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ANDERSON COOPER 360 DEGREES

Stimulus Package Negotiations Under Way; Wall Street Unhappy

Aired February 10, 2009 - 22:00   ET

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


ANDERSON COOPER, CNN ANCHOR: Tonight, breaking news on Capitol Hill: House, Senate and White House negotiators meeting right now in the Capitol Building late at night behind closed doors, trying to craft a massive final stimulus plan to jump-start the economy, a plan they hope pass will both the House and the Senate as early as this Friday.

It has been a long day for the Obama administration. Earlier, the president was on the road, meeting with people, coming face to face with the raw emotion of the recession.

Wall Street, meantime, giving a massive thumb's-down to the plan the Treasury Department unveiled today to bail out the banks, the Dow industrials shedding 381 points. Also, new layoffs at GM, even Wal- Mart cutting jobs -- a lot to cover tonight, nearly $2 trillion in play, and just possibly your family and this country's future.

We're covering all the angles, starting with the talks right now on Capitol Hill.

Dana Bash is there.

Dana, what is happening?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, Anderson, as we speak, the White House chief of staff and the president's budget director are inside House Speaker Nancy Pelosi's office.

And, in fact, they have been here coming up on eight hours straight -- eight hours straight -- shuttling between the House speaker's office and Senate Majority Leader Harry Reid's office, trying to urgently broker a compromise between House Democrats and Senate Democrats in order to get the president's stimulus package to -- to his desk by this week.

And I just spoke to a Democratic source who says that, in these talks, they are narrowing their differences.

(BEGIN VIDEOTAPE)

BASH (voice-over): House Democrats are not happy that Senate Democrats cut some $100 billion in spending from their stimulus package, tens of billions slashed from Democratic priorities, like education.

But House Speaker Nancy Pelosi is now signaling, they will likely have to live with it.

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: As President Obama cautioned the nation, that we cannot allow the perfect to be the enemy of the effective and of the necessary. And we will not.

BASH: Pelosi may not have a choice, because, in the Senate, centrists the president needs to pass his stimulus package tell CNN that putting back money for programs they don't think stimulate the economy is non-negotiable.

SEN. BEN NELSON (D), NEBRASKA: This is a place where you never say never, but this is probably as close as you get.

UNIDENTIFIED FEMALE: Arlen Specter's office. Can you hold, please?

BASH: Republican Arlen Specter's experience tells you why he and other centrists are taking such a hard line against adding to the price tag.

SEN. ARLEN SPECTER (R-PA), JUDICIARY COMMITTEE RANKING MEMBER: Well, the phones were overwhelming.

BASH (on camera): Overwhelming against...

(CROSSTALK)

SPECTER: And I was -- it's a very unpopular vote.

(CROSSTALK)

BASH (voice-over): Specter is up for reelection and is getting pummeled for supporting the 800-plus-billion-dollar stimulus bill. Conservative groups are vowing to spend millions to help any Republican who will run against him.

In fact, Republican Pat Toomey, who almost beat Specter in a GOP primary last time, tells us that top Republican officials want him to challenge Specter again.

REP. PAT TOOMEY (R), PENNSYLVANIA: I think Republicans are pretty we well united in understanding that we can't tax and spend or borrow and spend our way out of this recession. So, there's a high level of frustration.

(on camera): How concerned are you that this could be the thing that costs you your seat?

SPECTER: Well, I am very concerned about it. I had a tough 1 percent primary last time. And I know the political peril. And in light of the very severe need to take action to avoid a depression, I thought my duty required that I do just what I did.

(END VIDEOTAPE)

BASH: Now, Specter is one of only three Senate Republicans who have crossed party lines to support the Senate stimulus bill. And that's why they hold a lot of power in these negotiations that, again, are going on as we speak, at this late hour, here on Capitol Hill.

And, Anderson, let me just give you one quick example of the negotiations going on. I spoke to a couple of Democratic sources, who say that -- that they are likely to take out, or at least scale back, tax credits for homebuyers that passed in the Senate in order to make room for some of the House Democrats' priorities.

That is just one of the many, many things that they are talking about behind these closed doors.

COOPER: It would be fascinating to be a fly on the wall right now.

(LAUGHTER)

BASH: It sure would.

COOPER: Probably a lot of bare-knuckle politics going on.

Dana, we will check in with you throughout this hour.

President Obama is back in Washington, after another day selling his stimulus package directly to Americans, yesterday, Elkhart, Indiana, home to massive unemployment, tonight, Fort Myers, Florida, foreclosure capital of the country.

Candy Crowley has the "Raw Politics."

(BEGIN VIDEOTAPE)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The Senate just passed our recovery and reinvestment plan.

(CHEERING AND APPLAUSE)

B. OBAMA: That's good.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT (voice-over): As the Senate passed its $838 billion stimulus package and Treasury Secretary Timothy Geithner unveiled what may be a trillion-dollar-plus effort to stabilize the banking industry...

TIMOTHY GEITHNER, U.S. TREASURY SECRETARY: This strategy will cost money. It will involve risk. And it will take time.

CROWLEY: ... President Obama was in Fort Myers, putting faces on those unimaginable numbers -- an unemployed homeless secretary.

HENRIETTA HUGHES, RESIDENT OF FLORIDA: we need something more than the vehicle and the parks to go to. We need our own kitchen and our own bathroom. And please help.

CROWLEY: A former worker now on unemployment.

UNIDENTIFIED MALE: If you go from making $3,000 a year -- month to $1,100 a month, how are you able to take care of your family?

CROWLEY: The stimulus bill likely to be signed into law offers only marginal immediate help for those in the worst of circumstances, $25 more a week for unemployment, an increase in food stamps, a $500 tax rebate. All can be accomplished fairly quickly, within months.

But building bridges and roads and clean-water facilities takes time. Some of those projects may take up to two years to produce jobs. And, so, the president, whose political capital is his public support, uses these town hall meetings not just to tell Congress they are running out of time.

B. OBAMA: If we don't act immediately, then millions more jobs will disappear.

CROWLEY: He is also playing for time.

B. OBAMA: Even with this plan, our economy will likely be measured in years, not weeks or months.

CROWLEY: Administration officials say it may take a year before the country feels the effects of the stimulus bill, so the president needs a longer honeymoon than most, fully understanding the reality of political marriage.

B. OBAMA: If stuff hasn't worked, and people don't feel like I have led the country in the right direction, then you will have a new president.

CROWLEY: But he is ahead of himself. With a 76 percent approval rating, the bloom is still on the rose.

UNIDENTIFIED MALE: Oh, this is such a blessing to see you, Mr. President. Thank you for taking time out of your day!

(CHEERING AND APPLAUSE)

CROWLEY: Even as he balances the urgency for action against the need for patience, the president is also trying to find the sweet spot between not scaring people and white-hot warnings that things could get worse before they get better.

B. OBAMA: We have inherited an economic crisis as deep and as dire as any since the Great Depression.

CROWLEY: Honest, perhaps, but not a confidence-builder. Things will not get better until Americans believe they will. Two-thirds of the U.S. economy is consumer spending. And consumers don't spend when they're worried about the future.

Candy Crowley, CNN, Washington.

(END VIDEOTAPE)

COOPER: It should be pointed out, we're seeing something this president do that we haven't seen the last president do over the last eight years, which is meet with large groups of people who have not been pre-screened, pre-selected to ask questions.

So, there's a certain impromptu nature to a lot of these questions and the responses. I want to show you -- you saw a little bit in Candy's report, but a dramatic moment that occurred today with that -- that woman who asked the president a question. I want to show you the full exchange between the two. Take a look.

(BEGIN VIDEO CLIP)

HUGHES: I first want to say I respect you, and I'm so grateful for you.

B. OBAMA: Thank you.

HUGHES: I have been praying for you.

B. OBAMA: I believe in prayer, so I appreciate that.

HUGHES: I have an urgent need, unemployment and homelessness, a very small vehicle for my family and I to live in. We need urgent. And the housing authority has two years' waiting lists, and we need something more than the vehicle and the parks to go to. We need our own kitchen and our own bathroom. Please help.

B. OBAMA: Well, I -- listen. What's your name? What's your name?

HUGHES: It's Henrietta Hughes.

B. OBAMA: OK, Ms. Hughes, well, we're going to do everything we can to help you, but there are a lot of people like you. And we're going to do everything we can, all right? But the -- I will have my staff talk to you after this -- after the town hall, all right?

(END VIDEO CLIP)

COOPER: President Obama selling his stimulus plan today.

David Gergen and our panel will join us shortly to talk about today's developments. You can join the live chat happening now at AC360.com and check out Randi Kaye's live Webcast during the break.

Up next, though, the other sales job today: Treasury Secretary Timothy Geithner pitching part two of the bank bailout, $350 billion now, possibly more than a trillion dollars to come. The market did not like it, as we mentioned. Some experts aren't crazy about it either. We will break it down, so you can decide for yourself.

And, alter, mass murder in Australia, that's what the prime minister is calming the fires that have destroyed communities. Death toll is rising -- some remarkable survivor stories ahead to tell you about.

And the more you hear about the mother of octuplets, the worse it gets -- a look at how her first six kids are living now. And we will show you what fertility clinic helped her have eight more kids. (COMMERCIAL BREAK)

COOPER: Our breaking news: negotiations under way right now at Capitol Hill tonight, important meetings, House, Senate and White House players meeting behind closed doors, trying to harmonize two stimulus bills, each topping $800 billion, but differing extensively on where the money goes.

The other part of the administration's plan to save the economy was unveiled today: Treasury Secretary Timothy Geithner laying out the new bank bailout plan. It did not go as well as anyone had hoped.

Tom Foreman is going to break it down for us -- Tom.

TOM FOREMAN, CNN CORRESPONDENT: Thanks, Anderson.

It seemed like it broke down on its own accord, to a degree. The key problem that has confounded all efforts to fix the economy is that credit has remained tight. If you are an individual or a business, getting a loan is still very tough, because no bank wants to get stuck if you can't repay it.

So, Treasury Secretary Geithner has a four-part plan to beat that problem down. And he unveiled it today. It starts off with this idea of going to the very biggest banks, those with more than 100 billion in assets, a stress test for them. He wants to talk over their books, know that they will not fold if the recession deepens, and that they are solid enough to justify more government investment in them, if it comes to that.

In short, this is about building cornerstones. He wants to see which players he can depend on, as the recovery plan goes forward.

Part two, he wants a combination public-private fund to deal with all those bad home loans, which are still poisoning the recovery. Banks are afraid, if they have too many much these bad loans in their portfolio, it could wipe them out. So, Geithner wants to establish a market for buying and selling all these bad loans, essentially guaranteeing some kind of value for them.

Part three, Geithner, working with the Federal Reserve, wants a trillion-dollar initiative, a lending program, to pump money out there for small businesses, student loans, consumer loans, auto loans, you name it. Big stuff, he says? You bet.

(BEGIN VIDEO CLIP)

TIMOTHY GEITHNER, U.S. TREASURY SECRETARY: The path our country has pursued to date was too limited in support. It came late, came with too little broad trust and confidence and too little direct support to the businesses and consumers and households that are most affected by the crisis, people who were careful and responsible in their actions, but were damaged by the judgments of those who did not.

(END VIDEO CLIP) FOREMAN: And the fourth part of Geithner's plan, he wants to launch a comprehensive housing program to stop prices from falling, make mortgages as affordable as possible, and protect the single largest investment families will ever make.

How will he do it? Well, he says those details are going to come in a few weeks. We will just have to see how it works out -- Anderson.

COOPER: Yes, we will be watching closely.

Tom, thanks very much for that.

Want to talk to Ali Velshi now, want to talk more about how the markets reacted to what Secretary Geithner announced today, a lot of pundits calling it a vote of no confidence. But, one, Steven Pearlstein of "The Washington Post," went ballistic this afternoon, saying, we owe Wall Street nothing until the fat cats -- and I quote -- "say, I'm sorry, say, thank you, and tell us what their plan is."

He went on to say that nothing would satisfy Wall Street at this point. So, where does that leave all of us, our money and our future?

Ali Velshi joins from now us Chicago.

Ali, a lot of people saying the markets went down because there weren't enough specifics announced by Geithner. Is that true?

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Yes, that's exactly what it was.

You and I talked about this last night on TV, Anderson. You asked me, what's going to happen tomorrow? And I said, you know, they delayed this announcement about the second half of TARP, how they're going to spend the -- the second $350 billion -- look at that -- of the bailout to help banks. And they were holding it off, so it didn't conflict with the stimulus.

President Obama last night, in his speech, said, "I don't want to steal Tim Geithner's thunder."

Well, all of a sudden, Tim Geithner makes a speech today, and there is no thunder. As one of my colleagues at CNN said, we were expecting a blueprint, and we got a sketch on a napkin.

That was upsetting to markets. That was upsetting to investors. I wouldn't read too much into it although, Anderson, because, ultimately, investors ran away from the market because they didn't see a plan, which means, when there is a plan, when the president and Tim Geithner get together and say exactly what they're going to do, it will probably bring investors back in, but quite a big drop in the market, took us down to levels we haven't seen since November, since the low of the market.

Again, there was a reason for it. It was an expectation that was created that wasn't met. I think today was a major P.R. flub on Tim Geithner's part. It reminded people back of September and October, when you used to hear Henry Paulson speaking and President Bush speaking and Ben Bernanke speaking, and then the market would sell off.

I don't think it's all too serious, but they do need a plan, because we were expecting one.

COOPER: Yes.

We're going to have more coming with Ali and our panel coming up.

Ali, stay with us.

Want to look at the fine print and the missing details that are making TARP II, as they're calling, just as potentially toxic as the original.

Also, this -- take a look.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Everyone's lost everything. There's our house, baby, gone. Everything's gone.

(END VIDEO CLIP)

COOPER: "Everything is gone."

Heartache, heart-stopping tales of survival on the fire lines in Australia -- plus, the latest on the search for culprits.

Also, arrests in the Michael Phelps bong hit -- that's right, arrests -- eight of them, reportedly, including the alleged owner of said bong. Are police going way too far because of the media coverage? You can be the judge -- ahead.

And, later, the growing octuplet outrage -- troubling new details about the mom and her doctor. Why did he help her if she already knew she had six kids she couldn't even care for?

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. RICHARD SHELBY (R), ALABAMA: Is this plan, conceptually, a 180-degree turn from the Paulson plan? Or is it kind of the son of Paulson?

GEITHNER: Senator, this plan is fundamentally different in broad objectives and direction.

(END VIDEO CLIP)

COOPER: Treasury Secretary Timothy Geithner telling Richard Shelby his new plan to fix the banking crisis is not just more of the same, that it's better than the one designed last fall by his predecessor, Henry Paulson.

Wall Street doesn't seem convinced yet. While Geithner was getting grilled, as we talked about earlier, the Dow plunged 382 points.

So, why the cold reception? Well, as Ali talked about, almost everyone, including Geithner himself, agrees the bailout plan he unveiled today is very short on specifics.

Joe Johns tonight is "Keeping Them Honest."

(BEGIN VIDEOTAPE)

JOE JOHNS, CNN SENIOR CORRESPONDENT (voice-over): Giving Geithner his due, there is almost nothing this guy could say that would make Wall Street's problems go away overnight. So, he came up with a big idea.

STEVE BARTLETT, PRESIDENT AND CEO, FINANCIAL SERVICES ROUNDTABLE: He's only been secretary of secretary for two weeks. It's a deep hole. He came up with what is actually a pretty robust plan that's comprehensive. It's -- it's huge.

JOHNS: "Keeping Them Honest," Geithner has been running the Federal Reserve in New York and dealing with this problem on the front lines. So, a lot of people, including many on the Street, expected a real blueprint of how to clean up our toxic assets.

But, instead of laying down specifics, Geithner laid out a work in progress.

GEITHNER: One of the reasons why we laid this out in general terms today is because this is enormously complicated to get right. And we're going to try to get it right before we lay out the details.

JOHNS: But the detail is the thing, according to bank bailout expert Doug Elliott of the Brookings Institution. He says Geithner left too much uncertainty, especially on toxic assets.

DOUG ELLIOTT, ECONOMIC STUDIES FELLOW, BROOKINGS INSTITUTION: We don't really know what it is. And there are a lot of ways that it could be designed badly.

JOHNS: Elliott says the biggest question mark is finding a way to put price tags on the bad assets. Banks don't want to sell them for too cheap, and investors don't want to pay more than they're worth.

Geithner wants to combine government money with private money, and let the market decide the right price. But that doesn't necessarily let the taxpayer off the hook.

ELLIOTT: If A bank says thinks they're worth $50, and the private investors want to buy them for $30, you're not going to be able to bridge that gap, unless the government's willing to step in and pay 20. So, the other -- the other potential problem would be that the only way it works is the government writes very large checks.

JOHNS: So, why even do it this way? Well, for one thing, the public is so fed up with bailouts for banks, that the Troubled Assets Relief Program, or TARP, as it's called, is, frankly, becoming a four- letter word.

(END VIDEOTAPE)

JOHNS: But don't even think this is the end of taxpayer financed bank bailouts. More so-called cash infusions to financial institutions could be on the way. And Treasury is reserving the right to ask Congress for even more money at a later date -- Anderson.

COOPER: Yes, more money we don't have.

Joe, thanks very much.

Joe is going to be joining our panel in just a moment. We're going to look at more of Geithner's plan to free up the credit markets and how it could affect your finances. We will have Joe, as well as David Gergen, and Ali Velshi back as well.

Also ahead, a candid question for first lady Michelle Obama.

(BEGIN VIDEO CLIP)

MICHELLE OBAMA, WIFE OF SENATOR BARACK B. OBAMA: He's in Florida.

UNIDENTIFIED CHILD: He doesn't live with you?

M. OBAMA: Yes. No, he does live about me. He just went there for today.

(CROSSTALK)

UNIDENTIFIED CHILD: ... lives with you?

M. OBAMA: He lives with me. He does, really.

(LAUGHTER)

(END VIDEO CLIP)

COOPER: Mrs. Obama clearing up a bit of confusion while visiting a community health clinic in Washington. We will have details on that ahead.

Plus, could Grammy-nominated R&B singer Chris Brown be facing more criminal charges? Why the DA is asking police to do some more digging on the domestic assault cast against his girlfriend, Rihanna.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP) OBAMA: And I know how frustrating it is for taxpayers when they're looking and they're saying, let me get this straight. You've got a guy who's making $20 million a year who ran his bank into the ground, and now we've got to come in and clean up the mess.

Now, that's something that -- it just makes you mad.

(END VIDEO CLIP)

COOPER: President Obama in Fort Myers, Florida, on the road for a second day, trying to drum up support for his economic plan, the president taking his case directly to Americans, telling them he gets that they're angry and disgusted with the fat cats who helped create all this mess.

Tonight, the breaking news -- you see it on the bottom of your screen -- on Capitol Hill, where House, Senate, and White House negotiators are meeting right now behind closed doors trying to craft a massive final stimulus plan to restart the economy. They hope to have this hammered out and voted on perhaps as early as Friday. It could get ugly.

Let's talk strategy with senior political analyst David Gergen and once again Ali Velshi and Joe Johns.

David, with this meeting happening right now behind closed doors, you have Rahm Emanuel, you have House Democrats and Republicans and members of the Senate there as well. What -- I mean, you have worked for Republicans and Democratic presidents. What goes on behind -- what goes in these meetings behind closed doors? How tough raw politics is it?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Well, a couple of things, Anderson.

There's usually a very broad conversation about the content of what's going to be in the bill. And then there's a side conversation, often with a smaller number of players, about the politics of it.

And, in this case, Nancy Pelosi seems to be sending messages that she's willing to compromise, realizes that necessity requires that, wants to get the bill done, is trying to be loyal. But, at the same time, they have got a real problem. They have got three Republicans holding the whip hand.

And they have can't produce a bill that those three Republicans veto, because then they won't get the passage on the floor of the Senate. That's their political problem. Everybody knows it. And, so, the compromising way toward the House bill is just not going to happen.

COOPER: Joe, Tim Geithner's announcement today much heralded, much talked about and anticipated, how big of a P.R. disaster was it?

JOHNS: Well, I mean, you heard it. It was sort of a smackdown, really, when you think about it. A lot of people around town that I talked to were saying, hey, if you're going to have a rollout, have a real rollout. Don't have something like this, where you come out and you just state some principles.

So, it was a tough day for -- for Geithner on the one hand. On the other hand, you sort of have to let these things kind of play out, because there was one fellow I talked to who has a lot of experience on the Street who said, it could have been a lot worse for us. The fact of the matter is, if he had come out with a whole bunch of Washington regulation that nobody on the Street wanted, there would have been a negative reaction there, too.

So, at the end of the day, this is not just about what this administration says. It's also about execution. Whatever you decide on, you're going to have to pull it off. So, they have a bunch of different hoops to fall through. And this one P.R. hit may not last very long.

COOPER: Ali, in terms of the market's reaction, I mean, it dropped significantly today, but is there some good news in there, in terms of -- of finding a bottom?

VELSHI: Yes.

Well, first of all, Joe's right. We're no further -- we're no worse off than we were yesterday. All we didn't do is get a plan. So, maybe that reaction was a little overwrought.

But, you know, a number of people have said to me, look at this market. We're back to where we were at the lows of November. This is terrible. And my response to that, Anderson, is that, economically, we're far worse off than we were in November. We have got far more people unemployed.

We have seen housing prices go down further. We haven't seen a loosening of the credit freeze. So, if our market is where it was in November, we're not doing too badly. This is how you form a bottom on the market. We have now come back to the point that we were in November. And that indicates that there's people who are playing in the market from the level that we're at now above.

I think this is not a bad thing. And, fundamentally, when the market goes down for a reason, in this case, disappointment that we didn't get detail on the plan that we thought we were going to get, that is fine with me. I worry when the market goes down for no reason.

When Tim Geithner and President Obama come up with a plan, the one that we thought we were getting today, you will probably see people get back into the market. I'm not overly alarmed by this -- a bit of a P.R. mess, nothing that can't be solved. If they come out with the plan that we were expecting, I think we will be back on track again.

COOPER: David, the -- the broad frameworks of Geithner's plan doesn't seem to be what the Street was necessarily reacting to, just a lack of specifics.

And, I guess to Ali's point, that -- that -- there is some good news in that. Once the actual specifics are fleshed out, then perhaps there will be support for the plan.

GERGEN: Well, I -- I'm a little in disagreement, Anderson.

I do think, fundamentally, we have to be patient. Franklin Roosevelt's team made a number of mistakes early on. They had some early bumbles. The Obama team is going to make some mistakes. We have got to give them time to get on their feet.

But I do think that this, as a -- as a publicity matter, as a public-relations matter, was a black eye for Tim Geithner and for the administration. They had put a lot of stake in this rollout. They had promised and led people to believe that it would be bold and detailed. It was neither.

And when the plan was introduced last night on the Hill, briefed to congressional staffs, "The Wall Street Journal" has reported today that it -- it met with a rude reception, skepticism, sarcasm, even laughter from some Republican quarters. And then, today, it got this negative reaction on the Hill.

I think this is not what they wanted. It's not what they planned for. Yes, they can get it straightened out. But for Tim Geithner and getting started here, it is -- I can't tell you how important it is.

Now, it's important not only to have a plan. But this administration needs an economic spokesman who can speak with authority and be respected for what he says or she says. And right now they haven't quite found that person in Tim Geithner. And he is their chief economic spokesman. That's what he's been designated.

So it's very, very important, not only for the president, but for Tim Geithner, to get back on track quickly and to establish his authority and his gravitas. Because that's going to be very important to confidence in the system.

COOPER: Joe, David makes an excellent point, which is that, you know, finding other voices. Right now they're relying an awful lot on President Obama and, you know, using his tremendous popularity to sell this. But at a certain point, and very quickly, I mean, they need other people who they can put out there who people have confidence in.

JOHNS: Clearly, they do need other people. And certainly, the president is going to be associated with it. And as Candy Crowley talked about it earlier in the program, the fact of the matter is, he's going to have to talk a lot. You saw a little bit of the sympathizer in chief today. Because he's got to buy some time in order for people to start seeing some effects of the programs that he's trying to put into place.

So they've got a lot to think about. They do need surrogates. I can tell you, I called over looking for the surrogates today at the Treasury Department. Who do you have out there speaking on this issue? And they pointed me to a couple of United States senators.

There have got to be other people out there who are like-minded with the same voice and who can say what the administration wants said.

VELSHI: Anderson, you know, to that point, one thing that happened is the market smacked the administration down today. The Republicans smacked them down. At the end of the day, Tim Geithner did say, "Yes, we probably could have done a better job of that." We fought last year a long time for having the administration saying that they got what was going wrong. At least today, I thought there was some acknowledgement from the administration that that really didn't work. Let's hope they fix that.

COOPER: All right, Ali Velshi, David Gergen, Joe Johns, thank you, good discussion.

Up next, the first lady's tour of Washington continues. Michelle Obama meeting some young fans. Her increasingly visible role. We'll talk about that, coming up.

And eight people have now reportedly been arrested in connection with Michael Phelps' bong hit. The hit seen around the world. Will the Olympic swimmer actually face charges, too?

And we'll continue to learn more about the octuplets' mom. We'll bring you inside the home where all 14 children will live and hear the harsh words from the grandmother, who thinks her own daughter has gone way too far.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MICHELLE OBAMA, FIRST LADY: You know, I have little girls, too. My little girls are...

UNIDENTIFIED FEMALE: I know their names.

M. OBAMA: What's their names?

UNIDENTIFIED FEMALE: Sasha.

M. OBAMA: That's right. That is right. Do you know how many times I have read this book to Sasha and Malia? Can you guess how many times?

UNIDENTIFIED FEMALE: Four hundred.

M. OBAMA: Close. I think it was more than that. I think it's been millions of times.

(END VIDEO CLIP)

OBAMA: First lady Michelle Obama. Hugs after she read, "Brown Bear, Brown Bear" at a community health clinic in Washington, the latest stop for her tour of her new city.

We're following other studies tonight, as well. Let's check in with Randi Kaye for a "360 News and Business Bulletin" -- Randi.

RANDI KAYE, CNN CORRESPONDENT: Hi, there, Anderson.

Exit polls in Israel are showing moderate foreign minister Tzipi Livni's Kadima Party edging out conservative leader Benjamin Netanyahu's Likud Party. The polls also show strong support for smaller hard-line parties, though, and that could make it difficult for Livni to form a government.

More on today's pink slips. General Motors is cutting 10,000 white-collar jobs worldwide. One third of those job losses are here in the U.S. And Wal-Mart is eliminating up to 800 positions at its headquarters to trim its costs.

The L.A. district attorney has asked police to do some more investigative work before decided whether more charges will be filed in a domestic violence case against singer Chris Brown. Sources say the alleged victim was his girlfriend, singer Rihanna.

And a 360 follow now. WIS-TV in Columbia, South Carolina, reporting that eight people have been arrested for their ties to that pot party where Michael Phelps was photographed taking a bong hit. Seven face drug possession charges. One is accused of distribution.

The Richland County Sheriff's Office is reportedly still investigating Michael Phelps' role.

There's also word that the infamous bong has been confiscated after -- get this -- its owner tried to sell it on eBay for $100,000.

COOPER: I'm not sure exactly if you could say it was a pot party from what I've read about it. But...

KAYE: OK.

COOPER: ... minor point.

KAYE: We won't go with that.

COOPER: I can't believe they've arrested eight people. It...

KAYE: I can't believe the guy tried to sell it on eBay.

COOPER: Stranger and stranger.

Before we get back to the "Beat 360" winners, just a quick program note. The crew of U.S. Airways Flight 1549 spent the evening on "LARRY KING LIVE." That was just part one. You can see part two of the interview with Larry tomorrow night at 9 p.m. Eastern Time right here on CNN.

Now, "Beat 360." It is our daily challenge to viewers, a chance to come up with a caption better than the one that we can think of for a picture that we put on our blog every day.

So tonight's picture, an old English sheep dog getting ready for show time at the Westminster Kennel Club Dog Show here in New York. Great photo, that.

Our staff winner tonight is Brooke. His caption: "It takes our makeup artist many, many hours to prep Anderson for air." Yes.

I should say it was a former staff member here.

KAYE: That's how we get those blue eyes to show.

COOPER: He was fired two hours ago. Unrelated. He was fired for cause.

Our viewer winner is Wyatt from New York. His caption: "Lady, I said I wanted the John King look, not the Don King look."

(SOUND EFFECT: DRUM BEAT)

KAYE: That's pretty good.

COOPER: That's good. Wyatt, your "Beat 360" T-shirt is on the way.

Up next, terror in Australia as fires continue to rage. Take a look.

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UNIDENTIFIED FEMALE: Your mind kept saying, go to sleep, lay down, sit down. Sit down. And you know -- you just kept fighting, trying not to black out. Because if you blacked out, you were dead.

(END VIDEO CLIP)

COOPER: A survivor of the inferno. The fire is being called an act of mass murder. Authorities suspect arson in several of them. And the death toll continues to rise. We'll take you there.

And the octuplets' mom reveals new details about the controversial fertility clinic she went to for treatments. Plus, her mother, the grandmother of the kids, speaks out, calling her daughter's decision to have so many kids unconscionable.

And later, Dolly Parton and Barack Obama. What do they have in common? It's tonight's "Shot," coming up.

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UNIDENTIFIED MALE: All their best friends are dead. You know, their kids are dead. And -- you know, I played golf with the 12-year- old kid on Saturday who's not here anymore.

(END VIDEO CLIP)

COOPER: Unimaginable grief in Australia tonight from the killer wildfires. Authorities say some were deliberately set. Right now, the search is on the arsonists who left scores dead, including entire families.

Some of the fires have been contained, but the suffering appears to be spreading. And with each new day, the grim details of lives lost and lives destroyed emerge.

Gary Tuchman has the latest.

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GARY TUCHMAN, CNN CORRESPONDENT (voice-over): Surrounded by flames, a cell-phone camera captures the horror. In Southern Australia, where the worst wildfires in the country's history have engulfed entire towns, turned forests into wasteland and have left thousands homeless.

From space, a NASA photograph reveals the scope of the catastrophe.

UNIDENTIFIED MALE: It's on fire. Cars on fire. Everything's gone. The car is blown up.

TUCHMAN: He was one of the lucky ones. Killer infernos officials suspect were caused by arson. The prime minister has labeled them an act of mass murder. The death toll now stands at more than 180, but authorities fear it will surpass 200. And hundreds of others have been injured.

Many of the dead were found in their homes. A family of six reportedly burned alive in their car. Those who perished had nowhere to run, no chance to escape.

UNIDENTIFIED MALE: So we have the houses there with unknown people within them that we've now got to identify and track their movements.

UNIDENTIFIED FEMALE: It is absolutely unprecedented. We -- we haven't had to face this task before.

TUCHMAN: The brush fires began Saturday. At their height, hundreds were burning out of control. Now, firefighters, aided by the army, have brought the number down to around 20. For those returning home, only memories remain.

UNIDENTIFIED MALE: I lost two kids, mate. You know. And nothing will bring them back.

TUCHMAN: There is overwhelming tragedy, but at the same time, incredible stories of survival. A woman is reunited with her father after being separated by the disaster.

UNIDENTIFIED MALE: Don't cry. Please. Please? UNIDENTIFIED FEMALE: I love you.

TUCHMAN: And an extraordinary sight. A firefighter comes to the aid of a koala bear, giving the animal water from his bottle.

Gary Tuchman, CNN.

(END VIDEOTAPE)

COOPER: Unbelievable, what's happening there.

Coming up next on 360, how could a doctor have made it possible for the mother of six to have eight more kids which she can't afford? Tonight, we'll show you the clinic where this was done.

Also, the children's beleaguered grandmother lashes out at her daughter and what her doctor has done.

And what do President Obama and Dolly Parton share? They both managed to make it into tonight's "Shot." Find out how ahead.

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COOPER: Few mothers in recent memory have ignited the kind of reaction that woman, Nadya Suleman has. The 33-year-old single mom on public assistance gave birth to octuplets last month. She has six other children already. We now know a lot more about her and her kid situation than ever before. In a new interview, Suleman said all the embryos were transferred at a fertility clinic. The case is now being investigated.

And Suleman's own mother now says her daughter's behavior is unconscionable.

Up close tonight, here's Randi Kaye.

(BEGIN VIDEOTAPE)

KAYE (voice-over): The octuplets are still in the hospital as their mother showed the world on NBC's "Today Show."

NADYA SULEMAN, MOTHER OF OCTUPLETS: Hi, Maliah. Your eyes are open. This is Noah. And he is -- he's doing well. He's really well. He's not on oxygen or anything. He's the blonde one. He's the tiniest one that was the troublemaker.

KAYE: But when they are released in a few weeks, this is where they will live. Pictures from the entertainment Web site, RadarOnline, take us inside the octuplets' home for the first time.

This bedroom is crammed with two cribs and a bed. Radar's reporter described the home as filthy, with food on the walls. Mom, Nadya Suleman, lives here with her other six children and her parents. Do the math. Soon there will be 14 children and three adults, sharing three bedrooms. In an interview with RadarOnline, the octuplets' grandmother, Angela Suleman, questioned her daughter's decision to have so many kids.

ANGELA SULEMAN, GRANDMOTHER OF OCTUPLETS: To have them all is unconscionable to me. She really, really has no idea what she's doing to her children. And why would she do this?

KAYE: And how is she going to pay for them all? Her mom owns the home they all live in, and her mom says Suleman hasn't worked since she had kids or helped pay the bills.

Suleman told NBC...

N. SULEMAN: No, I'm not receiving help from the government.

KAYE (on camera): But we've learned she is. Suleman's own publicist told us she gets $490 every month in Food Stamps. And that three of her six older children get some kind of government disability assistance.

(voice-over) Her publicist told us she was treated here at the West Coast IVF Clinic. Without naming names, the medical board confirms it's investigating the case: "We are looking into the matter to see if we can substantiate a violation of the standard of care."

Many have wondered why a doctor would implant so many embryos into a single, unemployed mother of six. On NBC, Suleman defended her doctor.

N. SULEMAN: He did nothing wrong.

KAYE: Doctor Michael Kamrava is the director at the clinic. He hasn't returned our calls. Suleman hasn't said if Kamrava was her doctor this time. But this is her at his clinic back in 2006, when he treated her.

N. SULEMAN: It was amazing. It was totally different than that old fashioned in vitro, because you see it through the monitor. You see it on ultrasound. He knows exactly which area to pinpoint.

KAYE: Still, "The L.A. Times" reports that Dr. Kamrava's clinic had only two successes out of 20 tries that year, one of the worst rates in the country. But Suleman may help change that. Her fertility treatment worked every time: for her first six children and now eight more tiny success stories.

Randi Kaye, CNN, New York.

(END VIDEOTAPE)

COOPER: And so many questions about this. Let's dig deeper with Professor Art Caplan, medical ethicist at the University of Pennsylvania.

Good to see you again. So Nadya Suleman said six embryos were transferred for this last pregnancy. Let's listen to what she said about that in the interview with "The Today Show."

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N. SULEMAN: Some people were like, "Whoa, that's too many." And a lot of people are not aware of statistics involved in IVF. There is a very low probability of success in most procedures. And on any given procedure, about 50 percent chance one will grow, maybe less.

(END VIDEO CLIP)

COOPER: Is she accurate? I mean, is there really -- is she basically defending why she would have six embryos transferred into her at once?

ART CAPLAN, MEDICAL ETHICIST, UNIVERSITY OF PENNSYLVANIA: She's trying. But -- and it is true that the chance of success for any given embryo is probably 50 percent or less. But I don't believe she only had six or seven put into her. It's not credible to me that all of them took. I think there probably were more involved.

And putting in so many embryos just runs a risk of multiple birth that any respectable infertility program wouldn't do. I mean, nowhere, Anderson, in the U.S. is anybody putting in five, six, seven embryos in women under 35.

COOPER: Her -- she lives with her parents. She gets Food Stamps and admitted to having no income. I want to listen to more of what her mom, Angela Suleman, said about the situation to RadarOnline. Take a look.

(BEGIN VIDEO CLIP)

A. SULEMAN: How she's going to cope, I really don't know. I'm really tired of taking care of those six. I need her to really think of what she's going to do and how she's going to provide for these -- all these children.

(END VIDEO CLIP)

COOPER: Clearly, she should have thought of that before she had these kids. And when you look at these photos from RadarOnline, inside her parents' three-bedroom home, you know, there are several cribs, bunk beds. There's clothes all over the place.

Is it appropriate for a doctor, a fertility specialist, to consider someone's financial situation before implanting embryos?

CAPLAN: You know, Anderson, people say it's not up to the doctor; they shouldn't be making these calls about how many kids someone can have. I completely disagree. I think it's absolutely appropriate to step in and say, "Look, do you have the money to support children? Do you have a home where children can go? Are you, yourself, emotionally, psychologically able to face this type of challenge? Do you have any help?"

She doesn't have any of that. You look at that house. You look at the number of kids that are going to be in there, and you think Child Protective Services is going to be visiting them. I'm not even sure she's going to wind up being able to keep those kids.

COOPER: What about mental health? Your fertility doctor -- I mean, is there a psychological assessment? You look at that interview of her. I mean, I have tons of questions about whether I'd want that person, you know, raising any child.

CAPLAN: You know, again, this isn't a question of discriminating against somebody because of their being a single mom or because they're Lutheran or Lithuanian. What we're talking about here is a doctor should be making a call to look out for the best interests of kids.

If this woman has six kids at home and she's got three disabled kids, which we now know she does, she's on Food Stamps, doesn't have any help, doesn't even own her own home, it is absolutely appropriate both to ask about the social circumstances and the psychological circumstances.

I mean, when I look at her, I wind up thinking to myself, this woman's got a lot of psychological problems. I can't believe that she would make it in as a patient to get one more baby, much less take the risk and wind up having eight more babies.

COOPER: What's the No. 1 thing you'd like to ask that doctor?

CAPLAN: To me, did you ask anything about the psychological, emotional, social circumstances or did you just look at the cash that she somehow scraped together to pay you and say, "I'll do what you want"?

COOPER: Art Caplan, it's always good to have you on. Appreciate it.

CAPLAN: My pleasure.

COOPER: Thanks.

We have more breaking news. This time, deadly weather. Three tornadoes confirmed touching down in Oklahoma, one of them causing three fatalities in Lone Grove, about an hour south of Oklahoma City. Twenty-five to 50 injuries reported. Nearly 30,000 homes without power right now.

If you're living in the area, especially heading east towards Texas, stay on the lookout. The line of storms that caused these tornadoes expected to plague the area throughout this evening.

Other news. On a far lighter note, "The Shot" is next. Dolly Parton, the queen of country, goes to D.C. and delivers a memorable line about the new administration. The joke, "The Shot," coming up. And we're continuing to follow the breaking news out of Capitol Hill. White House chief of staff Rahm Emanuel and House Speaker Pelosi, Senate Majority Leader Reid all talking still right now, trying to hammer out final language on a stimulus plan. Your money, your vote, when 360 continues.

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COOPER: All right, Randi. Time for tonight's "Shot." An American icon with her own theme park had them laughing at the National Press Club in D.C. today. Take a look.

(BEGIN VIDEO CLIP)

DOLLY PARTON, SINGER: I was out on the tour when they -- everybody was campaigning and when Hillary was running and thought it would be great to have a woman in the White House. And I thought, well, I don't know if that's such a good idea. Every 28 days, those terrorists better run deeper into the woods if we get a woman in there.

But somebody said to me, thought, "You know what? You just got such a big mouth, and you just know how to talk to people. Did you ever think about running for president?"

I said, "I think we've had enough boobs in the White House." But hopefully, Obama ain't going to be one of them.

(END VIDEO CLIP)

COOPER: Dolly Parton. How cool is Dolly Parton? She's -- I'm a big fan. I wonder how many times she's used that line before?

She -- we should actually have a belated happy birthday to the music legend. She turned 63 last month. So happy birthday, Dolly Parton.

KAYE: Still looking pretty good.

COOPER: Yes. You can see all the latest -- and she's got a play, I think, "9 to 5." I think it's opening on Broadway sometime soon.

You can see all the most recent "Shots" at AC360.com. That's why that's on the street (ph).

Coming up at the top of the hour, what's in the latest bank bailout for you, and why did Wall Street tank when news of it broke?

Also, President Obama selling the economic rescue plan as lawmakers hammer out final details deep into the night. The talk still going on as we speak. That and more when 360 continues.

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