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Parker Spitzer
Targeting Financial Reform; Under the Hood; GM is Back
Aired November 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 ANCHOR: Good evening. I'm Kathleen Parker.
ELIOT SPITZER, CNN ANCHOR: I'm Eliot Spitzer. Welcome to the program. Another great program tonight.
Kathleen, we will go under the hood with the mechanic David Goldsmith who's going to tell us why GM cars are getting better.
PARKER: I can never get enough car talk, Eliot. You know me.
We're also going to look at this controversy out in Fresno, California, where the newly elected student body president at Fresno State University, turns out he's an illegal alien -- illegal immigrant. And there's talk of deporting him. So we'll look at that, too.
SPITZER: I like that.
And, Kathleen, also we've got Barney Frank who is brilliant. He's going to tell us why the economy is coming back and why government played a critical role in doing it.
But first, tonight as always, opening arguments. Very simple. It worked. The GM bailout, an enormous success. Your tax dollars did two things -- restored an iconic American manufacturer to produce cars and it makes money. It is profitable.
What more can you ask for? We're going to get our money back.
PARKER: Whoa.
(LAUGHTER)
PARKER: Look. This is a great success story. I'm not -- I'm not about to put a cloud, a dark cloud, over this story because it's wonderful.
But still there's yet -- you know, we still have a ways to go.
SPITZER: Sure we do.
PARKER: We still -- GM still owes the U.S. government, us the taxpayers, $27 billion. Chrysler has not been such a great success story. So I think we can't get too carried away with this government money, it can always work but it's doing a good job in this case so let's --
(CROSSTALK)
SPITZER: But here's the larger point. Of course we're not there. Nobody is saying the war is over. We've got unemployment. We've been talking about it on the show every day, about unemployment is a crisis in this country.
We need to invest more and more but the notion that you have government completely step back, which is what the Tea Party was calling for, now we have the example where the government said, we will roll up our sleeves, invest in a smart way, force the company to change, kind of get the give-backs by workers and by those who had the debt.
Get everybody to pitch in and what we get at the end of the pipeline is a new company that works. And so that is a better model --
PARKER: Fair point. Fair point.
SPITZER: -- than what the Tea Party is talking about which is you run up the white flag and concede defeat.
All right.
PARKER: All right.
SPITZER: And to discuss more about General Motors' amazing turnaround, let's go into "The Arena."
Joining us now, Democratic Congressman Barney Frank. Congressman, thank you for joining us.
REP. BARNEY FRANK (D), MASSACHUSETTS: You're welcome.
SPITZER: Today is a good news day. You know, the calculation of about 1.4 million jobs saved in aggregate across the economy because of the bailout of General Motors and the collateral industries there in the auto sector.
Is this a paradigm? Is this an example that you can now use to say, look, you know what, our theory of government intervention works and when the Tea Party starts screaming about cut, cut, cut, you're going to be able to stand up and say, but wait a minute, here's proof that we now have that these things make sense?
FRANK: Yes. And you've got a very good argument by Warren Buffett in some sense. Now it's not a paradigm in the sense that it's something you want to do all the time. This was an emergency response so what that shows -- what it shows, Eliot, very well -- in the intersection and the interaction of the public and private sectors.
People who think it's a war of public versus private are wrong. There are roles for both. By the way, the best proof of that was Ford which was not itself facing bankruptcy, which was not going to be asking for any of the money, which is a strong advocate for our voting the money to General Motors and Chrysler to which something you alluded to. The supply chain. The other industry.
But there's a lot of lip service being paid in America to try and promote manufacturing, there's still a manufacturing in America. It's a hard thing to do. The single most effective thing we've done to sustain manufacturing in America and begin to expand it was voting that money that was lent to General Motors and Chrysler that -- in the case of General Motors at least it's going to be paid back and I think substantially for Chrysler.
But yes, it is an argument. It's proof that this notion that it's a war between the private and public sectors is mistaken. And that they both have roles and the important thing to do is to get that interaction right.
SPITZER: Look, I think one of the -- and I want to go down this path of communication is one of the failures of the administration, unfortunately, has been that it has not explained what that affirmative role for government must be and also what the limits to that role must be, so that the public is left with a sort of unknowing sense that the government was growing, growing without an articulation of why and where it could work.
But here you have your perfect example to say, here's the proof, and I hope that people use this example for that purpose.
FRANK: There's no question. As I said, when you want to talk about manufacturing, you want to talk about some public policy that again work with the private sector. And look, people have tried to do it. I have tried to do it.
We don't control the media and we don't control -- and the negative is easier to say. There is a headline $700 billion in the TARP. Well, we never spent -- advanced that $700 billion. We advanced something in the 400s. Most of that's been paid back.
The bank piece of this, by the way, we can be clear, it's not just General Motors that's working out. The bank piece of the TARP, we've already gotten more money than we advanced to them. We made a profit on that. We've got more coming in because we wrote into the bill a requirement that there'd be some payback. But at a time when unemployment is high, good news is a hard sell.
SPITZER: Can we cross the continents just for a moment? Since you talked about manufacturing, I know you signed the letter just the other day asking the president to get a whole lot more aggressive about China and the currency issue is in with the World Trade Organization.
Where do you think we are in that regard? And don't you think the White House needs to get a lot more aggressive with respect to our --
FRANK: Absolutely.
SPITZER: -- bilateral relations?
FRANK: There is a cultural -- what's particularly fascinating here is while we are being told, well, wait a minute, we've got to understand China, the Chinese are attacking Ben Bernanke for daring to put America's needs for economic growth on the table and the Chinese Central Bank basically said, America, you have to worry about the rest of the world. You can't do this.
And I was particularly struck that a group of Republican economists including either Reagan or Bush appointees specifically sided with these foreign central banks explicitly in attacking Bernanke.
Yes, let's give one example about China, which has got nothing to do with fair trade, et cetera. One of the areas where America does well is intellectual property in cultural, movies, songs, software.
Piracy is rampant in China. And when we try to get the Chinese to enforce that what are we told? Well, you know, it's hard to enforce. Let's make it very clear. If these pirated DVDs and movies and software were attacking the Chinese Communist Party of the Chinese government they would have no trouble in finding them.
This notion that China can't control the flow of information is nonsense. They can when there is anything political. They can round up anybody who said anything nice about a Nobel Prize winner but oh, they can't control the widespread sale on the streets of pirated American intellectual property.
PARKER: OK. Well, let's talk about Alan Greenspan then. He recently -- the former Fed Reserve chairman Alan Greenspan recently criticized Dodd-Frank arguing that it will create uncertainly and impede economic growth.
What is your response to that?
FRANK: That's like being called silly by the Three Stooges.
(LAUGHTER)
FRANK: Alan Greenspan's failure to do any sensible regulation in the financial area is how we got into this mess. In 1994, the last Democratic Congress before the one that we are now losing passed a bill called the Homeowners Equity Protection Act mandating the Fed to restrict bad mortgages, mandatory lending.
Alan Greenspan explicitly refused to do it. He said the market knows better. He's the one who said don't regulate derivatives. He created -- yes, there was certainty. The certainty was that any financial institution can do whatever the hell it wanted to do and it brought about this terrible crisis.
And what we've done is to respond to that and I think here his predecessor Paul Volcker has a much better part of the argument because we listened very closely to Mr. Volcker and others. What we did was to impose some of the restrictions that Greenspan should have imposed.
Now the notion that we've created the uncertainty, this is the man who has acknowledged that his failure to use regulatory powers caused a large part of the problem.
SPITZER: Yes --
FRANK: He hasn't given us specifics about what he thinks we should do.
PARKER: Well, Congressman, you also -- you personally has said that the critics of extending these risky mortgages to people who really couldn't afford them were overreacting. Clearly --
FRANK: No. I didn't say that. I did say that I thought Fannie Mae and Freddie Mac were not in serious trouble. And I was wrong about that in 2003 as I was about Lehman Brothers and Wachovia and some others.
But I was always for them doing affordable housing. And that's a distinction people have failed to make. In 2004 when George Bush pushed Fannie and Freddie to do more low income mortgages I objected to that. I did agree that we should be trying to get homes for the -- for low income Americans but rental, not home ownership.
And I have been very much a critic of this notion that everybody should be a homeowner. I have pushed for affordable rental housing. I did not foresee the extent of the collapse and what happened of course was that even housing above the low income level collapsed. I didn't see that. I acknowledge that.
But in terms of pushing for home ownership for low income people, no, I've always been critical of that and have pushed for rental housing instead.
SPITZER: You know, Congressman, one of the most critical pieces of Dodd-Frank, named after you, if we could just point out for everybody in our audience, was the Volcker rule which will begin to take away some of the high risk endeavors of the banks that have government guarantees behind them.
And yet one of the first things the new Republican majority in the House is saying it wants to undo is in fact the Volcker rule.
Will you be able to stop that? Will they be able to whittle away at those critical protections you put into the statute?
FRANK: I do not think they will. That's obviously a very important point for us. What I worry about is that they will -- by using their control of the House -- try and underfund, for example, the Securities and Exchange Commission and the Commodity Futures Trading Commission because we have put very strict rules into derivative trading.
And by the way, one of the things I wish if we had kept the majority, I had plan to do, was to examine some of these trading activities because I honestly don't think they add very much if anything at all to real economic activity.
I think we have to distinguish between the role of financial institutions in financing productive work by people who produce goods and services and so we're trading back and forth like kids with baseball cards, and creating risk. So they will not be able substantively to undo anything with the Senate there, with the president there.
And I also believe we have in this one clearly public opinion on our side. What I fear is that they will -- in the appropriations process -- underfund some things. Now they can't do that. We were careful with the Consumer Protection Bureau because in -- and I'm very proud of what we did there working with Elizabeth Warren, we funded that without the appropriations process.
We funded it by taking money from the FDIC and the Federal Reserve that already comes into them and diverted that to this -- to the consumer agency. But the Securities and Exchange Commission, the Commodity Futures Trading Commission, which have important new responsibilities for regulating derivatives and other corporate monkeyshines, I'm afraid that they will try to underfund that and that'll be our fight.
SPITZER: Yes, you make such a critical point about this trading that the bank were involved in, not really being either productive or of any value to the whole economy.
One of the critical accomplishments with restructuring General Motors is GM is now a car company instead of a finance company. GM went over the cliff and basically become a bank with GMAC and mortgage financing. That is, to a certain extent, also what pulled it under.
Now that it can focus on cars it's going to do what we need for our economy which is produce real products -- jobs for real people. And that is another --
FRANK: Absolutely.
SPITZER: -- benefit of the bailout.
FRANK: And one of the things we do in the bail is restrict any new of these industrial banks because you get a blurring of the responsibility for the industry. So that's absolutely an important piece of what was done with General Motors.
SPITZER: So, Congressman Barney Frank, thank you so much for that wonderful conversation.
FRANK: Thank you.
PARKER: And later in the program should a college student body president get deported for not being a citizen? We'll be right back. Stay with us.
(BEGIN VIDEO CLIP) DAVID GOLDSMITH, OWNER, URBAN CLASSICS SERVICE: The Ford Fusion actually last year was rated higher than the Honda accord and the Toyota Camry. I believe that's true that Consumer Reports rated it as a better vehicle.
So I think that it's not impossible for American manufacturers to make great cars. It is a fact, however, that they haven't been making good cars for a long time.
(END OF VIDEO CLIP)
(COMMERCIAL BREAK)
PARKER: With all this talk about GM we thought it might be a good idea to look under the hood. David Goldsmith owns Urban Classics Service, an auto repair shop here in New York, right under the Brooklyn Bridge. And as a mechanic, David works on all kinds of cars. He knows GM cars from the inside out.
SPITZER: So, David, welcome to the program. You've got -- we can zoom in there, where apparently an older Chevy and a newer Chevy there.
Tell us from your experience how did the GM cars look to you as a mechanic who's working on them every day?
GOLDSMITH: Well, the new GM cars, I think, are greatly improved. I mean we've seen big, big changes and they've -- you know, they're modern vehicles, they're reliable, they're not polluting. We like the new GM cars.
PARKER: You say they're improved. I just wonder how they compare to other cars that you see.
GOLDSMITH: I mean I would say that General Motors cars -- you know for years they were sadly not competitive at all. But you know lately, especially in the last three, four years we've seen, like I said, vast improvements.
The Impalas and the Malibus are getting very high marks. And we -- you know the guys under the hood, we see the difference. I mean the cars are -- we don't see them coming in with those annoying problems or the things that make them not reliable. They're really nice cars. Our customers like them, too.
PARKER: Well, what specifically is an improved part? I mean what in the engine do you look at and say, wow, this is so much better?
GOLDSMITH: In the old days, General Motors, as most of the manufacturers, they had a hard time complying with the new emissions standards and with the fuel efficiency standards. And -- and the cars just couldn't perform.
But I think they've caught up and now we have cars that pollute -- like this car, a 2004 Colorado, pollutes a whole lot less. I mean this car probably pollutes 90 percent less than the vehicle that I have behind me which is a gas guzzling -- it's a beautiful car. It's a 1971 Oldsmobile Delta 88. It's got a 455 cubic-inch engine in it. And it just uses a lot of gas and pollutes the environment terribly.
So this vehicle -- and many times in the morning this thing back in the '70s wouldn't start up. And it would come in on a tow truck because it had the old style carburetor.
SPITZER: You're talking about that '71 car as though it was yours. Was that actually yours way back 30, 40 years ago?
GOLDSMITH: I lusted for a car like this but I never owned one.
(LAUGHTER)
GOLDSMITH: That was -- I was in high school. I was in high school. And so I look back at it and I -- you know they are beautiful cars. And everybody says, gee, Dave, you know, why don't they make them like they used to?
And, you know, I work on them every day and I say, you know, they may be beautiful but thank goodness they don't make them like they used to because this car is just -- it's not as safe, it's not as reliable, it pollutes. It's good looking and it's -- it belongs in car shows. That's about it.
PARKER: Well, David, if you had $25,000 today to spend on an American car, what would you buy?
GOLDSMITH: If I had $25,000 and I was going to buy a sedan, I would buy either -- I would buy an Impala or I'd buy a Ford Fusion.
SPITZER: One of the things that confuses me is it's one thing to drive the car out of the showroom, it's another thing to know five years later that it holds up to the wear and tear of putting three kids and two dogs --
GOLDSMITH: Yes.
SPITZER: -- in the back every day and the streets in New York City with the potholes.
GOLDSMITH: Yes. Yes.
SPITZER: So when will we begin to really see whether the cars that are coming off the assembly line today really are going to be able to withstand what we put them through?
GOLDSMITH: Well, you're 1,000 percent right on that point. Because it is five years from now. And that is the test. I know a guy who sells both General Motors cars and he sells -- he owns dealerships and sells Toyota also.
And he goes -- and he always used to say back in the day when -- you know, he would drive a Toyota with 125,000, 150,000 miles on it and it would feel like it's brand new. And he'd say, why can't the Americans do that?
The fact of the matter is that they are starting to do that. But that really is the true test. And we're seeing a lot -- huge improvement in American cars over the last two, three years but, you know, you're right. It hasn't been five years yet. We don't really know.
PARKER: Thank you, David. Thanks so much for your time.
GOLDSMITH: All right. Thank you.
PARKER: And coming up on PARKER-SPITZER, the president is an illegal alien, but it's not what you think. We'll be right back.
(BEGIN VIDEO CLIP)
HARRY WILSON, FMR. SR. ADVISER, AUTO TASK FORCE: It used to be that General Motors would break even if they sold 4 million cars a year in the United States. Now they break even if they sell 2 million a year.
PARKER: So you went in, you helped them get rid of waste and cut spending? Do you think we could get you to go to Washington and do this?
(LAUGHTER)
WILSON: I tried to get to Albany. It didn't work it.
(END OF VIDEO CLIP)
(COMMERCIAL BREAK)
PARKER: General Motors is back. The company returned to Wall Street with a bang today in the largest initial public offering of stock in American history at $23 billion. GM shares closed at $34 a share, a dollar above where the shares were priced.
When the company filed for bankruptcy in June of 2009, GM stock was trading at less than a dollar.
SPITZER: General Motors is also profitable again, enjoying a dramatic turnaround after the government's $50 billion bailout last year.
Joining us in "The Exchange" tonight, one of the people responsible for saving General Motors, Harry Wilson, former senior adviser to the task force.
PARKER: Welcome. Thank you for coming.
WILSON: Thanks for having me.
SPITZER: So first, we just got to observe it worked. This was a huge success. Congratulations.
WILSON: Thank you.
SPITZER: There were skeptics, to say the least. And so you put together a $50 billion investment in the company. What was the grand bargain? Who gave back what to make this happen?
WILSON: Sure. Well, I think -- I think the reason this company is so radically different, the reason it's been so well received is there're really three things that were taking place. Two big bang concepts, one of mass reduction cost of about $9 billion which I'll go through in a second. Secondly a huge reduction in the amount of outstanding debt liabilities to the tune of over $90 billion.
And third, a product portfolio General Motors that we didn't have anything to do with. The management team had been refurbishing and redeveloping. I was in process and infused to the status. It's much better than it has been historically.
PARKER: So you went in and you helped them get rid of waste and cut spending? Do you think we could get you to go to Washington and do this?
WILSON: I tried to go to Albany. It didn't work out.
(LAUGHTER)
PARKER: Do you think that -- was this the right time for the IPO even in the midst of the industry still recovering?
WILSON: Well, you know, the administration had this tension. When on the one hand, they want to maximize recovery for the taxpayers, on the other hand they want to get out as fast as possible which I think is good for the company and good for the economy to get the government out of the private sector.
And there's a natural tension there. So I think that the company is certainly ready to go public. I mean it's developed great results, been very profitable every quarter of this year, will remain profitable.
I think there is that tension of how many shares you sell and when you sell them. The longer they wait the more money they realized for the taxpayer but the longer the government intervention lasts.
You could argue that they should have waited a little bit but at the end of the day they -- I think they are honoring what they have said all along which they want to get out of the company as quickly as they -- as quickly as they can without damaging the company.
PARKER: And of course we have heard that the government is getting back this big hunk of money now.
WILSON: Yes.
PARKER: And -- but we still have a ways to go, $26 -- $27 billion yet. And my understanding is that we have to be able to share -- but GM has to be able to sell shares at, what, $53 a share for -- on average for a couple of years in order for the government to recoup all of the money. Is that likely?
WILSON: I would say we'll probably fall a little short. And here's why. The way the deal worked before the IPO was the -- the government needed to sell shares about $42, $43 a share which I think the company will be close to $34 today as you said. I think within a year I figure it'll be in the low 40s.
And so had they waited a year I think they could have sold all the stock at that level. But again they want to get out early. So they sold some -- they sold almost half the stock, about 40 to 45 percent of the stock today at $33 a share and so they basically has locked in a loss on that stake, raising the average to -- from $43 to $53 a share.
Now I think they can get to $53 within two or three years as the company generates about $3 or $4 a year in cash flow and as the economy recovers. But I think they'll try to get out sooner than that therefore will lose a modest amount of money in the context of the deal.
PARKER: Now Eliot and I have decided we're going to buy some shares.
WILSON: I saw that.
PARKER: So -- but is this something average Americans can do? Can anybody go out --
WILSON: Absolutely. So you can -- so any American can buy stock today, tomorrow around $34 a share. Not very different from the IPO price. I still think it's attractive because --
SPITZER: And -- you just said it's going to go up to the low $40s in about a year?
WILSON: That's my personal view. And I'll tell you why.
SPITZER: Right.
WILSON: I think it's --
(CROSSTALK)
PARKER: I'm buying more shares.
SPITZER: This sounded good. I mean this is good. Better return on getting my savings account, right?
WILSON: Sure. Sure. Absolutely. There's a little bit more risk, but better return.
SPITZER: But because -- it could be bailed us out again.
(LAUGHTER)
WILSON: If just shares you buy, if five shares I'll be able to help you out. Yes.
SPITZER: Here's the other piece of the big bargain you're talking about. The products. You said you cut costs, you got rid of liabilities and it's a better company.
WILSON: Yes.
SPITZER: Which raises perhaps the paramount issue, it's a car company now. When you first looked at it, it was more into mortgages, it was more into auto finance. It had become a finance company, not an auto company. And they were distracted. Now they're building cars and they're building better cars. How did that happen?
WILSON: On the product side some of the GM had quietly been working out for some period of time. Has really accelerated in the last couple of years and it's still continuing where they had really reinvested much more in their products. And there are two pieces to that.
One is, well, I'll call kind of common sense car designs. So Bob Lutz, who was one of the real archetypes of the U.S. auto industry in the last 50 years, but particularly of GM's new design, he would take a few hundred dollars, literally, invest it in the interior of the car and that car would then sell for several thousand dollars more.
So literally the Chevy Malibu, for example, sells for about $4,000 more than the old Chevy Malibu before its redesign. It only costs a few hundred dollars more to make. So all that difference is incremental profit. They sell twice as many.
So that's a hugely more valuable product to General Motors and they've done it now with the Chevy Malibu, the Equinox, Cadillac SRX and a whole slew of new products.
PARKER: There is a new study out today that says the bailout saved 1.4 million jobs for GM and Chrysler. In your mind was there any other option that the bailout?
WILSON: No. I think the alternative -- and this was -- look, I'm a free market guy. So this is something that I got to --
PARKER: You're even a Republican.
WILSON: I am. I am. The only Republican in the senior leadership team. And I feel very passionately generally opposed to government intervention in the economy. But I think in this -- in that moment of time where we were in American history was one of these once every 75, 100 year moments. And because there were no private capital markets the alternative would have been no capital at all.
The company is little liquidated. The entire automotive industry would have gone away in a very short period of time. Lost I think actually more jobs because you're not adding in -- that is to say doesn't add in Ford and only ancillary jobs associated with that.
And you would have lost this great industrial backbone that didn't need to be lost. And so that, to me, was -- when you look at those alternatives is a very clear choice.
PARKER: Harry Wilson, fascinating discussion. Thank you.
And still to come, Nancy Pelosi, Dick Cheney and Lord Voldemort? We'll see what that unlikely trio has in common in our "Political Party" coming up.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: There's no citizen requirement to be a student officer holder, you know? It's student government. I'm here to serve the students, not the -- not the -- you know, the state of California or the -- you know the federal government.
(END OF VIDEO CLIP)
(COMMERCIAL BREAK)
SPITZER: Welcome to "Our Political Party," and offbeat conversation with a mix of opinionated guests. Let's see who's at the table tonight. We start with Dennis Rodman, one of the great NBA defensive players of all time. He racked up -- come on, Dennis.
DENNIS RODMAN, FMR. NBA STAR: I have no business on this show.
SPITZER: Twelve rebounds. But here we go. Here's the part you care about. Just as important, he is participating in a raffle to support the mission of St. Francis nonprofit drug and alcohol treatment center in Fort Lauderdale, Florida.
Dennis, tell us about how can we buy tickets to the raffle?
RODMAN: Are we taping now?
SPITZER: Yes, we're taping.
KATHLEEN PARKER, HOST: Yes, we're on.
RODMAN: Oh, yes, you can go on Rodman.com.
SPITZER: Rodman.com.
RODMAN: But this charter organization is about helping homeless people get off the street, get their lives back together, stuff like that. So I used to be homeless back in the day, back in 1981, '82. And, you know, I used my fame with this organization because it's a great one.
SPITZER: If you win the raffle, what do you get?
RODMAN: What do you win? Oh, a lot of money.
SPITZER: All right.
RODMAN: It's all about -- donated this house because they can't afford anymore because times are hard. And they gave it to the charity to auction off to raise money for the charity and for them. And actually it's a $3 million house with running water.
PARKER: You're amazing. You're amazing. Your fame draw attention to this issue.
RODMAN: Draw attention to this issue.
PARKER: Very good. It's good for you.
SPITZER: Great stuff. Also joining us, Joe Queenan, who is an author, humorist, columnist of the "Wall Street Journal" and we found out last time we was here, a great singer.
JOE QUEENAN, COLUMNIST, "WALL STREET JOURNAL": Well, not a great singer I would say.
SPITZER: By my standards, great.
QUEENAN: Well, yes.
PARKER: And over on the side table, we have Nicky Kurokawa who is with the Independent Women's Forum, a think tank in Washington, D.C. And we have Andrew Jenks who tells me I'm not part of his demographic. But he has -- he's the creator and star of the "World of Jenks," a documentary film series on MTV. So welcome, everyone.
ANDREW JENKS, MTV'S "WORLD OF JENKS": Thank you.
PARKER: All righty (ph). First question, the national book awards were announced yesterday and the singer Patti Smith, her memoir, "Just Kids" won for nonfiction. If you can hand out a book for a book you've read recently, what would it be? I read books so that's --
NICOLE KUROKAWA, CONSERVATIVE POLICY ANALYST: I read a great book recently called "A Thousand Sisters, the worst place in the world to be a woman." It's about the Congo and just how awfully tragic everything is there. So I highly recommend that. It was really moving.
SPITZER: Sounds upbeat.
PARKER: Sounds important.
KUROKAWA: It was really sad.
SPITZER: Not --
KUROKAWA: No.
SPITZER: Anybody got a more happy idea?
QUEENAN: I was going to say "Don Quixote" because I've been reading that. But actually, I read a book by a writer named David Bajo, a book called "Panopticon" and it's about universal surveillance. It's about people go in and there's surveillance cameras all the time on us and people start taking the video and editing it and making their own little films with you in them. And it's just really scary, creepy, interesting book. It's called "Panopticon."
SPITZER: May not be fiction.
QUEENAN: It's fiction.
SPITZER: But it may not be.
QUEENAN: No, no, no. There are 200 cameras have taken pictures of us today -- 200 cameras. Everywhere you go. Every bar that you go into, if you're in the subway. And it's a scary book but it's very good. But "Don Quixote" is very good as well.
PARKER: "Don Quixote" is awesome. All right. So we have important, creepy.
JENKS: I'll go with --
PARKER: Fun? Can we go with fun?
JENKS: Yes, I'll go with Russell Brand. Russell Brand is pretty good. He has a new memoir out, and it's where he keeps it real. He talks about how he faced drug charges and how he was bulimic at age 12 and then now he's obviously this famous rock star. So it's a good memoir. It's almost as good as this guy's back in the day.
SPITZER: What do you got for us, Dennis?
RODMAN: What I got for you? This is for you. This is for you. I don't have a book right now. I wrote four but --
SPITZER: Did you really?
RODMAN: Yes.
I would say if I had to pick, I'd say my book.
SPITZER: All right.
RODMAN: That is what I want to be.
PARKER: Do you have a favorite among the four you've written?
RODMAN: Yes. "I Should Be Dead By Now."
PARKER: "I Should Be Dead By Now."
RODMAN: That's my favorite.
JENKS: Is that the one where you're naked on the motorcycle?
RODMAN: That's the first one. That's the first one.
"I Should Be Dead By Now."
PARKER: Got that.
RODMAN: I like that.
PARKER: Got that. Well, we're glad you're not. We're glad you're not.
SPITZER: Here's a happy one.
RODMAN: That's right.
SPITZER: That's why I'm saying, you know, not a lot of upbeat stuff there, Joe.
QUEENAN: No.
PARKER: Well, here's something upbeat. GM is back, maybe. And there's a big IPO today. So which American icon would you like to see make a big comeback.
RODMAN: They still owe $27 billion, man.
PARKER: Yes, yes, yes.
RODMAN: How are they back?
QUEENAN: You know who must have gotten the federal money? You know who got federal money? I think the Oakland Raiders got some federal money because the Oakland Raiders are back now. The Oakland Raiders are winning. They scored 59 points a couple of weeks ago.
(CROSSTALK)
SPITZER: We've got an expert. We've got an expert here. It's not the teams that spend the most that win. It's the teams that actually find the raw talent and get it young and they cultivate the players, right?
UNIDENTIFIED MALE: No.
SPITZER: No. You disagree?
All right. You know, Dennis raised Warren Buffett. SO I want to go back to Warren Buffett.
RODMAN: You sincerely like this, huh?
SPITZER: Oh, yes. He wrote a big thank you note to the government in the op-ed page of the "New York Times" earlier this week and said, thank you for bringing the economy back. So if you could say thank you to the government for doing something, what would it be?
RODMAN: You can't thank you to the government. Because the government owes $13 trillion. What the hell is that?
SPITZER: You're a deficit hawk.
RODMAN: Yes, come on, man. We're not coming back.
SPITZER: You buy gold?
RODMAN: What?
SPITZER: You buy gold.
RODMAN: No, only silver.
(LAUGHTER)
Come on, man. She's good. She don't say much at all.
SPITZER: All right, Joe. Now you're the "Wall Street Journal." You don't' say thank you to the government for anything.
QUEENAN: Oh, yes, I do. I do. The national parks in Maine. I was in Maine this summer for the first time. And Maine --
SPITZER: Which one?
QUEENAN: Maine is further away than Canada. I mean, you have to drive forever to get there. When you go to Acadia National Forest --
SPITZER: Amazing place, isn't it?
QUEENAN: You go on Cadillac mountain at 4:56 in the morning and you see the come up, it is the most amazing thing and the federal government operates that park.
RODMAN: I tell you one thing -- all the time, right? Vancouver, Ontario, and all those places, man. Wow. Those strip clubs are awesome.
PARKER: Oh, my goodness.
SPITZER: That's the Canadian federal government.
(LAUGHTER)
UNIDENTIFIED MALE: Thank you for the strip clubs.
(CROSSTALK)
PARKER: All right. Nicky?
KUROKAWA: I'm a libertarian so there is little I would say if I were to write a thank you note for. But, you know, he wrote that letter and then he got a Medal of Honor. So I might be considering my positions going forward.
PARKER: Well, that's a point. You've got a point there. Yes.
How about you, Andrew?
JENKS: I would say, you know, before we end some of the grants that the government has been giving out for education, a lot of college students. But then on my way here actually I was reading something that said the average college president makes over $1 million a year.
PARKER: I saw that. They've got --
JENKS: Well, us college kids of that age are getting totally, totally --
SPITZER: I don't know if it was the average guy. I think there were a couple who were over a million. I don't think it was the average. I may be wrong. I think there were a couple over.
JENKS: Maybe I read it too fast. Maybe I should check my facts before I'm on CNN.
PARKER: All right. We have another question when we come back. Don't touch that remote.
(BEGIN VIDEO CLIP) GOV. BRIAN SCHWEITZER (D), MONTANA: You could decrease the cost of health care in the United States by 25 percent and still improve care. We know that because my neighbor in Saskatchewan has the same population as Montana and their health care costs half as much.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
PARKER: All right. Welcome back to "Our Political Party." Let's squeeze in one more question. Last week, Nancy Pelosi was re-elected minority leader of the House. Dick Cheney spoke at the dedication of the Bush presidential library and Lord Voldemort is back in "Harry Potter 7." So of the three, which would you least likely -- least like to stuck with in an elevator.
QUEENAN: I don't want to be in an elevator with Nancy Pelosi.
PARKER: Why?
SPITZER: You can choose Lord Voldemort.
(CROSSTALK)
QUEENAN: I know this is going to be an unpopular to say. She scares me.
PARKER: Not in person.
QUEENAN: Well, maybe you've met her in person. I've only met her on television. She's scary-looking.
SPITZER: She is charming. She is genteel. She is smart.
Your politics may be this far away but you would find her absolutely delightful and fascinating to spend time with. PARKER: Oh, I don't know. My son worked on the Hill and he said she's really sweet to him. So I like her.
KUROKAWA: I think she's a terrific role model. I disagree with her politics across the board, but I would love to talk with her.
QUEENAN: So nobody wants to be in the elevator with the guy from "Harry Potter"? Is that what you're saying? Come on.
SPITZER: Have you seen Lord Voldemort? My goodness.
QUEENAN: Come on.
SPITZER: You'll be 10,000 years back in half a second.
PARKER: Who's the person you would least like to get stuck in an elevator with -- just anybody in the whole world?
QUEENAN: Dick Cheney, if he's got a gun.
(LAUGHTER)
And there's a mini alarm, there's a duck on one side, I'm in the middle and Dick Cheney. I think Dick Cheney.
JENKS: I don't think he even needs a gun.
(CROSSTALK)
SPITZER: He's got one bad rap. All right.
PARKER: All right. Dennis Rodman?
RODMAN: That's good though, bro. Nice to meet you.
QUEENAN: Nice to meet you.
RODMAN: I don't know anything about it.
PARKER: These guys are so happy to meet. Joe, Dennis. We're glad we could bring you all together.
QUEENAN: I have seen him before. I haven't seen him before.
RODMAN: I've seen you, too. Used to be the governor, right?
(LAUGHTER)
SPITZER: You just figured that out.
RODMAN: You're that guy.
SPITZER: I'm that guy. All right.
PARKER: I don't want to end this party. It's just starting to get good. Thank you all for being with us. (BEGIN VIDEO CLIP)
PEDRO RAMIREZ, FRESNO STATE STUDENT BODY PRES.: There's no citizenship requirement to be a student officeholder. You know, it's student government. I'm here to serve the students, not the, you know, state of California or, you know, the federal government.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
SPITZER: Tonight's headliner is one of only two governors in the entire country who actually had a budget surplus instead of a deficit.
PARKER: We spoke earlier with Montana Governor Brian Schweitzer and asked him how did he manage to balance the state's checkbook five years in a row, no tax increases, no education cuts and he still has $327 million left in the bank.
SPITZER: Sounds like a magic trick.
PARKER: Nice to see you.
GOV. BRIAN SCHWEITZER (D), MONTANA: It's great to be on your show. And good to visit with you, Eliot.
SPITZER: Good to always be chatting with you, Governor.
PARKER: Gosh, every time we have a governor on, Eliot's old pals, I still have a little advantage. So I'm going to go first. You said that the trick to keeping the state in the black is applying lessons you learned as a rancher. Explain that to us, please.
SCHWEITZER: Well, you'll have good years and you'll bad years when you're in business or when you're running a ranch. And the way we managed to stay in the black in Montana is not that the recession didn't arrive here. We have 7.5 percent unemployment which, of course, is lower than the national average. But when we had the good years four years ago and five years ago like every other state in the union, what we did is we quit bonding. We didn't borrow any money for projects. We paid cash on the barrelhead.
And we put $175 million in one-time funds in our pension program to shore it up. And then I built the largest savings account in the history of Montana because I knew, you know, when you've got a good year going and the cattle are fat and you've got plenty of grain in the bin, who knows what the prices will be next year? Who knows whether the rains come next year? And the rains didn't come and our revenues declined but unlike the 48 states that went into the South Park, we kept money in the bank and now we're just drawing down on that savings account.
I just proposed a budget for our legislature yesterday. We increased funding for K-12 education and for higher education. We also cut some budgets elsewhere. But we increased our budget by about 1.97 percent and I proposed to cut more taxes for more Montanans at any time in history and we'll still have one of the largest ending fund balances in history. It's just good money management.
SPITZER: Governor, an amazing array of accomplishments. Just want to make it clear, though, I'm correct you did get federal stimulus money to help you tide over that downturn that you're talking about?
SCHWEITZER: Whenever the federal government sends you money, you put it in your bank account. That's just the way it works.
Eliot, one thing is true. There are 50 business models in America. And what all governors do is the same thing. Eighty-five percent of our budget is to educate, to medicate, to incarcerate. And so if you look at a pie chart of New York or California and Montana, you'd find out that we effectively distribute our resources in almost exactly the same way. So people who say they want to cut the size of state government or they want to reform state government, I tell them, well, unless you've got a plan for education, medication or incarceration, you're just blowing smoke.
SPITZER: You are laying out a blueprint that you're saying could be applied to the entire nation. So take your methodology and take your theories about how you run your state government, apply it to the federal government. Where would you cut? What would you do? And you know, we're saying name your cuts, everybody and our guests. What would you cut if you had to in the federal budget?
SCHWEITZER: Let's get right to the heart of the matter. Let's talk about Medicaid and Medicare. Montana and the rest of the states around the country, we pay more for our health care than our competitors do in Canada, in Europe. We pay more and we get less because we pay two and three times as much for our prescription drugs as they do in our competitor countries. We pay more for our medical devices. We pay more for our insurance.
Therefore, our health care costs are higher in the United States than they are in other countries. And yet they passed this health care bill without challenging the expenses of the medical devices, of the pharmaceutical companies, of the insurance companies. They just added new members to Medicaid and Medicare and kicked the costs down the road. What you've got to do is challenge those expenses. You could decrease the cost of health care in the United States by 25 percent and still improve care.
SPITZER: But let's go to social security, which is the other major expenditure on the books that you talked about. What would you prescribe for social security?
SCHWEITZER: Well, Frank Luntz recently polled some young people less than 30 years old. He asked them a couple of questions. One of the questions was, "Do you think you'll ever get a dime from social security? And the other question is, "Do you think you'll meet an alien during your lifetime"? And more of the 30 and younger people in the United States thought they would meet an alien than ever get a dime from social security.
So here, I'm just going to tell you how to fix this thing. Everybody who knows insurance understands time and money. You can't tell somebody that's 50 or 55 years old everything that you've done for your whole productive career is out the window and we're going to change the retirement age or we're going to change your reimbursement package. So you start from 45 to 30.
Somebody that's 45 to 30 we say to them, here's the deal. You're going to retire two years later and you're going to get 90 percent of the benefits that the people that are currently retired are getting. And if you're under 30, you're going to retire four years later and you're going to get -- you're going to get 80 percent of the benefits.
PARKER: Governor, I want to shift gears just a little bit here. You were in -- you spent seven years in Saudi Arabia. What's your takeaway message from the Middle East and what would you tell us about the Middle East to help us develop a better understanding between those cultures and ours?
SCHWEITZER: Well, first of all, people really don't understand that it's not a single culture there. They don't understand that the Arabs have been fighting with the Persians for 3,000 years. And so step number one, when we went into Iraq and took Saddam Hussein out, we created a vacuum. Because the whole time I lived in Saudi Arabia, Iraq was fighting Iran and they both lost a million troops of their troops in that war. As long as they were fighting each other, they weren't fighting somebody else.
So when we eliminated Saddam Hussein, we empowered Iran and now they scare all of our allies in the Middle East. They scare the Saudis. They scare the Kuwaitis. They scare the Jordanians. They scare the Israelis. And they're building the capacity for nukes.
And the blame is actually landing on our shoulders. If we would have just let the regime in Iraq continue, it wasn't a great regime. They were repressive and they tortured their people. It wasn't necessarily a good place for women, but you picked a place in the Middle East that is. But for our foreign policy needs to have a counterbalance of Iraq on Iran protected our backside. Now we own Iraq and we have an Iran that is empowered. They're partnering with Hugo Chavez and others in our own hemisphere, and we really have a tiger on our hands.
SPITZER: Governor Schweitzer, thank you for joining us. Time is short. Join us again in the near future and come visit. We look forward to having you join us here in person.
SCHWEITZER: Great stopping by.
SPITZER: Thank you.
PARKER: Thanks, governor.
SPITZER: We'll be right back.
(COMMERCIAL BREAK)
JOE JOHNS, CNN SENIOR CORRESPONDENT: Hello, I'm Joe Johns. More of "PARKER SPITZER" in a moment. First, the latest.
The remains of an Ohio mom, her 10-year-old son and a family friend have been found in a wooded area in Central Ohio. The bodies were in plastic bags inside the hollow of a tree. Police say Matthew Hoffman arrested for kidnapping the boy's sister revealed the location of the bodies.
The alleged barefoot bandit pleaded not guilty in federal court and charges in a Seattle courtroom today. 19-year-old Colton Harris Moore is accused of stealing planes, books and cars often while shoeless during a cross-country crime spree that lasted two years.
And dogs are among the most popular pets in the world, but how smart are they? Tonight on "Anderson Cooper 360" a look at canine intelligence. What researchers are learning about how dogs see the world and how they think. Plus, dog whisperer Cesar Millan joins us.
"PARKER SPITZER" back after this.
PARKER: Tonight on "Culture of Politics" we feature the president. And no, not President Obama but Pedro Ramirez. He's the president of the student body at Fresno State in California. He's the 22-year-old political science major who failed to mention something when he was running for office. He's here in the United States illegally.
SPITZER: Uh-oh.
(BEGIN VIDEO CLIP)
PEDRO RAMIREZ, FRESNO STATE STUDENT BODY PRES.: There's no citizenship requirement to be a student officeholder. You know, it's student government. I'm here to serve the students, not the, you know, state of California or, you know, the federal government.
(END VIDEO CLIP)
SPITZER: But you what, Kathleen, when you dig into these facts, it's not as though he came here last week illegally and then got into college and said, oh, by the way, I'm getting into politics. He's been here since he was 3. He didn't even know he was here illegally until he was applying to college.
PARKER: There's, of course, another point of view, as you might expect. The student who lost the election is the head of the college Republicans and he's calling for Ramirez to step down. Have a listen.
(BEGIN VIDEO CLIP)
COLE ROJEWSKI, PRESIDENT OF CAMPUS COLLEGE REPUBLICANS: He misled the students. He was not upfront about it. And no one knew about it. So I think that he should step down and have a re-election.
(END VIDEO CLIP)
PARKER: This is kind of a classic though. Isn't it? You have the college Republican versus the illegal immigrant. And it's kind of a classic clash, you know, that corresponds to this immigration debate we're having in this country. And clearly when you put a human face on the illegal immigrant, it's a different story. I mean, nobody wants to punish this young 22-year-old.
SPITZER: It's more than just complicated. Whether the number is 11 or 12 million undocumented individuals here in this nation which is, you know, the term that I think is preferred these days, so many of them like this kid were here because their parents came in with them.
PARKER: But, you know, Eliot, let's remember, too, a lot of Americans did come through the back door --
SPITZER: Yes.
PARKER: -- such as Alexander Hamilton.
SPITZER: Yes.
PARKER: He got off the boat from the West Indies and all he did was write the constitution and become the first secretary of the treasury and, of course, what about the terminator?
SPITZER: That's right. We've got to have Arnold who is in his last days as the great governor of California. Has a little bit of a deficit that he's leaving for his successor, the "moonbeam" Jerry Brown. So you got Arnold, you got Alexander Hamilton. Can you imagine the two of them having dinner together?
PARKER: That's our show for tonight. Thank you so much for being with us.
SPITZER: "LARRY KING LIVE" starts right now.
