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Signs of Desperation Abound in Troubled Economy

Aired December 8, 2008 - 19:00:00   ET


JANE VELEZ-MITCHELL, HOST (voice-over): Nearly 2 million Americans out of work this year alone, and the signs of desperation are everywhere as the holidays approach.

In Chicago, abruptly fired workers stage an angry sit-in. In Detroit, churchgoers with SUVs on an altar, pray for a bailout. As companies across the nation teeter on the brink, Barack Obama lays out sweeping plans to fix it. We`ll take your calls.

Then, Caroline Kennedy could be the favorite to fill Hillary Clinton`s New York Senate seat, but are people sick of Kennedy, Clinton, Bush political domination? Weren`t we looking for change?

Plus, another terrifying chapter in the war on women as the search continues for a beautiful 25-year-old woman last seen at a Manhattan nightclub in the company of a registered sex offender. We`ll have the details on this issue and lots more tonight.


VELEZ-MITCHELL: Tonight our desperate economy and the sweeping new plans to fix it. More than half a million jobs were lost last month alone, bringing the yearly total to almost 2 million. Unemployment is at almost 7 percent. It`s the worst job market in 15 years. People are scared.

They`re angry, and they`re acting out, whether it`s a sit-in at a Chicago factory, a former executive walking the streets in a sandwich board, or a deadly stampede on a very Black Friday, Americans have kicked into survival mode. At times the national mood seems like it`s bordering on mass hysteria.

Here`s my issue tonight. Yes, times are tough, but we have to maintain our civility. We must continue to be compassionate and think of those whose circumstances are more dire than our own.

Meantime, President-elect Obama trying to create millions of new jobs with a massive public works program. The question is, will it work?

I want to hear what you think about all of this. Has the national mood gone from nervous to hysterical? Call 1-877-JVM-SAYS. That`s 1-877- 586-7297, with your questions and comments.

But, first, our fabulous expert panel. Eamon Javers, financial correspondent at Politico, and Stephen Moore, editorial writer at The Wall Street journal."

Thank you for joining us.


VELEZ-MITCHELL: Hey, how are you doing? Stephen, President-elect Obama is proposing the largest public works construction program in half a century to create 2.5 million new jobs by rebuilding our nation`s infrastructure. We`re talking hospitals, schools, electric grids. This is a huge concept. Do you think it`s doable, or will it create its own massive bureaucracy?

MOORE: Well, I think the latter, unfortunately, Jane. I think this is sort of the new New Deal, right, where Franklin Roosevelt tried to get us out of the Great Depression with huge ABC spending programs that tried to put America back to work with make-work programs, and it didn`t work very well. The Depression lasted another eight years after he was elected.

I am a Reaganite, Jane. I think we should be doing tax-rate reductions to try to get businesses back on their feet, hiring more workers. And I`m not sure I...

VELEZ-MITCHELL: But I have to jump in there. I mean, haven`t we already seen that that doesn`t work? Haven`t we been trying tax cuts under the Republican administration? And look where it`s gotten us.

MOORE: Well, it certainly worked pretty well after Ronald Reagan when he came in, in even bigger economic crisis than we face today. You know, when I graduated from college in 1981, the unemployment rate in Illinois was 12 percent. It was actually the Reagan tax cuts that created the 2 1/2 decade long expansion.

So I think it`s a policy that works. I`d like to at least see a combination, Jane, where some tax cuts with some of the spending. Right now it`s all spending, no tax cuts.

VELEZ-MITCHELL: Yes, and Eamon Javers, where are we going to get the money? Our budget deficit is approaching a trillion dollars. They`re saying that this massive construction project is going to cost up to a trillion dollars.

EAMON JAVERS, FINANCIAL CORRESPONDENT, POLITICO: Yes, we`re going to borrow this money or we`re going to print it. I mean, there`s only two options here. There`s really no money lying around in federal coffers for this kind of expenditure.

And make no mistake. This is an enormous project that Barack Obama is proposing. He`s talking about the biggest infrastructure spending since we built the federal highway system back in the 1950s. So we`re looking at an enormous amount of money.

And the gamble here on Obama`s part is that he can create enough jobs, all of this construction in states across the country, that that money will trickle into the rest of the economy and blunt the staggering force of this economic wipeout that we`ve been seeing. It`s a big gamble, and it`s a big amount of money.

VELEZ-MITCHELL: Well, I hear he`s meeting with Al Gore to talk about green jobs tomorrow night. I certainly hope that is part of the program.

I want to talk about bailout B.S. Two hundred workers in Chicago abruptly, rudely fired after Bank of America, which got a $25 billion bailout, yanked their factory`s credit line.

Now the workers have been staging a very angry sit-in to get the severance pay they are legally owed. The governor of Illinois is supporting those workers and struck back at Bank of America by suspending state business with the company, saying this.

Listen to this.


GOV. ROD BLAGOJEVICH (D), ILLINOIS: Bank of America received $25 billion in taxpayer money as part of the financial bailout. This is exactly and precisely the kind of thing that isn`t right, when on the one hand, powerful special interests get the help of taxpayer money to bail them out, the banks. And yet the purpose of that money was supposed to be to provide a line of credit to businesses like this to keep workers working and keep people employed.


VELEZ-MITCHELL: So, Stephen, this is obscene, in my opinion. Not only are these workers thrown out on the street with virtually no notice, not getting their legally-required severance pay...

MOORE: Right.

VELEZ-MITCHELL: ... but at the same time Bank of America is buying Merrill Lynch. And the CEO of Merrill Lynch had originally wanted a $30 million bonus. Then he dropped it to $10 million. And only just moments ago, after an entire day of uproar on airwaves across the nation, did he finally say, "You know what? I really don`t want the $10 million bonus after all."

What is wrong with these people? Are they absolutely tone deaf and blind to what`s going on around them?

MOORE: Yes, I think there is a lot of arrogance, Jane. I mean, it`s the same thing when the -- when the Big Three auto firms took their Leer jets to come to Washington to plead for more money.

You know, I don`t have a problem, Jane, with paying CEOs of companies a lot of money if the company is making money and if they`re hiring workers and making the products that people want. But I object, as I think you do, when you`ve got companies laying off workers, when they need a tin cup bailout from taxpayers, and then they`re paying millions, in some cases tens of millions of dollars, in -- in not only pay but, in some cases, golden parachutes to these people to retire on the banks of the Riviera.

VELEZ-MITCHELL: Eamon, Merrill Lynch lost $12 billion in 2008.

JAVERS: Right.

VELEZ-MITCHELL: Their stock price has plunged, and this man has the nerve to ask for, first, in the 30s of millions of dollars, then down to ten and now today, late this afternoon, never mind. I mean...

JAVERS: Look, it`s amazing that it took as long as it did for that number to come down as much as it did but, look, there`s a huge political backlash coming. Because people, as you say, out in the country are really hurting right now. They`re scared and they`re angry.

And when they see these symbols of corporate and political excess, like the corporate jets, like the CEO compensation, they`re going to lash out at that. And I think executives and politicians have to be very careful in this climate. This is a new political climate that we`re in right now.

And the irony is Barack Obama is a guy who really benefited from a lot of that anger and fear out there. That -- that economic crisis really benefited Barack Obama at the polls, as voters said, "You know what? We`re so fed up we`re willing to try an untested new guy here." Now Barack Obama`s got to be careful that he doesn`t reap some of this backlash, too.

VELEZ-MITCHELL: Well, look...

MOORE: Jane, there`s -- there`s another side to this, though. I mean, let`s take the example of what`s going on now with Ford and Chrysler and GM. There`s a lot of talk of, you know, getting rid of the CEOs and the boards of director, bringing in a new...

VELEZ-MITCHELL: Hallelujah. Let`s get rid of them.

MOORE: Exactly. I applaud that, too. But here`s the thing. If you want to get the top talent, if you want to get somebody like a Jack Welch that can turn around those companies and create tens of thousands, and save tens of thousands of jobs for Americans, it may take a pretty good salary to bring that person in.

VELEZ-MITCHELL: Stephen, I have to jump in and say I think that all of these guys, as President-elect Obama said, have their head in the sand. All of these CEOs.

You know what they are guilty of? Short-term thinking. Short-term thinking. The head of GM actually admitted that his biggest mistake was axing the electric car and not giving enough attention to hybrids. But he said, "Oh, it didn`t affect our profits. It only affected our image."

They still don`t get it. The only thing they think about is the next quarter. They are so short-sighted. Why is it that Toyota and Honda are not facing bankruptcy right now? Because they think long term.

MOORE: But also -- but, Jane, there`s another big factor there. They don`t have the albatross of the United Auto Workers union that has commanded these huge wages that they simply can`t pay. I think if you got rid of the UAW at Chrysler, GM and Ford, they could probably be profitable, too.

VELEZ-MITCHELL: Well, it`s only 10 percent of the total cost.

MOORE: But it`s a big deal in terms of the increased cost of a car.

VELEZ-MITCHELL: Gentlemen, hang tight. We are going to get into the whole Detroit mess in just a second.

You won`t believe this. One of Detroit`s biggest churches placed several SUVs at the altar and offered up prayers -- yes, prayers -- for Congress to bail out the auto industry.

I may not be able to answer your prayers, but I can answer your phone calls, so give me a holler at 1-877-JVM-SAYS. That`s 1-877-586-7297. I want to hear your thoughts on our crumbling economy and what to do about it next.



UNIDENTIFIED MALE: A very crucial time in our history and in the history of Detroit, especially, and America. And I believe that we need to send up a prayer to God that he might reach those lawmakers to do the right thing.


VELEZ-MITCHELL: Things have gotten so bad in Detroit that a church there literally put SUVs on the altar and prayed for an auto company bailout. I`m not kidding.

Meanwhile, on "Meet the Press" this weekend, President-elect Barack Obama said if GM, Ford, and Chrysler do get taxpayer money, then they`re really going to have to change the way they do things.


SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: What I think we have to put an end to is the head-in-the-sand approach to the auto industry that has been prevalent for decades now. If they want to survive, then they`d better start building a fuel-efficient car. And if they want to survive, they`ve got to recognize that the auto market is not going to be as large as some of their rosy scenarios that they`ve put forward over the last several years.


VELEZ-MITCHELL: It looks like there`s almost a deal to give the car companies $15 billion in bridge loans that they could get within days. The money comes with some of the strings the president-elect mentioned, as well as a car czar and an oversight board. Is this a good compromise? I want to hear what you think about how your tax dollars are going to be spent: 1- 877-JVM-SAYS. That`s 1-877-586-7297 to sound off on the Big Three bailout.

Back with me, my guests Eamon Javers, financial correspondent at Politico, and Stephen Moore, editorial writer at the "Wall Street Journal."

Eamon, the Moody`s expert testified they actually made up to $125 billion to survive.

JAVERS: Right.

VELEZ-MITCHELL: So how is $15 billion going to do anything more than keep the patient on life support a couple of more weeks?

JAVERS: Well, the answer is it`s not. I mean, all of the Washington politicians are doing here is kicking the can down the road a little further, and they`ll have to deal with this again in a couple of months.

And you know, they were praying in Detroit, but there was a lot of praying going on here in Washington, too, because no politician likes this choice. They`re faced with either voting for an enormous and hugely unpopular bailout of the Big Three or being blamed for allowing all these American jobs to vanish. That is a no-win position for a politician. A lot of them were praying they wouldn`t have to make that decision.

Now we see the sort of compromise where Washington says, "Well, we`ll give you about half of what you asked," for which isn`t going to solve the problem and is only going to put it down a few more months until we have to deal with it again.

VELEZ-MITCHELL: All right. Calls are coming in here. Les from Colorado, your question, sir?

CALLER: Well, instead of giving the money to the -- to the companies and everything, why don`t we just give $25,000 to each American and let the thing work up instead of down? Because it doesn`t definitely trickle down. It stops.

VELEZ-MITCHELL: It does stop. And Stephen Moore, since you`re the trickle down man, I`ll let you answer that one.

MOORE: Thanks, Jane. Well, look, I agree with this gentleman. I mean, I don`t see the point in putting a lot of money in new government programs. If we want to put money into the economy and get it spent and get it spent wisely, I just think most Americans agree with this gentleman that it makes a lot more sense for Americans to spend the money themselves than to have the government take the money from them and spend it. So that`s one of the reasons I don`t like the -- the infrastructure spending and all of these bailouts.

We`ve spent $5 trillion -- $5 trillion, Jane -- in the last six months on bailouts of insurance companies, banks, auto companies. I mean, we can`t bail out everybody. Because guess what? The federal government is broke, too.

VELEZ-MITCHELL: Yes, and obviously we are basically saying generations in the future are going to have to deal with this mess that we`re creating.

You know what the idiocy of this entire thing is? They want Detroit to change, but they`ve decided to use the money that`s already been allocated to allow the auto companies to transition to hybrids and electrics. So they`re raiding that fund and stealing that money to give them $15 billion so they can stick around for three more weeks and not to make the changes they need to make to survive. To me that`s insane, Eamon.

JAVERS: You know, Jane, what -- something really interesting happened today. We`ve been talking all about the Big Three. And we saw a united front as all three companies came to Washington last week to ask for this money.

But then, this afternoon the Ford Motor Company put out a statement saying, "You know what? No thanks. We`re just fine. We don`t need this money. We`re not going to ask for any part of this $15 billion bridge loan."

So you`re starting to see the Big Three really become just the big two. We`re talking now just about bailing out Chrysler and GM. And really, the political concern here is about GM. They`re the juggernaut. Chrysler is a privately-held company. It`s owned by an enormous hedge fund which could bail it out if it wanted to.

VELEZ-MITCHELL: Yes. They could -- I mean, it`s a privately-owned company.

JAVERS: Right.

VELEZ-MITCHELL: And the company that owns it is rich and is not pumping any of its own money into saving Chrysler. That is complete insanity.

And, you know, I`d like to talk a little bit about the mood of the nation right now. Things have been getting ugly. I don`t care whether you`re talking about the Black Friday stampede that resulted in a man being literally trampled to death. There are demonstrations around the country. There are sit-ins at factories. Things are changing now. And I think it`s kind of a global shift.

Let me ask you, Stephen, about what the Nobel economics prize winner, Paul Krugman, said.

MOORE: My biggest friend.

VELEZ-MITCHELL: Well, he basically said U.S. car companies are going to disappear, period, because of geographical forces. And that basically, it`s globalization, and it doesn`t really matter what they do in Congress or how much money. It`s forces bigger than ourselves.

And that`s what it feels like when you see the demonstrations, this guy walking around, a professional, who`s got a sandwich board on, begging for money. It feels like that sort of Depression-style...

MOORE: It does.

VELEZ-MITCHELL: ... shift, a seismic shift like an -- after an earthquake.

MOORE: It does. I think these are way too apocalyptic predictions by Paul Krugman. I mean, the truth is, we have many states that have very profitable auto plants and manufacturers. You talk about states like Alabama and Texas and South Carolina. Foreign firms have come in there. They have very profitable plants there that pay good wages, good manufacturing wages.

The only area where the companies are losing money is Detroit. And so I think you can see a very profitable expansion of a lot of foreign firms here. And I would love to see Ford continue to prosper. And as Eamon just said, Ford is making money.

Here is the problem, though, Jane. You`re going to have people in Congress tell -- tell the auto companies what kind of cars to build. I mean, you just said it yourself.

VELEZ-MITCHELL: Yes, because they needed to build hybrids a long time ago.

MOORE: Why? How do we know that, Jane?

VELEZ-MITCHELL: Because there is a demand for hybrids. There`s a demand for electric vehicles, and GM killed the electric car.

MOORE: But you know what, Jane?

VELEZ-MITCHELL: Rick Wagoner admitted that was his worst decision ever. And, you know, he just still doesn`t get it.

MOORE: But Jane...

VELEZ-MITCHELL: That`s why Christopher Dodd says he has to go. And all these management people have to go.

MOORE: Jane, the truth is it was exactly the fuel efficiency standards that were imposed on the auto companies that have forced them to make cars they don`t make money on. Ford makes money on their big cars, on their SUVs...

VELEZ-MITCHELL: No -- no, they`re not.

MOORE: ... on the pickup trucks.

VELEZ-MITCHELL: Nobody wants them since the gas went up.

MOORE: Yes, but gas [SIC] is now down to $45 a barrel.

VELEZ-MITCHELL: Even though it`s back down, everybody knows it will go back up again. It`s a finite resource.

MOORE: Maybe.

VELEZ-MITCHELL: We have to come up with another alternative.

MOORE: Yes, but isn`t that for the company to determine? And not the members of Congress.

VELEZ-MITCHELL: No! Because they`re asking for our tax dollars.

MOORE: Well, that`s the whole problem. I think we agree on that.

VELEZ-MITCHELL: This is not a pure capitalist society anymore. And we should just forget that we`re pretending that it is a pure capitalist society anymore. It hasn`t been for a long time. You know, the farm bill. There are subsidies everywhere we turn.

MOORE: It`s true.

VELEZ-MITCHELL: I would like to ask you fabulous gentlemen to stick around. We are taking more of your calls on the economy, the dire straits a bit later.

Twenty-five-year-old Laura Garza went missing after a night out in New York City. She was last seen with a known sex offender. I will look at this and other disturbing abduction cases. We`re talking about the war on women.


VELEZ-MITCHELL: We`re back taking your calls on the ailing economy.

David in Florida, your question or comment, sir.

CALLER: Hi. Yes, Jane, how`s it going?


CALLER: I think it`s ironic that the government a couple months ago wanted to spend money to stop global warming. And now they want to bail out the three, the No. 1 contributors. And on top of that, you know, what happened when we didn`t bail out the airline industry, JetBlue, Southwest, AirTran Airlines. That`s what we get whenever we don`t bail out industry and let the free market take hold.

VELEZ-MITCHELL: I love you. I think you`re absolutely right.

Eamon Javers...


VELEZ-MITCHELL: ... there are little car companies that make electric vehicles in Palo Alto, California, that are ready to go, that are excited, that want to put electric vehicles with chargers all across the state of Hawaii. Why not give those people money? They`re the future.

JAVERS: Yes, I mean, there`s a real argument that says break up the Big Three and use the successful pieces and maybe have a little ten instead of a Big Three. And that might create a more dynamic auto industry that`s not saddled with all these burdens and management and layers of history that they`re struggling with right now.

The problem with that is that there are a lot of people who will lose their jobs in that kind of a jarring transition. And politicians are really, really sensitive to people losing their jobs. And it`s easier to vote now to preserve the system than to change it as radically as that.

VELEZ-MITCHELL: Let me ask you this question, Stephen Moore, about the whole losing jobs issue, because I don`t understand one thing. Barack Obama is going to create this massive program to improve our infrastructure, and that`s going to create 2.5 million new jobs. But that`s going to be electric grids and dams and schools and hospitals.

The people who are losing their jobs are copping coming from sectors like banking and from the service sector. How do we retrain all these people who are used to working on computer to working on a dam? It`s not that easy, is it?

MOORE: Well, I think that`s part of the problem with the make-work projects, which I don`t support in the first place.

I mean, look, we have lost a million and a half jobs already this year. The recession is probably going to get worse for a few more months so we could have perhaps the half a million to more than a million jobs lost.

And I agree with Eamon. You know, what we need to do is maybe make our industries more cost effective. We`re in a global economy right now. We have to provide assistance for people who have lost their jobs.

But, Jane, we cannot throw the free enterprise system out the window and move towards socialism. It`s going to make things worse. It didn`t work in Europe.

VELEZ-MITCHELL: Well, you know what? I think we already moved there. I mean, they say the price of a burger...

MOORE: You`re probably right.

VELEZ-MITCHELL: ... would be $12 if it wasn`t subsidized.

Brian in Georgia, your question or thought, sir?

CALLER: Yes, ma`am. Why don`t the oil companies help bail out the car -- car manufacturers? I mean, after all, they`re in bed together. So...

VELEZ-MITCHELL: All right. I`m going to give Eamon that question. That`s a good one.

JAVERS: I haven`t heard that proposal yet in Washington. But there`s a time for everything. That`s an idea that -- maybe whose time just hasn`t come yet.

VELEZ-MITCHELL: You know, I want to talk about this whole idea that we`re approaching something like the Great Depression. You know, my parents had me late in life. They actually experienced that as children. And, boy, the hard-luck stories they tell of standing in bread lines and walking miles and, you know, shoes that were tattered, it`s nothing like today. Should we not make that comparison?

MOORE: No, we shouldn`t. I mean, Jane, my parents told the same stories about people knocking at the door and begging and stuff. And, you`re right. I mean, those were terrible times. We`re a much richer and healthier and wealthier society today. This is going to be a tough time, but this isn`t going to be the Great Depression. This is not 1933. You know, we just have much more resources now to deal with this.


JAVERS: Somebody I saw made a good comment on that, Jane. She said this is a great recession, potentially, but nothing like a Great Depression.

VELEZ-MITCHELL: Well, I`m giving you the last word. Thank you so much, gentlemen. Great insights.

Next, Hillary Clinton getting ready to join the Obama team in D.C. I`m going to tell you who may take over her Senate seat. And the huge controversy over the contenders.


VELEZ-MITCHELL: Pretty 25-year-old Laura Garza went missing last Wednesday. She was last seen leaving a posh Manhattan nightclub with a registered sex offender. Now police fear she is dead. Look at that beautiful girl.

I will have the latest details on Garza`s disappearance and I will be taking your calls on the war on women. Call 1-877-JVM-SAYS, that`s 1-877- 586-7297 to discuss this new terrifying front in the "War on Women."

But first, at the top of the block the buzz surrounding Caroline Kennedy`s interest in taking over Hillary Clinton`s New York senate seat. Kennedy, the daughter of JFK and the niece to Ted and Robert, is best known for her philanthropic work but she took some bold steps onto the public stage this year with her very vocal support of Barack Obama`s presidential bid.

Now some are crying foul saying Kennedy`s political resume is very slim. Could her star wattage outshine more experienced contenders, or are people truly sick of the whole Clinton/Bush/Kennedy political dynasty thing?

Joining me now John Avlon, author of "Independent Nation" and columnist for "The Daily" John, always great to see you.


VELEZ-MITCHELL: First of all, there`s an amazing cast of characters in this soap opera. If New York Governor Patterson chose Caroline Kennedy, could that be considered a slap in the face to Hillary Clinton, the very person who would be vacating the seat to become Secretary of State? Caroline, of course, was very, very vocal in supporting Obama over Hillary back when it really counted.

AVLON: That`s a great point but I do think those campaign political feuds are being put aside. And in fact, there`s a lot more that generally has united the Clintons with the Kennedys than divided them in the past.

But right now, the momentum in the buzz is behind Caroline Kennedy. She is -- definitely there`s a lot of affection for her not only in New York but with the National Democratic Party. But it does raise question about this fallback to nepotism that we see sometimes in our politics particularly after this Bush/Clinton/Bush era. We`re just closing the door on them.

VELEZ-MITCHELL: Well, I want you to convince me because I`m going back and forth and back and forth. First of all, I think it should be a woman. We are replacing a woman and there are only 16 women in the U.S. Senate right now. So I think it certainly has to be a woman.

The feminist perspective is very, very crucial to have in the U.S. Senate as we make important decisions about where our world is going. But there are other women who seem to be very qualified, women who are currently in Congress like Nydia Velazquez and Carolyn Maloney. They have been in politics for years working hard, struggling, pulling themselves up by the boot straps. And there are a lot of people who say, hey, these are the women who deserve this appointment because at this point it is an appointment until they would have to run for election themselves.

AVLON: Sure. And Governor Patterson has made it very clear that he is inclined to pick a woman to fill Hillary Clinton`s seat. As you`ve mentioned Nydia Velazquez and Carolyn Maloney, other name that`s come up is Christian Joanbrand upstate New York, a centrist Democrat.

But I do think we need to get move beyond in our politics just playing a kind of identity politics algebra. What Governor Patterson should be looking at is the best person for the job. One that Caroline Kennedy claims she could bring is immediately bring a lot of attention and existing relationships, a strong personal relationship with the incoming president.

And someone who would immediately be a player on the national scene, but Governor Patterson wants to weigh that against all the various other benefits including a strong Congressional component from New York with many women in it.

VELEZ-MITCHELL: Well listen, I am a big fan of Caroline Kennedy`s. I think she`s a terrific person. She`s a lawyer, she`s written books, she`s raised so much money for the public schools but does she have what it takes in terms of experience having never run for public office before for anything to immediately jump into the U.S. Senate? I mean, wouldn`t anybody else have to start out maybe in the city council and then move to perhaps the state senate or then Congress and then maybe after that the Senate?

AVLON: Well, you`re absolutely right except for the fact that no one`s ever accused the Kennedy`s of ever leapfrogging. This would not be the first time this has occurred. I`m shocked that there would be this sort of nepotism going on.

But in all seriousness, I`m a believer in a citizen`s legislature and while this is a unique opportunity to fill a seat by appointment that might in normal times Caroline Kennedy might not run and want to put herself in the rough and tumble of politics.

But this is the seat that once held by Robert F. Kennedy. It was the seat that was held by Daniel Patrick Moynihan so there are a lot of opportunities here.

VELEZ-MITCHELL: And you know there`s other dynasties, too. Thank you so much John.

As we wrap up I just want to mention that Andrew Cuomo would also according to some reports like the job and he`s, of course, New York State`s attorney general. And he comes from a political dynasty; his dad was former governor of New York, Mario Cuomo. So there`s a lot of nepotism there all the way around. Very interesting. We`ll have to see what happens.

I`m going to turn now to a story with more immediate impact for one very, very worried family. This is a shocking new chapter in the war on women.

Laura Garza, a really beautiful 25-year-old woman is missing after leaving a New York City nightclub with a convicted sex offender. They had been spotted dancing at the club.

According to authorities, the aspiring professional dancer was last seen at 4:00 a.m. Wednesday morning. As she left the club in Manhattan, Club Marquee (ph), with 23-year-old Michael Mele, whom you`re looking at there. The two were later spotted in Mele`s SUV in upstate New York. Mele is a sex offender who has been sentence to probation for forcibly touching women at a shopping mall. Police have searched his home for clues. They are said to be interested in an area of missing carpet in his condo that would be large enough to wrap a body in. That`s certainly not a good sign.

As of now Mele has not been charged. He is being held on a probation violation. Police are calling him a person of interest. As Laura Garza`s distraught family waits for news, authorities are appealing to other women who may have come into contact with Mele. Please, come forward if you`ve had any contact with this creep at all.

You know, the natural instinct of too many people is to ask should this young woman have been in the wrong at the wrong time? But isn`t that blaming the victim, I want to hear from you. Call 1-877-JVM-SAYS, that`s 1-877-586-7297 with your comments and questions.

Joining me now, Nicole Deborde, a criminal defense attorney and former district attorney and Sunny Hostin, a former federal prosecutor and defense attorney. Thanks for joining, both.

Sunny, police sources confirmed Mele had what appear to be bite and scratch marks when he was booked Friday night. What does that tell you?

SUNNY HOSTIN, FORMER FEDERAL PROSECUTOR: That tells me that he is the guy. I mean, it is really, really unbelievable that he had the bite marks on his hands, he also had scratches on his neck and shoulders. But I think what`s very important, Jane, is that no one is discussing his prior record.

They`re saying, ok, he was convicted of misdemeanors and had this forcible touching conviction. What he was doing was running up to women in parking lots, terrorizing them, pushing them up against cars and masturbating on them. That is a very different crime than just forcibly touching someone.

And so I think that really people should have known that this guy, his behavior was going to escalate and I am not surprised that this is the guy that the police are looking at.

VELEZ-MITCHELL: Well, here`s the outrageous part, Nicole Deborde. He wasn`t actually charged with a lot of those alleged offenses where women said that he did exactly what Sunny just described, basically go up to them and literally masturbate on them.

Now the charges that he did get were misdemeanors which are comparable to punishments like shoplifting, graffiti, and beating a transit fare. So why is it that he got six years` probation with absolutely no jail time for this horrific initial crime of going up to women and violating them in this horrible manner? What does that say about our society?

NICOLE DEBORDE, CRIMINAL DEFENSE ATTORNEY: Well, a lot of times you have situations where when the prosecution can get a known verdict or a plea, for example, in a particular case and they have victims who may not want to come to court, may not want to participate, are very stressed out by the process, they go ahead and they take what they can get.

I don`t know exactly what happened in his previous cases but it`s very possible that they went ahead and took what they knew they could get, which was a plea for the six years` probation so they could watch him instead of rolling the dice as to whether or not these victims would come in.

VELEZ-MITCHELL: Well, you know, they didn`t even charge him with some of these crimes. And I have to wonder is it because his father is a retired metropolitan transit authority assistant deputy police chief, Sunny Hostin?

HOSTIN: One really has to wonder. I`ve got to tell you know, not only did he -- was he accused of doing this to two different women at a mall, two other women said that he did the same thing. I am very surprised that he only got a misdemeanor conviction, six years` probation and arguably, I mean, he did have to register as a sex offender but only a level one sex offender. And that means when in New York when you go online, his face doesn`t pop up. His name doesn`t pop up. You actually have to affirmatively call an 800 number to find out about this guy.

DEBORDE: You know what --

VELEZ-MITCHELL: We have to start taking these crimes against women seriously. If somebody comes up and masturbates on somebody, that person has to go to jail. Meanwhile, our jails are chockfull of people who have done nonviolent drug offenses where there`s basically no victim. Why don`t we get those drug cases out and put the real sickos in the jail; the people who are dangerous to women who are creating this war on women in America?

When are the powers that be going to wake up to this?

Nicole, I just have become so frustrated. Year after year, decade after decade covering one violent crime after the next and nothing seems to change. We`re always obsessed with locking the person who did it up but we don`t solve the bigger problems.

DEBORDE: Well, I`d have to agree with you. You make an excellent point.

I mean, we have sort of gone down this road where the trend is to punish all kinds of things that for previously weren`t crimes or are addictions, things of this nature by putting people in prison when this prison space probably needs to be reserved for people who are a danger to society and not people who need drug treatment and similar types of treatment.

And it is backwards and until we can get this solved, there`s simply not going to be enough resources to prosecute the real criminals.

VELEZ-MITCHELL: Yes, and well, and when Congress fixes the car dilemma, if they ever fixed that crisis, they better get around to dealing with the war on women, ok, because we`re not going to take it anymore.

Ladies, stick around. Back with your calls on the terrifying disappearance of Laura Garza and what we should do about the war on women. I want to hear your thoughts. Give me a call 1-877-JVM-SAYS, that`s 1-877- 586-7297, and sound off after the break.


VELEZ-MITCHELL: We`re back talking about the disturbing case of Laura Garza, another missing woman feared dead in yet another example of the war on women. We want to hear your thoughts. Call 1-877-JVM-SAYS or 1-877- 586-7297 with you opinions and questions.

And back with me are Nicole Deborde, a criminal defense attorney and former DA and Sunny Hostin, a former federal prosecutor and defense attorney. Phone lines lighting up.

Dawn in Ohio, and your question ma`am?

DAWN IN OHIO: Well, it`s more of a comment.


DAWN: My issue is this. I mean, this young lady is old enough to go out and have a good time. She should be able to go wherever she wants without feeling like her life is in danger. I mean, it`s an innocent life involved.

And the fact that anyone is having credibility or issues with the fact that she is going out anywhere, I mean, this young lady was minding probably her own business. Someone`s bothering her against her will. Hopefully she`s in, you know, safe right now. But I just think it`s appalling that she should be able to go wherever she wants without feeling like her life is in danger.

VELEZ-MITCHELL: Well, I think what you said, Dawn, is absolutely 100 percent on the money. Unfortunately, authorities are investigating this as a possible homicide. They have searched the woods around the suspect`s or the person of interest`s -- I should say -- home. And he is locked up right now on a probation violation because he was drinking that night, the night that they were dancing together at the club.

But, Sunny Hostin, this is what happens all the time with women who are victimized. It happened with Imette St. Guillen, and a beautiful John J. College of criminal justice student who went out to party and have a good time and she was in lower Manhattan and at 4:00 a.m. a bouncer escorted her out and now that bouncer is accused of rape and murder of this woman.

And, you know, there were some people who actually said, oh, you know, she shouldn`t have been out late at night and if she hadn`t been out late at night none of this would have happened.

I find that so offensive. Since we know that women are attacked everywhere including in their own homes --

HOSTIN: Exactly.

VELEZ-MITCHELL: For example, Anne Pressly the anchor woman who was attacked in her own home.

HOSTIN: In her own home and exactly you`re right on the money on that, Jane. I hear this all the time and I heard it as a prosecutor. Blame the victim. So what, she went home with someone that was very charming, owned a Quiznos sandwich place, had a nice car, was seemingly a nice guy, went home with him at 4:00 in the morning. So does that mean she deserves to be missing and possibly dead?

What about someone that goes to a bar and tells her friends, you know I`m going to go home with this guy. I really like him. And maybe we`ll just go out and eat; does that mean this person deserves to die? Absolutely not, it`s about time that we stop blaming women and start blaming the men who are perpetrating these crimes.

VELEZ-MITCHELL: Bravo. I agree with you 100 percent. And what we`ve got to do is take this argument to Washington and convince the powers that be and go to districts all over the country and talk to the police department and talk to the city council and say, hey, we have to reprioritize. And anybody who violates a woman needs to be locked up and forget about the people who are doing some drugs and not hurting anybody because that`s who is clogging up the prison system right now.

Mary from Louisiana, your thought or question, ma`am?

MARY FROM LOUISIANA: Yes, I`m outraged being the mother of daughters, that these daughters aren`t free to just go and enjoy themselves in their late 20s. And I`m outraged that these fellows get misdemeanors, and basically it`s like a slap on the wrist, and then they`re free to escalate their crimes. As a result of that these young women are turning up missing or dead. I`m outraged.

VELEZ-MITCHELL: Yes, and Nicole Deborde, why wasn`t he wearing some kind of ankle bracelet so we could have tracked this creep?

DEBORDE: Well, you know that`s a good question. But the reality is that one of his conditions clearly on probation was that he wasn`t supposed to be drinking alcohol and he probably wasn`t supposed to be hanging out in bars.

And here he is in the situation anyway. So I kind of wonder if he had the ankle monitor if it would have resolved the problem anyway. He was going to do what he was going to do.

VELEZ-MITCHELL: Yes, the whole system is broken down. In everyone of these cases virtually everyone of these cases the person who is arrested and who is considered a person of interest or a suspect has a long criminal record. Quite often they have violated parole. They have violated probation. But nobody`s tracking them.

Who, Sunny Hostin, is tracking these people to determine whether or not they`re living up to the terms of their conviction?

HOSTIN: Well, that`s a great question and the bottom line is sex registries really do work. There`s family watchdog for all over the country. There`s the New York Sex Registry but the problem here is that someone dropped the ball with this guy by allowing him to only get a conviction on a misdemeanor. And that means -- what that meant at least in this case in New York is that while he was registered as a sex offender, he was registered as a level one which really means that, yes, you`re going to be on the sex registry for 20 years but you`re considered low risk and so you don`t have an ankle bracelet.

You`re allowed not to be on the Internet and that is what happened here. My policy as a prosecutor was always sex crime means you do time. Bottom line.

VELEZ-MITCHELL: Yes, and let me tell you something, I think it is a sexist issue because I think that primarily it`s men making these laws. And let me tell you if somebody masturbated on them you know that person would be going away for a long time.


VELEZ-MITCHELL: But I don`t think they take it as seriously if it`s not a rape.

Well, you see where it goes. You see the escalation of these crimes.

Now this guy does not fit your stereotype of a suspect. He`s first of all a businessman. He`s apparently good looking and drives fancy cars. He`s not, you know, I don`t think he`s good-looking, but that`s what they`re all saying, he`s good-looking. And he had a girlfriend. So he also owned a sandwich franchise.

What does that say, Nicole, about how we as women have to be vigilant that people are not always what they appear.

DEBORDE: Well and you`ve heard the cliche a million times, you can`t judge a book by its cover. And it`s certainly true as it relates to anybody who might commit a sexual offense, you certainly cannot look at another person and decide what kind of criminal they may or may not be.

You may have someone on the other hand, who looks completely rough and might be the most gentle, nice person that you could ever meet. You certainly cannot tell by looking.

VELEZ-MITCHELL: Yes, and you know I have to say that after he was stopped by the cops patrolling shopping malls, there are some who theorize so that`s why he went to the bars.


VELEZ-MITCHELL: Bad situation.

Ladies, stay right there, after the break, I`m going to have more of your calls on the disappearance of Laura Garza and what we need to do on this war on women. Something has to be done immediately to stop the violence against women. We can`t just keep reporting these stories over and over again.


VELEZ-MITCHELL: We`re back. Taking your phone calls in the case of the missing Texas native, Laura Garza who left a nightclub with a convicted sex offender. With me are two former prosecutors, Nicole Deborde and Sunny Hostin and great prosecutors they are.

We`re going to take a look at the forensics in this case, the suspect. This happened Wednesday night, and by the time they caught up with him, his SUV had been thoroughly cleaned, Sunny. He also had, according to investigators, cut patches of hallway carpet, vacuumed thoroughly, frantically tossed away pieces of evidence, including a woman`s shoe in several dumpsters, one of which sits at the Quiznos franchise that he owns near his home.

And apparently according to the "New York Daily News," unaware what was going on, the suspect`s girlfriend helped him dispose of the carpet, according to sources that spoke to the "Daily News." What do you make of it all?

HOSTIN: I hate to rush to judgment, Jane, but I think all of this certainly points to him. It points to him being the person. And what you do after a crime certainly is an indication of guilt of that particular crime.

For instance, if you flee from the scene of a crime, sometimes that can be considered. And so I think when you look at the scratches on his neck and shoulders, when you look at the bite marks on his hands, I mean, she clearly put up a hell of a fight. And when you look at all of this evidence with scrubbing and bleach and moving carpet out, I don`t think that there is any other sense that this is the guy that did it.

VELEZ-MITCHELL: All right, Mia from Michigan. Your thought or question, ma`am?

MIA FROM MICHIGAN: Hi. I love the show.


MIA: I`d like to know just as an average citizen, what can we do to protect our women and kids, because it just seems too frequent we`re hearing these horrific stories over and over again about these guys that just get out of jail, and they just -- it doesn`t seem to work, whatever rehabilitation that they say they`re putting on these guys. Just -- it isn`t working.

VELEZ-MITCHELL: Well, ma`am, you hit the nail on the head. I think it`s an excellent point.

Nicole Deborde, I personally am sick of decade after decade covering these horrific murder cases. When we`re not talking about the largest societal issues, what can we do? You`ve got 20 seconds to give us some thoughts.

DEBORDE: Well, I think that it`s important to let your legislatures know what you think is an important crime that should have the time spent on court prosecuting these crimes. And which ones are maybe something that should go to the back burner. And that might make a big impact.

VELEZ-MITCHELL: Yes and I think we have to change our attitude. Let`s teach people violence prevention before they become violent, not after they get arrested for violence. Hello?

Nicole, Sunny, thank you so much, great guests. Come back soon.

I`m Jane Velez-Mitchell, and you are watching "Issues."


VELEZ-MITCHELL: A hearing in the case of the 8-year-old Arizona boy accused of killing his father and another adult. Are killers born or made? That`s tomorrow on "ISSUES."

Right now it`s time to check in with Nancy Grace. Hey, Nancy what`s coming up?

NANCY GRACE, HN ANCHOR: Jane, the grandparents, George and Cindy Anthony head to California to investigate another alleged sighting of 3- year-old Caylee. And tonight, they insist there is video proving little Caylee is alive. And Jane, more bombshells; more secretly recorded surveillance video of tot mom`s personal meetings behind bars with family.

VELEZ-MITCHELL: Wow. And I hear there may be a break in the case of missing mom Nadia Kirsch. What`s the latest with that?

GRACE: That`s right, Jane. Grainy surveillance video released could explain what happened to Kirsch the day she went missing. And Jane, the latest tonight, from police searching for the young mom.

VELEZ-MITCHELL: Thanks, Nancy. That`s all coming up next. "Nancy Grace" starts right now.