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Holding Half of Bailout Money for Obama Administration; Sold in China: GM Sales Strong in Emerging Markets; Obama Meets With McCain, Vets Clinton
Aired November 18, 2008 - 11:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
TONY HARRIS, CNN ANCHOR: It is Tuesday, November 18th. And here are the top stories we're following for you this hour in the CNN NEWSROOM.
GM, Ford and Chrysler hoping to drive a bargain on Capitol Hill today. Auto execs in front of Congress, asking for taxpayer dollars to stay out of bankruptcy.
Team Obama vetting Bill Clinton's business dealings post- presidency. Will they stand in the way of a Secretary of State Hillary Clinton?
Good morning everyone. I'm Tony Harris. And you are in the CNN NEWSROOM.
Six weeks into the $700 billion government bailout, how is it going? The Bush money team is on Capitol Hill this morning to answer that question. Live pictures now.
Treasury Secretary Henry Paulson explaining his change in bailout strategy. Instead of buying bad assets from financial institutions, the government will get new cash circulating by buying up bank stock. And he told a House committee he will hold half of the bailout money for the Obama administration.
(BEGIN VIDEO CLIP)
HENRY PAULSON, TREASURY SECRETARY: The actions of the Treasury, the Fed and the FDIC have stabilized our financial system. The authorities in the TARP have been used to strengthen our financial system and to prevent the harm to our economy and financial system from the failure of a systemically important institution. As facts and conditions in the market and economy have changed, we have adjusted our strategy to most effectively address the urgent crisis and to preserve the flexibility of the president-elect and the new secretary of the Treasury to address future challenges in the economy and capital markets.
(END VIDEO CLIP)
HARRIS: All right. Let's get to Christine Romans now for a little analysis on this. She's in New York for us.
Christine, good to see you.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Hi there.
HARRIS: I've got to tell you something, Christine. Every time I know I'm asking you a lot of questions on this, but you are really enlightening me at each turn on this. So Secretary Paulson says this morning that he is actually holding half of the bailout money for the Obama administration. The idea of holding money and the idea of crisis, crisis, crisis don't necessarily go hand in hand.
Why is he holding some of the money now?
ROMANS: Because he can't do anything with it. He has to go to Congress and ask for it. That was the stipulation of the $700 billion, the whole bill. He has to go to Congress and ask for it, and he's gotten permission to spend the first $350 billion, and there's $350 billion that remains in that bailout funding, and Congress has to be asked for it.
You can see there I kind of divvied it up on a pie chart for you, Tony.
ROMANS: That $350 billion, he has got to go to Congress first to spend. Everyone expects that's money that will be the Obama team that will spend.
He has $60 billion of his half of the money that he's already gotten congressional approval for that could still be deployed right now, and that's the $60 billion there. That blue slice of the pie, that's what a lot of people are fighting for. That's what people are fighting for in terms of maybe foreclosure mitigation, they're fighting for it for maybe the auto industry, they're fighting for it for all kinds of different things, maybe some more insurance companies.
So you can see how the money has been divvied up. There's $350 billion left that the Obama team can go next year and ask for, and spend as they choose.
HARRIS: So why don't we do this, Christine? Let's go to the pie chart once again that you prepared for us.
HARRIS: And you're talking about the $60 billion. As I'm listening to the hearing this morning, I'm hearing the chair of the FDIC, Sheila Bair, asking for $24 billion to help mitigate these foreclosures. And one might ask the question, I hope fairly, why not use a portion of that, give that to the FDIC to help foreclosure, at least families facing foreclosure right now?
ROMANS: The administration has said that it doesn't want to use the money for that, that TARP, the focus of TARP, was always about stabilizing the financial system. And there's definitely a public disagreement here between the treasury secretary and the chairwoman of the FDIC. HARRIS: Well, thank you for acknowledging that, because I certainly felt that as I was watching the hearing this morning.
ROMANS: Oh, yes, there's a public disagreement there. I mean, she has come out and said that she has this big plan that's $24.4 billion, I think, to try to help 1.5 million homeowners. And the Treasury Department essentially has said that they're not going to fund it, and they're doing some other kinds of programs.
And there are a lot of different programs, frankly, between the public and private partnerships to try to mitigate foreclosures. At the same time, housing prices keep falling and foreclosures keep skyrocketing.
So, yes, I mean, there's a lot of efforts under way. And they haven't been enough. And Sheila Bair said we need a national solution to a national problem.
ROMANS: And the treasury secretary is sticking to the fact that TARP was meant to stabilize the financial system, that's what it's done, but there's still a lot more work to be done.
HARRIS: And you can make the argument that of the top two priorities right now, you can certainly understand helping the financial sector. But you can also make a very strong case, it seems to me, for helping out families facing foreclosure. And if you've got a $60 billion -- I just think that this is going to continue to be a big and heated discussion point. Do you think...
ROMANS: Don't forget the autos, too. I mean, Tony, there's a lot of work to be done. And everybody wants a piece of that pie, literally that pie I showed you.
HARRIS: All right, Christine. Appreciate that. Thank you.
Christine Romans for us in New York.
This afternoon, U.S. senators will hear from American automakers on why taxpayers should bail out the struggling companies. A silver lining, perhaps. GM's future looks brighter beyond U.S. borders. In the third quarter, six out of 10 GM cars were sold outside North America.
Here is CNN's Emily Chang in Beijing.
EMILY CHANG, CNN CORRESPONDENT (voice-over): At one of Beijing's biggest car markets, rows and rows of gleaming automobiles just waiting for a test-drive.
Feng Chongwei is shopping for his first car. This is GM's Buick Excelle.
"With the economic crisis, car sellers are under great pressure, so we can get better discounts," says, Feng.
The pressure is so great, GM has warned it could collapse. So if the U.S. government bails out GM, it will be saving a company that's relying on business from China to survive.
HOU YANKUN, AUTO INDUSTRY ANALYST: China is the largest auto market outside of the United States for GM. And they are the most profitable auto market for GM.
CHANG (on camera): GM broke into the China market early. It's now considered the most prestigious U.S. auto brand here and employs about 20,000 Chinese workers. Even on the verge of bankruptcy, GM wants to expand in China. Its sales in the U.S. may be falling, but here they're rising.
(voice-over): In fact, some say China could speed past the U.S. as the world's largest car market in a matter of years.
Automakers expect to sell a million more cars in China this year compared to last year, and about 2.5 million less in the U.S. However, drivers in China are hitting the breaks, too. Car sales slowed for the first time in three years in August during the Olympics because of rising gas prices and restrictions on car use in Beijing to limit pollution. Business is better now, but still slow.
"The car market in China has been influenced by the world economy, but in a big city like Beijing, thousands of cars are still being bought."
Dealers here expect a boom in sales ahead of the Chinese new year. Good tidings for GM if GM, as the world knows it, survives.
Emily Chang, CNN, Beijing.
HARRIS: You know, this probably underscores the desperation in Detroit. Ford announced today it is selling most of its holdings in the Japanese carmaker Mazda. The move will raise about $540 million in much-needed cash for Ford.
So, do the big three and the unions have their own greed and shortsightedness to blame for the mess they're in, or are they getting a bit of a bad rap here? An article in today's "Detroit Free Press" lays out what it calls the six myths about the big three.
If you want to read about it, just go to Veronica De La Cruz's Facebook group page for this program, search for "Tony Harris" or "Veronica," and you will find the link to that article.
(BEGIN VIDEO CLIP)
ERROL LOUIS, "NEW YORK DAILY NEWS" COLUMNIST: They're also concerned about a catastrophic failure. You know, can you imagine if they inject $25 billion or even more, and it might well be more, $100 billion, $200 billion, only to see the bankruptcy occur anyhow? You know, so I think they have to be very careful about this.
They also, I think, have this question of, if they prop up this major piece of manufacturing, American manufacturing, what do they do when the textile people come to them right after that? You know, what do they do if the construction industry comes?
UNIDENTIFIED MALE: Right. Where do you draw the line?
LOUIS: Right, where do you draw the line? And so he wants to do something big, Obama does. He has to. The Democrats all support that. And there is a consensus among economists that there has to be deficit spending.
Situations like this are why you do deficit spending. This is one of the few times when you're supposed to.
(END VIDEO CLIP)
HARRIS: Help for the auto industry, just one of the items on Barack Obama's to-do list. He is also busy choosing his cabinet and reaching out to former rivals.
Live now to Chicago and CNN's Ed Henry.
Ed, good to see you.
You know, no better example of the president-elect's outreach to former rivals than an extraordinary meeting yesterday so soon after the election between John McCain and Barack Obama.
ED HENRY, CNN WHITE HOUSE CORRESPONDENT: That's right. Clearly, Tony, the president-elect moving quickly to try and turn the page with John McCain. It's in both their interests to try to move forward after that very tough campaign. But we're also seeing Barack Obama reaching out to another rival who actually may wind up in his cabinet.
HENRY (voice-over): This is a president-elect who believes in keeping your friends close and your enemies closer. Whether it's mulling Hillary Clinton for secretary of state or making nice with John McCain in Chicago.
BARACK OBAMA (D), PRESIDENT-ELECT: We're just going to have a good conversation about how we can do some work together to fix up the country, and also to offer thanks to Senator McCain for the outstanding service he's already rendered.
HENRY: The two former rivals privately discussed some controversial issues they plan to work on together next year as they turn the page on a bitter campaign. A senior Obama transition official told CNN they talked about trying to revive the immigration reform plan that fell apart last year, and finding a way to close the military prison at Guantanamo Bay, Cuba. Those are hot-button issues that will be hard to find common ground, especially since their body language suggested it's not easy to heal their divisions. OBAMA: Hey, guys. What's up?
HENRY: This moment had awkward written all over it. So they did what guys do. Talk football.
SEN. JOHN MCCAIN (R), ARIZONA: I noticed that yesterday's football.
OBAMA: Oh, see there.
MCCAIN: Greeted with --
HENRY: They're trying to show they can bury the hatchet, but there are limits. People on each side insist McCain will not get a cabinet post.
SEN. HILLARY CLINTON (D), NEW YORK: I'm not going to speculate or address anything.
HENRY: Speculation is only intensifying, however, about a place in the cabinet for another former rival. Two Obama transition officials confirm they have started looking at former President Bill Clinton's finances and post-presidential dealings, including his charitable foundation and presidential library to identify potential roadblocks to his wife being nominated as secretary of state.
The president-elect has still has not made a formal job offer, but senior Democrats believe the vetting shows he's serious about considering it.
HENRY: Now, the Web site Politico is reporting that there's been exasperation in the Obama camp about the slow pace of the Clinton camp turning over some of these records, but I can tell you that senior Obama aides say that's not true. They say they're satisfied so far, but they are still looking for more information. So it's something we're going to have to keep a very close eye on -- Tony.
All right. Ed Henry for us in Chicago.
Ed, appreciate it. Thank you.
You know, 60 seats in the Senate would definitely help the Obama administration moving forward. And in Minnesota, they are getting ready for a recount in the Senate race. Officials meet today to approve plans for a hand recount that begins tomorrow.
Republican Senator Norm Coleman leads Democrat Al Franken by just over 200 votes. Officials will manually recount almost three million ballots.
Also tomorrow, a hearing is scheduled on a lawsuit by Franken. He wants counties to release the rosters of voters whose absentee ballots were rejected.
And the remaining ballots in the Alaska Senate race expected to be counted today. At last count, Anchorage Mayor Mark Begich led incumbent Republican Senator Ted Stevens by just over 1,000 votes. Election officials say they have about 24,000 ballots left to count. Stevens was recently convicted on felony charges of lying on Senate disclosure forms.
The big debate across the country, should taxpayers bail out the big three automakers?
(BEGIN VIDEO CLIP)
SEN. RICHARD SHELBY (R), ALABAMA: GM, Ford, Chrysler have spent billions and billions in the last few years trying to right themselves. If this was a good deal, private banking would be running in there, financing this in a second. Nobody believes really that this is going to work.
(END VIDEO CLIP)
HARRIS: How sweet it is. About 100 Indiana National Guard troops back from Iraq. Kisses and hugs. How about that?
After nine months in the war zone, hundreds of family members and friends at this welcome ceremony at the Indianapolis International Airport. The troops will be debriefed for several days before reuniting with loved ones.
Take in these moments. Home just in time for the holidays. Good stuff.
Another important step today in Iraq. Officials agreeing to hold long-awaited provincial elections on January 31st. It is seen as a move toward national reconciliation, something the U.S. has been pushing for. However, the disputed oil-rich city of Kirkuk not part of the vote. The announcement comes as Iraq's parliament prepares for a vote next week on a U.S. security deal. It sets a three-year timeline for American troops to remain in Iraq.
You know, he used the Internet like no other presidential candidate ever had. And some observers say Barack Obama transformed American politics. Now campaigns around the world are taking a page from Obama's playbook and imitating his winning strategy.
John Roberts talked about that with Chief International correspondents Christiane Amanpour on CNN's "AMERICAN MORNING."
CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: In France, for instance, a group of minorities have put out an affirmative action manifesto in which they've literally taken the slogan, "Yes, we can." "Oui, nous pouvons" in French, because in France, which has the biggest minority and Muslim population in Europe, barely an official elected to national office in the parliament. So this is something.
In Indonesia, where Barack Obama grew up, they're trying to use "Change" and "Yes, we can" on things like climate change and the economy.
In Jamaica, a senator there has said, let's use the slogan "Change" and "Yes, we can" to meet some of the challenges that we face as a nation.
JOHN ROBERTS, CNN ANCHOR: It's "Yes, man, we can" down in Jamaica.
What's the flip side of all of that?
AMANPOUR: Look, the flip side, certainly in Europe, is that they simply don't have their Obama. There are many, many countries in Europe which have very huge minority populations of immigrants, longstanding, and there are barely any representatives in parliaments, whether it be in France -- England is a little better. Germany has almost never had it, and they have a huge ethnic Turk minority.
Just this week though, for the first time ever in Germany, they elected a party leader who is an ethnic Turk, the Green Party leader. So that's a huge leap forward.
ROBERTS: And we've also seen people say some -- I don't want to say intemperate things about Obama, but some not so politically correct things.
AMANPOUR: That's correct. It's not so politically correct, and there is a latent racism. That's for sure. But I think the momentum is to try to get over that, which is what's happening in France. Use that slogan, try to empower their own minority consciousness movement.
HARRIS: Well, it is a great resource for you. Check out our Political Ticker for all the latest news on the transition. What you do is just log on to CNNPolitics.com. It is your source for all things political.
Bringing in big bucks in small towns. Personal Finance Editor Gerri Willis joins us with news that may want to make you leave the bright lights of the big city.
HARRIS: OK, so the economy is down. But you know what? Things are looking up in some small towns. Affordable homes, available jobs.
What? Where are these places?
Personal Finance Editor Gerri Willis has "Money" magazine's best places to live.
Gerri, good to see you. Who came out on top here?
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Well, you know, we've got a handful of great cities here. And job bases are growing, costs are low. There's a lot to be attracted to these places like Plymouth, Minnesota; Fort Collins, Colorado; Naperville, Illinois, Irvine, California. And finally over here on the East Coast, we've got one in the top, Franklin Township, New Jersey.
OK. Now, Tony, let's drill down here and take a closer look at these.
WILLIS: Plymouth was, this was number one ranked. And I've got to tell you, this is really "Leave it to Beaver" territory, a real family town here.
WILLIS: And if you have got kids in school, test scores are 32 percent above the state average. That's for reading. Affordable housing. The median is $288,000. This is well below the survey's average.
Now, if you're going to buy a three-bedroom house with two baths, the price is closer to $350,000. But look at the median income here. Folks here make a lot of money, $111,000-plus.
Small town. And here, you're going to love this, Tony. Median commute time, 21 minutes.
HARRIS: I love that.
WILLIS: How about that?
WILLIS: A recreation town, boasts more than half a dozen sizeable bodies of water. Water sports mecca. Mall of America, if you like to shop, it's a quick drive away. The downside, of course, it's cold there in January, about 4 degrees is the average.
Now, Fort Collins, Colorado, we mentioned before. Also small. But Fort Collins is cool.
The city's old downtown district -- you'll love this -- contains four microbreweries and more than two dozen restaurants. Bike lanes are everywhere. You can even check out a bike for up to seven days free in that town, which is fantastic.
Tech-heavy employers, Agilent, Hewlett-Packard, Kodak do business there. And the Colorado State University based there. It keeps the town young. Median income there, because of that, $76,000, a little lower than what we just looked at. And the property taxes under $2,000 a year.
Naperville, Illinois, it ranks third. It's been on Money's list three times. They have not got this wrong.
There's -- the downtown charming. There's a brick path that follows the river for two miles. It's near Chicago, which is fantastic.
You can commute into the city, but there are lots of employment opportunities locally. The median commute time -- I keep talking about this, right, because I'm obsessed with it.
HARRIS: Yes. Well, it's important, yes.
WILLIS: Twenty-seven minutes. That's fantastic. Right?
HARRIS: Yes, it is.
WILLIS: And graduates of the city's high school, they do really, really well, outscoring state and national averages on college entrance exams.
Of course there is a downside here. The average price for a three bedroom, two-bath house is $380,000. That's pretty pricey...
WILLIS: ... compared to other Chicago suburbs. You know, people have discovered there's some serious auto congestion there.
But I have to tell you, these three towns combine some really great characteristics for folks out there who might be looking for a new place to live.
HARRIS: Gerri, how exactly are these cities chosen?
WILLIS: Well, you know, they look at affordable housing, just like you do...
HARRIS: Yes. Schools and...
WILLIS: ... affordable housing, best schools, jobs available, average commute time. And there's a whole list, and it really covers the country.
If you just want to see how your town stacks up, go to CNNMoney.com. And if you want to send me a question, because I love hearing from you, send me an e-mail at email@example.com.
HARRIS: I'm wallowing here in the doom and gloom. It's just nice to know there are some great places to live if you're in a position to sort of pack up and move.
WILLIS: Well, there's good news out there.
HARRIS: There really is.
WILLIS: We're scrambling to find it, Tony.
HARRIS: Yes. All right, Gerri. Appreciate it. Thank you.
WILLIS: My pleasure.
HARRIS: And as the most serious credit crisis in really decades rocks your finances, CNNMoney.com has some advice, some answers for you. Just check out our special report, "America's Money Crisis." It's at CNNMoney.com.
OK. Two days left to vote for your favorite CNN Hero. Go to CNN.com/heroes to see their stories. And then we really do want you to vote. Then join Anderson Cooper Thanksgiving night to find out who will be CNN's Hero of the Year.
Vote now, CNN.com/heroes. Only two days left.
And the American auto industry struggling to stay in business, asking for help. Here is what some General Motors workers have to say about it all.
(BEGIN VIDEO CLIP)
I have two children and a husband. So it's very important to me, because how am I going to feed and clothe my kids? I need the bailout bad.
UNIDENTIFIED MALE: I really don't know what's going to happen with our insurance or benefits. It seems like we just keep losing little by little by little.
(END VIDEO CLIP)
HARRIS: Hey, very quickly, I just wanted to show you these pictures. Just moments ago we showed you pictures of about 100 Indiana National Guard troops back from Iraq after nine months in that war zone. How about this? We were able to get this up for you. Live pictures now from Indianapolis.
As you can see, this is another group -- another combat team -- back from Iraq, 280 troops here it says from the Indiana National Guard. The 76th Infantry Brigade Combat Team returning home from Iraq. And this is live for you right now, getting some of the hugs and that warm welcome there at the Indianapolis International Airport. We're going to pick and choose some of these pictures and turn this around for you again in just a couple minutes. But wanted to show you these pictures as they were happening live for you right here in the CNN NEWSROOM.
OK. Bailout progress report. You are looking now at live pictures from Capitol Hill. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke trying to explain their handling of the government's $700 billion bailout package. The House committee hearing comes just about a week after these guys switched strategy. Instead of buying toxic assets from financial institutions, they're injecting billions into banks.
Paulson insists the move is in response to changing conditions in the financial crisis. And he says he will hold half of the bailout billions for the Obama administration.
So, who is watching out for the taxpayer while the government spends all this bailout money? It is, after all, your money.
CNN's Jim Acosta takes a look.
JIM ACOSTA, CNN CORRESPONDENT: The bailout is one month old. Billions of dollars have flowed to the nation's biggest banks. But the government is just now getting around to naming someone to oversee the program full time. That someone is this man, federal prosecutor Neil Barofsky.
NEIL BAROFSKY, INSPECTOR GENERAL NOMINEE: I fully intend to keep you fully and promptly apprised of significant findings and concerns.
ACOSTA: At his confirmation hearing, one senator compared oversight of the bailout to the Wild West.
SEN. RON WYDEN (D), OREGON: I would characterize the operation of this program now, in terms of oversight, as like Dodge City before the marshals showed up.
ACOSTA: The Treasury Department's inspector general, who is unofficially keeping an eye on the bailout, told the "Washington Post," "I don't think anyone understands right now how we're going to do proper oversight of this."
The non-profit watch dog group, Taxpayers for Common Sense, points to the application for bailout funds, the form the banks must fill out to receive some of the money. It's just two pages, the group notes, shorter than the typical application for a mortgage.
RYAN ALEXANDER, TAXPAYERS FOR COMMON SENSE: When anybody thinks about the amount of credit they've applied for in their life, be it a student loan, a car loan, their house, anything, line of credit for a small business, it's more than two pages.
ACOSTA: A Treasury Department spokeswoman counters that banks must sign off on other supporting documents as well. "It's entirely inaccurate," the spokeswoman says, "to imply this operation doesn't have oversight."
Oklahoma senator Jim Inhofe says he believes lawmakers were not told the truth about the bailout. Adding, "Congress doesn't know how much money Treasury Secretary Henry Paulson has given away to anyone. It could be to his friends. It could be to anybody else. We don't know."
Of the $700 billion in the bailout, only half has been authorized by Congress. Some key lawmakers say they're not quite ready to hand over the other half.
REP. ELIJAH CUMMINGS (D), MARYLAND: We have learned now from what we've already seen that we have to have some pretty strict oversight. Mr. Paulson has disappointed a number of us.
HARRIS: All right. And Jim Acosta joins us now.
Jim, there is real concern about getting the oversight in place and getting it in place quickly because there's a sense that many have that the Treasury secretary is actually picking winners and losers here.
ACOSTA: Right. You heard this morning during the bailout hearing that the Treasury secretary is sticking to his guns. He does not think that these T.A.R.P. funds, that's the Washington jargon for this bailout money, should be used to bailout the automakers. And so they're at an impasse here. Unless something extraordinary happens, that money is not going to these automakers, according to the Treasury secretary.
Congress is trying to do some oversight here. As you saw in our piece, Elijah Cummings, the congressman from Baltimore, who is an influential member in all this, has now said that they wish they had done more oversight from the beginning. They just got around yesterday to naming somebody to permanently oversee the bailout for the financial firms, never mind one for the automakers. So there are lots of problems with this, Tony. And they're just getting to the bottom of it.
I talked to a member of Nancy Pelosi's staff yesterday. And he said that they are getting involved in this, that they've had hearings. He emphasized they've had 20 hearings so far. But there are many more to come, Tony.
HARRIS: You really don't want to go down this road of should ofs and could ofs. You really don't want to hear that from your Congress members. All right. Jim Acosta for us in Washington.
Jim, good to see you. Thank you.
ACOSTA: You bet.
HARRIS: Ford's top executive says his company is working hard to adapt to demands of the 21st century automarket. Alan Mulally says he will make that argument to Congress today when he asks for a taxpayer loan.
(BEGIN VIDEO CLIP)
ALAN MULALLY, CEO, FORD MOTOR CO.: The automobile industry is just absolutely essential to the United States economy. We're in an economic situation now with the credit crisis and the financial and the banking issues that we really, more than ever, the automobile industry needs to be part of the solution. And the only thing that we're asking for is to set up a bridge loan mechanism. So if the economy continues to deteriorate in the near term, that we could access that so we can continue to invest in the products that people really do want and value and help be part of this economic recovery.
(END VIDEO CLIP)
HARRIS: Mulally rejected talk that mismanagement has pushed Detroit automakers to the brink of bankruptcy.
Some say the union is one big reason why the Big Three are in a world of hurt. What role did it play?
Here's Randi Kaye keeping the industry, and all of its players, honest.
RANDI KAYE, CNN CORRESPONDENT: It is the engine that's supposed to keep automakers running. But some say the United Auto Workers Union has helped bring the Big Three to a grinding halt. UAW workers earn as much as $75 an hour, including pension and future health care. James Sherk from the Heritage Foundation, a conservative think tank, calls the contract greedy.
JAMES SHERK, THE HERITAGE FOUNDATION: Every so often management will try and insist on more competitive contracts and then you'll have the unions go on strikes. Rather than take billions and billions of dollars in loses, the management caves.
UNIDENTIFIED MALE: We called a strike at 11:00 a.m.
KAYE: That was last year when 73,000 GM workers walked off the job, shutting down operations in 30 states. The union did make concessions in the contract negotiated during that strike. It let the company buy out about 20 percent of the workforce and replace them with lower-paid workers.
Senior research economist, Don Grimes --
DON GRIMES, ECONOMIST, UNIV. OF MICHIGAN: The concessions that they negotiated in last year's contract really were too little too late.
KAYE (on camera): Keeping them honest, we checked. The union's health care coverage costs GM about $1,600 per vehicle, compared to about $200 per vehicle over at non-unionized Toyota. That, some economists say, is killing the Big Three.
(voice-over): That, plus the U.S. company's reputation for producing inferior vehicles. Grimes believes the industry may be doomed. (on camera): Doomed because of deals like the jobs bank set up back in the 1980s. It's an unprecedented agreement that continues to pay workers 96 percent of their salary after they've been laid off. It costs GM $900 million a year.
SHERK: It's one of the reasons General Motors is on the verge of bankruptcy. You can't pay workers to do nothing, to sit in a -- one of these rubber rooms and fill out crossword puzzles.
KAYE (voice-over): In last year's contract, the union did agree to put a two-year limit on the length of time a laid off worker can stay in the jobs bank.
UAW president, Ron Gettelfinger --
RON GETTELFINGER, PRES., UNITED AUTO WORKER: We're willing to put our wages and all of our benefits out on the table. Let our critics put theirs out there. We have assisted these corporations. And we will continue to work with them. Our job is to build a quality product.
KAYE: Gettelfinger says the contracts are fair.
GETTELFINGER: I don't think that the auto workers have been greedy. I think we corrected a lot of the things in the past.
KAYE: Grimes calls the contracts unsustainable.
GRIMES: When the foreign producers came into the country, the great benefits that the UAW had achieved -- the gig was up. They could no longer sustain those benefits.
KAYE: The days of the fat contracts are over. Union members are lobbying Congress, along with the automakers, for a bailout.
GETTELFINGER: This wasn't brought on by the industry and it's not a bailout. It's a low interest loan. And that's simply what we're looking at. The industry needs it. I think it's fair to say that they're in a crisis.
KAYE: At stake for union members, not just jobs, but health care for retirees. That could leave as many as 250,000 employees, and their families, without a job and without any health care.
Randi Kaye, CNN, New York.
HARRIS: You know lots of folks are defending the automakers amid criticism that they were simply short sighted and made bad business decisions. An article in the "Detroit Free Press" we want to bring your attention to today, lays out what it calls the six myths about the Big Three.
If you're interested just visit Veronica De La Cruz's Facebook group page for this program. Search for Tony, that's me, or Veronica and you will find the link to the article. Then talk about it with the group. We may share some of that conversation with you, or we may not. Depends on how good it is. Or you can just go to "Detroit Free Press."
An early taste of winter coating the Midwest in snow and cold. Lake-effect snow blowing off Lake Michigan and burying towns like South Bend, Indiana. That's a lot of snow there. Snow falling at a rate of 2 to 3 inches an hour. It could add up to about a foot of snow today.
And Rob, take a look at this. Western New York state, bit of a bigger blast here. Some towns south of Buffalo buried under 28 inches of snow. And I guess, Rob, the folks there were a little rusty in driving around. Maybe it's early in the season because you can see here we've got some tape of plenty of accidents there in the Buffalo area overnight.
HARRIS: Hey, we need you to play tomorrow. Tomorrow we're doing -- it's a day-long extravaganza here in the newsroom on holiday travel. So we're going to need your help. Any ideas you may have, OK?
ROB MARCIANO, AMS METEOROLOGIST: We will be here to advise and delight.
HARRIS: We'll be sharing tips with you. What you need to know about how to get where you're going stress free. There you go, stress free. Plus, where to find the best deals and how to stay healthy. That is tomorrow right here on CNN in the CNN NEWSROOM.
But first, how about this? A shoutout before we go to break. 80 years ago Mickey Mouse made his debut on film. Remember this? "Steamboat Willie" was the first talking, animated cartoon.
HARRIS: This just in to CNN. Our Supreme Court producer Bill Mears is passing along this news. Supreme Court Chief Justice John Roberts' father, John Glover Roberts Senior, has passed away after a long illness. John Glover Jack Roberts Senior was an executive of Bethlehem Steel Corporation, later worked for CSC Industries and taught at the University of South Carolina's Graduate School of Business. The court has not released the senior Roberts' exact age or where he died. He was born in Johnstown, Pennsylvania. And in 1952 he married Rosemary Podrasky who survives him.
That news just coming in to us. The father of Chief Justice John Roberts has died after a long illness.
Let's get to some business news now. And finally some good news on Wall Street. Wholesale prices plunged last month by the largest amount on record. Susan Lisovicz is at the New York Stock Exchange with details.
Susan, good morning --
SUSAN LISOVICZ, CNN CORRESPONDENT: Good morning, Tony.
HARRIS: -- and some good news.
LISOVICZ: Some good news.
Inflation, it was such a huge problem. Remember, Tony? In the summer, gas prices were at record highs, oil prices were at record highs. Guess what? That concern has gone away because energy prices have fallen so fast and so sharply. A huge drop in crude oil helped to push wholesale prices down nearly 3 percent in October. That's the biggest monthly decline ever and tops the previous record that was set in the wake of 9/11.
During the past month, oil plunged by about 30 bucks. That sent gas at the producer level down 25 percent. Home heating oil prices fell, and even milk and meat prices dipped a bit.
Oil trading slightly higher today, about half a buck, below $56 a barrel. That and a solid earnings forecast from Hewlett Packard is sparking some gains on Wall Street. Hewlett Packard shares are up 12 percent. This is a rarity, too, Tony. Hewlett Packard says its quarterly profit will beat the Street's estimates and for next year it will beat the Street's estimates.
So, the Dow right now is on the upside, up 130 points. The Nasdaq is up 6 points -- Tony.
HARRIS: So if the companies that make our products save a little money, does that mean the savings will be passed along, Susan, to you and me?
LISOVICZ: Yes, like what about me? Of course, that's the real equation here.
For the savings to be passed on to you, me and to all of us, wholesale prices generally have to stay low for a while. Wholesale prices have now fallen for the past three months, but the decline escalated in October.
In any case, we'll get the answer for sure tomorrow. Wall Street is expecting a modest decline in consumer prices. Again, driven by food and energy costs. We'll find out an hour before the opening bell when the Consumer Price Index is released.
My guess, Tony, not going to be anywhere near as the big decline that we're seeing in wholesale prices. But if it's a trend, that's a good thing.
HARRIS: I will take your guidance on that, Susan. We'll see you next hour. Thank you.
LISOVICZ: You got it.
(BEGIN VIDEO CLIP) JENNIFER DONAHUE, RESIDENT FELLOW, HARVARD INST. OF POLITICS: There are limited things he can do. He's not president yet. And I think what you see is John Podesta really working on the policy front, working with economists on both sides of the aisle, trying to figure out what a middle ground is, thinking about what the voters said, trying to think about what to do next.
Then you've got Rahm Emanuel looking at the political side, looking at the makeup of the Senate and the House, realizing that there's got to be stuff that can be passed that can -- you know, every economist that I've talked to from every different persuasion, as Obama said, believes something further has to be done. That's less about the money that needs to be spent and more about the fact that the first bailout plan didn't have an enforcement mechanism in it. And that is a real problem. And they need to go back now, address that problem and provide further relief for the economy.
(END VIDEO CLIP)
HARRIS: Getting the U.S. economy back on track, a top priority for President-elect Barack Obama. But Obama also faces another money challenge, raising money for his transition and inauguration.
That story now from CNN's Christine Romans.
ROMANS: He raised a stunning amount of money for the general election, more than $639 million in campaign contributions. Now, the president-elect's challenge is to raise more cash for his transition and inauguration.
CRAIG HOLMAN, "PUBLIC CITIZEN": I really do hope Obama sticks by his principles and does not accept corporate money, does not accept money from lobbyists and places a very, very low ceiling on the amount of money he'd accept from individuals to pay for his inauguration.
ROMANS: "Public Citizen" says companies spend that cash to buy influence.
There is about $10 million of taxpayer funds to pay for the transition, but experts say that's not enough. Presidents tap private money and corporate cash to cover the difference. President-elect Obama taking pains to keep lobbyists out of his transition and forgo corporate cash, but he hasn't explicitly outlined his intentions for the inauguration.
George Bush raised a record $42.8 million, mostly from corporate donors for his second inauguration. To address potential conflicts of interest, Bush limited corporate donations to a quarter million dollars each.
Obama could decide to accept corporate donations for the inauguration, but impose tighter limits.
DAVID LEWIS, VANDERBILT UNIVERSITY: I think past presidents have had to raise lots of private money to do these things, and I think he's actually got a good resource base of donors that are willing and probably will give money for both the transition effort, but also the inaugural campaign as well.
ROMANS: Make no mistake, even without corporate cash, the Obama fundraising machine has been a force. After a record haul and a win on Election Day, Team Obama was quickly soliciting more money. Here, raising money for the DNC.
(on camera): Any money leftover from the general election campaign funds cannot be used for the transition. But many say the Obama fundraising machine will have no trouble raising more money.
Christine Romans, CNN, New York.
HARRIS: Once Obama takes office, he is going to facing perhaps the biggest economy crisis in the country since the Great Depression. That leads a lot of people to see a comparison to FDR's first year in office. Check out the latest cover of "TIME" magazine. We're going to talk to the head of the Roosevelt Institute during the noon hour.
HARRIS: All right. And this just in to CNN. Senator Joe Lieberman who was a Democrat and then ran as an Independent and is an Independent now, who caucuses with the Democrats, has been under a lot of pressure recently for supporting John McCain during the presidential campaign and making statements during the campaign that many Democrats found pretty offensive. He has been informed that he will be allowed to retain his chairmanship of the Senate Homeland Security Committee. He made a statement just a couple of moments ago. We want to bring that to you now.
(BEGIN VIDEO CLIP)
SEN. JOE LIEBERMAN (I), CONNECTICUT: ... very much Senator Reid.
Look, we had a very open and constructive discussion about my status in the caucus after which my colleagues voted to support a resolution, which I believe was fair and forward-leaning. It's a resolution that not only resolves the current dilemma, but it's a resolution of reconciliation and not retribution and I appreciate it.
I particularly look forward to continuing my work as Chairman of the Senate Homeland and Governmental Affairs Committee and Chairman of the Airland Subcommittee on Armed Services, and in that capacity to work as I have in the past with the new president, Barack Obama, and his administration, to keep the American people secure here at home, and to protect our freedom from enemies abroad.
(END VIDEO CLIP)
HARRIS: And Senator Joe Lieberman just moments ago on retaining his chairmanship of the Senate Homeland Security Committee.
Pirates in control of 2 million barrels of oil. It is a serious standoff and we will bring you the very latest next hour right here in the CNN NEWSROOM.