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Parker Spitzer
Republican Ads; President Obama's Message; Politicians "Man Up"; The Next Financial Meltdown; Women in Politics: Mean Girls or Politics as Usual; Presidential Mythbusters
Aired October 18, 2010 - 20:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KATHLEEN PARKER, CNN NEWS HOST: Good evening. I'm Kathleen Parker.
ELIOT SPITZER, CNN NEWS HOST: And I'm Eliot Spitzer. Welcome to the program. You know what, Kathleen, two weeks to the midterm elections, the politicians are sprinting, the Democrats are panicking, Barack Obama looking for a magic bullet that I don't think exists because you know what? -- the storyline is set in concrete. Two years ago he was hope and change, now he's the status quo, it's an impossible thing to change that narrative, as they call it. It's getting very, very tough.
PARKER: Well, he's becoming the thing he campaigned against. And in the meantime, this is how bad it really is, because two of the most prominent candidates out there are campaigning as a witch and a nerd.
SPITZER: Or not.
PARKER: Or not.
(BEGIN VIDEO CLIP)
CHRISTINE O'DONNELL (R), DELAWARE: I'm not a witch; I'm nothing you've heard. I'm you. None of us are perfect, but none of us can be happy with what we see all around us.
ANNOUNCER: We've tried happy talk and we're 50th out of 50, dead last.
RICK SNIDER (R), MICHIGAN: It's time for a nerd.
ANNOUNCER: As president he grew Gateway computers. He's nurtured innovative companies to grand success and grown thousands of jobs in Michigan and across America.
Rick Snyder for Michigan, he's one tough nerd.
(END VIDEO CLIP)
SPITZER: The problem that Barack Obama has right now is that he simply cannot persuade people that government is working and whereas two years ago, he could say government was the problem, now he needs to say government is working and I'm doing good things for you. Nobody's going to listen to it or buy it. I'll show my partisan colors right now, I think Barack Obama has given that to us, it is difficult, it takes time. These things don't happen overnight when you're digging your way out of a casm as deep as this one, it's going to take time to get back to where you even see some clawing over the top of that lift and we're not there yet and so, you know...
PARKER: I'm exhausted.
SPITZER: You know, give the poor guy some time would be my plea, but that's not a winning...
PARKER: Give him some time? He's had two years. That's the problem in it.
SPITZER: Yeah, but you know what? That's not a strategy either.
PARKER: Well, I mean, he's the one that came in with the hope and change, which is not a strategy, it's not a policy, and you said it...
SPITZER: To some it's a strategy. It's not a political strategy, because we all know the time line for voters is this, it's one week.
PARKER: Look, bottom line, Barack Obama came in and did what the most of the American people did not want him to do. He created this problem and now he's got to deal with it. I'm sorry that he did so poorly, because look what we've got.
SPITZER: Well Kathleen, you can't say he created this problem. If you were to say he should not have moved on health care first because jobs, jobs, jobs is all people cared about, fine, fair debate about priorities. Creating the problem clearly was not on his watch. You could even say it was Bill Clinton as much as Bush.
PARKER: Yeah, but he magnified the problem.
SPITZER: No.
PARKER: He absolutely did. Yes, he did.
SPITZER: No. No. No. Not at all. The reality, according to most economists, is that the stimulus has in fact had a very positive impact. Not enough. The argument is whether it should have been bigger. This is somebody was using all the economic tools available. I don't think he's done enough. But, the question isn't whether he created it, he clearly didn't.
PARKER: I didn't say he created it, I said he magnified it. OK? There's a difference.
SPITZER: He didn't magnify it, either.
PARKER: Well, of course he did. I mean...
SPITZER: So, what would you have had him do, no stimulus?
PARKER: Oh, for crying out loud. Are we going to go through this again?
SPITZER: Sure we are, because if you're saying he magnified it, the question is, did the stimulus...
PARKER: I want to go back to the narrative and I want to get back to the ads for a minute, because here is the thing that I think you and I can agree on which is that Barack Obama has done such a poor job that we have now candidates who are emerging and who are probably -- at least have a chance of taking office in places where they don't belong...
SPITZER: I disagree fervently with some things he has done. I've been very clear about my dissatisfaction with his economic policy, hasn't gone far enough. Put all that aside, they have used the tools there as best they could in an economic cataclysm. You can fall over, but this is reality and that's what you got to do.
PARKER: That is falling asleep.
SPITZER: But this is the thing that matters.
PARKER: Talking points do that to me.
SPITZER: They're not talking points, this is a harsh reality, so that when we were in office we needed Democrats...
PARKER: We? Oh, we?
SPITZER: Yeah, we. We traded 23 million jobs and left with a budget surplus. The crass failure of Reaganomics and lower taxes for those who could afford it, and letting the financial system destroy has brought us to where we are. Put all that aside, I agree with you about some of these candidates. Christine O'Donnell should not be in the United States Senate. But, you know what, if she goes there, it won't be a big problem.
PARKER: I think that if we actually do have a mouse with a fully functioning human brain, we should send them to Washington. We've got rats in already, why not a mouse.
(LAUGHTER)
SPITZER: I agree with you on that. I don't know about rats, we've got worse than that. We've got vipers.
PARKER: It's time for our headline interview with the mad genius behind these ads we've been talking about, Fred Davis.
SPITZER: Mad genius is right, if Christine O'Donnell does in fact win, he's the guy to blame, he has put the ads on the air that made her respectable and brought her within just a couple points so far, as we've said, she does believe, mice and humans are crossbreeding and there's a mouse with a fully functioning human brain somewhere out there.
PARKER: And he also has a brilliant idea for Barack Obama, a way for the president to turn everything around. Anyway, we spoke with him just a little bit ago, he's fascinating.
(BEGIN VIDEOTAPE)
SPITZER: Ed Maved (ph) and Fred Davis is the creator of those ads we just showed you, including Christine O'Donnell's famous, "I am not a witch" ad.
PARKER: In addition to trying to rework a O'Donnell's image, Davis has also produce ads for former president George W. Bush, for John McCain and Arnold Schwarzenegger.
Welcome, Fred, and thanks for being here. And let me just start with this witch ad. You're not afraid of self-parody, what were you thinking when you came up with that idea?
FRED DAVIS, REPUBLICAN AD MAKER: Well, the idea was very simple. She was the butt of most national jokes and I found her -- I had dinner with her one night and filmed her the next day and that was the only time I had to get to know her, so all I knew is what the voters knew and that's what they saw on "Saturday Night Live" and the "Today Show" and "Tonight Show" and all the jokes. And I thought it was important and Christine thought it was important to draw a line in the sand and say OK, that was before, this is after, now let's move on to what's really important to people in Delaware which had very little to do with her being a witch or not.
PARKER: Well, yeah, when I first saw the ad I thought, oh my gosh, I can't believe this. And when Eliot saw the ad he said, oh my gosh, that's brilliant, so I think you have...
DAVIS: We like Eliot.
SPITZER: Well, you know, but here's what I found about it, the "I'm not a witch line" was almost necessary; it did, as you hoped set that issue aside. The line that mattered to me, as a viewer, as potential -- I'm not a voter of Delaware, of course, was "I am you." No, there's a message you're saying here is, "I am like the rest of you, I'm not one of them up in Washington." That seems to me to be the thematic of your campaign. And it's working, I would observe, you're within, what, 11 points at this point?
DAVIS: We've narrowed the gap by 50 percent in one week and I'll take that any day.
SPITZER: And there is an element of her that is still a little bit jarring to most people, and she doesn't believe in evolution and there is that famous tape with her recently, I mean not the witch stuff from 20 years ago, or whatever, where she says that mice and humans are being cross bred and we have a -- you know, they're creating a mouse with a fully functioning human brain.
PARKER: Yeah, let's take a look.
SPITZER: Let's take a look at this one, Fred.
(BEGIN VIDEO CLIP) O'DONNELL: American scientific companies are cross breeding humans and animals and coming up with mice with fully functioning human brain.
(END VIDEO CLIP)
SPITZER: That is kind of a remarkable claim for somebody who is now only a couple points away from being elected to the United States Senate to make. Does this worry you at all? I mean, do you ever say, my goodness, this is a candidate who maybe just shouldn't be in the United States Senate?
DAVIS: I honestly did think that, Eliot, before I had the dinner with her. Because I'd seen that, and I'd seen other recordings from the past and I met her in the lobby of a hotel in Philly and within five minutes I'd figured out that I was wrong, and that she's sort of gotten a -- you know, did she get a bad shake by the press? Not really. She really said those things and it's your duty and job to report those things, but this wasn't the girl that I met and she hasn't -- if you saw the debate, she has a great grasp of the issues, she has a heartfelt position on every one that will not vary, and believe me, you -- we're -- well, I can't give it away, because it hasn't run yet, we're work on a new ad for her that talks about her strength, and so I've been going in the past over some of the strong statements she's made and they're very strong.
PARKER: When you talk about doing an ad about her strengths, that's what we call an image ad versus a negative ad. What do you think is more effective?
DAVIS: They're both effective and you'll hear people say, well, the only ones that really have moved the numbers are the negative ads or contrast ads, and it's not true. You can - "One Tough Nerd," Rick Snyder in Michigan that was nothing but an image ad. No one in Michigan had heard his name, and a few months later he won the Republican primary with a lot of people in the primary, he won it by, I think, five or six points.
PARKER: That's a great ad that Chris Coons...
(CROSSTALK)
DAVIS: ...on pretty much image.
PARKER: Chris Coons could probably benefit from a tough nerd ad. But, would you explain just a little bit what that ad is? I mean, you have this fellow who's maybe not the most gregarious sort, but he's very smart and has a good record, and you decided to go with the nerd.
DAVIS: Well, I'll tell you, he's very gregarious, but he'd be the first to tell you he's a nerd. I went and met -- it was another one where I got hired without meeting him. Went to dinner, was going to have dinner one night, filming the next day. That always means I'm up all night writing scripts. So, I walked into the restaurant in Ann Arbor, Michigan, and there was a roundtable obviously there was Rick and he looked like a governor and I thought well, this is a good sign. And he stuck his hand out and he goes, "hey, Fred, I'm Rick Snyder," and- he had this really, really kind of nerd-like voice and my heart sort of sank.
And we sat down and he was really, really smart and great history, had been the CEO of Gateway computers during their good days and somewhere in the conversation he said, "I bet you've never had a client that's as big a nerd as I am." And I was nodding to myself and I wrote that down and at the end of dinner, his wife Ann was across the table and I thought, well, I'll be fired before I even shoot one foot of film. And I said, "What would you think about really selling yourself as one tough nerd in the context that Michigan's tried this and this and this, and we've tried everything else and nothing's working, it's time for a nerd," and Ann, to her great credit, looked across the table, real sweetly and she goes, "Oh, honey that's you." And so all of a sudden, I'm up all night writing nerd ads, which I really hadn't expected going to Michigan.
SPITZER: Having been in the business for awhile and seeing good ads, but mine and others that worked or didn't work. What that means is that in this election cycle, with just two weeks to go, trying to parse out what's going to happen, the problem Barack Obama has, he doesn't have a narrative that fits with the emotions of the public, right now.
DAVIS: I think Barack Obama needs to sit down and look America in the face and his first words would not be, "I'm not a witch," his first words would be, "I was wrong."
Now, you and I know that he's not going to say that. So, I'm safe saying it. It would be something like, "I was wrong. I somehow put my issue agenda ahead of yours, that stops today. I'm going to put Obamacare on hold, I'm going to put Cap and Trade on hold. I'm not going to ask senators Kyl and McConnell, and Cornyn to the Oval Office, I'm going to go to their house, I'm going to knock on their door tonight. If they don't answer the door, I'm going to go back tomorrow night and I'm doing to keep going, America, until we put aside Republican and Democrat and we develop an America's agendas that puts you back to work. And then we'll get back to where I wanted to go all along." I don't think that'll happen, but I think that's what he could do to dramatically reverse this.
PARKER: Well, we started with Christine O'Donnell and we'll finish with Christine O'Donnell. Do you think she can win, and if she does, will you be happy about that?
DAVIS: Will I be happy about that? I'll be elated and jumping up and down. I think she has a very clear shot to victory, believe it or not. I didn't think that a few weeks ago, but when you make up, you know, 10 or 11 points in one week, and I know what the game plan is for the remaining couple of weeks, I think she has a very good chance at victory.
PARKER: Well, and let's be clear, she's not a witch. So, thank you.
SPITZER: That we can agree on.
DAVIS: You didn't ask Eliot, Eliot didn't say that.
PARKER: Fred, thank you very much for being with us. We'll be right back.
DAVIS: We'll be right back.
(END VIDEOTAPE)
(BEGIN VIDEO CLIP)
SPITZER: Rand Paul's idea would be what? Would be to just privatize Social Security?
UNIDENTIFIED MALE: Look, you can't at the same time ignore the fact that no one is talking about changing entitlements and then make their idea seem like those spawned from the devil.
(CROSSTALK)
PARKER: I'm glad we were able to work the devil in here, actually.
(END VIDEO CLIP)
SPITZER: It is expected that billions will be spent on advertising this political season. President Obama and the Democrats are now cast as the insiders and the Republicans have the message of hope and change.
PARKER: And joining us in "The Arena" tonight to discuss this, Ari Melber, he's a correspondent with "The Nation" and a columnist for "Politico." And Will Cain from the "National Review."
Ari, welcome. How are you?
ARI MELBER, "THE NATION": Good to see you. How are you?
PARKER: I'm beginning to feel like a little family.
SPITZER: Will, great to see you.
PARKER: We see so much of you.
SPITZER: Kind of like Thanksgiving, here.
PARKER: I know, it really is. We just don't have a tur -- well, I won't say that, I wouldn't go that far.
SPITZER: I'm complaining.
PARKER: We have a turkey. Anyway, we've been talking about poor Barack Obama, the former agent of hope and change, it seems that this is no longer working. Who is now the agent of change?
MELBER: Well, you know, the Republicans are obviously arguing that any change is going to be good here and they don't have the same pressure that you have during a presidential campaign of do you have the responsibility, do you have the experience. I think inexperience is clearly an advantage, so they're saying change and don't worry whether they can balance the books, they're going to get in the way of Obama's agenda. That's what they've been selling.
SPITZER: Ari, can I say this? I'm on your side all the time, it sounds like poor excuse making. I wish I were with you, but we're not making our arguments. I mean, Will, you guys are winning. It's killing me.
WILL CAIN, NATIONAREVIEW.COM: Yeah, logic wins out, often, Eliot.
(LAUGHTER)
SPITZER: Yeah. This is not logic. This is hope and prayers over logic and experience. But look, Ari, we got to face facts, the public has turned against the Obama message. It may not be because it's wrong, it's just a fact of life right now, and no matter how many speeches he does, he's not going to get their support, right now.
PARKER: It's not that it's wrong, it's just that everybody hates it. What do you think?
CAIN: You know, lest we run into the same problem we did two years ago, I think the integral question to ask is, what is it exactly we want to change?
SPITZER: That's a good question.
CAIN: I mean, two years ago we had a message that was put forward and centered around the concept of hope and change, but no one really stopped to ask, what exactly is it that we're trying to change?
PARKER: Well, they were trying to change George W. Bush.
CAIN: That's one of the things.
PARKER: That was his only (INAUDIBLE)
SPITZER: Will, I think you're exactly right, I think there was this patina that the words themselves were a governing agenda and I think we all know that is not the case. The agenda people did want, and I think that sensible people, you know, all the rhetoric aside, would agree on, is that investments that will create jobs and a tax structure that produces investment, and education, things that aren't nitty-gritty, that aren't the passionate words of a campaign. But, I think the president feels he's been doing that is his frustration.
CAIN: I understand his frustration. I think he agrees with you, but the problem with this Eliot, and why Barack Obama hasn't been able to find his footing this year, is that concept of change basically brought together an umbrella of three different kinds of people: One who heard change and thought exactly, that it was just a change in Bush. That was the protest vote. Barack Obama can't rely on those people this year, that change has been made.
SPITZER: The reason for it is gone. CAIN: The reason -- exactly.
The second group heard the concept of change and said, "This is a guy who's promising to change Washington." These are the people that place civility above all of us. They think with the right personality traits, they can magically make Jim DeMint and Bernie Sanders agree.
SPITZER: Right. Never going to happen.
CAIN: Never going to happen. These voters are constantly disillusioned and they'll move from party to party. So we can't count on them. And then there's the final group, and that's the one you referenced, the one that who truly heard his message that he's going to change America. And by that he meant he's going to pass a health care bill that every liberal president since Teddy Roosevelt has tried to pass, has the most successful legislative session since 1966. He's delivered for these people. The problem is, there's not enough of them.
SPITZER: Well, I think, you know, that's actually a fair critique, but I think what he has failed to do, and this is where communication does come into play, is explain how he has planted the seeds for a much broader resurrection of the American economy. And that, I think, is what would swamp numerically, if he could persuade people of that, then the first two piece of the stool, and you're right, they may have disappeared, he could get enough people to join him, nonetheless. He (INAUDIBLE) that case.
PARKER: I want to add a fourth leg to that stool and that is that I think we're forgetting a whole group of people who were simply excited about the possibility that this post racial man could transform America, we could get past something once and for all and get on the other side.
CAIN: I think you're right.
PARKER: I mean, that was huge. I think that was particularly huge for possibly the baby boom generation, that they wanted to live to see this day when we had an African-American president and be done with it, you know, and no longer have all that baggage.
MELBER: But, you know, we're also talking in terms categories, what did people want, what did they get? The other dividing like to pick up on what you're saying, Kathleen, is age. Voters over 45 still went for McCain. Voters under 45 went for Obama, and voters under 30 went for Obama by a 34 point margin, largest in the last several elections. And in midterms you have much lower turnout traditionally among lower people, as well as, partly the African-American and minority base that was a part of the coalition.
So, when you factor in those turnout rates and the economy, what we're seeing, partly, is a conversation about the universe of people turning out, not necessarily that we're unhappy, and I think that's why most people still would say Obama's going to get re-elected, because that universe changes again in 2012. CAIN: I think these, both of your explanations, Eliot, are very good excuses for you, in this respect: One, as long as you say that it's the enthusiasm gap, that people just aren't turning out, people that think like you are just aren't going to the polls, or that people just aren't understanding how great your ideas, Eliot, are. Which basically is what she said, Obama basically hasn't convinced people how great these ideas are. You never have to face the fact that people didn't really like the ideas when they were first presented.
SPITZER: You may be right. I'm willing to concede that's a possibility, I really am. But I I think there is a larger issue here, and this is where I have broken with the administration. The reason they became a status quo so quickly, is that they negotiated with everybody in a way that maintained the status quo. And I use Wall Street as the perfect example for that. Had he maintained the impression in the public that he was really fighting against the entrenched financial interests on behalf of the public, which is clearly not what he's done, the banks are still the same, they're making the big profits, the foreclosure mess these days. All of these things have coagulated, to use your metaphor from last week, to persuade people that really things are stuck in the same place, had he instead been breaking down the ramparts of Wall Street, then there would have been a sense he's not there yet, but he's fighting for us, and it hasn't gotten there. I think that message has been given up by his willingness to negotiate with the status quo instead of take it on. And I think that's the emotional part.
CAIN: And I guess I'm shocked by your shock at that revelation. I mean, Barack Obama, the Democratic Party, the Republican Party had been so enshrined with Wall Street stayed (INAUDIBLE) for decades. Now, why would you be surprised that that's the way it turned out?
SPITZER: Well, you don't have to tell me that the Democratic Party elite has been enshrined with Wall Street. When I was A.G. and doing that, you will notice how much support I had from the leadership of the Democratic Party -- zero, zip, nada. Nobody wanted to do it, they tried to subvert me. And so I fully appreciate that, but I think that this president, I was hoping having gone to what we saw the nation go through in '07-'08 there would have done something quite different.
CAIN: So now with this disillusion it sounds like you're ready to join the Tea Party.
SPITZER: No, I'm ready to drink some tea, but I'm not going to join that party, trust me. We are still, because -- and here's where the difference between rhetoric and governing really emerges, there isn't yet a coherent answer from either Dick Armey or the pledge to America or any of the budget numbers we look at, it takes us further down a path of bigger deficits and no job growth and that's what has me worried.
MELBER: Yeah, and that's the key is that nine out of $10 in the federal budget go to your nondiscretionary programs, defense and entitlement. Right? So, when you have people coming along saying, well, we're going to go get fraud and waste, it's easy to run against fraud and waste. It's easy to run saying you're not a witch, right? Nobody wants to be a witch, nobody likes fraud, nobody likes corruption. It's harder to put that all aside and figure out, where do the other nine dollars come out. And I haven't heard, and I don't know if you've heard -- you tell us who we should keep an eye on, but I haven't heard a Tea Party nominee come out with that kind of budgeting yet. So, what we have from them is just rhetoric.
CAIN: Well, you're not listening, Ari. I mean, Rand Paul, for better or worse, Sharron Angle, Mike Lee, all of these people have talked about making real changes to entitlements.
MELBER: Well right, Rand Paul's idea would be what? Would be to just privatize Social Security?
CAIN: Look, you can't at the same time ignore the fact that no one is talking about changing entitlements and then make their idea seem like those spawned from the devil.
(CROSSTALK)
PARKER: I'm glad we were able to work the devil in here, actually.
SPITZER: But Ari's right. Do you think privatizing Social Security is the right answer? If you do, I admire you for saying it. I think it's dead wrong and I think it would destroy the safety net for seniors.
PARKER: Yeah, so do you still believe in it now?
CAIN: I still believe in it no matter how wrong I really think it is.
PARKER: Thanks so much for being with us. Coming up, we have finally found the issue that's really driving this election, and it's not the economy or unemployment, it's manliness? We'll be right back.
(BEGIN VIDEO CLIP)
RAND PAUL (R), KENTUCKY: Run a race as a man, stand up and be a man.
SHARRON ANGLE (R), NEVADA: Man up, Harry Reid, you need to understand that we have a problem with social security.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
SPITZER: Time for "Fun with Politics." And just when you think this campaign season can't sink any lower, it does. One issue on the table these days, man up. Take a look.
(BEGIN VIDEO CLIP)
RAND PAUL (R), KENTUCKY: You just out and out lie because you have nothing to stand on. Run a race as a man, Stand up and be a man instead of just calling me names.
JACK CONWAY (D), KENTUCKY: OK, OK, OK. SEN HARRY REID (D), NEVADA: Social security is a promise we have to keep. It takes care of seniors in their golden years.
SHARRON ANGLE (R), NEVADA: Man up, Harry Reid, you need to understand that we have a problem with social security.
SARAH PALIN (R), ALASKA: Jan Brewer has the cojones that our president does not have...
(END VIDEO CLIP)
PARKER: Wow! Since when did we start saying cojones in public and since when do we talk about testicular fortitude -- I can't even say it. It's bad enough when one man challenges another man's manhood, but when a woman does it to a man...
SPITZER: You know, Kathleen, you wrote a book about why men matter and why women should care. How does all this make you feel?
PARKER: It was called "Save the Males," actually.
SPITZER: In your bookstores, right now.
PARKER: Yes, in paperback. It makes me feel like I need a bath, please. You know, if a man spoke to a woman in a similar way, he wouldn't get elected dogcatcher. And of course, you know how I feel about dogs.
SPITZER: I've learned.
PARKER: But with just a few weeks left in the campaign, is it too much to ask that we start manning up and maybe start acting like, oh I don't know, ladies and gentlemen? We'll be right back.
(COMMERCIAL BREAK)
SPITZER: Tonight's person of interest is a world-renowned economist who has worked with everyone from the International Monetary Fund to the Congressional Budget Office. He's also the co-author of the new book, "13 Bankers: Wall Street Takeover and the Next Financial Meltdown." A must read for everybody. He is MIT economist Simon Johnson.
Thanks, Simon, for being here. And I have to confess I read this book when it came out. Pulled it off the shelves of my local bookstore. It tells the tale, tells it beautifully, and one of the things that struck me right on the front page, you have a beautiful quote proving once again that fiction is sometimes a more accurate, historical tale than history itself. It's from F. Scott Fitzgerald, "The Great Gatsby." It says they were careless people, Tom and Daisy. They smashed up things and let other people clean up the mess they made." A perfect metaphor for the banks. What happened and why in this economic cataclysm?
SIMON JOHNSON, ECONOMIST: Oh, the banks went crazy, Eliot. They were irresponsible to start with. There was a massive credit bubble, to some extent around the world, but really since the United States and nobody stopped them. None of the regulators were there.
SPITZER: For 50 years, 60 years between the Great Depression and 2007, 2008, we didn't have a crisis of this sort. Why not?
JOHNSON: Banking was boring after the 1930s because FDR made it boring. They put a lot of rules and regulations in place. And the system wasn't perfect, but it really stayed inside that box. It's when Reagan era deregulation starts. And people start to think they got really clever about finance. And when greed becomes good, as in the original "Wall Street" movie--
SPITZER: Right, right, right.
JOHNSON: -- that's when things start to go off the rails.
SPITZER: I hate to reduce life to a series of sort of cheap cliches, but you said banking was boring. Are you saying it should be boring?
JOHNSON: I think it would be very good if a lot of banking is boring. Banking that we deal with these customers, the banking where we get our credit cards and where we get our mortgages and so on and so forth. If some people want to run a casino off in -- I don't know -- Last Vegas --
SPITZER: Right.
JOHNSON: -- that's fine with me. But having that --
SPITZER: (INAUDIBLE) casino.
JOHNSON: Absolutely. (INAUDIBLE) casino. Have people know that the House is going to win and they're going to lose and it's a form of entertainment.
SPITZER: And as you said, greed became good. It also, to quote "Wall Street," too, became legal. And so you had this deregulatory spasm, we had this bubble, we had this massive collapse. What was the lesson that you took away from it?
JOHNSON: Well, what they should have done in that collapse was sort out the bankers. At any moment of a financial crisis, you have an opportunity. The bankers are always powerful. They've got too powerful in this case like in other countries. They should have broken their power. They should have fired a lot of them. They should have closed down some banks. Should have made the banks smaller, much smaller. And they didn't do any of those things.
SPITZER: Stop right there, because scale is something that everybody talks about. This phrase too big to fail, what does that mean?
JOHNSON: Too big to fail means that at the moment of failure, the government is terrified of the consequences. So they let Lehman fail, it's true, but they'll never do something like that again. Because the consequences of massive credit decline around the world, the recession is still with us today, eight million jobs lost. SPITZER: And so for that 24 hours after Lehman failed, after it was permitted to fail, suddenly credit ground to a halt. The government said we can't do this again. So what was the consequence of that?
JOHNSON: The government now implicitly backs all the big banks. They're all government-backed enterprises. They have what people like to call more hazard, which means you're not going to be careful. It's not your money, it's the government's money you get.
SPITZER: Right.
JOHNSON: Wall Street gets the upside. The government taxpayer gets the downside.
SPITZER: Right. Are the banks, big banks bigger or smaller relative to the economy today than they were when this began?
JOHNSON: Oh, they're much bigger. If you go back 15 years, our biggest banks were 15 percent of our economy. That's the total size of the banks relative to our GDP.
SPITZER: Right.
JOHNSON: Now, they're more like 60, 65 percent and they want to get bigger. All that prior suspension.
SPITZER: This is a little -- Simon, I hate to interrupt, but this is a little fact that people just have not gotten their arms around. The banks are bigger and more powerful today than they were before all this happened.
JOHNSON: Absolutely. And I tell people this in Washington. And they're stunned when they see the numbers, by the way.
SPITZER: Right.
JOHNSON: They know it. They see it day to day. They see the banks and the chronicles of (INAUDIBLE) they can't believe what has happened.
SPITZER: When you say that we -- the government basically is guaranteeing the banks, what does that mean?
JOHNSON: It means if you think a bank is going to fail or the bank is on the verge of collapse, the government is going to step in one way or another. But I don't know if this law is going to make it easy. They're going to step in and prevent the failure to stop the economic crisis.
SPITZER: And day-to-day, how does that reflect itself in the way these banks operate?
JOHNSON: Well, it's much cheaper for them to obtain financing. And that's the key for banks. So they can use this, of course, to entice customers in. They can have more ATMs. They can offer better rates on checking accounts and so on and so forth. Besides, it's everything in this business, Eliot.
SPITZER: Can I -- tell me if I'm correct whatever that is to say. The key to banking is the differential between the cost of borrowing and the way they lend money out. That spread in the interest rate is how they make their money. And if their cost of borrowing is lower because the government is guaranteeing them, they're going to make more money and keep growing bigger and bigger.
JOHNSON: Absolutely right. It's the guarantee lowest across the funding because all the creditor, all the people who lend the money are going to feel protected. That's a huge advantage to have.
SPITZER: So over time, what's going to happen?
JOHNSON: They're going to get bigger.
SPITZER: And then what?
JOHNSON: I think they're going to collapse. I'm afraid to say. These things go in cycles. It won't happen right away, but this is what we've seen in Europe. The banks became even bigger in Europe, and the collapse there has brought down the Irish economy, the U.K. economy, the Swiss economy in big trouble from this.
SPITZER: Now, did the reform bills that we put in place, frankly, did it do anything that was important?
JOHNSON: It gave us some consumer protection. And Elizabeth Warren is now in charge of putting it. That's a very good thing. But in terms of the systemic risk that you and I are just talking about --
SPITZER: Right.
JOHNSON: It did nothing. Essentially nothing to make a difference.
SPITZER: Are there people who used to be the proponents of this sort of supposed deregulatory framework who buy into what you're saying?
JOHNSON: In private, some top Obama administration officials will give some ground. But when you talk to them in public, I'm afraid they're still stonewalling.
SPITZER: Am I right that it was the Obama administration that pushed back most vigorously against the more fundamental reform?
JOHNSON: They had the opportunity. The Bush administration for sure had the big deregulation philosophy also.
SPITZER: Right.
JOHNSON: But the Obama administration had a moment of real opportunity early 2009, another in early 2010, and they missed it on both occasions.
SPITZER: Was this -- this may be an unanswered question, but do you think it was because they intellectually didn't agree with this, or was it a political -- something they just didn't think they could do politically?
JOHNSON: That's a fascinating question. We'll have to see the memoirs.
SPITZER: Right.
JOHNSON: It will take us 20 years to sort out. I think it was a bit of both. I think for a long time, the people at the top of this administration have been on the side of wanting deregulation and believing that finance was good, more finance was better and completely unregulated. Big finance was the best. And it's taken them a while to break that thinking.
SPITZER: Where does Alan Greenspan come down on this?
JOHNSON: Oh, Greenspan is fascinating. Because Greenspan, of course, was the disciple of Ayn Rand. He was the ultimate free marketer in the heyday, and now, of course, he regrets it.
SPITZER: And he switched sides?
JOHNSON: He's largely switched sides. He does a little flip flop, but he's largely switched sides. And we quote him to that --
SPITZER: And I pulled the quote, I mean, it is a wonderful quote because what he says, radical things such as break them up, you know. In 1911, we broke up Standard Oil. So what happened? The individual parts became more valuable than the hole. Maybe that's what we need.
This is quite -- sounds like a liberal Democrat talking, about breaking up Standard Oil and saying the same things to the banks, but had no political traction in Washington?
JOHNSON: It hasn't so far. But I would emphasize, Eliot, that the right and the left, many people on the right and left agree on exactly this point. For the people on the right, this is not a market. This is an unfair government subsidy scheme. And for the people on the left, this is at best an abuse of power. They actually agree on this issue.
SPITZER: Right.
JOHNSON: But it didn't come together in the Dodd/Frank legislation to turn into something really concrete you could implement.
SPITZER: Simon, thank you very much. Again, everybody read this book, "13 Bankers." It is a critical, critical book.
Up next, "Our Political Party." It's the party you do not want to miss. We'll be right back.
(COMMERCIAL BREAK)
SPITZER: It is time for "Our Political Party," a provocative conversation with people of strong opinions at a whole range of topics. Let's meet our guests. Rebecca Traister is a senior write for Salon.com. and author of "Big Girls Don't Cry," a look at the 2008 presidential election from a woman's perspective. And Jacob Soboroff is a co-host of NBC's "School Pride," a campaign to help communities improve their schools.
KATHLEEN PARKER, HOST: Will Cain is host of "Off the Page," at NationalReview.com. Will, you've joined this party before. And Dana Bash is here. She's CNN senior congressional correspondent.
Welcome, everyone.
UNIDENTIFIED FEMALE: Thank you.
UNIDENTIFIED MALE: Thank you.
PARKER: First question to the party, the good news is that there are more women than ever in politics. The bad news is that they're catching some heat.
SPITZER: One is Christine O'Donnell. No.
(LAUGHTER)
UNIDENTIFIED MALE: Come on now. Come on now.
(CROSSTALK)
PARKER: Maureen Dowd recently wrote that it's actually the era of the mean girl. And Maureen is a good friend of mine, but I will add to that, she should know.
(LAUGHTER)
SPITZER: One Pulitzer prize winner to another. All right. What's the question for these folks?
PARKER: Well, is it good or not? Are women making more progress or not?
REBECCA TRAISTER, SALON.COM: Yes. The short answer is yes, women are making progress. However, I want to take issue with the mean girls epithet. Because I think we have to let go of ideas that just because women are in the political process they're somehow going to meet some higher bar for civility, niceness, kindness, happiness. Right.
UNIDENTIFIED FEMALE: I agree. I agree.
TRAISTER: And so in part what we're looking at, yes, yes, women are mean, so are men. Politics is mean. If you want to call for more civility in politics, that's fine. But I don't think -- I think we need to talk about how we already associate gender with a sort of sweeter sugar and spice mentality.
PARKER: Right, right, right.
TRAISTER: It's just not right.
PARKER: We definitely learned that stuff, right? Man up. (INAUDIBLE) et cetera.
DANA BASH, CNN SR. CONGRESSIONAL CORRESPONDENT: I abs agree. And the fact that women are sort of playing in the same field as men, whether it's negative campaigning or not negative campaigning, I think that says a lot for where women are right now.
Having said that, I have to tell you, I was talking to an aide to Senator Harry Reid, of course, is running against a female candidate. Right before they had their debate last week, who said that one of the things that the campaign was thinking about, was a little bit worried about was the fact that he was on the stage with a woman and he just had to calibrate it differently because of that. And that is something that is still out there. There's no question about it.
PARKER: There's no question it's still out there.
JACOB SOBOROFF, NBC'S "SCHOOL PRIDE": The fact that we're having this conversation is fantastic in the first place. Remember 100 years ago, women could not vote in the United States of America. Today, we're talking about is it mean girls, is it mean boys. Everybody is mean in politics. The system is, and that is part of the problem.
PARKER: I agree.
WILL CAIN, NATIONALREVIEW.COM: You know, only puts that, Jacob, is that I'm not sure that we should be analyzing progress by gender representation. I'm not totally comfortable with that. Who cares what chromosomes you have?
(LAUGHTER)
Who cares what chromosomes you have? I care about what's between your ears.
TRAISTER: When you're talking about two centuries plus of American history in which you've never had a woman leader and until very recently had never had an African-American president, then it's something to care about. It's very easy to not care about equal representation when your particular demographic has been well represented.
SPITZER: Well, I think you're right in terms of pure theory but it's somewhat like what the Supreme Court said about affirmative action. Twenty-five years from now, let's hope we don't need it and maybe they'll get rid of it. But until things really are equal, then you talk about it and you should pay attention to it.
Anyway, before you rebut, we're going to ask a question. We're not going to give you that chance.
President Obama is going to appear in an upcoming episode of the science program "Mythbusters." What's a good myth for him to bust?
SOBOROFF: I have one.
TRAISTER: This is an easy one. SPITZER: If you all say the same thing, nobody will be surprised.
SOBOROFF: No, no, no, it's not mine. Mine is the more money you spend, the more people are going to come out to vote. If you think about it, something like $4 billion will be spent in the midterm elections and $40 million people will go $100 a vote. It's higher than any other country in the world, yet the United States ranks 139th out of 172 countries in the world in voter participation. The argument that more money means more votes is completely ridiculous.
PARKER: Say that again.
(LAUGHTER)
SOBOROFF: A hundred thirty-nine of 172 countries.
BASH: As soon as I saw that this was what the president was going to do in December, I was e-mailing with a senior White House official, with the obvious, right?
UNIDENTIFIED MALE: Right.
BASH: Are they going to come out and give out his birth certificate?
I know, I know. I haven't taken the shot.
SPITZER: He should do it.
BASH: And the fact that he goes to church and perhaps, not to, you know, a mosque.
SPITZER: That one -- yes, I'm sorry.
TRAISTER: I have a completely separate myth. That's a great myth to bust. But I would like to have a myth busted for President Obama. I read the "New York Times" profiled him this weekend. And I would like for somebody to bust the myth that the Republicans are going to work with him if he just works to be more inclusive, which seems to be his major lesson that he's taken from two years.
SPITZER: I'm with you on that one. This myth of bipartisanship that anybody who's in a leadership position in Washington now really wants it. It is a pure myth. Both sides just want the big prize, the White House and everything is a stage to get there. It's a sad, but I think that's --
CAIN: Carry that myth one step further that bipartisanship is a virtue. It's not.
SPITZER: Well, that's another and maybe an important argument we should have.
PARKER: That's a good myth to bust.
SPITZER: Let me change it. The notion that bipartisanship leads to transformation is a myth because transformation requires a singular focus with a dedicated ideology and that's never going to be bipartisan.
CAIN: But "Mythbusters" wants ratings. Bust (INAUDIBLE).
SPITZER: There you go.
(CROSSTALK)
PARKER: That sounds unkind. All right.
SPITZER: Man up, Mr. President. No, no, we're not saying that anymore.
PARKER: This has not been the most civil campaign in history, not that they ever are. But if you were the political Miss Manners, who would you call out for having gone the furthest over the line?
BASH: You got one?
TRAISTER: Carl Paladino.
SPITZER: Yes.
TRAISTER: Carl Paladino. I mean, using not only a sort of accidental homophobic slur, but actually using homophobia as a campaign tactic. But there are so many to choose from. You also have the aide to Jerry Brown calling Meg Whitman --
SPITZER: Yes, that was a bad one.
PARKER: Oh, yes, yes, yes.
TRAISTER: We are living in an age of faux pas and, you know --
PARKER: We're living in an age we're forgetting that our mikes are on.
UNIDENTIFIED FEMALE: Yes.
TRAISTER: Joe Miller called Lisa Murkowski a member of the world's oldest profession. I mean, this has been an open season on --
BASH: But we are also living in an age of political trackers and each one of these candidates has somebody with them almost all the time. It's not that new.
SPITZER: From the other side.
BASH: For the other side.
SPITZER: Right.
BASH: But what is new is that technology allows them to put everything on the Internet and turn it instantly into an ad if they want to.
SOBOROFF: It's too much. The faux pas were talking about faux pas. We want to talk about issues.
SPITZER: You're exactly correct. Look, we have to take a break. We want to hear from you. Check out our blog at CNN.com/parkerspitzer. Follow us on Facebook and Twitter. We'll be back with another question right after this.
(COMMERCIAL BREAK)
PARKER: Welcome back to "Our Political Party." I could stay all night, but we've only got a few more minutes. So let's do one more quick whip around the table.
President Bush is soliciting questions on his Facebook page. And yes, he has a Facebook page. What would you like to ask President Bush. This will be answered presumably on his book tour.
UNIDENTIFIED FEMALE: You got one from the right?
CAIN: I'll ask my fellow Texan, if you ever had that brush cleared.
UNIDENTIFIED FEMALE: If he ever got all that brush cleared.
BASH: (INAUDIBLE) with the "Mythbusters" and that is that you mention the fact that he sort of chalked it off. That George Bush has a Facebook page because we think of him as talking about the Google, like not knowing anything about the Internet. I was talking to a senior Bush official who was with him one night. He was on Air Force One. It was dark. Everybody was sleeping, on Ambien (ph). She woke up and looked up and saw a guy wearing an Air Force One jacket surfing the web, looking at baseball scores. And it's George Bush, President Bush. He apparently got an iPad early. He apparently got a Kindle early, so --
PARKER: He's catching up.
BASH: Catching up, we'll see. I don't know if he has a cell phone.
PARKER: Anybody else?
SPITZER: Wait a minute. They didn't have an iPad back then.
BASH: No, no, no, recently.
(CROSSTALK)
SPITZER: Surfing the net. All right. OK. All right.
TRAISTER: All the questions I have for George Bush are so, like existential. I mean, I can't even get to the specifics because it's like --
SPITZER: Oh, why not? Come on.
TRAISTER: -- did you really want to be president? What did you want to do? PARKER: You and I are like. I asked him that once. I actually did. And I said, sometimes I think you must wake up in the middle of the night and go, oh, my gosh, I'm the president. And he looked at me like, what are you talking about, girl, I love being president.
TRAISTER: Isn't he amazing? This is like the myths about the technology. He really is this totally honest, ambitious, technologically savvy guy.
SOBOROFF: Mine is really quick, education. I've been traveling the country with "School Pride" seeing schools and just literally crumbling in some of America's great cities. "No child left behind" was one of his signature accomplishments of the Bush administration and it was bipartisan. Today, you see "Waiting for Superman," America ranks 25th in math, 21st in science. How much further do we have to go? What else can we do to get every kid in America a great, great education?
SPITZER: Wonderful questions. And you know what? On that note, unfortunately, we have to break up the party. That's all we have time for. Thanks for joining us. We will be right back.
(COMMERCIAL BREAK) JOE JOHNS, CNN SENIOR CORRESPONDENT: I'm Joe Johns. "PARKER SPITZER" is back in a moment.
First, the latest. Forget (INAUDIBLE). A senior NATO official says Osama bin Laden and his top deputy, Ayman al-Zawahiri, are believed to be living comfortably in homes in northwest Pakistan. The area that he described covers hundreds of square miles of some of Pakistan's most rugged terrain. Pakistani officials have repeatedly denied protecting Al Qaeda members.
The most powerful typhoon so far this year roared across the Philippines ripping off roofs, cutting off electricity and killing at least five people. The storm weakened after making landfall but is expected to regain strength as it heads over the South China Sea. It could make a second landfall after this week in China or North Vietnam.
In Reno, Nevada, former Alaska Governor Sarah Palin kicked off the latest Tea Party bus tour. She said she doesn't think the Tea Party will split the Republican Party but she also had this tough message for the GOP establishment.
(BEGIN VIDEO CLIP)
SARAH PALIN (R), FMR. ALASKA GOVERNOR: Hey, politicians who are in office today, you -- some of you need to man up and spend some political capital to support the Tea Party candidates instead of doing this, waiting to see how everything's going to go. You know that the Tea Party candidates are constitutionalists. They've got the common sense. So some of these politicians, the bigwigs within the machine, they're driving me crazy because they're too chicken to come out and support the Tea Party candidates.
(END VIDEO CLIP)
JOHNS: In Connecticut, the penalty phase began today in the trial of convicted murderer Steven Hayes. The same jury that found him guilty will now decide if Hayes should be sentenced to death for the slayings of Jennifer Hawke-Petit and her two daughters, 17-year-old Hayley and 11-year-old Michaela. They were tortured and murdered during a 2007 home invasion. Hayes' defense attorney told jurors his client can, quote, "be quite likeable but has struggled with drug addiction."
We've been following this case closely on "360." We'll have today's developments tonight. That's the latest. Now, back to "PARKER SPITZER."
SPITZER: Now for tonight's p.s., our postscript. As election day draws near, Congress again has not done anything substantive on a vast variety of important issues.
PARKER: But they have been working hard to push through some pet causes. According to today's "Los Angeles Times," more than 400 bills passed by the House are still awaiting approval by the Senate.
SPITZER: And these include one from California Democrat Joe Baca honoring golfer Chi Chi Rodriguez, an important issue to all of us out there.
SPITZER: Well, Republican John Campbell is trying to add 40 small rocks in Orange County to California's coastal national monument.
SPITZER: Got to be done.
And they tried to push through a bill called "don't let the bed bugs bite." Although I don't think that one is going to happen even if they pass the bill.
PARKER: Well, I understand people and their pet causes. You know, I have one of my own.
SPITZER: Oh, my goodness. Not again.
PARKER: Thanks so much for being with us. Be sure to join us tomorrow.
SPITZER: Good night from New York.
"LARRY KING LIVE" starts right now.
