Week of 10.17.08
Transcript: Virginia's Vote & A Better Bailout?Segment 1: A Better Bailout?
BRANCACCIO: More frantic maneuvering this week to tweak the economic bailout in order to get frozen credit moving again, even amid the wild swings of the stock market.
The idea that a Republican administration would borrow from the playbooks of Socialist governments and partially nationalize the banks was not at the top of anyone's list of predictions. And across the media, bankers are getting their shots at reacting to developments. But what about employees, workers, and retirees? Who's been looking out for them? Karla Murthy produced our report.
Three weeks ago, we met Damon Silvers, a top official at the biggest federation of labor unions in the country, the AFL-CIO. We watched as he navigated the first days of the first version of the bailout.
SILVERS: We began to realize how much money we were talking about. And then we realized that really we're talking about the whole future of the economy and of our public—and a public policy for a decade, at least, right is—is suddenly on the table, right.
BRANCACCIO: But things have changed in a fortnight, radically. So I caught up with Silvers this week where he is looking beyond the bailout/rescue to broader issues of how we are going to treat hard working Americans as we move forward.
Damon, people who've never been to Wall Street, people who've never been summoned to meeting at the U.S. Treasury for an audience with His Majesty the Treasury Secretary, regular people on Main Street. What do they get out of Treasury Rescue bailout version 3.0?
DAMON SILVERS: David, it's an improvement over 2.0 for two reasons. One is, it seems like it might work. And two is that the taxpayer, the public—has a clear, fixed claim on these banks—to get paid back. And a slice, not a very big slice, but a slice of the upside. Perhaps—w—perhaps we'll make some money on the deal a—a—as a public.
But we—the real issue here, though, is that this financial crisis, the freeze in the credit markets, while very serious, is just the tip of—of the—of this economic crisis. We've got a three-layered problem, all right? The—the—the first problem is that we've been trying for a long time now to run a consumer economy, a middle-class economy, on low wages and severe economic inequality. And it just doesn't work. The second layer is, because that doesn't work, we've tried to patch it up with debt, with lending individuals money to fund their current consumption on their medical bills, on the—buy cars—you know, pay—in some cases, pay for their groceries.
BRANCACCIO: Yeah, credit cards, second mortgages on these homes, and so forth.
SILVERS: And—you cannot sustain current consumption on credit in that way. Credit's for investment. And the—that brought us the subprime crisis. That brought us the mortgage mess. That brought us millions of people losing their homes, in danger of losing their homes, and it brought us falling real estate values.
If that's not bad enough, we've then turned that into the financial crisis. That's the third layer. And we did that through deregulation, by ha—ha—creating the financial—system that is opaque. Nobody knows where the assets are, nobody knows who's doing business with whom. When suddenly you put $2 trillion of bad assets into this black box, then no one trusts anybody and you see the credit freeze.
We've just begun to try to address the immediate—critical crisis in the credit markets. But we now have to, in short order, deal with the housing problem and—and the foreclosure problem. And the underlying issue here, which is that we can't have a middle-class society without good jobs and good wages. And we just—those problems are enormous and they—and they face the next president, the next Congress.
BRANCACCIO: Well, let's unpack this slightly. On foreclosure, What's the state of play this week?
SILVERS: We don't yet have the two things we really must have. We need to have A) a moratorium on foreclosures. If we don't have a moratorium on foreclosures, all the people in the system won't have an incentive to work it out with the home owners.
And then we need some real—a real plan for giving home owners the ability to—to—to refinance, to readjust those mortgages. That combination of things is what we need and they're not—not in place yet.
BRANCACCIO: Another fact, you'd say, is part of the big problem that we have that's even beyond the acute financial crisis is what to do about stagnant wages? I mean, there's no bailout package for that. How does any new administration move forward on this question?
SILVERS: This has an acute and immediate form, which is people are losing their jobs now and our unemployment system is not equipped. We need to put more money into that system and improve the benefits today.
BRANCACCIO: Well, unemployment insurance runs out after a couple months, right?
SILVERS: That's right. And it needs to be extended in this situation or else we're going to have a downward economic spiral. Now, the Democrats in Congress tried to get that through at the same time as the bailout. The Republicans blocked it.
But that's just the beginning.
BRANCACCIO: And you're looking for a better return on the investments for the U.S. government. Why? Why—I mean, obviously we don't wanna throw money down a black hole. But—
BRANCACCIO: You wanna be sure that we're getting' our money's worth.
SILVERS: The resources of a federal government are not limitless. We can sort of pretend they are, but they're not—they're not limitless. And if we choose to waste assets in subsidizing Wall Street—if we do this badly, if we don't get back a fair return on the taxpayers' investment, then the resources may not be available in the future to do things that are vital for our society, right?
To improve our educational system. To repair our crumbling infrastructure. To address the long-term and very serious crisis we face involving energy and the environment, right? Those are matters that are gonna require vast public resources.
And if the money's not there to do those things, then it's not just that we've kind of wasted the money and that's too bad. It's that we—we—we will have given our future away to Wall Street.
BRANCACCIO: Damon Silvers, AFL-CIO, thank you very much.
SILVERS: Thank you, David.
BRANCACCIO: The policies silvers says we need right now to fix our economy: a moratorium on foreclosures, refinancing those mortgages, and the extension of unemployment insurance.... Silvers says all these issues will face serious battles in congress. And he expects little action till after the election.
Segment 2: Virginia's Vote
RECEPTIONIST: And do you have your resume with you?
HINOJOSA: If you want to see close up just how the nation's financial crisis could decide this election, walk through the doors of this employment office in Fredericksburg, Virginia.
CINDY MATERN: Are you ready Ms. Jaymie? Come on back. How ya doin' today?
JAYMIE GERACE: I'd be better if the economy were better.
HINOJOSA: Cindy Matern runs the agency here in this strip mall. And on the day we visited, Jaymie Gerace stopped by looking for work.
CINDY MATERN: Right now you're not working right now, is that correct?
JAYMIE GERACE: I was just laid off Thursday.
HINOJOSA: Gerace just lost a high-paying job as a Human Resources Consultant for a defense contractor. With the flow of credit getting choked up, Gerace's boss told her the company was having trouble getting enough financing to run its operations.
JAYMIE GERACE: He basically sat me down, and just explained to me, because of what's going on with the economy, because we are a small business, and we rely on the line of credit to do our business, to front the $500,000-$700,000 for the parts and stuff, for the program that we're working on, that we could no longer do that.
HINOJOSA: Nationally, the number of people applying for unemployment benefits is the highest in seven years. Matern has been trying to find jobs for more and more anxious people.
CINDY MATERN: I've seen first hand, having the employment agency—and our—with our economy and the employment agency, how many people are out of work. And it's frightening.
HINOJOSA: Matern is troubled by some of the stories she's heard.
CINDY MATERN: I have seen people comin' into my office over the age of 65. Look—they're havin' to have to supplement their income. With the price of gas. With groceries goin' up. So, now they're havin' to have to come out of retirement to find a job.
I had a man come in here, he was 85 years old. And, you know, someone like that, they've paid their dues. And it's—you know, it breaks my heart.
HINOJOSA: Jaymie Gerace and Cindy Matern join an avalanche of voters who have named the economy as their number one concern this fall.
Both women voted for George W. Bush. But this year, they're turning away from the G-O-P.
CINDY MATERN: Oh, I'm furious. I'm furious. And now, when I stop and I look back and see what has happened over the last eight years—I mean, I just feel like—that the Rep—the Republicans have really let—not only let me down, but they've let the country down.
HINOJOSA: It's not a decision she makes lightly...
CINDY MATERN: Thirty three years I have voted Republican. And I—I'm sad. But at the same time, I have to think what's best for my country. What's best for my family.
HINOJOSA: Virginia is in the crosshairs this year. As the country prepares to elect a president during the most serious financial crisis since the Great Depression -early signs show John McCain in big trouble in Virginia, a state that has long been considered staunch Republican territory.
The Obama team has launched a fierce ground campaign here.
Obama: I think we may just turn Virginia blue this time!
HINOJOSA: Barack Obama and Joe Biden have visited the Old Dominion eleven times.
Obama: We need to stop giving those tax cuts to corporations and CEOs on Wall Street and start giving them to families on Main Street.
HINOJOSA: And they have nearly fifty campaign offices blanketing the state. Compare that to the number John Kerry had here at the same time in 2004—just two.
The reason Obama is spending so much time and money here: Virginia has been changing, with a lot of new people moving in from other states and from all over the world. The liberal suburbs in northern Virginia have grown—tipping the balance away from the conservative rural areas in the southwest.
MCCAIN: Nothing is inevitable here. We never give up. We never quit. We never hide from history. We make history. Now let's go win this election and get this country moving again.
HINOJOSA: John McCain has virtually no chance of winning the presidency without winning Virginia—say political analysts. In recent weeks, the McCain campaign has doubled their staff and opened a dozen new offices. And nowhere is the battle hotter than in this critical swing area in southeastern Virginia known as Tidewater.
PALIN: Yes, Virginia. It is so good to be here.
HINOJOSA: When the candidates came to the state this week to rally supporters, Virginia Beach in Tidewater was their first stop.
Is it the swing district within a swing state?
GARY BYLER: I think there's no doubt about that.
HINOJOSA: Gary Byler is under extraordinary pressure this year. His mission is to win the Tidewater area—also known as Hampton Roads—for John McCain.
GARY BYLER: I think Hampton Roads will, in fact, be the deciding factor in—the state that we hope will be the deciding factor. I feel confident about Senator McCain's chances if it comes down to Virginia.
HINOJOSA: With the gloomy economic picture, Byler acknowledges he's got a tough task... but he's been in politics since Karl Rove gave him his first political job in 1976... so he knows a few things about winning elections.
Byler argues John McCain can still win Virginia on the economy because he appeals to fiscal conservatives.
On the economy, how do you—when you're managing a statewide campaign—counter people who may be thinking Bush economic disaster, Republican Party, time to walk away from that?
GARY BYLER: Senator McCain was the leading objection to the wasteful government spending that too many Republicans signed on to. The beauty of it is McCain's agenda is to cut spending. So if there's a financial meltdown crisis, we need to accelerate Senator McCain's plans.
HINOJOSA: Byler needs to win over people like Sean—he's a swing voter from this swing district.
SEAN: I'm on the fence, I'll say. It's tough. I'm probably leaning to one side, you know, a little bit, but there are just things about both sides that are really uncomfortable, and there are things that I like about both sides.
HINOJOSA: Sean is a union member and former shop steward at a paper mill in Tidewater. He's also a dad and a devout Christian. In this household, it's a tradition to always say grace before dinner.
SEAN: Lord, we thank you for the many blessings you have given us...
HINOJOSA: He's got an independent streak—having voted for both Bill Clinton and George W. Bush. A quarter of all Virginian voters consider themselves independent. And they're less likely to have made up their minds—making them a prized voting block for both campaigns.
HINOJOSA: What are you worried right now about, the most, in terms of your life, where you are?
SEAN: You know, my job is primary breadwinner for my family. I work shift work. And it's tough. I vote who I think is gonna give me the best chance to survive and keep a good paying job with good benefits and good wages.
HINOJOSA: Sean says the work force at his paper mill has shrunk to half of what it once was. And just a few weeks ago, the parent company of his mill, International Paper, announced more plant shut-downs because of current economic conditions.
So, when you look at your kids, 11 year old twins, in this presidential election cycle, do you worry about what this all means for them?
SEAN: I think it has to concern you—because who you vote for now, and who is president for four, maybe eight years—the effect goes on many more years past that. And so—you have to weigh that in your decision. I know for me, when I got hired at the mill in 1994, I looked at it as, "Hey, I've got a great job now, and I've got a place now, where if I ever have children, they can come work here too." I don't look at it like that anymore. I just hope it stays runnin' until I can retire.
HINOJOSA: While Sean is wrestling with his decision—his wife Tracy firmly supports the McCain/Palin ticket. So we wanted to hear from her as well.
What's the most important issue for you in this election?
TRACY: The one that has the most faith in the Lord.
HINOJOSA: That's make or break for you.
TRACY: That should be make and break for everybody.
HINOJOSA: And when you hear people saying, "Well, we understand your faith, but what if you're gonna vote against your husband's interests as an American worker?"
TRACY: The Lord will take care of us. That's the way I look at things.
HINOJOSA: For Tracy, this election is not so much about policies as it is about values. she says she doesn't feel like Barack Obama shares her conservative religious worldview.
TRACY: I can't imagine having a President of the United States being named President Obama. I really have a problem with that. And I am not the only one.
HINOJOSA: Because that means what to you?
TRACY: His background. A mother that was atheist. That really gets to me. A father that was a Muslim. That should get to everyone.
HINOJOSA: And when Barack Obama and his wife Michelle say, "But we're faith based. We're Christians".
TRACY: The church they were members of, that's not the Christianity I know. That's not the Christianity that's in the Bible.
HINOJOSA: And so, for you, you are firmly decided.
HINOJOSA: And what do you say to your husband, who is still on the fence?
TRACY: I will pray for him. He knows what the right decision is.
HINOJOSA: We took these concerns to the former Governor of Virginia —Doug Wilder.
So when you hear someone say—that they could never vote for Barack Obama because they don't want someone with that name leading this country?
DOUG WILDER: Yeah.
HINOJOSA: As someone said to me just yesterday?
DOUG WILDER: Yeah. I don't doubt that that will be an excuse given for not voting for him. Or someone sayin', well, you know, I don't know whether he's Muslim or not. There'll be any numbers of excuses. But to the extent that at least they have to say something as to why they make a different choice is a step forward. Heretofore they never would've had to say anything 'cause they never would've had the choice.
WILDER SUPPORTERS AT RALLY: We want Doug! We want Doug!
HINOJOSA: Wilder knows a thing or two about race and politics in Virginia. In 1989, he made history when he became the country's first African American to be elected Governor. And he did it as the grandson of former slaves in the state that once held the capital of the old confederacy.
HINOJOSA: So you—you know?
DOUG WILDER: Oh, of course.
HINOJOSA: That race, even though Virginia elected its first African-American governor?
DOUG WILDER: Yes. Yes. It's—as long as people have the—capacity to differ and to
choose differences, racism isn't gonna disappear. It's gonna be around. To the extent
that it's diminished is what's so important now. And that diminishing effect of race on
this election is what we are witnessing.
HINOJOSA: And there's something else at work in Virginia. Believe it or not—even the military vote is in play this year. One of the reasons why Virginia has been so reliably Republican in the past is its huge military population, which is the largest in the nation outside of California.
Chuck Smith is a former Marine and JAG lawyer who believes McCain's message resonates with veterans in Tidewater.
CHUCK SMITH: I think one of the central issues is—is—foreign policy—the United States in the world. And where is our place in the world. That seat that—John McCain is seeking is—is—is for sure, the leader of the free world. we need someone I think in that office who has the experience, who has the tenacity, who has the ability to—resolve some of these problems and work with the rest of the leaders around the world. That's why I support John McCain.
HINOJOSA: John McCain is a decorated war hero, as well as the son and grandson of admirals. But this year, that might not be enough. There is something stirring in the military community.
U.S. troops serving overseas have donated nearly five times more in campaign money to Barack Obama than to John McCain. And the Obama campaign is reaching out to military voters aggressively. At the Virginia Beach campaign office, Veterans for Obama stepped up their pitch.
OBAMA VOLUNTEER: Francis, my name is Rick, I'm a veteran of the United States Navy, I'm working with the Obama Campaign. I understand you're a veteran as well?
HINOJOSA: They are making inroads with many younger military families, such as Casey Spurr's.
Spurr's husband is a Naval Officer on his third deployment overseas while she's in Virginia Beach raising their son Carter. Carter has been separated from his dad for nearly a year now.
Military wives. What are you hearing about their morale, their sense of which candidate is going to be best for them?
CASEY SPURR: Well, I will tell you in the past—the majority of the military families that I spoke to were certainly Republican. But, this year more than ever before I'm seeing more and more military families that are becoming Democrats. And because they—you know, they're—really are upset about the way this situation in Iraq has been handled.
HINOJOSA: Spurr, and many other military voters we spoke to, say they are angry because they feel the armed forces have been misused in Iraq. And they're frustrated with repeated deployments for a war that doesn't seem to have an end.
For you Casey, ultimately what is at stake for you in this election?
CASEY SPURR: Someone that I love serves this country honorably. And I wanna know that his Commander In Chief is sending him somewhere with a mission that is clearly defined. And that the hard work and—that he puts in and the sacrifice that we make as a family is something that is yielding positive results for Americans.
HINOJOSA: With just two-and-a-half weeks to go, the race is still too close to call. The war, faith, race and the economy will all be in the mix as Virginian voters make their decision.
Doug Wilder: I've already promised Obama Virginia.
HINOJOSA: Doug Wilder—now the Mayor of Richmond—says the new battleground state of Virginia will be the one to watch on November 4.
When you think about the fact that your state Virginia is in play, is a swing state, what does that mean to you?
DOUG WILDER: It's something I have been wanting and hoping for a long time. It'll be a closer election than people think. I've always thought that. And there'll be some people who just can't bring themselves to vote for him—him. But I think it's another piece there too. A reverse effect that a lot of whites who may say they're not gonna vote for Barack Obama are going to vote for him.
DOUG WILDER: Because they know things are bad. They are tough. They are tight. And they don't like what's happened in the last seven and a half years.
A Better Bailout?
How to Win Virginia
Virginia's Changing Political Face
Prejudice, Polling, and the Election
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