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On the Story

President Bush has Uphill Battle at United Nations; Bush, Putin Meet at Camp David; "Do Not Call" list Bumps Head with Constitution

Aired September 27, 2003 - 10:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Welcome to CNN's ON THE STORY, where our journalists have the inside word on the stories we covered this week. I'm Suzanne Malveaux, on the story of President Bush's uphill battle to change minds this week at the United Nations and the uphill work to get help in Iraq.
JILL DOUGHERTY, CNN MOSCOW BUREAU CHIEF: I'm Jill Dougherty in Moscow, on the story of presidents Bush and Putin meeting this weekend at Camp David. What's at stake for both leaders and both countries?

JULIE VALLESE, CONSUMER EDITOR, CNN NEWSOURCE: I'm Julie Vallese, on the story of how the "Do Not Call" rule with telemarketers collided this week with the Constitution. And the whole mess is headed directly for court.

KELLY WALLACE, CNN NATIONAL CORRESPONDENT: I'm Kelly Wallace, on the story in California, talking about how the courts gave a green light to the recall this week, the big debate, and time running out.

GERRI WILLIS, PERSONAL FINANCE EDITOR, CNN BUSINESS NEWS: And I'm Gerri Willis, on the story of how many of us slipped far deeper into credit card debt, sometimes just to buy the basics. We'll talk about all of these stories.

Also coming up, remember OPEC? A decision this week my cost you at the pump and at the thermostat. And we'll listen to the president's weekly radio address at the end of the hour.

We want to hear from you. E-mail us: onthestory@cnn.com. Now straight ahead with Suzanne. And Mr. Bush goes to the U.N.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Now the nation of Iraq needs and deserves our aid. And all Nations of goodwill should step forward and provide support.

(END VIDEO CLIP)

MALVEAUX: President Bush speaking to the United Nations, asking for help and getting the diplomatic cold shoulder and a few "I Told You Sos" in return. You know the big question is, OK, he went before the United Nations General Assembly, they're going to present this resolution. But are they going to get the troops? Are they going to get the money that's necessary?

And that is -- that's a big question. That's a big gamble. A lot of people, they saw this, and they said, well, he went for it, he didn't apologize. He said the administration was right in taking its action. Others felt, well, perhaps he could have been a bit more humble in his tone, perhaps he should have come out directly and said, look, we really need your help. Not it's in your interest, but it's in our interest as well.

That's the big question that's going to play out here in the weeks to come, is whether or not he really is going to get the assistance that this administration desperately needs.

VALLESE: Well, and he's asking for $87 billion -- $20 billion for reconstruction. People really just started looking at what that that $20 billion is for, and he's not really making a lot of friends by asking for that.

MALVEAUX: And that was huge. I mean, that was extremely controversial on the Hill this week, because you've had Senator Kennedy over the last couple of weeks, who has only become emboldened by the criticism that, oh, he's using hate speech, that type of thing. But he's saying this is a sham, this isn't right.

But what's different this week, over the last 24 hours, is that Republicans have started to ask some of the questions. When you bleak down this reconstruction money, the $20 billion, you're looking at garbage trucks, you're looking at establishing a postal service, you're looking at all kinds of projects. And they're just thinking, you know, we cannot afford this.

One of the options that's on the table -- and even sources in the administration acknowledge -- is that perhaps instead of all of this money outright, as a -- almost as a grant, part of it being a loan. So you'd actually have those oil reserves from Iraq being used, the revenues being used later on to pay back some of that money. And that's a huge acknowledgement for the White House to actually realize that they're not just going to write a blank check and say, OK, this is the money you need, we're going to go ahead and give it to you.

WILLIS: Well, a loan would be nice. We've had a lot of harsh rhetoric, right? Is there going to be anything coming from anybody else, from the Germans, from the French? What kind of support might he have gotten at the U.N. this week?

MALVEAUX: You know, it's a very good question, and it still really is a question. We just found out this morning that the European Union, all 15 members, $240 million. Now, $240 million that they need anywhere from $25 billion to $60 billion for reconstruction.

That's coming from the administration. $240 million really isn't anything. So the Germans are saying, yes, we'll go ahead, we'll train Iraqi police. You had Chirac, who -- French President Chirac, who was saying, well, at the very least, we're not going to veto this resolution. We may not like it, but we're not going to stand in the way of a U.N. Security Council resolution. But, you know, it really is very unclear. It's uncertain whether or not they're going to get the money, the troops, to actually pull this off. And what you may see is they're considering more reserves, calling up more reserves -- Kelly.

WALLACE: Suzanne, take us behind the scenes a bit. I mean, the White House certainly must have expected somewhat of a skeptical response to the president's speech, but many people were very critical, saying the president had an unapologetic tone behind the scenes. Are aides saying that maybe they could have done a better job in that speech before the United Nations?

MALVEAUX: Well, you know, Kelly, as you know, this is not a White House that's going to go forward and be humble and apologize, mea culpa. They said, hands down, that's not going to happen.

He did take a different type of tone before the General Assembly. A lot of people recognized that. But, at the same time, if the goal was to get the troops and the money, that is a wait and see type of situation. We don't know whether or not they're going to succeed.

If the goal was, is to open up the channels of communication, one on one with these leaders, perhaps create better goodwill between the leaders, well, in that sense, you can say it was a success. Because you do have some concessions from the anti-war coalition, from Schroeder, from Chirac. We're going to hear from Putin today, as Jill knows. And there may be some signs, too, that there's progress on that front.

Right, Jill?

DOUGHERTY: Suzanne, Vladimir Putin was one of the leaders, of course, who was against the war early on, along with the French and Germans. So why does he get a free weekend at Camp David?

MALVEAUX: Well, I suppose, you know, Putin, out of all of them, as you know, they have a very close, a very warm relationship. He gets the royal treatment. But it's really meant to be an informal gathering, an informal situation.

The two of them brag about that they are so close they can speak bluntly to each other. So you'll hear them criticize each other publicly. But I have a lot of questions about -- about, really, what's going to come out of that session, what's going to come out of that meeting. Jill, I know you're all over it.

And I think what's going to happen with that is that perhaps they'll offer some sort of personnel on the ground, but they certainly are not going to offer money. Because we know they need that money desperately.

WALLACE: Suzanne, let me step in here.

DOUGHERTY: That's definitely true.

VALLESE: And what about an opposition, an opposition to anything that will be coming out for the money, putting troops in, rebuilding of Iraq? What does the president see -- have facing for him at that?

MALVEAUX: Well, one thing that was interesting that came out in the week is when they looked at the reconstruction cost, and when they asked, how do you justify having the administration, having taxpayers put up this kind of money? There was even a Democrat who came forward and said -- there's an American Parity Act that says, if you spend this kind of money in Iraq, you need to spend that kind of money back at home as well.

The White House spokesman, Scott McClellan in the gaggle, the informal gaggle, really kind of side stepped that and then afterwards came back and had this kind of argument that in the 1775 Continental Congress we established a postal service, and that's a part of our democracy and our freedom. And, you know, a couple of giggles inside the press room.

And I said, well, you know, that was -- your researcher put that out on the table there. But they realize the argument is that you need a stable Iraq, you need a functioning society. That's the foundation of a secure society, and they're trying to convince allies as well they should contribute to the effort.

DOUGHERTY: Lots of issues on the table for President Bush and President Putin at their private meetings at Camp David. We'll be back in a moment, back ON THE STORY, after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

VLADIMIR PUTIN, RUSSIAN PRESIDENT (through translator): Sometimes we don't like to hear certain things from each other. But we listen to one another and seek solutions.

(END VIDEO CLIP)

DOUGHERTY: Russian President Vladimir Putin, with a translator, talking about his relationship with President Bush, two leaders who don't always agree on everything. Welcome back. We're ON THE STORY.

MALVEAUX: Now, Jill what do we expect from the two leaders? What do we expect them to say? Obviously, there are a lot of differences on so many fronts. But I imagine that Iraq is going to be priority number one.

DOUGHERTY: Iraq has to be number one, there's no question. And that really is -- the question is, what can George Bush get from Vladimir Putin in that area?

He needs a bit of a fig leaf, because, after all, if he can get Vladimir Putin on board to do something -- obviously no money, because the Russians don't have it. In fact, they're owed money by Iraq. But maybe they get a few troops, maybe they get a few peacekeepers. That could maybe bring other countries on board.

So, probably, you're going to hear a lot of positive statements about the war on terrorism, and maybe something about -- probably not troops directly here, but some type of help that Vladimir Putin might offer.

WALLACE: Jill, what sense did you get -- you sat down with other reporters with President Putin, you said, for about four hours. What sense did you get from him about how he's going into this meeting with President Bush, about his relationship with Mr. Bush, and the sense of that relationship and how that could help the disagreement over Iraq?

DOUGHERTY: You know, I think that this time, after these four hours with him, he seemed much more assured than a couple of years ago, when we did the same thing for three hours. You know he's a judo expert. And I think you'd have to say he's very good at turning the argument against the other person, but in kind of a polite, diplomatic way.

So you'd have to say that this time he has something to offer to George W. Bush. It's not the reverse necessarily. In the old days, Russia had to give, give, give, and accept, accept, accept what the Americans wanted. This time, Putin has something to give to George W. Bush. So it's a little different dynamics there.

WILLIS: Jill, these are two men with a very intense personal relationship. At least they had one at one point. What's the status of that, and will it help with this upcoming meeting?

DOUGHERTY: The relationship between the two men is definitely quite good. Mr. Putin very complimentary about George W. Bush. And, you know, it's important, especially now, to have this good relationship, because both men have, let's say, ideologues from the old school who have a lot of distrust about the other side.

Mr. Putin has people from, you know, the military, et cetera, who don't trust the United States. And certainly, in the United States, you have many of the same type of -- you'd have to call them kind of cold warriors. So it's important that at least this channel, where both men want to get something done, is still pretty strong.

VALLESE: Jill, these two leaders, good friends. They talk a lot about open things. But President Putin has been criticized about really not practicing diplomacy so much. He's been criticized about really putting restraints on his country on an open society.

Will the friendship of the president really be able to call him on that and have him really answer some hard questions about how free of a society they really have in Russia?

DOUGHERTY: You know that is one thing that a lot of people are urging. There are a lot of groups that have actually been putting ads in American newspapers, saying "George Bush, don't trust Vladimir Putin. He's cracking down in his own society. You can't trust this guy."

But you'd have to say that it's a real problem for President Putin, because he wants to prove that he also is a Democrat. But you know don't expect at these meetings for the issues, like the thorny issues, Chechnya, human rights, don't expect them to get to the degree they would impede the relationship on Iraq. That's the primary thing.

The United States wants Russia to help them out on Iraq and other issues. And human rights, at this point, will always be secondary, even in spite of the yelling by many groups that it should be much higher than it is.

MALVEAUX: Jill, one of the really contentious points between the leaders -- and it's really been very difficult, I think, for the president -- is this whole thing over another member of the axis of evil, Iran. The fact that they have this deal to provide this technology, nuclear technology to Iran, and U.S. officials insist that this really could bolster perhaps a nuclear weapons program inside of that country.

And it just does not seem as if President Putin is willing to give on that. I mean, a lot of money at stake, $800 million. I have not been able to get the answer to this question on my side, which is, are there any concessions, do you think, that the Bush administration is willing to offer or exchanges for Putin to give up that deal?

DOUGHERTY: I don't think that Putin's going to give up that deal. I mean, I would be very, very surprised. Because what they feel, if you take the Russian position, they believe that everything that they are doing is according to the rules, according to international regulations.

And what they say -- in fact, I asked President Putin that question, in fact, during the four hours. And he said, "You might be surprised at my answer. The Americans are not telling me that what we are providing, that we're actually helping them to build the bomb. What they're saying is the technology and the know-how might be taken by the Iranians to help build a bomb."

So you'd have to say that Putin, at least as far as we can see here, is going to go right along with that. But what he is going to do is slow down his relationship in providing fuel for that nuclear power plant because the Russians are doing a side deal with the Iranians, saying, we're not going to give you the fuel until you make sure that everything is up to snuff according to international regulations.

So I think, in other words, you're going to see some foot- dragging by the Russians to provide fuel. And without the fuel, the Iranians won't be able to work that nuclear power plant.

WALLACE: Jill, not only do the two men, of course, share a close relationship, but their wives do as well. First Lady Laura Bush heading to Russia to spend time with the first lady of Russia. How significant is this visit, and what are the two women expected to do?

DOUGHERTY: Well, symbolically, it's important, of course. First ladies -- and this is the first time Mrs. Bush has ever been here in Russia. And they're going to be talking about library programs, books for schools and library programs for schools.

It's something that both of the women are very interested in. And substantively, not too sure exactly what will come out of it. But it will be very interesting to see them.

You know we don't see Lyudmila Putin that much. She's actually pretty quiet on the international scene. She of course accompanies her husband to all of these events, but we don't get a lot of information about her. So for me, personally, it will be interesting to see her.

WILLIS: Jill, thanks for joining us today. What's on the story for you in coming days?

DOUGHERTY: I have to say, what's going to come out of this, in a few minutes we're going to hear from both presidents. And then next week, we're going to have elections in Chechnya. So that will be quite interesting to see how that develops.

WILLIS: Indeed. Well, from the world scene to the economic scene, the falling dollar, growing consumer debt, and, thank thanks to OPEC, higher gas prices, too. I'm back on those stories in a moment.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We are exporting currently .9, 900,000 barrels a day.

(END VIDEO CLIP)

WILLIS: The Iraqi oil minister, speaking at the OPEC meeting in Vienna this week, predicting that his country's oil production will increase in coming months. OPEC responded by cutting oil production, something we may see at the pump and on our heating bills.

Welcome back. We're ON THE STORY.

Well, the big stories this week that I thought were interesting that didn't get a lot of play, two of them in fact. One, consumer debt. Over the '90s, we thought we had a big boom time. In fact, people were racking up credit card debt at a rate three times higher than at the beginning of the decade.

And they just weren't buying flat panel screen TVs either. That was the sad part about it. They were actually paying for food and other consumables that normally you don't recommend people put on credit cards.

Also, paying attention today to the story that's in the newspapers on poverty, which has been increasing, year to year. 2002, 12 percent of people, Americans, in poverty. Of course, the poverty lines are set pretty low for a family of four, about $18,000. And these are the kinds of things that people -- well, they're just not paying that much attention to right now.

WALLACE: Gerri, help us out. You know there are always conflicting signals or signs out there. You also tell us that, you know, housing sales are brisk. We hear, obviously, the poverty levels going up, credit card debt.

I mean, are things getting better or worse? It seems like conflicting signals out there.

WILLIS: Well, there are conflicting signals, and there's something in it for the Democrats and the Republicans as they approach the silly season. You can kind of pick out anything you want, right, to make a campaign out of.

But to the issue of the real estate, which you brought up, which I think is really interesting, the real estate market, home sales, on track here for their best year ever. Record sales. It's very impressive. And it's mostly due to low interest rates and a factor that's been helping the economy broadly, the fact that credit spigots been wide open for consumers.

No matter what they're buying, whether it's a house or anything else, that's the thing that's been keeping the economy going. And while we saw GDP, that's the broadest measure of the economy's growth, revised upward yet again at the end of this week, I think a lot of Americans feel like they're really not feeling it yet.

VALLESE: And Gerri, I mean, are Americans really, then, just digging themselves in a hole that they're not going to get out of? They're buying a home, but they really can't afford it unless they are putting things on their credit cards. Where are they getting this money? And will the ceiling end up falling in on them when it comes time to paying mortgages?

WILLIS: I think that's a great question. Of course, a lot of consumer debt racked up here. And the question is, will that burst the housing bubble?

None of the experts I speak to -- and I speak to a lot of people across the country about this very issue -- think that the real estate market is going to collapse from coast to coast. However, some independent communities, some places on the coast, big cities where the run-ups have been the greatest, those are the places that are most at risk to see some kind of either flattening of prices or a fall.

But I've got to tell you, the National Association of Realtors this week, they said the prices had increased 9.8 percent this year. And that's pretty dramatic.

MALVEAUX: And, Gerri, one thing, the White House, when you talk to people, they'll always say, well, if you look at the unemployment numbers, and even if you look at the number of people who are in poverty, that these are lagging indicators of an economic growth. And that the tax cuts are going to kick, this is all going to create jobs, eventually this is going to turn around.

The people you talk to, what do they say?

WILLIS: Well, they do say, in some cases, it is a lagging indicator. But consider this: the 6.1 percent we have in jobless rate right now, it probably undercounts the number of people who are jobless, because some people just get frustrated and they don't sign up for benefits or they run out of benefits. So I think that number may be misleading at some level.

Now, hopefully as the economy recovers things will get better. But that can have some unintended consequences as well, because interest rates will rise, and that will have an affect on the refi market and home sales. It could put a constraint on both of those.

WALLACE: Gerri -- and not to put you on the spot here to be our personal financial analyst -- but what about the stock market? You know we're all looking at our investments, wondering is it now time to sort of step in and heavily invest. The tech stocks, are they showing some growth? What's the situation right now and what's your best advice?

WILLIS: Well, Kelly, you know, I never recommend timing the market, getting in because it's going up, down, sideways, or anything else. I think a better plan is to put in money slowly over time in even amounts, even increments. But I've got to tell you that most people right now are focusing on what's going on at the NYSE, that's the New York Stock Exchange, where Dick Grasso just resigned.

And there's been a lot of controversy there about the structure of the NYSE, how it works. And it looks like the whole thing's going to be turned on its head. Such dramatic suggestions as taking the NYSE public, turning it away from an open outcry system, where you see the guys yelling out prices on the floor of the exchange, and turning it into an electronic exchange. This would ultimately save consumers some dollars, but I think there's still a lot of work to be done in corporate America, even in the mechanics of the market itself, before some people feel comfortable enough getting back in.

VALLESE: Thanks, Gerri.

From money and business to the big consumer stories of the week, just before the new national "Do Not Call" list was set to silence, telemarketers' calls to millions of us. The whole thing was caught in a legal and political whirlwind. I'm back on that story after a break and a check on what's making headlines at the hour.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: The curious decision of one court should not be allowed to frustrate the clear will of Congress and even clearer will of tens of millions of Americans.

(END VIDEO CLIP)

VALLESE: Senator John McCain, Republican, of Arizona, speaking for a huge majority of Congress this week, saying if consumers don't want telemarketers' calls, so be it. Not so simple, though. We're back; we're ON THE STORY.

President Bush expecting to sign this into law on Monday. But it's really just giving authority that the FTC won't be able to enforce, as long as it's in the courts. There's not going to be a "Do Not Call" registry most likely starting Wednesday.

WILLIS: Well, let's get to the bottom line. October 1st was supposed to be the deadline, that's Wednesday. Can I expect my phone not to be ringing during dinner?

VALLESE: No. You will probably most likely still have calls during dinner on Wednesday. The Federal Trade Commission has issued -- asked for a stay of the judge's decision in Denver. He has yet to rule on that.

If he does rule on a stay, then "Do Not Call" registry will go into effect. Calls will stop coming. But because of the big constitutional issue, a stay, a lot of people say, is unlikely. But there are other protections that you'll end up having come October 1st or next Wednesday.

MALVEAUX: So, Julie, what is the controversy? Help us explain this. Why is it being held up at this time?

VALLESE: The first controversy really was authority. Did the FTC have authority? Congress made no doubt about it: a swift passage through both the House and Senate. Nobody has ever seen them just act that quickly before.

So they now have the authority. But the Teleservices Association says it's a matter of their constitutional right for freedom of speech. Why can charities call, but businesses can't? They're selling the same things, but one's a donation, one is for profit. And that's really where the issue comes down to, is this really freedom of speech for everyone, or is the FTC selecting for consumers who can call their homes?

WALLACE: Julie, what are some of the protections that consumers will still have while this is held up in court, besides picking up the phone and just quickly hanging up the receiver?

VALLESE: Well, there's already one protection that consumers actually already have, and that is, if a telemarketer calls you, you have the right, and they have to listen to it, by saying "Take me off my list, don't call." And that is a protection you have right now.

Another right that you're going to get is, within two seconds of answering your phone, you better hear somebody. It's going to need to be a live voice or a recording. But telemarketers can only send out three percent of recordings to consumers.

So there's going to be no more dead air when you pick up that phone. And if it is, that's a violation, and you can just hang up the phone.

You also have protection of your credit card. No more can they do free to pay, offer you something for free and then bill you once that free promotion stops. You will have to verify your credit card number. A lot of people don't know, telemarketers have your credit card number, and they're more or less free to use it if you don't say no.

WILLIS: Wow, that's amazing. Of course, there is a flip side to this question, which is there are a lot of people who work in this industry and are going to be losing their jobs if all of this is made illegal. What do you think about that?

VALLESE: Well, 80 percent of the business, that's what direct marketers and telemarketers are saying. That is a lot. The people that voted against the measure in Congress said that's too many jobs and too much money lost. That there is going to be a definite fallback in terms of revenue for telemarketers.

But, unfortunately, in talking to consumers, their hearts really aren't going out to the telemarketers. But one thing that is really interesting, the folks that started this all in the Oklahoma courts have said, even though we're allowed to still keep calling, they have your name, they have your number, they know whether you want them to call or not.

They've told their members, don't call people on the list for now and respect that. A different association says it's free dealing and you can pick up the phone and call who you want. So there's really a disagreement within the whole telemarketing associations and fields right now as it is.

MALVEAUX: Then the bottom line, it's not enforceable?

VALLESE: It's not enforceable right now. In some states there are. There are a handful of states. These federal court cases, be it authority or constitutionality, does not affect state "Do Not Call" registries.

So if you are in one of those states that actually have a "Do Not Call" list, you're protected. It's the majority of the states, right now, that you're not protected if you're on the list.

WALLACE: Julie, any sense from your sources with such high consumer interest in this story about how quickly the federal courts might act?

VALLESE: No one's putting an actual timeframe on it. We spoke with the FTC yesterday. And they said they are going to fight this as long as we can.

It's really up to judges and the judicial system, how quickly it will go through the court system. That's where it is. Some people know it's a slow track in the courts. And other people know that it can be a highway, as fast as it can be, especially when you have more than 50 million Americans speaking out and saying this is something they want. The courts are going to have to really make a decision as quickly as they possibly can.

WALLACE: Well, Julie, from that "Do Not Call" to do not campaign, not likely. Because the recall campaign and the candidates are shifting into high gear as time is running out. I'm back on that story after this break. (COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ARIANNA HUFFINGTON (I), CALIFORNIA GUBERNATORIAL CANDIDATE: ... this is completely -- this is the way you treat women, we know that, but not now.

UNIDENTIFIED MALE: That was a direct and personal attack on Mr. Schwarzenegger, so, would you respond?

ARNOLD SCHWARZENEGGER (R), CALIFORNIA GUBERNATORIAL CANDIDATE: I would just like to say that I just realized that I have a perfect part for you in "Terminator 4." That's it.

(END VIDEO CLIP)

WALLACE: The back and forth between political commentator Arianna Huffington and Arnold Schwarzenegger, one of the major highlights in Wednesday's debate. The first and only debate Arnold Schwarzenegger has agreed to participate in.

Welcome back to ON THE STORY.

What a week we saw here in California. First, on Monday, the federal court stepping in and saying, yes, the election should go on as scheduled, taking place October 7th. Then we had that debate. And now we are seeing this race become much more confrontational.

Schwarzenegger puts a very negative ad on the airwaves, criticizing Governor Gray Davis' record. Davis responds with an ad of his own, for the first time mentioning Schwarzenegger by name, and then issuing a debate challenge to Arnold Schwarzenegger. But Schwarzenegger says he is not interested.

VALLESE: You know, Kelly, there's been a lot of firsts. Arnold Schwarzenegger showing up at the debate, Gray Davis coming out for the first time and personally attacking. Some real mudslinging. When people are going to go and vote for this, are they voting for someone, or the group of people that they just really don't like? Is it really not a popularity contest here?

WALLACE: Well, it is a key question, Julie. And it all depends on exactly who goes to the polls and why.

The voters do have two things to consider. First, they must decide, should Gray Davis stay in office or should he be ousted? They make that decision. Then they also decide if they want Gray Davis out, who should replace him? And that's where Arnold Schwarzenegger and these other candidates come in.

It is getting negative. No question. The airwaves will be filled with more television ads.

All the candidates are starting to attack each other's record. They're all saying they're staying away from personal attack. But, right now, it comes down to who can get more people to the polls to vote. And you are going to see all these candidates do everything possible to get their supporters out there.

WILLIS: Kelly, let's talk a little bit about the Republican side of the equation. Schwarzenegger, McClintock, big battle there. But it seems to me they don't have a chance of getting a Republican in unless one of them drops out.

WALLACE: That is certainly what Arnold Schwarzenegger and his aides would like to see happen. Senate Senator Tom McClintock, he is the Republican who is trailing Arnold Schwarzenegger. He is a conservative.

People close to him say he is a man of principle. He himself has said I made a promise to stay in this race until the end and I will be in this race until the end. You're starting to see, though, the conservative wing of the party, the Republican establishment, rallying behind Arnold Schwarzenegger.

On Friday, you had Darrell Issa, the congressman who bankrolled this whole recall movement, endorsing Schwarzenegger. You had Bill Simon on Thursday, another conservative, and former candidate himself, endorsing Schwarzenegger. All kind of trying to send a subtle message that Republicans must unify behind Schwarzenegger to avoid splitting the vote.

But right now, McClintock is not getting out. And the sense is we'll have to see what happens in the latest polls that will probably come out over the weekend. If he doesn't see his numbers move, pressure will mount. And then there's a big question: will he get out or will he stay in and just signal to his supporters he doesn't have a chance of winning?

MALVEAUX: You know, it's amazing. It seems like there's so much more interest in the California recall race then there was in the presidential Democrats debating. I mean, all of us -- every time I see that sound bite I just crack up, between Arianna and Schwarzenegger.

But is there any sense at all, polls that are taken, and how they're performing? If it's Bustamante ahead, or if it's Schwarzenegger? Do you know?

WALLACE: Well, Suzanne, first of all, I think you raise a very good point. Because we've been joking in a way. Political analysts have said these Democratic presidential candidates, maybe the best way they can get some attention and some press is coming here to California as opposed to other parts of the country.

But the sense is, right now, the race is very, very tight. That it looks like momentum is moving away from the recall, but still no poll has come out yet which shows Gray Davis holding on to his job. On the other side, in terms of the replacement candidates, you mentioned Democrat Lieutenant Governor Cruz Bustamante. He has been narrowly leading Arnold Schwarzenegger. But the sense is that, in Wednesday's debate, he might not have done as well, potentially, and that Arnold Schwarzenegger did well, many analysts believe, by simply holding his own. Expectations were very low. So we understand polls could come out as early as Sunday night, and that will be a very big sign of how the debate went and where voters minds might be right now.

VALLESE: You know, Kelly, we really saw some personalities come out at the debate. We saw who some people were, how they could talk about the issues, but also see how they hold themselves, and how they can actually bring issues and people together. Is there really any sense of any of these candidates, more one than the other, that might be able to unite and bring together a real divided California?

WALLACE: You know, that is another very good question. I mean, it is a huge job ahead for any person. If Gray Davis holds on to his job, or if any of these other candidates end up replacing him, because there are tremendous problems in the state, a lot of concern.

Some sense things might be getting better, but you have a budget deficit. Obviously, we've talked about economic problems in the rest of the country, here in California as well. Big immigrant population issues, such as driver's licenses for illegal immigrants, and health care.

So you have tremendous -- a tremendous number of issues ahead. It is unclear. I mean, again, this is all going to come down to who -- which candidates can get enough supporters to the polls, who can really rally their base, get their supporters to the polls.

And what we might see in this election, Julie, new voters. People have never voted before because they might be interested in Schwarzenegger, or just might be interested in the recall in general.

MALVEAUX: Well, Kelly, thank you.

From the recall roller coaster to another political story, how one couple is telling wedding guests to forget the presents. Support their choice for president instead.

We're back ON THE STORY in a moment. And we've heard Bush and Putin will speak at the top of the hour.

(COMMERCIAL BREAK)

MALVEAUX: Welcome back. We're ON THE STORY.

A California couple is telling their wedding guests to forget the traditional presents, give instead to the Howard Dean for president campaign. I don't know about you guys, but I'll take the toaster and the towels. I mean, I don't know. But, you know, I mean -- I guess seriously, Howard Dean making a splash, as well as General Wesley Clark.

Very impressive, when you look at the polls this week. Shot up -- straight up to the top of the pack, and looks like he could be very competitive with President Bush. Still very early of course.

VALLESE: He actually came out, he didn't make a fool of himself. He was able to hold his own, he was able to put sentences together. He came out, he didn't look so bad. For someone who has never really been in the political arena before, I think in the end, he ended up really impressing a lot of people.

WILLIS: I love these games of low expectations, you know? You have Schwarzenegger doing well because he didn't embarrass himself. You have Wesley Clark doing well because he didn't embarrass himself. I think we need to raise the playing level just a little bit.

MALEAUX: It's a page out of White House strategy as well, though. That's absolutely true, though. Low expectations and then wow 'em at the end.

WALLACE: All right. I want to go back, though, to this registry here, because -- or these wedding donations. Because I'm getting married and friends are bothering me about a registry, which I'm not interested in doing. But maybe a new trend should be get the china, get the pots and pans, and contribute to your favorite presidential candidate.

MALVEAUX: OK. So, Kelly, the question is, is it Schwarzenegger? Tell us, who's it going to be?

WALLACE: Put me on the spot -- no, no, no. I leave it blank. I let my guests contribute to the candidate of their choice. What about that, as a new registry item for brides and grooms of the future?

VALLESE: Well, I do think it's interesting that people are saying, we'd like you money to go to who we support, not necessarily who you may support. And maybe that some people would get a little more involved. It's the push that people need to get out and vote, or at least take an interest in politics.

MALVEAUX: I'm sorry. One thing I thought was interesting, too, is using the Internet to also generate funds as well.

WILLIS: How long does it take politicians to figure out that there's an Internet out there and it might be good way to mobilize their base? Everyone is shocked about the money Dean is brining in, but it's been happening. There's a company called AOL that owns this network that discovered that some time ago.

WALLACE: And you know, you guys, I want to go back to Wes Clark, of course, because he's going to be coming out here to California. Another Democratic presidential candidate coming here this week to campaign for Gray Davis, to try to help Davis defeat the recall.

But, Suzanne, I'm very curious, how concerned is the White House about Wes Clark and his popularity right now?

MALVEAUX: Well, of course they are concerned. They look at his background. I guess the one thing that they are really counting on, and one thing that they're watching very closely, of course, is how is he dealing with domestic issues? How is he going to compete with the other candidates?

I mean, clearly, his military record is stellar. And this is something that, of course, you know, just didn't stand out. The others just did not stand out in that sense. And, yes, they are worried about it. But, again, Kelly, as you know, the White House does play the low expectations game.

They say, publicly...

WALLACE: (UNINTELLIGIBLE)

MALVEAUX: Exactly. We have a tough fight ahead, it's going to be close. You rally your support and rally your base, you get the fund-raisers out there. And then in the end you surprise everyone when you come out on top.

WILLIS: Surprise everyone. Thanks to my colleagues, and thank you for watching ON THE STORY. We'll be back next week.

Coming up at the top of the hour CNN's live coverage of the joint news conference with President Bush and Russian President Vladimir Putin.

Also ahead, "People in the News," focusing this week on Tom Hanks and Michael Caine.

At 12:00 noon Eastern, 9:00 a.m. Pacific, CNN LIVE SATURDAY. And at 1:00 p.m. Eastern, 10:00 a.m. Pacific, CNN's "In the Money."

Coming up at the top of the hour a check of the top stories. But first, the president's weekly radio address.

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Putin Meet at Camp David; "Do Not Call" list Bumps Head with Constitution>


Aired September 27, 2003 - 10:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Welcome to CNN's ON THE STORY, where our journalists have the inside word on the stories we covered this week. I'm Suzanne Malveaux, on the story of President Bush's uphill battle to change minds this week at the United Nations and the uphill work to get help in Iraq.
JILL DOUGHERTY, CNN MOSCOW BUREAU CHIEF: I'm Jill Dougherty in Moscow, on the story of presidents Bush and Putin meeting this weekend at Camp David. What's at stake for both leaders and both countries?

JULIE VALLESE, CONSUMER EDITOR, CNN NEWSOURCE: I'm Julie Vallese, on the story of how the "Do Not Call" rule with telemarketers collided this week with the Constitution. And the whole mess is headed directly for court.

KELLY WALLACE, CNN NATIONAL CORRESPONDENT: I'm Kelly Wallace, on the story in California, talking about how the courts gave a green light to the recall this week, the big debate, and time running out.

GERRI WILLIS, PERSONAL FINANCE EDITOR, CNN BUSINESS NEWS: And I'm Gerri Willis, on the story of how many of us slipped far deeper into credit card debt, sometimes just to buy the basics. We'll talk about all of these stories.

Also coming up, remember OPEC? A decision this week my cost you at the pump and at the thermostat. And we'll listen to the president's weekly radio address at the end of the hour.

We want to hear from you. E-mail us: onthestory@cnn.com. Now straight ahead with Suzanne. And Mr. Bush goes to the U.N.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Now the nation of Iraq needs and deserves our aid. And all Nations of goodwill should step forward and provide support.

(END VIDEO CLIP)

MALVEAUX: President Bush speaking to the United Nations, asking for help and getting the diplomatic cold shoulder and a few "I Told You Sos" in return. You know the big question is, OK, he went before the United Nations General Assembly, they're going to present this resolution. But are they going to get the troops? Are they going to get the money that's necessary?

And that is -- that's a big question. That's a big gamble. A lot of people, they saw this, and they said, well, he went for it, he didn't apologize. He said the administration was right in taking its action. Others felt, well, perhaps he could have been a bit more humble in his tone, perhaps he should have come out directly and said, look, we really need your help. Not it's in your interest, but it's in our interest as well.

That's the big question that's going to play out here in the weeks to come, is whether or not he really is going to get the assistance that this administration desperately needs.

VALLESE: Well, and he's asking for $87 billion -- $20 billion for reconstruction. People really just started looking at what that that $20 billion is for, and he's not really making a lot of friends by asking for that.

MALVEAUX: And that was huge. I mean, that was extremely controversial on the Hill this week, because you've had Senator Kennedy over the last couple of weeks, who has only become emboldened by the criticism that, oh, he's using hate speech, that type of thing. But he's saying this is a sham, this isn't right.

But what's different this week, over the last 24 hours, is that Republicans have started to ask some of the questions. When you bleak down this reconstruction money, the $20 billion, you're looking at garbage trucks, you're looking at establishing a postal service, you're looking at all kinds of projects. And they're just thinking, you know, we cannot afford this.

One of the options that's on the table -- and even sources in the administration acknowledge -- is that perhaps instead of all of this money outright, as a -- almost as a grant, part of it being a loan. So you'd actually have those oil reserves from Iraq being used, the revenues being used later on to pay back some of that money. And that's a huge acknowledgement for the White House to actually realize that they're not just going to write a blank check and say, OK, this is the money you need, we're going to go ahead and give it to you.

WILLIS: Well, a loan would be nice. We've had a lot of harsh rhetoric, right? Is there going to be anything coming from anybody else, from the Germans, from the French? What kind of support might he have gotten at the U.N. this week?

MALVEAUX: You know, it's a very good question, and it still really is a question. We just found out this morning that the European Union, all 15 members, $240 million. Now, $240 million that they need anywhere from $25 billion to $60 billion for reconstruction.

That's coming from the administration. $240 million really isn't anything. So the Germans are saying, yes, we'll go ahead, we'll train Iraqi police. You had Chirac, who -- French President Chirac, who was saying, well, at the very least, we're not going to veto this resolution. We may not like it, but we're not going to stand in the way of a U.N. Security Council resolution. But, you know, it really is very unclear. It's uncertain whether or not they're going to get the money, the troops, to actually pull this off. And what you may see is they're considering more reserves, calling up more reserves -- Kelly.

WALLACE: Suzanne, take us behind the scenes a bit. I mean, the White House certainly must have expected somewhat of a skeptical response to the president's speech, but many people were very critical, saying the president had an unapologetic tone behind the scenes. Are aides saying that maybe they could have done a better job in that speech before the United Nations?

MALVEAUX: Well, you know, Kelly, as you know, this is not a White House that's going to go forward and be humble and apologize, mea culpa. They said, hands down, that's not going to happen.

He did take a different type of tone before the General Assembly. A lot of people recognized that. But, at the same time, if the goal was to get the troops and the money, that is a wait and see type of situation. We don't know whether or not they're going to succeed.

If the goal was, is to open up the channels of communication, one on one with these leaders, perhaps create better goodwill between the leaders, well, in that sense, you can say it was a success. Because you do have some concessions from the anti-war coalition, from Schroeder, from Chirac. We're going to hear from Putin today, as Jill knows. And there may be some signs, too, that there's progress on that front.

Right, Jill?

DOUGHERTY: Suzanne, Vladimir Putin was one of the leaders, of course, who was against the war early on, along with the French and Germans. So why does he get a free weekend at Camp David?

MALVEAUX: Well, I suppose, you know, Putin, out of all of them, as you know, they have a very close, a very warm relationship. He gets the royal treatment. But it's really meant to be an informal gathering, an informal situation.

The two of them brag about that they are so close they can speak bluntly to each other. So you'll hear them criticize each other publicly. But I have a lot of questions about -- about, really, what's going to come out of that session, what's going to come out of that meeting. Jill, I know you're all over it.

And I think what's going to happen with that is that perhaps they'll offer some sort of personnel on the ground, but they certainly are not going to offer money. Because we know they need that money desperately.

WALLACE: Suzanne, let me step in here.

DOUGHERTY: That's definitely true.

VALLESE: And what about an opposition, an opposition to anything that will be coming out for the money, putting troops in, rebuilding of Iraq? What does the president see -- have facing for him at that?

MALVEAUX: Well, one thing that was interesting that came out in the week is when they looked at the reconstruction cost, and when they asked, how do you justify having the administration, having taxpayers put up this kind of money? There was even a Democrat who came forward and said -- there's an American Parity Act that says, if you spend this kind of money in Iraq, you need to spend that kind of money back at home as well.

The White House spokesman, Scott McClellan in the gaggle, the informal gaggle, really kind of side stepped that and then afterwards came back and had this kind of argument that in the 1775 Continental Congress we established a postal service, and that's a part of our democracy and our freedom. And, you know, a couple of giggles inside the press room.

And I said, well, you know, that was -- your researcher put that out on the table there. But they realize the argument is that you need a stable Iraq, you need a functioning society. That's the foundation of a secure society, and they're trying to convince allies as well they should contribute to the effort.

DOUGHERTY: Lots of issues on the table for President Bush and President Putin at their private meetings at Camp David. We'll be back in a moment, back ON THE STORY, after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

VLADIMIR PUTIN, RUSSIAN PRESIDENT (through translator): Sometimes we don't like to hear certain things from each other. But we listen to one another and seek solutions.

(END VIDEO CLIP)

DOUGHERTY: Russian President Vladimir Putin, with a translator, talking about his relationship with President Bush, two leaders who don't always agree on everything. Welcome back. We're ON THE STORY.

MALVEAUX: Now, Jill what do we expect from the two leaders? What do we expect them to say? Obviously, there are a lot of differences on so many fronts. But I imagine that Iraq is going to be priority number one.

DOUGHERTY: Iraq has to be number one, there's no question. And that really is -- the question is, what can George Bush get from Vladimir Putin in that area?

He needs a bit of a fig leaf, because, after all, if he can get Vladimir Putin on board to do something -- obviously no money, because the Russians don't have it. In fact, they're owed money by Iraq. But maybe they get a few troops, maybe they get a few peacekeepers. That could maybe bring other countries on board.

So, probably, you're going to hear a lot of positive statements about the war on terrorism, and maybe something about -- probably not troops directly here, but some type of help that Vladimir Putin might offer.

WALLACE: Jill, what sense did you get -- you sat down with other reporters with President Putin, you said, for about four hours. What sense did you get from him about how he's going into this meeting with President Bush, about his relationship with Mr. Bush, and the sense of that relationship and how that could help the disagreement over Iraq?

DOUGHERTY: You know, I think that this time, after these four hours with him, he seemed much more assured than a couple of years ago, when we did the same thing for three hours. You know he's a judo expert. And I think you'd have to say he's very good at turning the argument against the other person, but in kind of a polite, diplomatic way.

So you'd have to say that this time he has something to offer to George W. Bush. It's not the reverse necessarily. In the old days, Russia had to give, give, give, and accept, accept, accept what the Americans wanted. This time, Putin has something to give to George W. Bush. So it's a little different dynamics there.

WILLIS: Jill, these are two men with a very intense personal relationship. At least they had one at one point. What's the status of that, and will it help with this upcoming meeting?

DOUGHERTY: The relationship between the two men is definitely quite good. Mr. Putin very complimentary about George W. Bush. And, you know, it's important, especially now, to have this good relationship, because both men have, let's say, ideologues from the old school who have a lot of distrust about the other side.

Mr. Putin has people from, you know, the military, et cetera, who don't trust the United States. And certainly, in the United States, you have many of the same type of -- you'd have to call them kind of cold warriors. So it's important that at least this channel, where both men want to get something done, is still pretty strong.

VALLESE: Jill, these two leaders, good friends. They talk a lot about open things. But President Putin has been criticized about really not practicing diplomacy so much. He's been criticized about really putting restraints on his country on an open society.

Will the friendship of the president really be able to call him on that and have him really answer some hard questions about how free of a society they really have in Russia?

DOUGHERTY: You know that is one thing that a lot of people are urging. There are a lot of groups that have actually been putting ads in American newspapers, saying "George Bush, don't trust Vladimir Putin. He's cracking down in his own society. You can't trust this guy."

But you'd have to say that it's a real problem for President Putin, because he wants to prove that he also is a Democrat. But you know don't expect at these meetings for the issues, like the thorny issues, Chechnya, human rights, don't expect them to get to the degree they would impede the relationship on Iraq. That's the primary thing.

The United States wants Russia to help them out on Iraq and other issues. And human rights, at this point, will always be secondary, even in spite of the yelling by many groups that it should be much higher than it is.

MALVEAUX: Jill, one of the really contentious points between the leaders -- and it's really been very difficult, I think, for the president -- is this whole thing over another member of the axis of evil, Iran. The fact that they have this deal to provide this technology, nuclear technology to Iran, and U.S. officials insist that this really could bolster perhaps a nuclear weapons program inside of that country.

And it just does not seem as if President Putin is willing to give on that. I mean, a lot of money at stake, $800 million. I have not been able to get the answer to this question on my side, which is, are there any concessions, do you think, that the Bush administration is willing to offer or exchanges for Putin to give up that deal?

DOUGHERTY: I don't think that Putin's going to give up that deal. I mean, I would be very, very surprised. Because what they feel, if you take the Russian position, they believe that everything that they are doing is according to the rules, according to international regulations.

And what they say -- in fact, I asked President Putin that question, in fact, during the four hours. And he said, "You might be surprised at my answer. The Americans are not telling me that what we are providing, that we're actually helping them to build the bomb. What they're saying is the technology and the know-how might be taken by the Iranians to help build a bomb."

So you'd have to say that Putin, at least as far as we can see here, is going to go right along with that. But what he is going to do is slow down his relationship in providing fuel for that nuclear power plant because the Russians are doing a side deal with the Iranians, saying, we're not going to give you the fuel until you make sure that everything is up to snuff according to international regulations.

So I think, in other words, you're going to see some foot- dragging by the Russians to provide fuel. And without the fuel, the Iranians won't be able to work that nuclear power plant.

WALLACE: Jill, not only do the two men, of course, share a close relationship, but their wives do as well. First Lady Laura Bush heading to Russia to spend time with the first lady of Russia. How significant is this visit, and what are the two women expected to do?

DOUGHERTY: Well, symbolically, it's important, of course. First ladies -- and this is the first time Mrs. Bush has ever been here in Russia. And they're going to be talking about library programs, books for schools and library programs for schools.

It's something that both of the women are very interested in. And substantively, not too sure exactly what will come out of it. But it will be very interesting to see them.

You know we don't see Lyudmila Putin that much. She's actually pretty quiet on the international scene. She of course accompanies her husband to all of these events, but we don't get a lot of information about her. So for me, personally, it will be interesting to see her.

WILLIS: Jill, thanks for joining us today. What's on the story for you in coming days?

DOUGHERTY: I have to say, what's going to come out of this, in a few minutes we're going to hear from both presidents. And then next week, we're going to have elections in Chechnya. So that will be quite interesting to see how that develops.

WILLIS: Indeed. Well, from the world scene to the economic scene, the falling dollar, growing consumer debt, and, thank thanks to OPEC, higher gas prices, too. I'm back on those stories in a moment.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We are exporting currently .9, 900,000 barrels a day.

(END VIDEO CLIP)

WILLIS: The Iraqi oil minister, speaking at the OPEC meeting in Vienna this week, predicting that his country's oil production will increase in coming months. OPEC responded by cutting oil production, something we may see at the pump and on our heating bills.

Welcome back. We're ON THE STORY.

Well, the big stories this week that I thought were interesting that didn't get a lot of play, two of them in fact. One, consumer debt. Over the '90s, we thought we had a big boom time. In fact, people were racking up credit card debt at a rate three times higher than at the beginning of the decade.

And they just weren't buying flat panel screen TVs either. That was the sad part about it. They were actually paying for food and other consumables that normally you don't recommend people put on credit cards.

Also, paying attention today to the story that's in the newspapers on poverty, which has been increasing, year to year. 2002, 12 percent of people, Americans, in poverty. Of course, the poverty lines are set pretty low for a family of four, about $18,000. And these are the kinds of things that people -- well, they're just not paying that much attention to right now.

WALLACE: Gerri, help us out. You know there are always conflicting signals or signs out there. You also tell us that, you know, housing sales are brisk. We hear, obviously, the poverty levels going up, credit card debt.

I mean, are things getting better or worse? It seems like conflicting signals out there.

WILLIS: Well, there are conflicting signals, and there's something in it for the Democrats and the Republicans as they approach the silly season. You can kind of pick out anything you want, right, to make a campaign out of.

But to the issue of the real estate, which you brought up, which I think is really interesting, the real estate market, home sales, on track here for their best year ever. Record sales. It's very impressive. And it's mostly due to low interest rates and a factor that's been helping the economy broadly, the fact that credit spigots been wide open for consumers.

No matter what they're buying, whether it's a house or anything else, that's the thing that's been keeping the economy going. And while we saw GDP, that's the broadest measure of the economy's growth, revised upward yet again at the end of this week, I think a lot of Americans feel like they're really not feeling it yet.

VALLESE: And Gerri, I mean, are Americans really, then, just digging themselves in a hole that they're not going to get out of? They're buying a home, but they really can't afford it unless they are putting things on their credit cards. Where are they getting this money? And will the ceiling end up falling in on them when it comes time to paying mortgages?

WILLIS: I think that's a great question. Of course, a lot of consumer debt racked up here. And the question is, will that burst the housing bubble?

None of the experts I speak to -- and I speak to a lot of people across the country about this very issue -- think that the real estate market is going to collapse from coast to coast. However, some independent communities, some places on the coast, big cities where the run-ups have been the greatest, those are the places that are most at risk to see some kind of either flattening of prices or a fall.

But I've got to tell you, the National Association of Realtors this week, they said the prices had increased 9.8 percent this year. And that's pretty dramatic.

MALVEAUX: And, Gerri, one thing, the White House, when you talk to people, they'll always say, well, if you look at the unemployment numbers, and even if you look at the number of people who are in poverty, that these are lagging indicators of an economic growth. And that the tax cuts are going to kick, this is all going to create jobs, eventually this is going to turn around.

The people you talk to, what do they say?

WILLIS: Well, they do say, in some cases, it is a lagging indicator. But consider this: the 6.1 percent we have in jobless rate right now, it probably undercounts the number of people who are jobless, because some people just get frustrated and they don't sign up for benefits or they run out of benefits. So I think that number may be misleading at some level.

Now, hopefully as the economy recovers things will get better. But that can have some unintended consequences as well, because interest rates will rise, and that will have an affect on the refi market and home sales. It could put a constraint on both of those.

WALLACE: Gerri -- and not to put you on the spot here to be our personal financial analyst -- but what about the stock market? You know we're all looking at our investments, wondering is it now time to sort of step in and heavily invest. The tech stocks, are they showing some growth? What's the situation right now and what's your best advice?

WILLIS: Well, Kelly, you know, I never recommend timing the market, getting in because it's going up, down, sideways, or anything else. I think a better plan is to put in money slowly over time in even amounts, even increments. But I've got to tell you that most people right now are focusing on what's going on at the NYSE, that's the New York Stock Exchange, where Dick Grasso just resigned.

And there's been a lot of controversy there about the structure of the NYSE, how it works. And it looks like the whole thing's going to be turned on its head. Such dramatic suggestions as taking the NYSE public, turning it away from an open outcry system, where you see the guys yelling out prices on the floor of the exchange, and turning it into an electronic exchange. This would ultimately save consumers some dollars, but I think there's still a lot of work to be done in corporate America, even in the mechanics of the market itself, before some people feel comfortable enough getting back in.

VALLESE: Thanks, Gerri.

From money and business to the big consumer stories of the week, just before the new national "Do Not Call" list was set to silence, telemarketers' calls to millions of us. The whole thing was caught in a legal and political whirlwind. I'm back on that story after a break and a check on what's making headlines at the hour.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: The curious decision of one court should not be allowed to frustrate the clear will of Congress and even clearer will of tens of millions of Americans.

(END VIDEO CLIP)

VALLESE: Senator John McCain, Republican, of Arizona, speaking for a huge majority of Congress this week, saying if consumers don't want telemarketers' calls, so be it. Not so simple, though. We're back; we're ON THE STORY.

President Bush expecting to sign this into law on Monday. But it's really just giving authority that the FTC won't be able to enforce, as long as it's in the courts. There's not going to be a "Do Not Call" registry most likely starting Wednesday.

WILLIS: Well, let's get to the bottom line. October 1st was supposed to be the deadline, that's Wednesday. Can I expect my phone not to be ringing during dinner?

VALLESE: No. You will probably most likely still have calls during dinner on Wednesday. The Federal Trade Commission has issued -- asked for a stay of the judge's decision in Denver. He has yet to rule on that.

If he does rule on a stay, then "Do Not Call" registry will go into effect. Calls will stop coming. But because of the big constitutional issue, a stay, a lot of people say, is unlikely. But there are other protections that you'll end up having come October 1st or next Wednesday.

MALVEAUX: So, Julie, what is the controversy? Help us explain this. Why is it being held up at this time?

VALLESE: The first controversy really was authority. Did the FTC have authority? Congress made no doubt about it: a swift passage through both the House and Senate. Nobody has ever seen them just act that quickly before.

So they now have the authority. But the Teleservices Association says it's a matter of their constitutional right for freedom of speech. Why can charities call, but businesses can't? They're selling the same things, but one's a donation, one is for profit. And that's really where the issue comes down to, is this really freedom of speech for everyone, or is the FTC selecting for consumers who can call their homes?

WALLACE: Julie, what are some of the protections that consumers will still have while this is held up in court, besides picking up the phone and just quickly hanging up the receiver?

VALLESE: Well, there's already one protection that consumers actually already have, and that is, if a telemarketer calls you, you have the right, and they have to listen to it, by saying "Take me off my list, don't call." And that is a protection you have right now.

Another right that you're going to get is, within two seconds of answering your phone, you better hear somebody. It's going to need to be a live voice or a recording. But telemarketers can only send out three percent of recordings to consumers.

So there's going to be no more dead air when you pick up that phone. And if it is, that's a violation, and you can just hang up the phone.

You also have protection of your credit card. No more can they do free to pay, offer you something for free and then bill you once that free promotion stops. You will have to verify your credit card number. A lot of people don't know, telemarketers have your credit card number, and they're more or less free to use it if you don't say no.

WILLIS: Wow, that's amazing. Of course, there is a flip side to this question, which is there are a lot of people who work in this industry and are going to be losing their jobs if all of this is made illegal. What do you think about that?

VALLESE: Well, 80 percent of the business, that's what direct marketers and telemarketers are saying. That is a lot. The people that voted against the measure in Congress said that's too many jobs and too much money lost. That there is going to be a definite fallback in terms of revenue for telemarketers.

But, unfortunately, in talking to consumers, their hearts really aren't going out to the telemarketers. But one thing that is really interesting, the folks that started this all in the Oklahoma courts have said, even though we're allowed to still keep calling, they have your name, they have your number, they know whether you want them to call or not.

They've told their members, don't call people on the list for now and respect that. A different association says it's free dealing and you can pick up the phone and call who you want. So there's really a disagreement within the whole telemarketing associations and fields right now as it is.

MALVEAUX: Then the bottom line, it's not enforceable?

VALLESE: It's not enforceable right now. In some states there are. There are a handful of states. These federal court cases, be it authority or constitutionality, does not affect state "Do Not Call" registries.

So if you are in one of those states that actually have a "Do Not Call" list, you're protected. It's the majority of the states, right now, that you're not protected if you're on the list.

WALLACE: Julie, any sense from your sources with such high consumer interest in this story about how quickly the federal courts might act?

VALLESE: No one's putting an actual timeframe on it. We spoke with the FTC yesterday. And they said they are going to fight this as long as we can.

It's really up to judges and the judicial system, how quickly it will go through the court system. That's where it is. Some people know it's a slow track in the courts. And other people know that it can be a highway, as fast as it can be, especially when you have more than 50 million Americans speaking out and saying this is something they want. The courts are going to have to really make a decision as quickly as they possibly can.

WALLACE: Well, Julie, from that "Do Not Call" to do not campaign, not likely. Because the recall campaign and the candidates are shifting into high gear as time is running out. I'm back on that story after this break. (COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ARIANNA HUFFINGTON (I), CALIFORNIA GUBERNATORIAL CANDIDATE: ... this is completely -- this is the way you treat women, we know that, but not now.

UNIDENTIFIED MALE: That was a direct and personal attack on Mr. Schwarzenegger, so, would you respond?

ARNOLD SCHWARZENEGGER (R), CALIFORNIA GUBERNATORIAL CANDIDATE: I would just like to say that I just realized that I have a perfect part for you in "Terminator 4." That's it.

(END VIDEO CLIP)

WALLACE: The back and forth between political commentator Arianna Huffington and Arnold Schwarzenegger, one of the major highlights in Wednesday's debate. The first and only debate Arnold Schwarzenegger has agreed to participate in.

Welcome back to ON THE STORY.

What a week we saw here in California. First, on Monday, the federal court stepping in and saying, yes, the election should go on as scheduled, taking place October 7th. Then we had that debate. And now we are seeing this race become much more confrontational.

Schwarzenegger puts a very negative ad on the airwaves, criticizing Governor Gray Davis' record. Davis responds with an ad of his own, for the first time mentioning Schwarzenegger by name, and then issuing a debate challenge to Arnold Schwarzenegger. But Schwarzenegger says he is not interested.

VALLESE: You know, Kelly, there's been a lot of firsts. Arnold Schwarzenegger showing up at the debate, Gray Davis coming out for the first time and personally attacking. Some real mudslinging. When people are going to go and vote for this, are they voting for someone, or the group of people that they just really don't like? Is it really not a popularity contest here?

WALLACE: Well, it is a key question, Julie. And it all depends on exactly who goes to the polls and why.

The voters do have two things to consider. First, they must decide, should Gray Davis stay in office or should he be ousted? They make that decision. Then they also decide if they want Gray Davis out, who should replace him? And that's where Arnold Schwarzenegger and these other candidates come in.

It is getting negative. No question. The airwaves will be filled with more television ads.

All the candidates are starting to attack each other's record. They're all saying they're staying away from personal attack. But, right now, it comes down to who can get more people to the polls to vote. And you are going to see all these candidates do everything possible to get their supporters out there.

WILLIS: Kelly, let's talk a little bit about the Republican side of the equation. Schwarzenegger, McClintock, big battle there. But it seems to me they don't have a chance of getting a Republican in unless one of them drops out.

WALLACE: That is certainly what Arnold Schwarzenegger and his aides would like to see happen. Senate Senator Tom McClintock, he is the Republican who is trailing Arnold Schwarzenegger. He is a conservative.

People close to him say he is a man of principle. He himself has said I made a promise to stay in this race until the end and I will be in this race until the end. You're starting to see, though, the conservative wing of the party, the Republican establishment, rallying behind Arnold Schwarzenegger.

On Friday, you had Darrell Issa, the congressman who bankrolled this whole recall movement, endorsing Schwarzenegger. You had Bill Simon on Thursday, another conservative, and former candidate himself, endorsing Schwarzenegger. All kind of trying to send a subtle message that Republicans must unify behind Schwarzenegger to avoid splitting the vote.

But right now, McClintock is not getting out. And the sense is we'll have to see what happens in the latest polls that will probably come out over the weekend. If he doesn't see his numbers move, pressure will mount. And then there's a big question: will he get out or will he stay in and just signal to his supporters he doesn't have a chance of winning?

MALVEAUX: You know, it's amazing. It seems like there's so much more interest in the California recall race then there was in the presidential Democrats debating. I mean, all of us -- every time I see that sound bite I just crack up, between Arianna and Schwarzenegger.

But is there any sense at all, polls that are taken, and how they're performing? If it's Bustamante ahead, or if it's Schwarzenegger? Do you know?

WALLACE: Well, Suzanne, first of all, I think you raise a very good point. Because we've been joking in a way. Political analysts have said these Democratic presidential candidates, maybe the best way they can get some attention and some press is coming here to California as opposed to other parts of the country.

But the sense is, right now, the race is very, very tight. That it looks like momentum is moving away from the recall, but still no poll has come out yet which shows Gray Davis holding on to his job. On the other side, in terms of the replacement candidates, you mentioned Democrat Lieutenant Governor Cruz Bustamante. He has been narrowly leading Arnold Schwarzenegger. But the sense is that, in Wednesday's debate, he might not have done as well, potentially, and that Arnold Schwarzenegger did well, many analysts believe, by simply holding his own. Expectations were very low. So we understand polls could come out as early as Sunday night, and that will be a very big sign of how the debate went and where voters minds might be right now.

VALLESE: You know, Kelly, we really saw some personalities come out at the debate. We saw who some people were, how they could talk about the issues, but also see how they hold themselves, and how they can actually bring issues and people together. Is there really any sense of any of these candidates, more one than the other, that might be able to unite and bring together a real divided California?

WALLACE: You know, that is another very good question. I mean, it is a huge job ahead for any person. If Gray Davis holds on to his job, or if any of these other candidates end up replacing him, because there are tremendous problems in the state, a lot of concern.

Some sense things might be getting better, but you have a budget deficit. Obviously, we've talked about economic problems in the rest of the country, here in California as well. Big immigrant population issues, such as driver's licenses for illegal immigrants, and health care.

So you have tremendous -- a tremendous number of issues ahead. It is unclear. I mean, again, this is all going to come down to who -- which candidates can get enough supporters to the polls, who can really rally their base, get their supporters to the polls.

And what we might see in this election, Julie, new voters. People have never voted before because they might be interested in Schwarzenegger, or just might be interested in the recall in general.

MALVEAUX: Well, Kelly, thank you.

From the recall roller coaster to another political story, how one couple is telling wedding guests to forget the presents. Support their choice for president instead.

We're back ON THE STORY in a moment. And we've heard Bush and Putin will speak at the top of the hour.

(COMMERCIAL BREAK)

MALVEAUX: Welcome back. We're ON THE STORY.

A California couple is telling their wedding guests to forget the traditional presents, give instead to the Howard Dean for president campaign. I don't know about you guys, but I'll take the toaster and the towels. I mean, I don't know. But, you know, I mean -- I guess seriously, Howard Dean making a splash, as well as General Wesley Clark.

Very impressive, when you look at the polls this week. Shot up -- straight up to the top of the pack, and looks like he could be very competitive with President Bush. Still very early of course.

VALLESE: He actually came out, he didn't make a fool of himself. He was able to hold his own, he was able to put sentences together. He came out, he didn't look so bad. For someone who has never really been in the political arena before, I think in the end, he ended up really impressing a lot of people.

WILLIS: I love these games of low expectations, you know? You have Schwarzenegger doing well because he didn't embarrass himself. You have Wesley Clark doing well because he didn't embarrass himself. I think we need to raise the playing level just a little bit.

MALEAUX: It's a page out of White House strategy as well, though. That's absolutely true, though. Low expectations and then wow 'em at the end.

WALLACE: All right. I want to go back, though, to this registry here, because -- or these wedding donations. Because I'm getting married and friends are bothering me about a registry, which I'm not interested in doing. But maybe a new trend should be get the china, get the pots and pans, and contribute to your favorite presidential candidate.

MALVEAUX: OK. So, Kelly, the question is, is it Schwarzenegger? Tell us, who's it going to be?

WALLACE: Put me on the spot -- no, no, no. I leave it blank. I let my guests contribute to the candidate of their choice. What about that, as a new registry item for brides and grooms of the future?

VALLESE: Well, I do think it's interesting that people are saying, we'd like you money to go to who we support, not necessarily who you may support. And maybe that some people would get a little more involved. It's the push that people need to get out and vote, or at least take an interest in politics.

MALVEAUX: I'm sorry. One thing I thought was interesting, too, is using the Internet to also generate funds as well.

WILLIS: How long does it take politicians to figure out that there's an Internet out there and it might be good way to mobilize their base? Everyone is shocked about the money Dean is brining in, but it's been happening. There's a company called AOL that owns this network that discovered that some time ago.

WALLACE: And you know, you guys, I want to go back to Wes Clark, of course, because he's going to be coming out here to California. Another Democratic presidential candidate coming here this week to campaign for Gray Davis, to try to help Davis defeat the recall.

But, Suzanne, I'm very curious, how concerned is the White House about Wes Clark and his popularity right now?

MALVEAUX: Well, of course they are concerned. They look at his background. I guess the one thing that they are really counting on, and one thing that they're watching very closely, of course, is how is he dealing with domestic issues? How is he going to compete with the other candidates?

I mean, clearly, his military record is stellar. And this is something that, of course, you know, just didn't stand out. The others just did not stand out in that sense. And, yes, they are worried about it. But, again, Kelly, as you know, the White House does play the low expectations game.

They say, publicly...

WALLACE: (UNINTELLIGIBLE)

MALVEAUX: Exactly. We have a tough fight ahead, it's going to be close. You rally your support and rally your base, you get the fund-raisers out there. And then in the end you surprise everyone when you come out on top.

WILLIS: Surprise everyone. Thanks to my colleagues, and thank you for watching ON THE STORY. We'll be back next week.

Coming up at the top of the hour CNN's live coverage of the joint news conference with President Bush and Russian President Vladimir Putin.

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Putin Meet at Camp David; "Do Not Call" list Bumps Head with Constitution>