking system by the Treasury.
DOBBS: Can you think of any excuse not to help out right now having put $8 trillion into the system, not to spend $34 billion to help out our Detroit car makers, who have about $3 trillion - I'm so used to bigger numbers, three million folks directly or indirectly are employed by the car industry?
ISAAC: Are you saying do I believe we should help the car makers, is that the question?
DOBBS: Uh-huh. I used a double negative, which you correctly chided me for having done
ISAAC: I'm just trying to make sure I understood the question. But no, I don't know whether in the end we should help them. That's a political decision. I do feel we should not help them unless we are convinced that they've come up with a business plan that works. My own sense -
DOBBS: I've got to ask you this. Would you trust any one of those senators today or any one of those congressman to read the business plan from General Motors and Ford and tell you whether or not it worked or it didn't work? Or one of their staff members?
ISAAC: I hope they have some advisers, but I - I guess what I'm - what my thought is, I think the - I don't know why the car companies are resisting going through a prepackaged bankruptcy.
DOBBS: You know why? It means the management is probably going to get blown out. It means the investors go away and the bondholders don't get bailed out because a large measure of this money will go to bail out the bond holders, right? So everybody gets happy. I don't want to talk about that publicly, but that's what we're talking about.
ISAAC: Yes. I believe that - I don't see the adverse - the serious adverse consequences of going through a bankruptcy proceeding and cleaning up these companies and so that they - so that we have some prospect that they're going to succeed going forward.
DOBBS: And I don't - I personally wouldn't give anybody a dime in Detroit unless they made very strict - strictly adhere to removing offshoring of production and the outsourcing of American jobs because it's not going to do any good to give them all those billions if they're going to continue this nonsense that the U.S. Chamber of Commerce has even shut up about, suggesting that offshoring production was about efficiency and competitiveness when what it's really about is the cheapest wages possible. So you know I agree with you on that. Between us, we can come up with a pretty good set of conditions, I believe.
Sheila Bair, one of your successors at the FDIC, I think has been rather noble in her assertions and ideas about how to help the homeowner. She's awfully lonely however in Washington, D.C. Do you think she's on the right track?
ISAAC: I do. I think she's on the right track. We need to help homeowners, and whether her specific ideas are going to work or not, I don't know, but she's actually been experimenting with them at the failed Indymac -
DOBBS: Right.
ISAAC: And they apparently are working there. She knows more - a lot more about the subject than most people and she's very smart. I would rely on her judgment.
DOBBS: Well, you've just probably eliminated her for consideration. Most of the folks in Congress are going to ignore her because he's making too much sense. You know one of the things she was think about is all these trillion of dollars. If we had just, for the mean price of a house, if we had just given them - just bought out the mortgage last year, that would have been $200 billion. We would still have about $8 trillion to play with. I mean, people aren't thinking. Why is that?
ISAAC: I don't know. There's a lot of things that are not being done right. I won't go into mark to mark accounting but that's critical. We've got to take care and address that issue. And people aren't -- there's no sense of urgency about it. I would also say that I'm curious about the Treasury plan that intends to increase the number of mortgages by driving down the price of those mortgages. From already pretty low levels, 5.5 percent down to 4.5 percent. How do you get banks that don't want to lend you money to lend you more by dropping the rate? I'm not sure I understand that.
DOBBS: To their credit, JPMorgan Chase started modifying loans, and without output modification I don't see how it works either. Do you?
ISAAC: No.
DOBBS: Bill Isaac, it's always great to have you with us. Come back soon.
ISAAC: My pleasure.
DOBBS: Thanks, sir.
SYLVESTER: Up next, does president-elect Obama have a plan to fix our struggling economy? We'll talk to three of the best political analysts in the country, next.
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SYLVESTER: Joining me now are three of the best political analyst in the country. "New York Daily News" columnist and CNN contributor Errol Louis. Errol is also the host of "The Morning Show" on WWRL in New York. Democratic strategist and CNN contributor Hank Sheinkoff. And in our D.C. bureau, Martin Kady, congressional correspondent, Politico. Thank you gentlemen for joining us. We must first start off with the loss of 500,000 jobs in the month of November. This is a fairly stunning numbers. Hank, let's start with you. Your thoughts on this?
HANK SHEINKOFF, DEMOCRATIC STRATEGIST: It's awful. This administration has no power to do anything about it. It's up to the Obama administration to do something about it. And people I think are having the hope that the new players will be able to do something about these stunning unemployment increases.
SYLVESTER: Yes. Errol, one of the problems as we're sort of in between administrations? I mean let's face it, President Bush does not have a lot of clout or he doesn't have a lot of authority here. We heard him speak. But the Obama administration is saying, President-elect Obama is saying look, I'm not the president yet.
ERROL LOUIS, "NEW YORK DAILY NEWS": Well, that's right, and they're very sensibly from a political standpoint choosing not to own a crisis that was not of their making. Frankly, so you got Henry Paulson in China. You got Condoleezza Rice playing piano for the queen of England. There doesn't seem to be anybody in charge. This is going to make things worse as it would have been. Unemployment is getting up around seven percent. The economists I've talked to say that we should expect it to top out around 10 percent. More pain ahead.
SYLVESTER: We have some sound that we have from President Bush. He is still expressing confidence in the economy, saying that he's optimistic that things will turn around. Let's take a listen.
(BEGIN VIDEO CLIP)
PRES. GEORGE W. BUSH, UNITED STATES OF AMERICA: It's going to take time for all the actions we've taken to have their full impact. But I am confident that the steps we're taking will help fix the problems in our economy. And return it to strength. My administration is committed to ensuring that our economy succeeds. And I know the incoming administration shares the same commitment.
(END VIDEO CLIP)
SYLVESTER: Martin, we have been hearing a lot of talk and rhetoric, not a lot of answers. You've seen foreclosures soaring 76 percent in the last year. As we mentioned, 500,000 jobs lost in November. What's going on here?
MARTIN KADY, POLITICO: It's interesting to hear the president talk about the actions we've taken. I think he's mostly talking about this $700 billion Wall Street bailout which doesn't seem to have done anything except confuse people. Secretary Paulson seems to move the ball every time he says what he's about to do with the money. It's not helping the economy yet. What Obama is doing, already planning with the democratic Congress for one of the first actions in January is a longer term economic stimulus, not a bailout, but something in the order of 500 billion, maybe as much as 700 billion economic stimulus that's more jobs focused. Something rather than getting a check in the mail like what we did with the last stimulus last January. They're talking about something that's sort of a government jobs project, a two year stimulus because this is the root of the problem now that we've seen these unemployment figures. We are close to seven percent unemployment and it's the worst job loss since 1974 which was a terrible recession. So this is their plan, but we can't really get anything done in this month or so interim where we are kind of between presidents.
SYLVESTER: Yes. Hank, the stimulus package that they are talking about it comes with a price tag estimated to be about $500 billion. Obviously, the country is losing jobs. So how do you sort of balance that? Because on Washington we saw the $700 billion bailout, on top of that, they ask taxpayers for a $500 billion stimulus plan. That's going to be a bit of a hard sell.
SHEINKOPF: Two things will happen here. They will have to do something in significant magnitude to stimulate the economy. You spend out of a recession and you hope that it works, getting people to work again on infrastructure provides some long-term good for the country. The real issue will be inflation a year and a half down the road. When you print money, you create inflation. They are printing an awful lot of money and Paulson's plan hasn't worked. Look for consistent long-term plan from this administration coming in that involves creating jobs instantly.
SYLVESTER: Errol, turning to the auto bailout? Do you think the numbers that we are looking at, do you think that's going to make it more likely that they will pass some kind of a bailout for the automakers?
LOUIS: I don't think some kind of rescue plan whether it's a bailout or something else, I don't think that there was ever any question. It's going to have to be done. You cannot add two or three million people to these already shocking unemployment numbers. I do think though that there's going to be some leadership out of Washington. They are going to have to come clean with the American public. They're going to have to say, listen, bankruptcy is not the same as liquidation and you know, complete destruction. A bankruptcy means you reorganize. We have flown on bankrupt airlines for many, many years and a lot of people worked for bankrupt companies and never miss a paycheck. It has to be completely reorganized. There's going to have to be a rethinking of both the union contracts, the long-term debt. They're going to have to changes at the board of directors, the product line and all of that stuff.
But you know with 60 percent of the public saying that the auto industry does not deserve a bailout, mostly because they don't like the cars, or something like that. It's going to be very hard to build it and build support for what everybody I think in Washington who knows is going to have to be done. That's why they are trying to ask the White House whether it's this or the next one to "leave them." It is a little bit shameful, frankly. I mean this is why we elected these folks. They need to you know sit down, be truthful with all of us about what they're going to do and then just go ahead and do it and throw the polls away.
SYLVESTER: All right. We're going to pick up the discussion in just a moment and we will be back with much more from our panel. Stay with us.
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SYLVESTER: We are back with Errol Louis, Hank Sheinkopf, and Martin Kady, thank you very much for joining us, gentlemen. Senator Christopher Dodd, chairman of the Senate banking committee, earlier in the week, he said that to do nothing for the big three is essentially playing Russian roulette with the economy. Martin, can you weigh in here?
KADY: Well, this is really the last game of chicken between the democratic Congress and the republican president. Nancy Pelosi and the Senate leaders in the Senate, they really don't want to call another vote on another bailout during a lame duck session unless they have the votes lined up. And right now, it's not 100 percent clear that they have the votes. So they are asking the president to pull the money out of the Wall Street bailout and say let's spend some of that on the auto bailout. Meanwhile GM is saying they need money before the end of this month. They can't wait until the next Congress. So this is up in the air and they are going back and forth. No one wants to be responsible for the bailout. Everyone thinks something needs to happen though. So we are not getting a ton of leadership and we're not getting clear decisive answers yet out of Washington.
HOST: You know, you've summed that up very nicely. In fact, we have some sound we play from Christopher Dodd. But I mean that's really what it comes down to. The votes are not there, but everybody said something needs to be done. Let's go to Senator Christopher Dodd.
(BEGIN VIDEO CLIP)
SEN. CHRISTOPHER DODD (D), CONNECTICUT: In my view, we need to act. Not for the purpose of protecting a handful of companies. If that were the extent of the issue, I would let them fail. I acknowledge that those who advocates such a course on the assumption that pressure from the outside will produce the desired results. My concern with such an approach is that a place that Russian roulette with the entire economy of the United States. Inaction is no solution.
(END VIDEO CLIP)
SYLVESTER: Hank, your thoughts? Will they or won't they?
SHEINKOPF: They will probably will not do it now. They'll probably will try to put it over to January and play chicken. The larger issue is what happens? Can America swallow another bailout? They want a structured bankruptcy will probably be more likeable for Americans to tolerate, number one. Number two, the larger issue for the Obama administration coming out of this will be health care reform and that's ultimately what propels the automakers argument. And that's what Obama is going to have to deal with.
SYLVESTER: Let's turn in fact to Senator Obama. He has selected, he is marching along in his cabinet picks, building this sort of team of rivals, if you will. What do you think of his approach, Errol?
LOUIS: Well, you know, I have been reading the book, "A Team of Rivals," just to get at it as more than a slogan. You know as it turns out, Lincoln actually had a lot of turmoil in his cabinet. I hope that Obama realizes that he may be buying a little bit of trouble. It was significant under Lincoln. We were talking about a war secretary who had to be fired both for corruption and because he was about to lose the civil war for us, you know. We were talking about a Treasury Secretary and Lincoln resigned four times and on the fourth time Lincoln accepted it. So you know the drama Obama persona he's built up may have to go by the wayside.
On the other hand, listen, what we need is unified leadership. And however he does it. It actually goes back a little bit to the infrastructure question. The smartest thing about his infrastructure plan is that it involves the governors of all the states. So the governors can join the Congress, can join the White House and private industry and all saying to the public, we are united, we have a plan, we're all in this together. That's the opposite of what's happening right now with the auto bailout.
SYLVESTER: Martin, your thoughts on this?
KADY: Well, what Obama is doing with each of his roll outs here, I mean he has already set a record for press conferences for a president elect. He's getting buy in from the key segments by keeping Gates and bringing on Hillary Clinton, he is certainly getting a certain amount of buy in for unity and national security. He did the same with Wall Street by choosing a top Wall Street guy. The New York fed chair Geithner. And next week he is going to - we're expecting him to tap one of the leading minds on health care former senator Tom Daschle to be the HHS secretary, to sort of unify these roll out and get people behind the universal health care reform. Plus he is getting a lot of air time. If you notice, every time that Obama has a press conference in the middle of the day. All the three networks interrupt and Obama dominates. That's why he is getting by with each of these announcement.
CHETRY: Hank, a lot of powerful figures, but a lot of powerful egos. We will give you the last word.
SHEINKOPF: They will put them aside for one reason, they want President Obama to be a successful president and they want the country to survive economically.
HOST: The country certainly needs that.
SHEINKOPF: Need the help. SYLVESTER: All right. Hank, Errol, Martin, thank you very much for your time. Thank you very much, gentlemen. And thank you for joining us. Please join us tomorrow and please join Lou on the radio for the "Lou Dobbs Show," go to loudobbs.com to check your local listings for the "Lou Dobbs Show" on the radio. For all of us here, thanks for watching. Good night from New York.
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