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THE SITUATION ROOM

Obama Speaks on Bailout Bill in Senate; Bill Clinton Hits Florida for Obama; Obama Gains in Key States; Palin Hits Back At Media

Aired October 1, 2008 - 17:00   ET

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


SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: When the House of Representatives failed to act on Monday, we saw the single largest decline in the stock market in two decades. Over one trillion dollars of wealth was lost by the time the markets closed. And it wasn't just the wealth of a few CEOs or Wall Street executives. The 401(k)s and retirement accounts of millions became smaller. The state pension funds of teachers and government employees lost billions upon billions of dollars. Hardworking Americans who invested their nest egg to watch it grow saw it diminish and, in some cases, disappear.
And while that decline was devastating, the consequences of the credit crisis that caused it will be even worse if we do not act now. We're in a very dangerous situation, where financial institutions across this country are afraid to lend money. And if all that meant was the failure of a few banks in New York, that would be one thing. But that's not what it means.

What it means is if we don't act, it will be harder for Americans to get a mortgage for their home or loans they need to buy a car or send their children to college.

What it means is that businesses won't be able to go the loans they need to open a new factory or make payroll for their workers. And if they can't make payroll on Friday, then workers are laid off on Monday.

And if workers are laid off on Monday, then they can't pay their bills or pay back their loans to be somebody else.

And it will go on and on and on, rippling through the entire economy. Potentially, we could see thousands of businesses close. Millions of jobs could be lost. And a long and painful recession could follow.

In other words, this is not just a Wall Street crisis, it's an American crisis. And it's the American economy that needs this rescue plan.

I understand completely why people would be skeptical when this president asks for a blank check to solve this problem. I was, too, as was Senator Dodd and a whole bunch of us here. And that's why over a week ago I demanded that had this plan include some specific proposals to protect taxpayers -- protections that the administration eventually agreed to. And thanks to the hard work of Senator Dodd and Republican counterparts like Senator Gregg, we here in the Senate have agreed to it. And now, hopefully, the House will agree to it, as well.

Let me just go over those principles. Number one, I said we needed an independent board to provide oversight and accountability for how and where this money is spent at every step of the way.

Number two, I said that we cannot help banks on Wall Street without helping the millions of innocent homeowners who are struggling to stay in their homes. They deserve a plan, too.

Number three, I said that I would not allow this plan to become a welfare program for Wall Street executives whose greed and irresponsibility got us into this mess.

And finally, I said that if American taxpayers are financing this solution, then they have to be treated like investors. They should get every penny of their tax dollars back once the economy recovers.

Now this last part is important, because it's been the most misunderstood and poorly communicated part of this plan. This is not a plan to just hand over $700 billion of taxpayer money to a few banks.

If this is managed correctly -- and that's an important if -- we will hopefully get most or all of our money back, and possibly even turn a profit on the government's intervention -- every penny of which will go directly back to the American people.

And if we fall short, we will levy a fee on financial institutions so that they can repay for the losses that they caused.

Now let's acknowledge, even with all these taxpayer protections, this plan is not perfect. Democrats and Republicans in Congress have legitimate concerns about it. Some of my closest colleagues, people I have the greatest respect for, still have problems with it and may choose to vote against this bill. And I think that we can respectfully disagree. And I understand their frustrations.

I also know that many Americans share their concerns.

But it's clear that, from my perspective, this is what we need to do right now to prevent the possibility of a crisis turning into a catastrophe.

It is conceivable -- it's possible that if we did nothing, everything would turnout OK There's a possibility that that's true. And there's no doubt that there may be other plans out there that had we had two or three or six months to develop might be even more refined and might serve our purposes better. But we don't have the that kind of time. And we can't afford to take a risk that the economy of the United States of America, and, as a consequence, the worldwide economy, could be plunged into a very, very deep hole.

So to Democrats and Republicans who have opposed this plan, I say step up to the plate. Let's do what's right for the country at this time, because the time to act is now.

I know many Americans are wondering what happens next. And passing this bill can't be the end of our work to strengthen our economy. It must be the beginning. Because one thing I think all of us who may end up supporting this bill understand is that even if we get this in place, we could still have enormous problems and probably will have big problems in the economy over the next several months, and potentially longer. Because the fact is, is that we have seen some mismanagement of the fundamentals of the economy for a very long time. And we are not going to dig ourselves out of that hole immediately.

So this is not the end. This is the beginning. As soon as we pass this rescue plan, we need to move aggressively, with the same sense of urgency, to rescue families on Main Street who are struggling to pay their bills and keep their jobs. They've been in crisis a lot longer than Wall Street has.

I've said it before and I say it again -- we need to pass an economic stimulus package that will help ordinary Americans cope with rising food and gas prices, that can save one million jobs, rebuilding our schools and roads and our infrastructure and help states and cities avoid budget cuts and tax increase; a plan that would extend expiring unemployment benefits for those American who have lost their jobs and cannot find new ones.

That's the right thing to do at a time when consumer confidence is down and we are in great danger of slipping into a big recession.

We also must do more in this rescue package in order to help homeowners stay in their homes. I will continue to advocate bankruptcy reforms. I know my colleague from Illinois, Dick Durbin, has been a strong champion of this, as have many. It is the right thing to do, to change our bankruptcy laws so that people have a better chance of staying in their homes and we're not seeing communities devastated all across the country.

We should encourage Treasury to study the option of buying individual mortgages, like we did successfully in the 1930s.

And finally, while we all hope that this rescue package succeeds, we should be prepared to take more vigorous actions in the months ahead to rebuild capital if it's necessary.

And just as families are planning for their future in tough times, Washington is going to have to do the same. Runaway spending and record deficits are not how families run their budgets. It can't be how Washington handles people's tax dollars. So we're going to have to return to the fiscal responsibility we had in the 1990s. And the White House and the next Congress is going to have to work together to make sure that we go through our budget, we get rid of programs that don't work, that we make the ones that do work better and cost less.

With less money flowing into the Treasury, some useful programs or policies might need to be delayed and some might need to be stretched out over a longer period of time. But there are certain investments in our future that we cannot delay, precisely because our economy is in turmoil.

Mr. President, I've exceeded the time a little bit. I would like unanimous consent for a couple of more minutes.

UNIDENTIFIED MALE: Unanimous consent (INAUDIBLE).

UNIDENTIFIED MALE: Congressman, we'd like that.

(LAUGHTER)

UNIDENTIFIED MALE: Is there objection? I see no objection.

OBAMA: Thank you.

There are certain investments in our future that we can't delay precisely because the economy is in turmoil. We can't wait to help Americans keep up with rising costs and shrinking paychecks and we're going to do that by making sure that we are giving our workers a middle class tax cut.

We can't wait to relieve the burden of crushing health care costs.

We can't wait to create millions of new jobs by rebuilding our roads and our bridges and investing in broadband lines in rural communities and fixing our electricity grid so we can get renewable energy to population centers that need them.

We need to develop an energy policy that prevents us from sending $700 billion a year to tyrants and dictators for their oil.

We can't wait to educate the next generation of Americans with the skills and knowledge they need to compete with any workers anywhere in the world.

These are the priorities we cannot delay.

Now let me just close by saying this. I do not think this is going to be easy. It's not going to come without costs. We are all going to need to sacrifice. We're all going to need to pull our weight, because now, more than ever, we are all in this together. That's part of what this crisis has taught us.

But in the end of the day, there's no real separation between Wall Street and Main Street. There's only the road we're traveling on as Americans. And we will rise or fall on that journey as one nation and as one people.

I know that many Americans are feeling anxiety right now about their jobs, about their homes, about their life savings. But I also know this -- that we can steer ourselves out of this crisis, that we are always have.

During the great financial crisis of the last century, in his first fireside chat, FDR told his fellow Americans that: "There is an element in the readjustment of our financial system more important than currency, more important than gold, and that is the confidence of the people themselves." Confidence and courage are the essentials of success in carrying out our plan. Let us unite in banishing fear. Together we cannot fail. We cannot fail -- not now, not tomorrow, not next year.

This is a nation that's faced down war and depression, great challenges and great threats. And at each and every moment, we have risen to meet up these challenges -- not as Democrats, not as Republicans, but as Americans -- with resolve and within confidence, with that fundamental belief that here in America, our destiny is not written for us, it's written by us. That's who we are and that's the country I know we can be right now.

I want to thank, again, the extraordinary leadership of Chairman Dodd in the Banking Committee, as well as Chairman Baucus and Majority Leader Reid. They have worked tirelessly.

I want to thank the leadership in the House of Representatives. I urge my colleagues to join me in supporting this important legislation, understanding that this will not solve all our problems. It is a necessary but not sufficient step to make sure that this economy, once again, works on behalf of all Americans in their pursuit of the American dream.

Thank you, Mr. President. I yield the floor.

JOHN ROBERTS, CNN ANCHOR: That's Senator Barack Obama voicing his support for the economic bailout plan, which will go to a Senate vote shortly after sundown tonight.

He was saying that this is going to take some sacrifice, it's not going to solve all of the problems, but it's time to do what's right, imploring holdout Democrats and Republicans to sign onto this bill.

And he, like President Bush and others, insisting that over the long-term, this is not going to cost the taxpayers any money, that eventually the $700 billion will all be paid back.

And that is a point of contention for many, many people, who believe that what they're calling the biggest bailout in the history of this nation will, in fact, end up costing the taxpayers a lot of money.

We do know that Senator John McCain is in the District of Columbia, the nation's capital, right now, and will be making his way over later on, at least to vote. We do not know if he will be making a floor speech, as Senator Obama did but -- just now. But we will guarantee that if he does while we're on the air here at THE SITUATION ROOM, we will bring it to you live.

Also, interesting to note that for either Senator Obama or John McCain, depending on the results of the November 4th election, it could be the last time today that they ever make a speech from the floor of the Senate. The Senate is expected to go into recess shortly after this bailout bill is dealt with and very unlikely for a sitting president to address the Senate from the Senate floor. Of course, they do address senators, but that's typically in a joint session in Congress, which takes place in the House.

The senators will vote on the Wall Street bailout bill tonight. It's going to be the first time that they've voted in the Senate in a while, by the way. McCain's last roll call vote was April the 8th, to advance a foreclosure prevention bill that finally passed. McCain has missed 173 Senate votes this year.

Obama last voted on July the 9th to advance a Medicare bill to a final vote. It did finally pass. Obama has missed 137 Senate votes this year.

And Joe Biden's last vote vas July the 31st, to adjourn the Senate. Biden has missed 33 votes this year.

We should not for you, it is not unusual at all for a senator who is running for president or vice president to miss a lot of votes.

Meanwhile, one of the Democrats' biggest guns is campaigning for Senator Obama for the first time in one of the most critical battleground states -- Florida. And former President Bill Clinton is drawing huge crowds.

CNN's John Zarrella joins us live -- and, John, where is the former president campaigning?

JOHN ZARRELLA, CNN CORRESPONDENT: Well, John, he was first in Orlando and then he came down here to Fort Pierce, where I am, today. And, you know, this certainly is a huge day for the Obama campaign, getting Bill Clinton out there on the campaign trail for the first time on behalf Barack Obama.

And his first stop, Florida -- a key battleground state.

(BEGIN VIDEOTAPE)

ZARRELLA (voice-over): Former President Bill Clinton launched the Democratic Party's full court press to take Florida back from the Republicans. Speaking first in Orlando, Clinton said Barack Obama has the better answers for what ails the nation now.

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: He's got better answers -- better answers for the economy, for energy, for health care, for education. He knows what it will take to get this country back on track. Every president does his very best to keep the commitments made in the campaign. You need to know what they stand for. Obama's answers are better.

ZARRELLA: The crowd was so large the event had to be moved to a bigger arena on the University of Central Florida campus -- an indication of just how popular Clinton remains in a state he carried in 1996, but not in the 1992. The events here and in Fort Pierce were billed as rallies to get people to register to vote before the October 6th deadline up in Florida.

But the former president also urged the audience to support a financial bailout plan. CLINTON: I know that all across America, anything the Congress does this week is going to be unpopular. But here's why you ought to be for action. It has nothing to do with bailing out Wall Street. The Wall Street that we knew is gone. That is not the issue.

Here's the problem. When people lose confidence in the financial system, they lose confidence in all of it.

ZARRELLA: The latest polls show Senator Obama making strides in this battleground state. A new CNN/"Time"/Opinion Research poll gives Obama a 4 point lead.

The Republican Party will likely be counting heavily on Florida's popular Republican governor, Charlie Crist. Crist is credited, in large part, with delivering McCain the state during the primarily. The general election may be a tougher challenge.

(END VIDEOTAPE)

ZARRELLA: Now, when he first arrived on stage here, one of the very first things he said was that he came here to Fort Pierce because he loves his country A, and, B, because "Hillary sent me" -- a clear indication to Hillary Clinton's many supporters here in the state of Florida that he, in fact, wants them to get out now and support Barack Obama -- John.

ROBERTS: The state of Florida a huge prize in this election. John Zarrella for us.

ZARRELLA: Yes, indeed.

ROBERTS: John, thanks so much.

Florida is not the only battleground state that is seeing a shift in the polls. Our senior political analyst, Bill Schneider, is tracking numbers for us -- Bill, what else are you seeing?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well we're seeing movement outside the battleground states not so much.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): The campaign season is like the hurricane season -- Florida lies directly in its path. Hurricane Obama hit Florida.

OBAMA: You know, we will not just win Florida.

SCHNEIDER: And Hurricane McCain.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: We must and will win the State of Florida in the upcoming election.

SCHNEIDER: Tropical Storm Biden made landfall in Florida.

SEN. JOSEPH BIDEN (D-DE), VICE PRESIDENTIAL CANDIDATE: I'm happy to be back in Fort Myers.

SCHNEIDER: So did Tropical Storm Palin.

GOV. SARAH PALIN (R-AK), VICE PRESIDENTIAL CANDIDATE: Florida, let us take a second here...

SCHNEIDER: Even Hurricane Clinton made a return visit to Florida.

CLINTON: In Florida -- and I'm glad to be here.

SCHNEIDER: The impact?

Over the last two weeks, Barack Obama has been gaining support in Florida. Obama now leads McCain by four in Florida. Four years ago, Florida went for George W. Bush by five.

Minnesota has been reliably Democratic since 1972. Last month, the Republicans held their convention in Minnesota and the race tightened up. Now Obama has pulled 11 points ahead in Minnesota. John Kerry won Minnesota by three points last time.

Missouri -- early this month, Obama trailed McCain. Now it's tight. Bush took Missouri handily in 2004.

Nevada -- Obama leads by four. Nevada, too, was a Bush state in the 2004.

And Virginia -- whoa. Obama has seized a 9 point lead in a state that hasn't voted for a Democrat since 1964. Last time, Virginia gave Bush a 9 point lead.

Obama's gaining in all five battleground states. But the Democrat is not showing big gains in the national polls. Why not?

Because there's no national campaign. The ads and the rallies are mostly in the battleground states.

(END VIDEOTAPE)

SCHNEIDER: Because of the way the Electoral College works, the voters of California and Texas and New York are deprived. We already know how those states are likely to vote. Those fortunate voters in the battleground states have the action mostly to themselves. And they appear to be giving Obama some momentum -- John.

ROBERTS: Bill Schneider for us this afternoon in the show me state of Missouri -- a real bellwether in every election, not just this one.

Sarah Palin taking heat and her running mate, John McCain, is talking to CNN Espanol. We're going to hear how he is defending Palin against critics of her recent interviews.

Plus, the financial crisis taking a devastating new toll on one of America's most vulnerable industries. (COMMERCIAL BREAK)

ROBERTS: Governor Sarah Palin has taken heat for coming across in television interviews as ill-informed. But she is turning that to her advantage, hitting back at the mainstream media.

CNN's Brian Todd joins us now with more on this.

What's Palin's strategy here -- Brian?

BRIAN TODD, CNN CORRESPONDENT: Well, John, her campaign says it's something she's been doing all along. But there's clearly an effort now to hit home the message that Sarah Palin is the perfect foil for those Eastern media elites.

(BEGIN VIDEOTAPE)

TODD (voice-over): Back on her turf connecting with the GOP base on talk radio, Sarah Palin counters the fallout from her TV network interviews. Her message -- those elitist critics don't like me because I'm just like you.

(BEGIN AUDIO CLIP)

PALIN: It's time that normal Joe six-pack American is finally represented in the position of the vice presidency. And I think that that's kind of taken some people off guard. And they're out of sorts. And they're ticked off about it.

(END VIDEO CLIP)

TODD: Palin pounds the regular gal theme -- her 401(k) is taking a hit these days, she says, and...

PALIN: There's been a lot of times that Todd and I have had to figure out how we were going to pay for health insurance.

TODD: That puts her on the outs with the Washington elite, says Palin, who don't like the idea of a working class American running for high office.

SUSAN PAGE, "USA TODAY": So I think she's trying to take a liability and turn it back into an asset. She hasn't looked completely well versed on some policies. But, you know, if she doesn't know exactly what the Bush Doctrine is when she's asked about it, I think a lot of Americans would listen to that and say I can relate to that.

TODD: Her campaign says this is not a new tactic, that she's always connected with voters at their level. But during the radio interview, Palin was also set up to counterpunch the mainstream media.

(BEGIN AUDIO CLIP)

HUGH HEWITT, HOST: The Gibson and the Couric interviews struck many as sort of pop quizzes designed to embarrass you as opposed to interviews. Do you share that opinion?

PALIN: Well, you know, I have a degree in journalism, also. So it surprises me that so much has changed since I received my education in journalistic ethics all those years ago.

(END VIDEO CLIP)

TODD: Analysts say this is a tactic Republican campaigns have used successfully for years.

LARRY SABATO, UNIVERSITY OF VIRGINIA: If you're a Republican and you want to throw red meat to the base and get them excited and donating money and time, just attack the news media. It's a sure fire way to get the results you want.

(END VIDEOTAPE)

TODD: Still, Palin has gotten a barrage of criticism in the media over a period of only about a week-and-a-half. Her defenders say she had to counter it somehow.

But it's the way she's doing it that's interesting here. Analysts say this regular gal portrayal is one way the McCain campaign is targeting those Hillary Clinton supporters who have not all migrated to Obama yet -- specifically, blue collar folks who voted for Clinton in the primaries. That's also that Joe Six-Pack audience, as well -- John.

ROBERTS: All right. And how are her approval ratings with the base these days?

TODD: Well, our polls in September showed that between early and late September, her favorable ratings among people calling themselves conservatives, and, more broadly, Republicans, did go down slightly. Now that could be reflective of her performance in those network interviews, but it's also very relative. Eighty-eight percent of Republicans in our latest poll still had a favorable opinion of her. She is scoring big with their base.

ROBERTS: Well, that's good in anybody's books. Brian Todd for us this afternoon. Brian, thanks so much.

TODD: Thank you.

ROBERTS: And as she makes a pitch to conservative loyalists on talk radio, will Palin's grassroots Joe six-pack campaign pay off?

(BEGIN VIDEOTAPE)

ROBERTS: Joining me now in THE SITUATION ROOM is conservative talk show host Hugh Hewitt, who interviewed Governor Palin yesterday. Hugh, it's good to talk to you. Thanks for taking the time.

HEWITT: John, good to be here. Thank you for having me. ROBERTS: Hugh, you've probably seen conservatives like George Will, David Frum, Kathleen Parker have all said, after they have seen Governor Palin in these television interviews, they don't believe that she is ready for prime time. Kathleen Parker even went so far as to say that she should step down.

In your interview yesterday, what was your sense of her? Is she ready to take on the big job?

HEWITT: Oh, very, very ready. And I also think that that -- the trio you named, very respected, very thoughtful people all, nevertheless represent a distinctly minority view among center right voters. In fact, the reaction to the interview that Governor Palin gave me yesterday, across the conservative side of the spectrum, and, indeed, across Independent voters, has been overwhelmingly positive.

I think it resonated because after the Gibson and the Couric interviews, which were adversarial, as it is their right to be, this gave her an opportunity to really talk about what motivates her, her character. And, once again, the Palin enthusiasm flared up in places like "National Review," where you read the Parker interview originally.

And I think it's been played all over the conservative radio world today because they've been waiting to see Sarah Palin and they were glad to hear what she had to say yesterday on my program.

ROBERTS: Let me get back to what you just said about the Couric and the Gibson interviews. You said that they were adversarial, which was OK.

Were they adversarial or do you think that they were appropriately probing?

You know, you asked the question yesterday of Governor Palin, you said, "Now, Governor, the Gibson and the Couric interviews struck many as sort of pop quizzes designed to embarrass you."

HEWITT: Right.

ROBERTS: I mean they were asking about her record. They were asking about her policies. They were asking about her global view, trying to get an idea of how she would govern. Are those not appropriate questions?

HEWITT: Well, John, I think if you look at the whole interview, there's a lot that was appropriate, a lot that I applaud. And if I had had more time, I would have gotten to, as well.

But I think every interview and every question is really intended either to inform the audience or diminish the guest. There were some questions in both of those interviews that I thought were quite purposefully intended to diminish and to catch out Governor Palin.

ROBERTS: Anything that you can immediately cite as an example? HEWITT: Sure. I'll give you, for example, the Bush Doctrine. Now, if you ask me about the Bush Doctrine, my response, as a person who's been in broadcasting for 20 years, is to ask you to define your terms, because it could mean four or five different things. Or when Katie Couric, an extraordinary television personality, turns to her and says it's my understanding Rick Davis' firm is still receiving -- is still receiving money from Fannie Mae and that he's got an investment in it, well, that's a fact-specific claim that you could hardly expect anyone to know about on camera. Those are got you questions.

To me, the best kind of investment a journalist -- an old- fashioned journalist like me and like you can make is to ask the sort of question that allows the candidate to explain to the audience their past, their present positions and their hopes for the future...

ROBERTS: Well, wait, wasn't...

HEWITT: ...and to do so without trying to trick them. And I think a lot of people out there have lost a lot of trust. In fact, there's systemic distrust of old media because they perceive a deep bias, a deep partisanship in this cycle that is used against John McCain and Sarah Palin and has not yet taken the field on issues like Tony Rezko or Bill Ayers or any of those sort of things with Barack Obama.

So that playing field isn't level and there's a lot of hostility toward old media as a result.

ROBERTS: Was it fair game to ask her yesterday about what newspapers she reads, what magazines she reads, how she keeps herself informed?

HEWITT: Oh, sure. I think that's a fine question. And I thought her answer was fine, as well. Now, if you want to play that, I would ask you, John, have you had...

ROBERTS: But she was nonspecific.

Should she have been specific?

HEWITT: Well, no, because the question, you know, I don't think I can get inside of Sarah Palin's head or Barack Obama's head and tell them what they should do. I think it's kind of a got you question.

Now, if I were to ask, John, have you read "The Looming Tower," John, by chance?

ROBERTS: Oh, well, I mean what is the relevance of what I have read? We're talking about...

HEWITT: Well, because it's -- it's -- you're a member of the elite media. You're part of the Beltway-Manhattan media elite, as a lot of people involved in this process are. And I think they tend to ask questions out of their experience, but that the same questions asked back at them -- and people wonder what -- what's that all about. And the question is, you know, it's not a normal question to ask someone. It's a catch you out question.

Now, "The Looming Tower," I always ask people about, it's the most important book written about Al Qaeda in the last six years, a Pulitzer Prize, "New Yorker" author Lawrence Wright. And I think everyone should have read it.

And -- but if I asked that of Barack Obama and he hadn't read it, I think that would be unfair of me.

So I think what we're looking for, at least in the audience that I hear from everyday, is fairness -- fairness toward every candidate, questions that are hard-hitting, questions that are specific about Israel, about Iran, about the war we're involved in, but not the kind of stuff that is, I think, almost unmistakably designed to embarrass and diminish.

ROBERTS: So here's a question many people are asking. Why do they not put her out there more? Since she was nominated she's done three major network interviews, one sort of off the cuff gaggle with the traveling press at the ground zero and she's done a couple of radio interviews including yours. In the same period of time, Joe Biden has been out more than 90 times. He did the spin post debate Friday night after the Mississippi debate. Why are they not putting her out there more?

HEWITT: My guess is that the charge of the light brigade is in their mind. They know that there are literally 1,000 mainstream media reporters representing hard left points of view in the media outlets that are represented by the "New York Times" and the "Washington Post" and your network and the other big networks that are waiting to ambush her. As a result, they're going to try and gauge what the situation is out there. They did not rush off to conservative media. They did not rush off to new media. They simply said let's have time with the voters. Let's have some time with John McCain to get up to speed on some crucial issues.

And Joe Biden he can go out and do 90 different interviews, John, because no matter what he says, you guys don't care. The other day he stood up and said FDR addressed the country on television at the time of the great panic of 1929. Well he wasn't the president. There wasn't television and yet Joe Biden doesn't pay any kind of price. Can you imagine if Sarah Palin had said FDR addressed the nation on the day of the great crash on television?

ROBERTS: In fairness, Hugh, we actually did do a piece on Joe Biden's gaffes just the other day.

HEWITT: On Joe Biden's gaffes but on that one.

ROBERTS: Yes, we did.

HEWITT: Can you imagine what would have happened to Sarah Palin?

ROBERTS: We did mention that one.

HEWITT: Again John, it's not about mentioned. It's about the emphasis and repetition. If Sarah Palin had said that FDR spoke on television as president in 1929, do you doubt for a moment honestly that it would have led every newspaper in America and would have dominated every media broadcast for three days?

(END VIDEOTAPE)

ROBERTS: The question from - a provocative question there from conservative radio talk show host Hugh Hewitt earlier today.

You're in THE SITUATION ROOM.

And happening now, Barack Obama and John McCain are set to vote tonight on the resurrected bailout plan. We'll bring you both of them in their own words speaking out on the financial crisis with only 34 days left and until the election.

The vice presidential debate is tomorrow and some analysts are billing it as a battle of the sexes. That may affect how Joe Biden and Sarah Palin will handle themselves during the showdown.

And the financial crisis putting a squeeze on the auto industry. New figures from major auto makers show that sales are plunging.

Wolf Blitzer is off today. I'm John Roberts. You're in THE SITUATION ROOM.

There's new evidence out this afternoon that the financial crisis is taking a devastating toll on one of the country's most vulnerable industries, automobile manufacturing.

CNN's Mary Snow joins us live now and some grim numbers out today for Michigan.

MARY SNOW, CNN CORRESPONDENT: They really were, John. All the major auto makers posting sharp declines last month. They've been hit with a one-two punch, high gas prices and now the credit squeeze. And it's having widespread ripple effects.

(BEGIN VIDEOTAPE)

SNOW: Robert Crisafi didn't need to see the latest auto sales numbers to know the picture is grim. A dramatic drop in used car sales has put his 25-year-old business in jeopardy.

ROBERT CRISAFI, AUTO DEALER: Nobody's buying cars. Finance companies aren't financing. And people can't get loans.

SNOW: From car dealers to carmakers, the credit crunch is dealing a devastating blow. Citing very tight credit conditions, Ford says sales plunged 35 percent in September. Chrysler dropped 33 percent and GM 16 percent. Japanese auto maker Toyota had its worst monthly drop in 21 years. Tightening credit say analysts took a bigger toll than expected.

TOM LIBBY, J.D. POWER AND ASSOCIATES: Six of every ten new vehicles are purchased with a loan and that portion of the market is now being pulled back. You're seeing major declines and frankly, credit has to be loosened for the industry to come back.

SNOW: And it's an industry that was already struggling. High gas prices caused consumers to pull back earlier this year and that dented sales. On Tuesday, the president signed a $25 billion loan package for troubled automakers but the worst may not be over.

CHRIS ISIDORE, SENIOR WRITER, CNNMONEY.COM: The traffic at the last ten days of September was far worse than the first ten days of September. It seems to be an accelerating problem for them.

SNOW: While the industry faces potential plant closings job cuts, car dealers are being squeezed. Carmax, the nation's largest used car retailer, announced 600 layoffs.

(END VIDEOTAPE)

SNOW: And an economist with the National Automobile Dealers Association says there's more to come and says there may be as many as 400 fewer auto dealerships in the U.S. by the end of this year on top of those already closed.

ROBERTS: In a state like Michigan which is an important political prize, this is going to race the stakes even higher.

SNOW: Absolutely because you know these executives at the auto firms said they do not know where the bottom is.

ROBERTS: Does anybody know where the bottom is with the economy these days? Mary Snow, thanks so much for that.

A train crash that killed 25 people now part of the investigation is in. The latest about one of the men at the throttle and what he was doing just 20 seconds before the trains collided.

And countdown to the vice presidential debate. Should it be gloves off or kid gloves? How the battle of the sexes may impact the debate.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

ROBERTS: Out on the campaign trail Joe Biden is known for taking off the gloves but in tomorrow's debate, should he treat Sarah Palin with kid gloves? That's just one of the strategic considerations when a political somehow down is also a political risky battle of the sexes. Our Fredricka Whitfield has been looking into this. What are you finding out, Fred?

FREDRICKA WHITFIELD, CNN CORRESPONDENT: This is a delicate dance. Why does it seem so much more is at stake when a male and female candidate compete in a political debate? We've seen it before, Geraldine Ferraro versus George Bush 41 and Barack Obama up against Hillary Clinton. What Sarah Palin and Joe Biden should know before tomorrow's highly anticipated debate.

(BEGIN VIDEOTAPE)

WHITFIELD (voice-over): Perhaps more so than any other political debate in modern history, their words, their actions under scrutiny.

DANA MILBANK, CNN POLITICAL CONTRIBUTOR: This debate throws everything out the window.

WHITFIELD: First term Alaska Governor Sarah Palin going toe to toe with 35-year veteran Senator Joe Biden. The disparity in experience and the difference in gender feeding the anticipation.

MILBANK: It's sort of the most public IQ test ever given in the history of the world because everybody's wondering about Sarah Palin and everybody's wondering if Joe bide is going to make some horrible gaffe as he is prone to do.

WHITFIELD: Take a look at the history of man against woman on this stage, sparks fly. Remember this moment 24 years ago between Geraldine Ferraro and George H. Bush?

(BEGIN VIDEO CLIP)

GERALDINE FERRARO (D), FORMER VICE PRESIDENTIAL CANDIDATE: I almost resent Vice President Bush your patronizing attitude that you have to teach me about foreign policy.

(END VIDEO CLIP)

DEBORAH TANNEN, GEORGETOWN UNIVERSITY: She is speaking directly to him which is something a little bit different than we've been seeing.

WHITFIELD: Linguist tickets professor Dr. Deborah Tannen says Biden and Palin can learn a lot from past face-offs. There was this in a New York senatorial debate.

UNIDENTIFIED MALE: I think everybody wants to see you signing something that you said you were for.

TANNEN: I don't think anyone's going to do that again anytime soon. Anytime you have a man and a woman in close physical proximity, there was an unspoken awareness he could physically attack her.

WHITFIELD: And when it was Hillary Clinton and Barack Obama earlier this year, delicate make or break moments.

UNIDENTIFIED MALE: Where they seem to like Barack Obama more.

SEN. HILLARY CLINTON (D), NEW YORK: Well, that hurts my feelings.

UNIDENTIFIED MALE: I'm sorry, senator. I'm sorry.

OBAMA: You're likable enough, Hillary, no doubt about it.

CLINTON: Thank you. TANNEN: She was able to turn it around in a way that she used her gender in a positive way.

WHITFIELD: If that's a strategy, do you see Sarah Palin looking for that kind of opportunity to do that?

TANNEN: I do.

(END VIDEOTAPE)

WHITFIELD (on camera): Dr. Tannen says Biden runs a risk of seeming to talk down to Palin and Palin, the professor says could be in danger of, and these are her words, seeming too weak. For both candidates, it will be like walking on eggshells. Both know what they say and what they do will be evaluated. Watch very closely by likely the largest vice presidential televised debate audience in history, John.

ROBERTS: It's interesting. This one is nothing less than extraordinary. Fredricka Whitfield, thank you very much.

Can Sarah Palin score a victory tomorrow night without actually winning the debate? Joining me to talk more about this CNN contributor and Republican strategist Ed Rollins and Democratic strategist Julie Menin. She's former chair of a group encouraging women to run for public office. This is your first time here in THE SITUATION ROOM. We welcome you.

JULIET MENIN, DEMOCRATIC STRATEGIST: Thank you for having me.

ROBERTS: Katie Couric has been talking to Governor Palin an awful lot in the past few days. She did ask her about debate preparations. Listen to what she said.

(BEGIN VIDEO CLIP)

KATIE COURIC, REPORTER: What is your coach advising you?

PALIN: I don't have a debate coach.

COURIC: What are your coaches?

PALIN: I have quite a few people who are giving us information about the record of Obama and Biden. And at the end of the day though, it is -- it's so clear again what those choices are. Either new ideas, new energy and reform of Washington, D.C. or more of the same.

(END VIDEO CLIP)

ROBERTS: Ed Rollins, she obviously had been coached and has done gubernatorial debates in the past. Apparently did quite well. Her first time on the national stage. This one so important. If you were coaching her, what would you be coaching her on?

ED ROLLINS, REPUBLICAN STRATEGIST: First of all, her personality is very important. She's got a big personality. She has to get that out and be in charge. Act like she is not the subservient position on the stage, she deserves to be there and has a lot of knowledge and needs to project all nap I think the key thing is to keep it light but basically be very substantive and project her strength.

ROBERTS: Julie Menin, Senator Biden obviously is a larger than life personality, as well. We've seen it in the Senate for 36 years or so. What does he need to do in Thursday night's debate? I understand he's been talking with Senator Hillary Clinton and Barbara Boxer how to approach debating a woman?

MENIN: I think he just needs to focus on the issues. The fact of the matter is what we've seen from Sarah Palin is someone who's fundamentally disinterested in the largest issues that this society faces, not able to name what newspaper she reads or a supreme court case.

ROBERTS: Can we say that she wasn't able to name them or chose not to?

MENIN: Declining to name them basically says a fundamental lack of interest in large issues. I think Biden can win if he focuses on his experience, his experience in Washington. His years on the judiciary committee, his years on the Senate foreign releases committee is what he needs to focus on.

ROBERTS: What about that, Ed? What about the point Julie just made about not naming the publications you read? Is that relevant?

ROLLINS: No, it's not. She could say I read Time, News Week and the Alaskan newspapers. That's not the issue. The issue is can she do the job as vice president and president. That's what she has to project. She has to project that strength. Talking about all the things I did in the Senate are basically just to remind people you've been a part of the problem for a very long period of time. She's not. She can come with a whole new concept and projecting that, but she's going to be an agent of change or part after administration of change.

MENIN: I have a fundamental disagreement with that because not being able to talk about the current issues of the day, you know, like last year when she mentioned she couldn't talk about the Iraq war because she hadn't focused on it, that is troubling to me. We want in a vice president the best and brightest of our generation. Is that the best and brightest when we have candidates who had McCain could have picked like Condoleezza Rice or Kay Bailey Hutchison, these women rely absolutely qualified.

ROLLINS: She hasn't had a real test yet. The bottom line is two interviews by national correspondents is not the test. The test will be the 50, 60 million Americans that get to watch her tomorrow night. At the end of that, if they think she's substantive enough?

ROBERTS: For each individual campaign, it's all a game of lowering expectations for your candidate and raising expectations for the other candidate. Have the expectations for Governor Palin been lowered to the point she could easily win by just delivering him a twist?

ROLLINS: She will outperform any expectations. My sense is a lot of things she can talk about that he doesn't know much about. Governors have to make daily decisions and governors have to do budgets and governors have to do lots of things. I think you're making judgments on a lack of information and tomorrow night we'll have lots of information.

MENIN: I do think as governor of a state that only has one town of 100,000 people and two towns over 10,000 people, it is not the kind of experience we need as vice president. I think this debate will be interesting because it's going to show the stark differences between the two candidates and there will a choice.

ROLLINS: State of Delaware does not have a city of.

MENIN: But he has years in the Senate dealing with foreign policy.

ROLLINS: I do not want to cross your space. You're a very good debater. At the end of the day. I'm old enough, I'm a grandfatherly figure. I think the bottom line is she is an unknown and she will become very widely known tomorrow and she can rise or fail based on her own performance. That's a good place to be.

ROBERTS: Senator Obama does not want to have a Rick Lazio moment where Lazio crossed the stage and loomed over Senator Clinton. But he also doesn't want to have a Bush 1984 moment.

ROLLINS: No, he does not. And Joe Biden does not want to be condescending. Biden has a tendency to get overly an aggressive.

ROBERTS: Julie, can he help himself here?

MENIN: I think Biden will do just fine. I don't think he'll have any major gaffes. He'll focus on the substance, which is what he's best at and let her deal with the lack of substance. I mean even when she speaks, the gaps in her words and the way that she comes across is not the gravitas we need in a vice president.

ROBERTS: She said she's Joe six pack America and that's what middle of this country wants. Let me ask you a quick question, Ed. You've seen the latest polls favoring Barack Obama extending his lead in many posh states, turning them around in some states, as well you engineered that famous 49-state victory for Reagan in 1984. What would you advice Senator McCain to do right now?

ROLLINS: He has to take charge of his campaign. He's had a bad couple weeks and the momentum is going against him. People are starting to vote in these states. It's very, very critical that in the next two weeks, he takes charge of his campaign and moves it forward.

ROBERTS: Ed Rollins, thanks very much. Julie Menin, thanks. I have a sense she'll be back here.

MENIN: Thank you so much.

ROBERTS: As always, Ed.

ROLLINS: She's a great talent.

ROBERTS: Thank you, Ed.

Stay with CNN for complete coverage of the vice presidential debate in St. Louis tomorrow. Our coverage begins right here in THE SITUATION ROOM heading into the debate at 9:00 p.m. eastern.

Sarah Palin under pressure. Critics say she is just not ready.

UNIDENTIFIED MALE: How important will tomorrow's debate be and what do you respond to those asking for her to resign?

ROBERTS: You will hear Senator John McCain's answer and more in a CNN Espanol interview.

Plus, an engineer and exactly what he was doing just 20 seconds before his train collided with another last month. 25 people died in that crash.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

ROBERTS: Fredricka Whitfield is monitoring stories coming into THE SITUATION ROOM right now. What have you got, Fred?

WHITFIELD: All right. Well, there's new evidence that text messaging may have contributed to last month's deadly train collision in Chatsworth, California when 24 people were killed between a Metrolink commuter train and a Union Pacific freight train. The National Transportation Safety Board released information about the Metrolink train engineer's cell phone records. They show that he sent a text message 22 seconds before that crash. He was among those killed. Metrolink does not allow the train operators to use such devices while on duty.

The slowing economy and the credit crunch are likely take a greater toll on the employment situation. 605,000 jobs in the U.S. have been lost this year. September's employment report will be released Friday. Analysts on average expect that the report will reveal that 105,000 jobs were lost last month alone. That would be the biggest monthly loss in five years.

And news around the world, a big show of military force in South Korea today in an armed forces event taking place there. South Korea's president called for strong defense posture amid tensions over North Korea's nuclear ambitions and he is concerned about the decision to stop disabling the processing plant and to take steps to try to restore it. U.S. envoy Chris Hill is the in Pyongyang. Today he is hoping to report on the disarmament deal that was struck last year.

And this final story, California is now the first state to enact a law that is requiring restaurant chains to list calories. Starting next July, chains with 20 restaurants in the state can either list calorie counts on menus or menu boards or they can provide brochures disclosing calories or more nutritional information. So starting in 2011 calorie counts will have to be listed on menus and indoor menu boards and drive through customers have to be offered brochures. So it is getting more complicated just to get a male.

ROBERTS: It does but you know more and more I find myself wanting to know how many calories.

WHITFIELD: And we are always counting calories.

ROBERTS: And then I go ahead and eat it anyway. Fred, thank you so much.

Well, we heard Senator Barack Obama. John McCain today speaking out on the bailout and his much-criticized opponent. Juan Carlos Lopez of CNN Espanol interviewed the Republican nominee. Here's part of it.

(BEGIN VIDEOTAPE)

JUAN CARLOS LOPEZ, CNN ESPANOL: I want to start asking you about the bailout and the economic recovery package and you are going back to Washington. Will you vote for the package? What do you tell people who still believe it is not necessary that yesterday's market rebound shows that it is not and that they still feel strong opposition to it.

MCCAIN: Well, I hope they understand that we are in the worst financial crisis of our lives, and it is affecting Main Street, people's ability for small businesses to obtain lines of credit for people who want to buy a car to get a loan and it is affecting them dramatically. The cause is Wall Street and Washington's excess greed and cronyism, and the fact is that we have to do it for average and working families. I am confident that we will pass it tonight. I believe we will pass it through the House.

I suspended my campaign to come back to make it better, and I am proud of the work that I have done and I got -- and I was helpful in getting the House Republicans in negotiations and I think that we got a package is going to pass and going to be signed by the president.

LOPEZ: There has been concern in recent days even in your party on a Governor Palin's performance in recent interviews. How important will tomorrow's debate be and what do you respond to those who are asking for her to resign?

MCCAIN: I haven't heard anybody asking her to resign and I have seen enthusiasm all over America for Republican, from Republicans and independents and Democrats that the enthusiasm is incredible. In Florida, she had a 20,000 people who came out to a rally on her behalf. So if there's some people who have been attacking her, fine. But it is not working with the American people. She is more popular than ever.

(END VIDEOTAPE) ROBERTS: Two days now until the first vice presidential debate, but some right wing bloggers have questions about the moderator and a book she is writing. We will fact check it for you.

(COMMERCIAL BREAK)

ROBERTS: On this October 1st, speculation about whether the month will bring a political surprise to affect the presidential race. Back in 1980 the phrase October surprise was coined amid allegations that President Jimmy Carter was planning an invasion to free the hostages in Iran to help the troubled re-election bid. The hostages were not freed until they day that Ronald Reagan inaugurated. Fast forward to 2000, just days before voters chose between George W. Bush and Al Gore, a main television station dug up records showing Bush had been arrested for drunken driving in 1986. And in October of 2004, a new Osama Bin Laden tape was released shortly before the Bush/Kerry presidential election.