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CNN Larry King Live
Dealing with the Economic Crisis
Aired September 21, 2008 - 21:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LARRY KING, CNN ANCHOR: Tonight, could the financial crisis be nearing an end? Or is the government bail out plan, maybe the biggest in history, just the beginning? If you have got a little money under the mattress or a lot in the bank, it will matter to all of us. Suze Orman lets us know what she thinks.
Plus, to tell the truth. Are the candidates being straight with the voters and if they aren't, why not and who should we believe? Do voters even care? Questions, answers, next on LARRY KING LIVE.
Good evening. It was quite a week. The historic run on Wall Street saw stocks way down and way up, scaring a lot of people in the process. And it prompted the government to step in with a rescue plan. Thursday night it came down. And just as Suze Orman and I were going on the air. Take a look.
KING: We begin with breaking financial news tonight, an extraordinary meeting has just concluded. Congressional leaders have met with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. CNN senior business correspondent Ali Velshi is with us. Ali, what can you tell about their meeting and what they have come up with?
ALI VELSHI, CNN SR. BUSINESS CORRESPONDENT: It's a remarkable gathering. As you said, Ben Bernanke, Henry Paulson. After spending the day with the president, Henry Paulson went over to Congress. They met in Nancy Pelosi's office and they seemed to have agreed they're going to sit around for a few days if they have to try to hammer out one deal that will try and deal with this ongoing domino of financial crises that we've been seeing. They want one deal. They want to look at this mess and say what can we do?
And he's got them all talking. The idea here is that maybe something, Larry, that is reminiscent of the deal that came out after the long- term crisis where there was an agency formed, a government body formed, that bought up a lot of the bad properties, held on them for a few years, cleaned them up and sold them at a profit.
The idea is maybe the government can take over all of this bad debt and somehow deal with it over the course of a few years. That's the thing. But Larry, we are talking about a deal could be worth more than a trillion dollars. There's a lot of bad money out there right now.
KING: Are you saying these meetings will be ongoing? VELSHI: We understand that they're prepared to meet through the weekend. As you know, the last several weekends have been working weekends for Henry Paulson, cutting deals for Merrill Lynch and Fannie and Freddie and things like that. They're prepared to go through the weekend and try and hammer out a deal. Congress and Nancy Pelosi has said they will sit beyond their September 26th date where Congress would normally get out of session. They're prepared to do this. This would have to be a legislative solution.
KING: Ali, thank you so much. Ali Velshi, CNN senior business correspondent, as always, right atop the scene.
Now let's bring in Suze Orman, host of her own "Suze Orman Show," personal finance expert. What do you make of this, Suze? Good idea?
SUZE ORMAN, PERSONAL FINANCE EXPERT: Well, actually, I think it's a good idea and here's the real question -- what took you so long? Truthfully, why did we have to get to this point for them to create something like an RTC, a resolution trust. This is the solution to come up with months ago when everybody knew that these loans were going to go down. They should have done it. So once again, I'm saying to you why does it take them so long to come up with the solution that they should have come up with a long time ago? But I'm grateful they're coming up with it now.
KING: The market rebounded today. Good sign?
ORMAN: Great sign, but for today. Not for necessarily the long run. Don't get suckered in just because this market goes up today. Maybe even tomorrow. Doesn't mean that we're out of the woods. How many times in the past have we seen the market go up 300, 400 points and then all the way down again?
We still have serious trouble on the horizon so until it's been settled, until things have cleared out, until unemployment starts to go down again and until they figure out how to secure these mortgages and get money into the system, we have trouble, Larry. This is the beginning of the solution to the problems.
KING: Republicans on the Hill today are blasting the Treasury Department and Federal Reserve for orchestrating that $85 billion bailout of AIG. What do you think of that?
ORMAN: Well, I think that's a great thing for them to yell about. Of course we had to do that. What is the matter with them? Don't they understand -- I get that the taxpayers are going to have to pay for it but do you have any idea -- do they have idea what would have happened if that institution had gone down?
That was a massive institution within 130 countries with about 113,000 employees in every aspect all over the world. So I don't know, I'm personally grateful that they bailed them out. And it is not a bailout. It was a deal, by the way. The government is going to make a serious sum of money on that. The taxpayers will in the end make money -- 80 percent of this company, for $85 billion? One of the biggest -- the biggest insurance company out there. Again, I have to say, that was one of the best business deals I've ever seen in my life.
KING: The New York attorney general Andrew Cuomo has opened an investigation into short selling and possible spread of false information. That investigation announcement drove down the stock price of several Wall Street firms including Goldman Sachs and Lehman and Morgan Stanley and AIG. By the way, the investigation is of investors and not employees. What do you think of that?
ORMAN: Well, here's what I really make of it. Did you see in London, they have shut down short selling altogether? Currently, you can now not short sell and there is a rumor by "The Wall Street Journal" right now that Cox is going to shut it down here in the United States, as well.
Something is not right with the short selling. I don't know what it is. But when you can take down companies and you can see their stock lose 50 percent, in just a week or so, and go -- or even a day sometimes, something is radically wrong. This is not normal short selling. Why they got rid of the uptick rule a few years ago is beyond me. But it really, I think, goes beyond the uptick rule and they seem to be taking very desperate measures right now because something is wrong with the shorts that are out there.
KING: McCain wants Cox fired, doesn't he?
ORMAN: Oh, he most certainly does. That was one of the things he said. I have to tell you, I don't agree with him with a lot but that's one idea, hmm, maybe he has an idea there. Why in the world he didn't come in and regulate more, I mean, why he didn't take action sooner and bring in certain things a long time ago is, again, beyond me. But it's better to do something now than to continue to have done absolutely nothing.
KING: We have an e-mail from Matt in Eugene, Oregon. "Why are my tax dollars being used to bail out companies that through bad business practices have gotten themselves into a mess?"
ORMAN: Because nobody else has any money to bail anybody else out. Listen, watch what's happening here very closely. You want to keep your money safe and sound now. You're putting it into our Treasury, because the Treasury is backed by the taxing authority of the United States government.
What's a three bill treasury paying you right now? Nothing, like a quarter of a percent. Nothing. So we are lending our money to the government in essence to keep it safe and sound. Just so that nothing happens to it at a 0 percent interest rate now so that they can use it to bail out everybody and hopefully make money. It's the only place that has money. You can't get money anywhere else so I have to say, it falls on us but it's always fallen on the taxpayer. This isn't something new.
KING: Hold the phone. Suze will be back right after the break.
(COMMERCIAL BREAK) KING: We're back with Suze Orman. Another e-mail question from Tamara in Montreal. "When it comes to savings accounts, I know that funds are protected up to $100,000. However, I hear that the FDIC may be starting to have troubles of their own. Do you think we have to start worrying about this and what do we do if the insurance can't be provided?"
ORMAN: Yeah, here's what you need to understand. I have personally spoken to Sheila Bair, the chairman of the FDIC. I have it in writing. Here's how the FDIC really works. If they, God forbid, ran out of money, they have a line of credit so to speak with the Treasury. They are backed by their charter by the full faith of the United States government. So they cannot go belly up.
Now, of course, what does that mean? The taxpayers, again, eventually if they had to go that route, but at this point, hopefully they have enough. She feels that they absolutely have enough for everything that she sees on the radar and they're behind the scenes looking at it. But in case they don't, they'll go to the Treasury. They have a line there and they will get the money needed to make sure that your money is absolutely safe.
KING: Let's take a call for Suze. Santa Fe, New Mexico, hello. Hello?
KING: Yes. Go ahead. Go ahead.
CALLER: OK, hi. Hi, Suze. I have a question. My question is that I have a relative that put a CD in for me and I cannot touch it for nine years and they refuse to take it out for me and I need the money now. Is there any way to go around this to get the CD out?
ORMAN: No. Whose name is the CD in?
KING: I don't know. I cut the phone.
ORMAN: Yeah, all right, fine. There you go. But if it's not in her name, she has no right to the money so there you go. I'd rather have money in nine years than not at all. I don't know.
KING: We have an e-mail from Burnville, Pennsylvania. It's from Michael. "Shouldn't we be buying right now? I was always told buy low, sell high. Does that mean put more money into my 401(k), even though I've been losing money on it for 14 months?"
ORMAN: All right. Let's go over this one more time. Here are the rules. You have 10, 20, 30 years until you need your money, you have got to keep investing in your 401(k).
This is not the time that you sell. You keep investing every single month. Just make sure you're investing in good, quality. Either mutual funds, exchange traded funds, whatever it is.
However, if you happen to be somebody who is retiring in six months and you need this money to be safe and sound, maybe to generate income for you, whatever that is, this isn't the time that you take a risk. This is the time that you never should have been in the stock market to begin with, that you need to be in safe things to generate income.
Larry, here's the thing also that people should think about doing. At times like this, if you are afraid and you don't know what to do, there's nothing wrong with switching your investments, meaning, you can come out of the stock market but buy things, stay in the stock market, that give you good dividend yields. Exchange traded funds that are paying you 4 percent, 5 percent, 6 percent. You have nothing to lose.
So if the markets continue to go down, at least you're getting income so you're not so freaked. Otherwise the money is sitting there making half a percent, maybe one or 2 percent in money market funds. So there's always a way to invest.
For those of you however who are afraid, you don't know what's happening, I don't know. Today was a very nice up day, you might want to lighten up a little bit if you need that money. If you don't need it, now's a great time. But don't do in it a lump sum, little chunks. If you have $50,000, now is not the time to be investing. If you're in your 401(k), little every month, OK, I don't have a problem with that.
KING: Chicago, hello.
CALLER: Hi. Suze, explain to us dollar for dollar how much this is going to cost the taxpayer. Why are we bailing them out? How much does it cost me as an individual?
ORMAN: I wish I could tell you that. Currently, we're on the hook for about $900 billion. If they go ahead with this new resolution trust, this RTC, or whatever it's going to be, it's got to be a little bit different than it was 1989. It can't work the same way. It is a very different problem.
But if they go ahead with doing this, this could be close to $1 trillion more. Now, what -- how that translates into taxes, I'm not exactly sure. Because how do they set up it up? Do they set it up so that eventually when they sell it, they make money and then we don't have to get taxed for it? I don't know how this is going to work out and they don't know how it's going to work out either. At least I'm willing to say, I don't know. I wish they would, you know.
KING: We have an e-mail from Deborah in Duncan, South Carolina. "We have our mortgage with Washington Mutual. There's talk of bankruptcy."
KING: "Well there be a time that they would be willing to accept a payoff lower than what we owe? We have excellent credit. We owe $77,000."
ORMAN: I don't think so because when you have excellent credit, they know you don't want to ruin your credit and they need your money. They need your monthly payments.
So at this point, they're not going to be willing to take less than that. They're usually only willing to take less when you have lousy credit and they'd rather get $50,000 than nothing. But when you have great credit, they want all the money.
KING: Are you optimistic Suze or pessimistic?
ORMAN: Well, I've been pessimistic as you know lately. I was optimistic after Bear Stearns. I was getting optimistic. I was thinking it wasn't so bad until then we had Fannie Mae, Freddie Mac. I'll feel better once there really is a decision to do we do something like an RTC, a resolution trust.
Are they taking care of the situations? Are they taking care of the short sales? Are they really dealing with the problems in an intelligent way? Have they been doing that up until now? Not exactly. If they could do that, I'd get a little bit more optimistic. But other than that, to say that this is serious - I said it the other night, I'm going to continue to say it. This is serious, everybody. This is serious.
KING: Thanks, Suze. We'll be calling on you again. I wouldn't be surprised if it's very, very soon. Suze Orman, host of "The Suze Orman Show."
KING: Donald Trump is here next and count on him to call it like he sees it, right after the break.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Breaking news on the American financial front.
UNIDENTIFIED MALE: A volatile day ending on a volatile note.
UNIDENTIFIED MALE: The world can exist without five investment banks, but can't take a major insurer out of place.
UNIDENTIFIED FEMALE: I think the most important part of AIG is it is the lynch pin of a lot of corporate America. You just can't let this company fail.
(END VIDEO CLIP)
KING: Donald Trump joins us on the phone. He'll be with us in the next segment. Donald, what's your read on all this?
DONALD TRUMP, TRUMP ORGANIZATION (on phone): Well, I think it has the chance to be the worst period of time since 1929. This is a really devastating period. When you look at AIG, when you look at Goldman Sachs and Morgan Stanley and so many others that are potentially great companies, are great companies and they're just down the tubes. It's an incredible period. As far as was the government right with respect to AIG? I believe so. And in a sense, they bought 80 percent of the company for a guarantee. They may have actually made a great deal. So I really believe they were right.
KING: Donald Trump is with us, the chairman and president of the Trump Organization. Who do we blame for this, Donald?
TRUMP: Well, there's a lot of greed on Wall Street. And a lot of people are making crazy deals and you can blame everybody, even the regular consumer that went out and bought a house and got a mortgage that was ridiculous. You know, we call them exploding mortgages. But you can really blame a lot of people. And I guess you can maybe just blame the times.
KING: Do we need more regulation?
TRUMP: I would hope not, Larry. There's so much regulations. If you look at Sarbanes-Oxley, I know companies that don't move because of Sarbanes-Oxley. They can't get out of their own way. And you go to other companies and they don't have the regulation. And we're in a tremendous disadvantage in this country. You go to other countries and there isn't that same regulation.
So, it really puts this country at a competitive disadvantage. So hopefully, there'll be some type of minor regulation. But it's the times and it's greed and I'm not sure you can ever do anything about pure greed.
KING: Are you concerned about Goldman Sachs and Morgan Stanley?
TRUMP: Well, it would seem to be a great concern. John Mack of Morgan Stanley is a great, great man. He's a great friend of mine, a great businessman and you see a company like that is under trouble, I know how good a man he is. I know what a good job he does, but you look at what's happening to Morgan Stanley.
It's very, very frightening. I had a friend that put a tremendous amount of money about a year ago into AIG. Smart guy, well-known, you know him very well, very rich. He said, Donald, I want security. He got wiped out, got totally wiped out. Now, not all of his money, but he lost everything he put into AIG. I called him, Larry, I gave him a very hard time, I really did laugh. He wasn't laughing, however.
KING: You enjoy that, Trump.
TRUMP: I do love it, I actually do.
KING: How worried is the average...
TRUMP: I can only love it when it's a great friend, Larry.
KING: I know, this is something you're not. So try to put yourself in their shoes, the average American family, average guy, how well --
TRUMP: Well, it's both a very tough time and a great opportunity. You have great opportunity. As an example, go out and buy a house right now from a bank, the bank will take back financing and make a great deal.
There are great opportunities right now for people when you say average family. It's an unbelievable time to buy a house and especially if a bank happens to own it because they've put the money in so it's not a question of getting financing, which you can't get.
The money is already there. Go out and make a deal. The banks want to unload their stock. They have thousands and millions of houses. Go out, see what they have, get yourself a great house, they will give you financing.
KING: Obama or McCain, who would handle this better?
TRUMP: Well, I know John McCain, and John McCain's a great guy, a tremendous guy. I've known him for a long time. And I'm with him, and I'm with him based on the fact that I have great knowledge of John McCain. Also, this is not the right time for tax increases and Obama wants to increase your taxes drastically. So this is not --
KING: In all fairness, he says he doesn't --
TRUMP: This is not the right time.
KING: Obama said 95 percent would be reduced under his plan.
TRUMP: Well, I'll tell you, the people that create the jobs and the people that really create a lot of things in the country, they're going to be taxed into oblivion. And I'm not even sure when you look really at his tax, I think everybody's going to be taxed a lot more. So I like the fact that taxes won't be raised under McCain.
KING: Are you concerned, say, about Sarah Palin or Joe Biden, who will be better suited to step into that office right now?
TRUMP: Well, I can only say that Joe Biden got less than 1 percent of the vote every time he ran for president. I mean, you know, I don't understand why Hillary wasn't chosen because she was really winning.
I have a friend that came to this country and was here for the last four weeks of that whole election. He said how did she lose? She won every election, she won every primary. He didn't understand it. The fact is that Obama went limping across the finish line. He should have chosen Hillary, it would have been a much different race, I believe. Right now, it looks to me like McCain is probably winning.
KING: Are you saying, though, that Biden would be better suited than Palin to step into that office?
TRUMP: No, I'm not saying that. I think she's made a tremendous impact. The impact that she has had on rejuvenating almost the Republican Party, it's been unbelievable. She has had a tremendous impact and frankly I didn't know who she was. Most people didn't know who she was. As soon as we got to see her and watch her, everybody's impressed. I think that really is to John McCain's credit. What he did in this choice is amazing because nobody else would have made it. It was a courageous choice. It has really reinvigorated the party.
KING: Have you formally endorsed the ticket?
TRUMP: No, but I'm endorsing McCain. I am basically very strongly -- you have to understand, I've known him, I like him, I respect him.
KING: So you're endorsing him?
TRUMP: He's a smart guy and I think he's going to be a great president.
KING: So you're endorsing him?
TRUMP: Sure, I'll endorse him on your show, why not?
KING: You just endorsed him.
TRUMP: I endorse him.
KING: Are you pessimistic or optimistic about this financial situation?
TRUMP: Well, I'm very pessimistic. And if you remember two years ago when I was on your show, I predicted near depression. And I get a kick out of these people. They get on television, they say we don't think - I saw it just this morning. We're not in a recession yet. I'm saying where do they come from? Where are these people from? They're saying we're not even in a recession yet. Well, in many parts of the economy and frankly in parts of the world, I just sold a house in Palm Beach a month ago to a Russian for almost $100 million and today I see the Russian stock market has collapsed. It's in the process of collapsing. They closed the market. What is going on? The world, this is beyond now the United States. The one good thing is that oil, which is the life blood of an economy, oil is dropping like a rock.
KING: Yeah, Donald always great to have you with us, thank you so much.
TRUMP: Thank you very much, Larry.
KING: Donald Trump, chairman and president of the Trump Organization. There by the way you see Barack Obama in Las Vegas where he just finished speaking about the economy. Hey, two really smart guys who know what they're talking about, Ben Stein and Robert Reich. They'll probably disagree on a few things after the break.
KING: Joined now by two terrific economists. In Washington, Ben Stein, the former presidential speech writer, author. His new book is "How To Ruin the United States of America." And in San Jose, California, Robert Reich, the former labor secretary in the Clinton secretary and is an economic adviser to Barack Obama.
First Ben, what are your thoughts on what is going on this week in the storm market?
BEN STEIN, ECONOMIST: First class disaster. The worst treasury regulation of the economy in my lifetime and I'm 63-years-old. Deregulation has been a disaster. Your friend Donald Trump to the contrary, not withstanding. Letting the investment banks and the commercial banks work together to wreck Wall Street has been a disaster. Not bailing out Goldman Sachs basically told the investing public that they're on their own. The effect on this on the ordinary investor and the pre-retiree trying to get going, seeing his savings being blown out of the water by short sellers is just catastrophic to the free enterprise system. I cannot think of worse stewardship of the economy than we have seen in the last few months, especially in the last few days.
KING: Robert Reich?
ROBERT REICH, ECONOMIST: Well, I'm hard pressed to disagree with Ben Stein on a lot of that. And the irony is that under Republican administration, we are seeing more intervention in the so-called free market than we have had since the Great Depression, taking over entire companies.
Now I would much rather have instead of bailouts and subsidies, I'd much rather have regulations that make sure that Wall Street is playing fair, full disclosure, capital requirements, you know, transparency. We have not had this. Instead, we now have a kind of reaping the whirlwind of a lack of oversight.
KING: Ben, here's what Obama had to say today about McCain. And we'll get your comments, watch.
(BEGIN VIDEO CLIP)
SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: Yesterday, Senator McCain actually said if he's president, then he's going to take on, and I quote, "the old boys network in Washington." That's what he said. He's going to take them on. I'm not making this up.
Now, think about this. This is someone who has been in Congress for 26 years. This is someone who put seven of the most powerful lobbyists in Washington in charge of his campaign. And now he tells us that he's the one who will take on the old boys' network in Washington.
What's wrong with this picture? The old boys' network? You know, in the McCain campaign, that's called a staff meeting.
(END VIDEO CLIP)
KING: Ben Stein, does the handling of the economy, the Bush administration, may or may not be involved give you pause?
STEIN: It terrifies me. It terrifies me that McCain is coming up with a whole raft of any ideas. I would like to see him suggest at least a new resolution to buy the bad assets of the financial institutions that are in trouble, get them off their books, re-liquefy them so they can start making loans to the individual families and businesses of America.
I would like to see Paulson fired yesterday. It's unbelievable that after his incompetency he holds that job. It is a disgrace to the Republican Party and to this country. I would like to see him come forward with some proposals for really serious regulation. Get Chris Cox out of there. He's an incredibly nice guy, but believes in a sterile and bankrupt ideology of hands off Wall Street.
KING: Robert Reich, Obama on the other hand has very little economic experience, right?
REICH: Well, since February of 2006, Barack Obama has been sponsoring legislation to create more disclosure on Wall Street, particularly with regard to mortgage instruments right there in 2006 before anybody was saying they had to reform it, Barack Obama was on this issue.
John McCain is sort of a born again regulator, but actually he's been anti-regulation for most of his 26 years. Every time there was a regulatory alternative, he said, no, we don't want regulation, we can trust the free market on Wall Street and that has been proven very badly wrong.
Barack Obama has come out very strongly for three things that need to be done. One is full disclosure, the second is better capital requirements, the third is getting rid of a lot of the conflicts of interest on Wall Street.
And John McCain, what does he stand for? Basically he is standing for more tax breaks for the very rich. I'm not surprised Donald Trump likes that. But if you look very, very closely, what is -- what is it that Barack Obama is saying? Regulate and give tax cuts not to the very rich, but to give tax cuts to average-working people.
KING: By the way in case you missed it just a little earlier, Donald Trump did officially announce his endorsement of John McCain tonight on this program. McCain, by the way, Ben, has a new ad up saying he'll reform Washington and Wall Street. Here's part of that ad. Give me your thought.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: You, the American workers are the best in the world. But your economic security has been put at risk by the greed of Wall Street. That's unacceptable. My opponent's only solutions are talk and taxes. I'll reform Wall Street and fix Washington.
(END VIDEO CLIP)
KING: Will he, Ben?
STEIN: I doubt it very much. I'd like to see some real proposals. Serious proposals, get somebody in the SEC who believes in regulating the security market. Get some teeth in the SEC, get some teeth in the Treasury Department.
We've got laws on the books against fraud. Let's enforce them. This whole mortgage thing was fraud. This whole business of deregulation was basically allowed fraud. We have got to say no more fraud. I've got a close friend who is a Holocaust survivor. He has just lost a large chunk of his savings.
This is an outrage. We're letting these short sellers and these fraudsters ruin the lives of ordinary Americans. Let's see some teeth in Senator McCain's proposal. I'm for McCain, but let's see some teeth, senator.
KING: Robert, McCain said Obama's going to raise taxes. I know you're part of his economic adviser to him. Straighten that out.
REICH: This is part of the McCain disinformation campaign, Larry. And I credit it again with Donald Trump. That is not the case. Independent groups like the Tax Policy Center that have looked at the two campaigns and looked at the two sets of proposals have been very clear.
What is going to happen, well, John McCain is going to cut taxes for the very rich, but actually raise taxes for everybody else because he wants to get rid of the employer provided that is now tax free health system. And what is Barack Obama going to do? He is going to reduce taxes for 95 percent of Americans.
And all of these independent centers looking at the proposals, say that Barack Obama's tax cuts are three times greater for the middle class and the lower middle class than our John McCain's. John McCain is simply continuing on with Bush's policies, tax cuts for the rich, tax cuts for corporations, deregulation.
And you know, it's amusing to me how these Republicans when they run for office they become populous. They rail against big corporations, rail against Wall Street. And then when they actually are elected, if they are elected, they embrace the very people they were railing against.
STEIN: To be fair, Wall Street has its hooks into both parties. The people running Wall Street, the speculators, the powerful speculative interests, the Wall Street power houses have got their hooks deep into both parties. I'm terrified by the extent of Wall Street's power.
REICH: Ben, let me agree with you in terms of Wall Street's political power. But let me disagree with you in terms of Barack Obama. I know the man, I've worked with the man. I know his policy team. I'm part of his policy team. I know he is dedicated to cleaning up the mess and he is not going to allow Wall Street to push him around.
KING: Hold it, guys. Our guys aren't finished yet. They've got a lot more to say right after the break.
(COMMERCIAL BREAK) (BEGIN VIDEO CLIP)
OBAMA: We need 100 percent guarantee that things are going to change. And you're not going to get it with John McCain.
MCCAIN: Senator Obama has never taken on his party. I've taken on my party.
OBAMA: Gosh, that guy Obama's been talking about change. That seems to be working, so maybe we should try to say it too.
MCCAIN: We've got to reform. We've got to reform the way that government does business.
OBAMA: They were all saying, experience, experience, experience. Then they chose Palin and they started talking about change, change, change. What happened?
(END VIDEO CLIP)
KING: We're back with Ben Stein and Robert Reich. Ben's new book is "How to Ruin the United States of America," and there you see its cover. Gentlemen, McCain economic adviser Carly Fiorina, the former head of Hewlett-Packard, raised a lot of eyebrows yesterday. She said none of the four candidates were qualified to run a major company. Here's she's asked about Sarah Palin in a radio interview.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Does Sarah Palin -- John McCain obviously thinks she has the experience to become president of the United States. Do you think she has the experience to run a major company like Hewlett- Packard?
CARLY FIORINA, MCCAIN ADVISER: No, I don't. But you know what? That's not what she's running for. Running a corporation is a different set of things.
(END VIDEO CLIP)
KING: Any comment on that, Ben?
STEIN: I think Carly Fiorina is right. By the way, she's doing her hair or something different. She looks fabulous. Anyway, I think she's totally, completely 100 percent right. It's a whole different skill set. Obviously, Mrs. Palin is quite intelligent. The issue is really whether she has the experience for the job. I think she's got enough administrative experience.
But I'd like to see her locked up with somebody really smart in the world of economics like Warren Buffet, who, I'm sorry to say, is advising the other side. Maybe we could borrow him for a little while and have him explain to her just what's going on economically. I'd like to lock Mr. Buffet up with Mr. McCain too. I mean, they're getting incredibly bad advice from somebody about these tax cuts. They've got to get some sensible advice. Maybe Mr. Reich would care to meet them.
KING: Would you switch a day or two just to help your country?
REICH: Well, to help my country, I certainly would. But I was going to have a suggestion to Ben Stein, who is agreeing with me on almost every issue tonight. Ben, you know I have a candidate for you. His name is Barack Obama. And it would solve many of your problems.
STEIN: No, it would not solve my problem with right to life, I'm afraid. But I'd like very much to see somebody get in the room with Mr. McCain and say, look, tax rights for corporations are not what is needed now. Tax cuts for wealthy individuals are not what is needed now.
What is needed now is crackdown on Wall Street corporations. Do something dramatic like FDR did, like we did in the Savings and Loan Crisis to restore confidence. I'd like to see the president get on TV with Mr. Obama to his left and Mr. McCain to his right and say, we are going to make sure that you Americans are going to stop be looted by Wall Street. We're going to do whatever it takes. If it takes putting them in prison, we're going to do that.
We're going to do whatever it takes to restore faith in the free market.
REICH: Ben, the president is not going to do that because he has done just the opposite for the last seven years. And McCain is not going to do that because for the last 26 years, he's been calling for deregulation. It's only Obama who is going to actually do that.
STEIN: I doubt if Mr. Obama will do it either, because it's true, they can't probably push him around, but they may be able to pay him around. These guys raise a lot of money on Wall Street. It's very hard to turn them down. Besides, you've got to really have guts to get in there. Which of the candidates has the guts to take on the power of brokers on Wall Street? Who has got the guts? It looks to me like it's McCain, but I don't know if he's got the advisers to tell him what to do.
REICH: Look, if you're you disagree -- if Ben disagrees with all of McCain's policies and all of Bush's policies and agrees with me and also, incidentally, agrees with Barack Obama and -- Ben, I still don't understand why you don't come to my side. But the fact of the matter is Barack Obama does have the guts. Barack Obama has a history of taking on some causes that many people are saying are lost causes from the beginning, when he was a community organizer, all the way through the state legislature, all the way through the Senate.
STEIN: I haven't seen it. I'd like to say name one while he was in the Senate. But anyway, time is up.
REICH: Ethics reform.
KING: Guys, Ben, that's our time.
REICH: Everything that he has done in the Illinois state senate. KING: We're out of time. Ben Stein and Robert Reich, never dull.
When it comes to politics, the truth is out there, but whose truth? Campaign trail fact versus fiction, next.
KING: Program reminder. Next Wednesday night, Bill Clinton, former president of the United States, will be our special guest.
It's time now to do some fact checking. In Washington, D.C., Bay Buchanan, president of the American Cause. She's a conservative activist. In Washington, as well, Viveca Novak, deputy director of FactCheck.org. And in Montana, Ed Schultz, the radio talk show host, who is supporting Obama for president. Quickly, Viveca, what is FactCheck.org.
VIVECA NOVAK, FACTCHECK: FactCheck.org is a part of the Annenberg Public Policy Center at the University of Pennsylvania. And we see ourselves as part of a consumer advocate for voters. We are there to point out what's factually wrong in candidate ads and speeches and debates and we're pretty busy lately.
KING: No endorsing, right?
NOVAK: No endorsing. We are totally nonpartisan.
KING: OK we're going to show you some clips. We'll have Bay and Ed comment, Viveca, as well. Here's our first one. McCain is hitting Obama, saying he'll just raise your taxes. Let's watch this ad.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: When our economy's in crisis, a big government casts a big shadow on us all. Obama and his liberal Congressional allies want a massive government, billions in spending increase, wasteful pork. And we would pay painful income taxes, sky rocketing taxes on life savings, electricity and home heating oil. Can your family afford that?
(END VIDEO CLIP)
KING: Ed Schultz, truth or not?
ED SCHULTZ, RADIO TALK SHOW HOST: No, that's not true, Larry. It depends on who you're talking about. If you're talking about the top two percent, absolutely, taxes are going to be going up for a fraction of the population in this country; 95 percent of Americans under Barack Obama's plan will get a tax break and a tax reduction, along with energy tax credits which John McCain voted against recently with wind and solar. There's a totally different philosophy here as to who gets the break.
KING: OK. Bay, you want to respond?
BAY BUCHANAN, REPUBLICAN STRATEGIST: Sure I did. I think, as he said, it was Obama and his liberal cronies back in Washington. And the key here is that Barack Obama, 94 different times, has either voted to increase taxes or keep taxes from being cut. He has a complete, absolute perfect record for keeping taxes high. That's his game plan. Always has been. He's come up with this new plan now as a candidate. But you look what the liberals do, all that spending they want to do, you have to ask Barack; how are you going to pay for all that, friend?
KING: All right. Viveca, do we have a conclusion from FactCheck.org?
NOVAK: Yes. The taxes that Obama is going to raise are on people, couples, families making more than 250,000 dollars a year. He is not going to raise capital gains taxes on you unless you're making that much. And taxes on home heating oil and electricity, he is not going to raise those for anyone.
KING: OK. We have another one here. Obama's trying to appeal to Hispanic voters. We'll show you an ad here with the Spanish language ad, which paints McCain as anti-immigrant. It puts up quotes from, of all people, Rush Limbaugh. Why Republicans think that is over the line, why, Bay?
BUCHANAN: Boy, the ad is -- it's crazy. First of all, John McCain is well-known in the Senate as somebody that's championed and actually sponsored, written immigration reform. That's the comprehensive. Those of us who believe in much more restrictive policies have fought him. He is a champion on the side of illegal immigrants, much more so than I'd like to tell you. Barack knows that. This is a complete, absolute distortion of the facts.
KING: Isn't that true, Ed?
SCHULTZ: No, it is not true. The fact is, as you can see it in his campaign right now, John McCain is doing nothing to get minorities to vote for him. What is he doing? He's given up on the African- American vote in this country. Absolutely doing nothing. The immigration bill is so screwed up right now, we don't know where we are as a country. But we know this: John McCain does not protect American jobs and he is anti-union and he is anti-middle class. He has nothing on the table that's going to make things better for the middle class. It will be more of the same.
BUCHANAN: So absurd.
KING: Comment, Bay?
BUCHANAN: Yes, I sure do. He didn't answer the question at all. There's no question that -- you know, you book at black America. They're obviously extraordinarily proud to have a possibility of the first African-American president here and they're championing that effort. So for Ed to suggest that somehow John McCain should somehow pander to that group is ridiculous. What he is offering --
SCHULTZ: It is not pandering.
BUCHANAN: It most certainly is to go after one group over another. SCHULTZ: You are talking as if black Americans in this country don't count. This is the problem with the Republican party right there.
BUCHANAN: Yes, Ed.
SCHULTZ: You want to put people in a box. You want to say, we don't need them over there. All we need is the top two percent crowd. And all we need is white working women and we're going to get there. You know, the other night, Bay, on this network, you said that Sarah Palin is a union member. That is absolutely false.
BUCHANAN: She was.
SCHULTZ: She's never been a union member. She's never been a union member. And you know that.
BUCHANAN: I do not know that. I thought she, indeed, was and I will double check with my friends in Alaska. But I know her husband is a steel worker.
SCHULTZ: I was in Alaska and I can tell you she's not a union member.
KING: Let me get a break, guys. We'll bring Viveca back in, as well. The truth squad is staying with us. See you after the break.
KING: Take a look at an Obama ad hitting McCain on school funding. Watch.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: When they grow up, will the economy be strong enough? Barack Obama understands what it takes, make America number one in education again. John McCain doesn't understand. John McCain voted to cut education funding, against accountability standards. He even proposed abolishing the Department of Education. And John McCain's economic plan gives 200 billion more to special interests, while taking money away from public schools.
(END VIDEO CLIP)
KING: Is that true, Viveca?
NOVAK: Well, when the ad says that McCain voted to cut education funding, you'll notice that there's some fine print on there. It's a list of five votes. Only one of those votes is a vote where McCain voted to cut education funding. In another one, he voted to increase education funding, just not as much as Democrats wanted. And the others are votes against increases the Democrats wanted to make. But they weren't votes to cut education funding.
KING: Got you. So it goes on both sides. I want to touch a couple of other things. Do you agree, Bay, that this Muslim thing should be put to rest?
BUCHANAN: In what respect?
KING: That people are still printing that Barack Obama is Muslim.
BUCHANAN: I don't know who's still talking about it. I haven't heard it. If there's something new and fresh, let me know about it, Larry. No one on our side are talking about it. We're not talking about it, not at all.
NOVAK: In our inbox at Fact Check, we constantly get e-mails asking about this. It's definitely still a topic of conversation.
NOVAK: I have no idea where it's coming from, no.
BUCHANAN: It could be the fact Barack went on national television to say it is indeed true John McCain is not attacking his Muslim faith. That might have confused some people.
KING: Maybe. Ed, is this bikini photo of Sarah Palin, is that her?
SCHULTZ: I don't know. And I don't think the American people care, Larry. I think it's just good entertainment around a campaign that is going to eventually come down to the issues, where Sarah Palin doesn't have the experience to make the right decisions. She's fabricating her record, that's very clear. I think, now that the economy is front and center, all these questions about whether Barack picked the right person, I wonder if John McCain doesn't have buyer's remorse, maybe he needs Mitt Romney right now.
KING: You want to say something quickly, Bay?
BUCHANAN: It's clear John McCain made a brilliant choice. If you want to talk about experience, the more we talk about experience and Sarah Palin's experience, it's more clear that Barack Obama has done actually nothing, has absolutely done nothing with the career given him. When you look at what Sarah has done, it's remarkable in a few years that she accomplished all she did. Her being on the ticket is going to put Barack Obama on that Bridge to Nowhere, Ed.
KING: Viveca, is this a campaign, as you look at it, a lot of lies?
NOVAK: I think right now, we're in a pretty low period, about as low as I have ever seen. I think since the conventions, both candidates have come out pretty fired up. Both have been running a lot of attack ads.
KING: We'll have you back. I'm told that photo is fake.
NOVAK: It is.
KING: OK. It is. Which candidate can get us out of our financial crisis? That's tonight's quick vote. Go to CNN.com/LarryKing.com and vote. And while you're there, download our new podcast, financial expert Suze Orman. That's a podcast you cannot afford to miss. Don't forget our big show this week, President Bill Clinton will be here Wednesday and Chris Rock is my guest Thursday. Check out the full guest schedule on CNN.com/LarryKing. Thanks for watching. Good night.