Middle Class tax Hike; Lobbying Reversal; Politics of HealthCare; "Cash for Clunkers"

CNN - Monday, August 3, 2009
Show: LOU DOBBS TONIGHT
Author: Lou Dobbs, Dan Lothian, Lisa Sylvester, Candy Crowley, KittyPilgrim, Brianna Keilar, Casey Wian, Campbell Brown
LOU DOBBS, CNN ANCHOR: Suzanne, thank you, and good evening,everybody.

The White House is trying to spin its way out of a controversyover a possible middle class tax increase, a controversy driven, inpart, by two of the administration's top officials. We will have aspecial report on whether the president is planning to break a keycampaign promise.

Also, rising outrage across the country over the president'shealth care plan -- congressmen returning home for their Augustrecess, they're hearing from their constituents.

And the president's plan facing protests similar to those anti- tax Tea Parties earlier in the year -- President Obama facing as wellstrong opposition to that health care overhaul from his own formerdoctor -- Dr. David Scheiner (ph) says it doesn't go far enough -- Dr.Scheiner (ph) among my guests here tonight.

First, the rising uproar over the possibility of a brokencampaign promise and middle-class tax hike. The White House todaytried to downplay that controversy over remarks by two of the leadingadministration economic officials who refuse to rule out such a taxincrease -- senior White House economic adviser Lawrence Summers andTreasury Secretary Timothy Geithner both declaring that it would bewrong to pass judgment on any tax increase now.

Today, White House press secretary Robert Gibbs said Summers andGeithner were speaking hypothetically. Dan Lothian reports from theWhite House.

(BEGIN VIDEOTAPE)

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT (voice-over): Thepresident's two top money men may have a good grip on all the numbers,but their words may have gone off script.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: I think they allowedthemselves to get into a little bit of a hypothetical back and forth.

LOTHIAN: That's the clarification of comes made by TreasurySecretary timothy Geithner and economic adviser Larry Summers, on theSunday morning talk shows. The two seemingly leaving the door open toa middle had-class tax hike in order to pay down the deficit andafford health care reform.

LAWRENCE SUMMERS, NATIONAL ECONOMIC COUNCIL CHMN.: It is never agood idea to absolutely rule things, rule things out, no matter what.

UNIDENTIFIED MALE: We are going to have to do what it takes. Weare going to do what's necessary.

LOTHIAN: Spokesman Robert Gibbs again stressed the president'scommitment to not raise taxes on Americans making less than $250,000 ayear.

(on camera): So there's no -- there's no real scenario there asthe administration sees it where middle-class taxpayers might be hitwith a hike? There is no scenario right now?

GIBBS: The president has been clear, very clear.

(CROSSTALK)

LOTHIAN: If someone says yes or no...

(CROSSTALK)

GIBBS: ... campaign -- the president made a commitment in thecampaign. He is clear about that commitment and he is going to keepit. I don't know how much more clearer about the commitment I can be.

LOTHIAN (voice-over): On the campaign trail, Mr. Obama drew aline in the sand.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: You will not seeyour taxes increase by a single dime, not your income tax , not yourpayroll tax , not your capital gains tax , no tax .

LOTHIAN: When asked if Geithner and Summers were testing thetemperature by leaving the door open, Gibbs said, "I don't know". Hedid say that during a meeting with his top economic advisers, thepresident reiterated his position on middle class taxes so there wouldbe no confusion.

(END VIDEOTAPE)

LOTHIAN: Now, Gibbs says that Geithner and Summer were not takento the woodshed in that meeting but up on Capitol Hill on the Senatefloor, Republican Senator Lamar Alexander (ph) says that he thinksthat they were reprimanded and he believes that it is irresponsiblefor this administration to say that they can do all the things thatthey currently have on their plate, like health care reform, withouttouching middle class Americans. Lou?

DOBBS: Well, Dan, there is also the comment by the president, asyou know, on July 22nd, and that press conference when he said that hewould be opposed to anything in which the tax increases for healthcare came down disproportionately on the middle class, seeminglyaccepting the idea that the middle class would receive part of any taxincrease.

LOTHIAN: Right, but you know every time you do either address aquestion to the president or to this administration, specificallyRobert Gibbs, they will come back time and time again and say, listen,the president has said that he is not going to hit middle-classtaxpayers and he is talking -- the number they threw out there isthose making less than $250,000 with additional taxes .

Now, I guess, you know the big question could be what do youclassify as middle-class taxpayers? Perhaps that number could beshifted and then you can move it all around but that is the numberthat they are using right now. We heard what Summers and Geithnersaid over the weekend. The White House saying nothing has changed.

DOBBS: Nothing has changed? It sounds like something ischanging. We just don't know what.

(CROSSTALK)

LOTHIAN: Exactly, something is going on behind the scenes.Perhaps we don't have all the answers.

DOBBS: Well I know one thing, you will get them. Dan, thanks alot...

(CROSSTALK)

LOTHIAN: I will try. OK.

DOBBS: Dan Lothian from the White House.

Well as Dan just reported, the president has repeatedly declaredhe has no plans to raise taxes on middle-class Americans. Here's oneexample of his rhetoric from a campaign event in Dover, New Hampshire,last September.

(BEGIN VIDEO CLIP)

OBAMA: And I can make a firm pledge, under my plan no familymaking less than $250,000 a year will see any form of tax increase,not your income tax , not your payroll tax , not your capital gainstaxes, not any of your taxes .

(END VIDEO CLIP)

DOBBS: Now, that was candidate Obama. Now, let's listen to whatPresident Obama is saying at a news conference just last month, as Isaid, on July 22nd -- President Obama clearly recalibrating hislanguage on the issue.

(BEGIN VIDEO CLIP)

OBAMA: If I see a proposal that is primarily funded throughtaxing middle-class families, I'm going to be opposed to that becauseI think there are better ideas to do it.

(END VIDEO CLIP)

DOBBS: In his statement, the president opposed middle-classtaxes that pay for the predominant cost of his health care plan. Overthe weekend, as we reported, two of the president's top economicadvisers, Lawrence Summers and Timothy Geithner, faced tough newquestions about the possibility of that middle-class tax hike. Theyboth flatly refused to rule it out, a tax increase to pay for healthcare and to tackle our exploding federal budget deficit -- TreasurySecretary Geithner first.

(BEGIN VIDEO CLIP)

TIMOTHY GEITHNER, TREASURY SECRETARY: I think that what thecountry needs to do is understand we are going to have to do what ittakes. We are going to do what's necessary.

SUMMERS: There's a lot that could happen over time, but thepriority right now (INAUDIBLE) never a good idea to absolutely rulethings, rule things out, no matter what.

(END VIDEO CLIP)

DOBBS: Although that apparently is exactly what White Housepress secretary Robert Gibbs did today, dismissing those comments asquote "a little bit of hypothetical back and forth", end quote -- theObama administration also breaking a promise to limit the power oflobbyists after intense lobbying from lobbyists.

The White House has reversed its course and is now allowinglobbyists to meet and to have telephone conversations with governmentofficials on economic stimulus projects -- Lisa Sylvester with ourreport.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Seven hundredeighty-seven billion dollars in stimulus money at stake, states,private companies and industries, lots of groups want a piece of it.The Obama administration had limited lobbyists to making appeals inwriting to government officials instead of having face-to-facemeetings over how the money should be spent.

But a memo just released by the Obama administration lifts thatcommunications ban. A variety of groups, including the ACLU and theAmerican League of Lobbyists, have threatened to sue the government.

DAVE WENHOLD, AMERICAN LEAGUE OF LOBBYISTS: Any time you decideto limit or discriminate against a class of people, whether it belobbyists, policemen, firefighters, whoever and restrict them frompetitioning the government is not right and it is unconstitutional.

SYLVESTER: With the rule change, lobbyists, lawyers and othersadvocating for special interests will still be banned from talking togovernment officials about the substance of the application as theyawait a decision on a stimulus grant. John Wonderlich (ph) with theSunlight Foundation says with so much taxpayer money on the line it isimportant that the public knows who is exerting influence.

JOHN WONDERLICH, SUNLIGHT FOUNDATION: Lobbyists wield adisproportionate amount of influence that can distort the policyprocess. Well, we should at least know who is paying you to make anargument and understand who you are meeting with and why.

SYLVESTER: Under the rule change, government officials must nowdocument certain lobbying and advocacy discussions.

(END VIDEOTAPE)

SYLVESTER: ... for president he said if elected, lobbyists wouldnot find a job in the White House. After the election that rule wasmodified to say that lobbyists would not dominate the White House.And here we are today, according to "The National Journal", they did asurvey and they found that 11 percent of 267 of President Obama'spolitical appointees and nominees were, in fact, registered to lobbyat some point in the last five years. Lou?

DOBBS: From zero to 11 percent? Also, the White Housedeclining, just as did the Bush administration, and actually beforethat the Clinton administration, to reveal who the visitors were, theadvisers to the president, on the issue of health care.

SYLVESTER: Yes, this is one of those ongoing things that is sortof the back and forth, is how much transparency that there should bein the White House. And when president -- was then-candidate Obama,he said that there would be lots of transparency, now there is a pushto -- for him to keep his word and for them to release the logs of allthe visitors and detailed logs, at that.

DOBBS: All right. Well transparency and openness not quite atthe level that it appeared that it would be in the campaign.President Obama -- Lisa, first of all, thank you very much.Appreciate it.

President Obama has now broken a number of other high-profilecampaign promises in just the first six months in office. Among thosepromises, a promise to allow five days of public comment beforePresident Obama signed bills into law.

One example, the recent Credit Card Bill of Rights, it was signedtwo days after Congress completed work on the legislation -- thepresident also breaking a promise to negotiate changes to health carein public sessions televised on C-SPAN. All of the negotiatingsessions at the White House and in Congress have been in private,behind firmly closed doors.

Up next here, President Obama's former doctor joins us. He willtell us why he opposes the president's health care plan, also, risingprotests across the country against the Democratic Party's health careagenda.

(BEGIN VIDEO CLIP)

UNIDENTIFIED GROUP: (INAUDIBLE)

(END VIDEO CLIP)

DOBBS: We will report on this increasingly bitter and vocalfight and we will tell you about one country where the health caresystem appears to work. And most of its people satisfied with theirmedical treatments. We will be telling you about things no one elseis, things that matter -- that's why we're here.

(COMMERCIAL BREAK)

DOBBS: Well Congress heading home to talk health care with theirconstituents and to listen -- Congress from both parties facing toughquestions on the extent of government involvement and the cost of anynew health care policy. And some of those lawmakers aren't exactlyreceiving a warm welcome back home -- Candy Crowley with our report.

(BEGIN VIDEOTAPE)

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT (voice-over):Democratic Congressman Lloyd Doggett (ph) was in his Texas districtover the weekend, talking health care trying to listen up to YouTube.

UNIDENTIFIED GROUP: Just say no. Just say (INAUDIBLE) no. Justsay...

CROWLEY: Also courtesy YouTube, Pennsylvania Senator ArlenSpecter with HHS Secretary Kathleen Sebelius in Philadelphia, tryingto talk health care reform.

UNIDENTIFIED MALE: (INAUDIBLE) very fast (INAUDIBLE)...

UNIDENTIFIED GROUP: (INAUDIBLE)

UNIDENTIFIED MALE: Why? Why? Why?

CROWLEY: Suddenly, the August recess seems pretty long. It wasmore sedate but doing rounds at a Denver hospital, Senator MichaelBennett (ph) did not sound like a man in a huge hurry to pass healthcare reform.

SEN. MICHAEL BENNETT (D), COLORADO: The more one gets into this,the more you see how complex a system it is, very important that wedon't create a bunch of unintended consequences that compound problemsand struggles that people already have.

CROWLEY: August recess has begun for most Capitol Hill lawmakerswho are headed home with one thing on their mind, health care --actually, two things.

AMY WALTER, HOTLINE: Members are always thinking about runningagain, so, 2010, top of their mind.

CROWLEY: Even those not up for re-election next year feel theheat of an August recess when a hot topic like health care is in limboon Capitol Hill. Senator Kent Conrad will do listening sessionsacross North Dakota. But bet your last dollar that August recess thistime will have a lot more to do with talking than listening.

SEN. KENT CONRAD (D), NORTH DAKOTA: I think it's also veryimportant that people across the country hear that the course we're onis not sustainable. CROWLEY: On the House side, Speaker Nancy Pelosi and Republicanleader John Boehner sent Talking Points to their members, basicallyboiling down to two broad themes.

UNIDENTIFIED FEMALE: Big evil insurance companies versussocialized medicine.

CROWLEY: Time is not on the side of Democrats, many of whomwanted health care done before recess. The longer the issue hangs outthere the more it becomes a pinata -- advantage, the critics.

REP. JOHN BOEHNER (R-OH), MINORITY LEADER: I think it's safe tosay that over the August recess, as more Americans learn more abouttheir plan, they are likely to have a very, very hot summer.

CROWLEY: Democrats say it is not that Americans are learningmore about reform, it's that they are learning erroneous things aboutreform -- August on defense.

REP. CHRIS VAN HOLLEN (D), MARYLAND: We are going to make surethat health care reform does not get swift-voted during the month ofAugust.

CROWLEY: The problem is there is no one single health care bill,no plan that has jelled on Capitol Hill. In some ways, it allows bothsides to claim they're right.

(END VIDEOTAPE)

CROWLEY: Now, about those angry voters, there are some whenRepublicans go out to talk about health care, but it looks as thoughDemocrats are getting the brunt of it and they accuse Republicanoperatives of sending protesters to these town hall meetings. Buteven if there is truth to that, the reality is that poll after pollshows Americans are divided about Obama-style health care reform.Lou?

DOBBS: And these constituents are making themselves heard. Isthere any reason to believe that these are some sort of politicaloperatives working for either -- well, the Republican Party?

CROWLEY: Well, we do have e-mails that go around and certainlyRepublicans -- various interest groups are looking at this andunderstanding, of course, as you know that it shows up on CapitolHill. But you know what, these are constituents, too, and they get toshow up and protest.

DOBBS: All right Candy, thanks a lot -- Candy Crowley.

Well the latest opinion polls supporting what Candy just reportedthat President Obama is losing support for his health care proposalsand he is losing that support very quickly. The most recent CNN Pollof Polls shows 45 percent of Americans disapprove of the way thepresident is handling health care, while 43 percent approve.

Meanwhile, the latest "New York Times"/CBS News poll shows thenumber of Americans who are very concerned their health care willworsen has soared from 28 percent just in June to now 41 percent.Perhaps one reason for the growing skepticism is there are a number ofquestions that haven't even been asked, let alone answered, abouthealth care in this country like what is the ratio of doctors topatients -- think about it, have you heard that discussion?

Well, in the United States it is one to 416. On average in otherdeveloped nations, it's one to 323. What is the biggest driver ofhealth care costs? Is it medical technology? Is it pharmaceuticals?What is it? We haven't been hearing that discussion. It's medicaltechnology, replacing older medical equipment with the newer optionsthat are far more expensive but not necessarily more efficient oreffective.

And what is a reasonable percentage of our GDP to spend on healthcare? We spend fully 16 percent of our GDP on health care. Otherdeveloped nations spend far less. France spends 11 percent. Germanyspends 10 percent, Canada also 10 percent. Why are other countriesspending less and what can we learn from their health care plans?

These are questions that our quote "representatives inWashington" should be asking but are not and openly discussing withthe American people and are not before any discussion of a health careoverhaul can be rushed through Congress and then signed by thispresident. We will be doing just that on this broadcast.

We will be having a discussion about the key questions thatshould be answered and the answers that will affect your family. Someof those answers to these questions may come from other countries'health care plans. One such country with a high level of satisfactionwith its health care system is Denmark . Most Danish health care isprovided by regional governments at federal taxpayer expense.

It is a lot cheaper than health care in this country, both as apercentage of the economy and per citizen -- Kitty Pilgrim with ourreport on Denmark .

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Denmark 's healthcare is funded by the government and it's responsible for collectingan eight percent tax on income to pay for the service. Each of thefive regions is responsible for running their own health care budgets,running their own hospitals, paying for doctor visits, treatments,nursing homes and all other health services.

Health care costs in Denmark are half of those in the UnitedStates. According to the Organization for Economic Cooperation andDevelopment, Denmark spends $3,362 per person, and that is 9.8 percentof GDP. The U.S. spends $7,290 per person, 16 percent of GDP.Richard Saltman (ph), who has written extensively on health care inEurope, says the Danish health care system is less expensive and lessinclined to litigation.

PROF. RICHARD SALTMAN, EMORY UNIV. SCHOOL OF PUBLIC HEALTH: Alltheir physicians are in the hospitals are public employees. Theydon't need malpractice insurance. Nobody ever talks about defensivemedicine. That's not a term that would be used in Denmark in anyform.

PILGRIM: Personal service is key. In 1998, 90 percent of Danessaid they were satisfied with their health care, according to a surveyby the European Commission. That was the highest satisfaction inEurope. There are more doctors per parent in Denmark than in theUnited States, almost four doctors for every 1,000 people versusalmost three in the United States.

Doctors in Danish hospitals are paid a fixed salary by contract.Primary care physicians are paid an annual amount for each patient andare paid additional amounts for more extensive treatments of severeconditions such as coronary care.

(END VIDEOTAPE)

PILGRIM: Denmark is also trying to reform its system. Now, someDanes are also buying private health insurance to cover extra costs,such as drug co-payments, fees and a better room in the hospital, buteven so, the World Health Organization says that in Denmark privatespending on health care is only 16 percent, while in the United Statesprivate spending is more than half of all spending on health care.Lou?

DOBBS: And I think it would surprise a lot of people to knowthat Denmark , with its universal care system, still, I think it isabout 70 percent of the co-pays on dental and that sort of care is upto the patient. It is not a place where -- it's a safeguard againstextraordinary and extreme and imprudent spending.

PILGRIM: That's right. That's exactly right.

DOBBS: This is -- it's fascinating and we haven't heard anybodyelse talking about these issues. We haven't heard this president whois demanding health care be signed, we haven't heard this Congress,either Republican or Democrat, talking about these comparisonsintelligently with other nations from which people can learn and forone thing with the issue that you bring up, malpractice.

PILGRIM: Yes.

DOBBS: The discussion they want -- they want -- I don't knowwhat we'll see, but they want a public option, IE, government healthcare, but haven't so far gained the courage to say does that meanthere would be no malpractice lawsuit brought by lawyers againstdoctors if it's a federal system? You know, these are not smallissues and this discussion is not taking place in public. It isalmost as if the public be damned.

PILGRIM: It's very enlightening to look at the differentsystems, especially on...

DOBBS: I'm glad you said that because enlightening is what weare going to do here, Kitty, and you're going to do much of it. We'regoing to be bringing you the comparisons over the August recess hereon the LOU DOBBS TONIGHT broadcast. We are going to show you what youother countries are doing, those -- those elements of those othernations' health care systems from which we can learn and which, onehopes, will benefit all of us here. Kitty, thank you very much --outstanding -- Kitty Pilgrim.

Up next, President Obama's former physician believes thepresident's approach to health care is just plain wrong. He isopposed. Dr. David Scheiner (ph) joins me here.

And the president's approval ratings, as we said, droppingsharply. Who's to blame? What's to blame? That's the subject oftonight's "Face Off" debate.

And the future of that "cash for clunkers" program now in thehands of the United States Senate. Don't be afraid.

(COMMERCIAL BREAK)

DOBBS: Now this is one of those rare nights -- are you ready?We have good news for you from Detroit. Ford Motors reporting salesup compared to the same time a year ago. Ford reporting its salesrose two percent on the year. Ford also reporting a six percentincrease in sales from June. Chrysler, one of several carmakersreporting declines in sales, however, from a year ago -- Chryslersales down nine percent.

I feel like I should say down only nine percent. Chrysler sayssales were up 30 percent from June, Toyota sales down 11 percent, butits sales soaring 32 percent from June. General Motors had a 19percent decline in sales year-on-year, but its sales were up eightpercent from June.

Well, the government's "clunkers for cash" program luring morecar buyers into show rooms. That program will end Friday if theSenate doesn't approve another $2 billion more for the program. Twokey senators, Democrat Dianne Feinstein and Republican Susan Collinsare both opposed -- well, they did oppose passing more money to payfor the program.

Now, they have changed their position and will support thatextension. But the program is still facing stiff opposition. BriannaKeilar has our report.

(BEGIN VIDEOTAPE)

BRIANNA KEILAR, CNN CORRESPONDENT (voice-over): ChristopherCheris (ph) and Mary Lafleur (ph) were going to wait until next yearto get rid of their 1998 Nissan Pathfinder, which gets 15 miles pergallon.

UNIDENTIFIED MALE: We qualify and we are very happy (INAUDIBLE).

KEILAR: Then they qualified for a $3,500 rebate toward a new carunder the government's "cash for clunkers" program.

UNIDENTIFIED MALE: We just don't want to miss that, to miss thisprogram.

KEILAR: That sentiment is fueling a boom at Neale Kuperman's(ph) Toyota dealership outside New York City.

NEALE KUPERMAN, OWNER, ROCKLAND TOYOTA: The sales have picked upat least 50 to 75 percent.

KEILAR: But the buying frenzy could be short lived.

UNIDENTIFIED MALE: The bill is passed without objection tomotion, reconsidered later (ph) on the table.

KEILAR: The House of Representatives passed a $2 billionexpansion of the program before adjourning for August recess lastFriday, but it's uncertain if the Senate can do the same before itleaves at the end of this week. Many Republicans oppose "cash forclunkers".

SEN. JIM DEMINT (R), SOUTH CAROLINA: The government should notbe in the used car business and this is just a great example of howbadly the government manages things.

KEILAR: Some Democrats have major reservations about extendingthe current program as is. Senator Claire McCaskill (ph) said onTwitter, "the idea was to prime the pump, not subsidize auto purchasesforever." But two key senators who opposed extending the program,Democrat Dianne Feinstein and Republican Susan Collins, changed theirminds after an analysis by the Obama administration showed consumerswere buying higher fuel economy vehicles than the law requires.

SEN. DIANNE FEINSTEIN (D), CALIFORNIA: Fuel efficiency has to bea major component of this program, not just clear inventories off ofcar lots.

KEILAR: For now, prospective buyers like Cheris (ph) and Lafleur(ph) continue to be enticed by hefty rebates.

UNIDENTIFIED MALE: I will be leaving here with a car today.

(END VIDEOTAPE)

KEILAR: But will other potential buyers get the sameopportunity? It is still unclear if Democratic leaders will be ableto get those 60 votes they need to pass an extension of "cash forclunkers" and the clock is ticking in the Senate, which leaves forrecess at the end of this week and also, Lou, a very busy week aheadof the Senate here, since they are going to debate and vote on SoniaSotomayor's nomination to the Supreme Court.

DOBBS: Well, "cash for clunkers", it will be interesting to seehow that unwinds. And basically, this is a scrap program as well?These cars that are being traded in are going out to scrap. Some ofthe differentials in gas mileage only amount to one to a few miles pergallon, right?

KEILAR: Well, for instance, when we -- our producers up in NewYork went to that dealership today, they were trading in a car thatgot 15 miles per gallon and they were trading it in for a car that got21 miles per gallon. And this is a program that actually thesecondary parts industry opposes because a lot of -- for instance, theengine certainly does not go to scrap, Lou. It's basically -- ordoesn't go to be recycled. It does go to scrap.

DOBBS: Right.

KEILAR: It's crushed and there that's the end of it.

DOBBS: Amazing. All right, well, a lot for the Senate to sortout. Brianna, thank you very much -- Brianna Keilar from Washington.

Harvard Professor Henry Louis Gates speaking out for the firsttime since last week's beer summit at the White House. At thatsummit, you recall, the professor met with and shared a beer withPolice Sergeant James Crowley and the president, who invited them tothe White House after that national controversy over the arrest ofProfessor Gates.

But Sergeant Crowley and the president's subsequent remark aboutthe Cambridge police acting stupidly. Over the weekend, ProfessorGates talked about what it was like to meet Crowley at the WhiteHouse.

(BEGIN VIDEO CLIP)

HENRY LOUIS GATES, JR., PROFESSOR, HARVARD UNIVERSITY: You knowwhat, I like Crowley. I thought that we would like each other, and,you know, I don't know what we'll talk about. But I asked him if hewould have lunch with me one-on-one.

I asked him maybe we could go to a Red Sox game together, maybewe can go to a Celtics game together. You know, maybe to have dinnerwith our families, you know. Why not?

(END VIDEO CLIP)

DOBBS: These guys are going to be spending a lot of timetogether. And Professor Gates also joked about helping Crowley'schildren with their college admission.

(BEGIN VIDEO CLIP)

GATES: You know, I offered to get his kids into Harvard.

(LAUGHTER)

If he doesn't arrest me ever again.

(END VIDEO CLIP)

DOBBS: A reasonable trade. And I think the professor is goingto hear from the sergeant on that admission's process.

When questioned by reporters, Professor Gates refused to saywhether he still thinks race played a role in that arrest.

Well, new developments in the Michael Jackson case. A judge inCalifornia today awarded Michael Jackson's mother custody of thesinger's children. 79-year-old Katherine Jackson given permanentcustody of Jackson's three children.

An agreement between Katherine Jackson and Debbie Rowe, themother of Jackson's two oldest children, cleared the way for thatruling.

Katherine Jackson also wants at least partial control over herson's estate.

Well, I'll have a few thoughts about all of these issues. Joinme on the radio Monday through Friday for "The Lou Dobbs Show" 2 to 4p.m. each afternoon on WOR 710 Radio in New York City.

Go to LouDobbs.com to get the local listings for the "Lou DobbsShow" on the radio and please follow me on Lou Dobbs News onTwitter.com.

Up next, more good news to tell you about on the economy, but theunemployment rate still rising. We'll have a special report on thisrecession and recovery.

Concerns tonight about the economy helping drive the president'spoll ratings even lower. We'll examine the president's sinkingapproval ratings in our "Faceoff" debate here tonight, next.

(COMMERCIAL BREAK)

DOBBS: President Obama's approval rating is falling sharply.Two major national polls showing a 6 percent decline in thepresident's approval rating last month. Health care, the economy,just what's behind the president's declining popularity. The subjectof our "Faceoff" debate tonight.

Joining me now, Jeffrey Guerin, Democratic pollster, president ofPeter Hart Research Associates.

Great to have you with us, Jeff.

GEOFFREY GARIN, DEMOCRATIC POLLSTER: Thanks for having me.

DOBBS: And Kellyann Conway, Republican pollster, president andCEO of a polling company.

Great to have you with us, Kellyann.

KELLYANN CONWAY, REPUBLICAN POLLSTER: Thank you.

DOBBS: Let's take a look at these most recent polls here, andlet's start with the ABC/"Washington Post" poll which has declinedfrom 65 to 59 percent. The CBS/"New York Times" poll from 63 to 57percent. NBC/"Wall Street Journal" 56 to 53 percent.

Jeff, should the White House be worried?

GARIN: Well, nobody likes to see their numbers going down, butthe reality is that president Obama is serving a at very difficulttime and he is trying to do very difficult things. What I would bepaying attention to if I were the White House are the fundamentalsounds in terms of his reputation and how people see him.

And what we also know from the polls is people still think he isa very smart president and -- who's been dealt a very difficult handand that that a very fundamental level, they like him and they arerooting for him.

DOBBS: You're talking about a lot of empathy there.

GARIN: When people stop rooting for him that's when they reallyare worried. But, look, you know, these are tough times things aren'tchanging as quickly as people would like, but in terms of thefundamental basic things that are important to Barack Obama's long-term success, both as president and politically, those things are inpretty good shape.

DOBBS: Kelly Ann, you look at those numbers. Significantdeclines, without question. But down to 59 percent, 57 percent, 53percent. Many a president would have paid a lot of money for thosenumbers?

CONWAY: Yes, but that's generic approval, and as Geoffrey pointsout, the man is likable. About 71 percent of Americans say that he,quote, "is likable" and they like him, they want him to succeed.

But he's the president, he's not the prom king. He wants to bevoted most likely to succeed, not most popular. And if you look atthe real devastation, Mr. Dobbs, in his disapproval, rapidlyincreasing on key issues, on taxes , on the deficit, on the economy andnow according to CNN Poll we Polls on health care.

He has what we pollsters call upside approval ratings. Morenegative than positive on these issues.

DOBBS: Let's take a look at those polls that Kellyann justreferred to CNN Poll of Polls, how Obama is handling health care,approval, 43 percent, disapproval, 45 percent. Your sense of howsignificant this is?

CONWAY: It's significant because this is what he's talkingabout. He's actually putting all his political capital which isdifferent than personal appeal on the line. He's doing town hallmeetings. He's got his economic team out there.

And fundamentally, Americans right now are looking at health carereform as an economic issue. That's where he's not faring well. Theyshould also be worried because he ran on pablum, hope, change,opportunity, and specifics are not his friend.

Every time he unveils specifics about a particular plan, like thestimulus, like the national energy tax , and now like health care, yousee a nexus in the dip in his approval ratings on these specificissues.

DOBBS: The Rasmussen Reports, Geoff, showing how would you ratethe health care you receive right now, excellent to good, that comesup to about -- and fair, you're talking about 74, 91 percent.

I mean, these are pretty strong numbers. If we could take a lookat that, please, that Rasmussen Report on the health care we receive.Excellent, good, fair, down to 17 percent.

Those are pretty strong -- that's a pretty strong support of what-- of the status quo, is it not?

GARIN: It is. You know it's why change is hard in health care,is that, there's a real schizophrenia here. People on the one handare satisfied with their own health care but on the other hand theyknow that the health care system is not working well for others.

The real question is, and I thought you did a real serviceearlier on in the show when you talked about these deeper issues, isthe current system sustainable, and that there's a lot of evidence itis not and that, you know, people have a right to be concerned aboutwhether they are going to be able to keep what they've got.

Frankly, you said nobody is talking about that. I thinkPresident Obama does. It's a complex message to try to communicate.But on these health care pollings...

DOBBS: Perhaps it's too complex for me to always correctlyproceed.

GARIN: The -- but on these health care poll ratings, theimportant thing on that is, look, this is obviously a work inprogress. His ratings are what his ratings are, but this is going tocome to some kind of conclusion at some point, hopefully, and thenwe'll -- that's really when the ratings will matter.

DOBBS: I think that's an interesting take, Geoff, if I may say,and Kellyann, as a Republican pollster. I will tell you, I think thatthe idea personally of rushing through health care at this point --we're talking about a sixth of the economy, we're talking about healthcare for really 300 million Americans, the rush to judgment seems, Iwill put it in the kindest terms possible, unseemly and perhapsimprudent. But it also seems unfair to judge a president who's beenin office for six months on this issue.

Is there some sort of great penalty here for this president andfor the Republican Party, the Democratic Party -- the Democraticleadership in Congress to say, wait a minute, we are really sincereand serious about this. Let's all take a deep breath, let's look andcompare, as we're going to on this broadcast, all the nation'sprincipal health care systems.

Let's look at the cost, what is sustainable, what is not, what isan appropriate way to go forward? Why not do that with an honest,open, public debate in this country? CONWAY: That would be terrific and I think it begs question,what was the rush? Why should we put 16 percent of the nation's GDPon an egg timer? You know, trying to ram this through...

DOBBS: But what about the role of the Republican Party in this?They should be full participating partners, not simply naysayers,right?

CONWAY: Yes. Well, there was a bipartisan plan that came outlast week. I think it's being driven by a few Republican senators andI think what's important here is that the difference between changeand revolution . I think Obama, a very smartly man on change.

And he himself seems like a very even-headed, slow-go guy,meaning he likes to look at best practices. He ran that way and Ithink he's governing way too rapidly for the kind of, quote,"change/ revolution " that Americans will follow.

DOBBS: Geoff, you get the last word and do it quickly.

GARIN: Well, the one thing I'd say is that...

DOBBS: You get the last word either way.

GARIN: I'll try to be quick. There are these bipartisannegotiations going on and the fact is the Republican leader MitchMcConnell is doing everything he can to kill them and in fairness toAmerica, he ought to encourage them, not try to suffocate them andthere is probably a bipartisan solution if the Republicans will let ithappen.

DOBBS: Well, I'm glad the two of you came together, Kellyannoffered up revolution , you offered up killing. I think we're a --we've built a very important bridge here tonight. We'll continue totry it.

Geoff, thank you very much. And Kellyann, thank you.

Still ahead, President Obama's health care plan faces sharpcriticism from his own former doctor, Dr. David Scheiner joins me.He'll tell me us why he thinks his president's plan doesn't work.

And more encouraging signs that our economy may be recovering.Do you hear? Recovering. We will have that special report. Staywith us.

(COMMERCIAL BREAK)

DOBBS: Encouraging positive signs on our economy to tell youabout. New home sales up 11 percent in the month of June. Sales ofexisting homes also rose last month. Economists, some of them atleast, saying this could be one indicator that our economy isbeginning to stabilize and perhaps recover.

Casey Wian has the good news.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): A surprisingincrease in spending on new home construction and other buildingprojects in June is the latest evidence that the worst of the U.S.recession has passed. That's the view of former Federal Reservechairman, Alan Greenspan.

ALAN GREENSPAN, FMR. FEDERAL RESERVE CHAIRMAN: I'm pretty surewe've already seen the bottom. In fact, if you look at the weeklyproduction figures of various different industries, it's clear thatwe've turned.

WIAN: The collapse of the housing market launched thisrecession. Now in distressed places like California, Arizona andFlorida home foreclosures have stabilized, according to the AssociatePress' economic stress index.

It measures unemployment, home foreclosures and bankruptcy inmore than 3,000 U.S. counties. Wide disparities exist, as this mapillustrates. Lighter colored countries in much of the Americanheartland show relatively healthy economic conditions, but high levelsof economic stress persist in California and the west, Michigan andmuch of the so-called rustbelt and parts of the south.

JOSEPH STIGLITZ, ECONOMIST & NOBEL PRIZE-WINNER: I think it's alittle bit premature to be confident about recovery and I think it'svery premature to be confident about a robust recovery by early nextyear.

WIAN: That hasn't stopped the president from taking some credit.

OBAMA: In the last few months, the economy has done measurablybetter than we had thought, better than expected. And as manyeconomists will tell you that part of the progress is directlyattributable to the Recovery Act.

WIAN: But his opponents are raising red flags.

SEN. JOHN MCCAIN (R), ARIZONA: There's a short-term improvementin the economy and I'll be glad to give him credit for that, but thequestion that I think we should be asking are the long-termconsequences of this unprecedented debts and deficits. Are theybeneficial to the country? And I think the answer is no.

WIAN: Many economists and even the White House say that for now,unemployment is likely to keep rising, even as the economy turnsaround.

(END VIDEOTAPE)

WIAN: Until job growth recovers, most Americans are not likelyto feel that the economy is recovering at all, which means consumerspending will probably remain slow and that, in turn, could slow therecovery -- Lou?

DOBBS: Yes, but you know, I -- I have to be honest. It get as alittle irritating to hear these economists be so cautious since theyreally have had little in the way of prescription about when itstarted, how they will wrap up. We are seeing positive signs asyou've just reported. Why not, if you will, exalt in those positiveswhich have been rare over the course of the past year and a half?

WIAN: Well, there are economists who do say that this recoveryis going to be stronger than a lot of their colleagues think. Theysay because industries like auto manufacturing and home constructionhave been down for so long that there's a lot of pent-up demand therein this recovery might just well take off, Lou.

DOBBS: Those are the economists we ought to be talking to,Casey.

Casey, thanks a lot. I appreciate it.

WIAN: Next time we will.

(LAUGHTER)

DOBBS: OK. You got it. You did great. Thank you, sir.

Up next, President Obama's health care plan is under attack byhis former doctor with whom I'll be speaking.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: There are multiple problems with the presenthealth care reform proposals but allowing private insurance tocontinue being involved is the most egregious.

(END VIDEO CLIP)

DOBBS: Egregious. We'll be joined by Dr. David Shiner. He'lltell us why he believes the Obama plan doesn't do well enough or gofar enough. We'll be right back.

(COMMERCIAL BREAK)

DOBBS: The president's health care proposal has many critics.One is the president's former personal physician, Dr. David Scheiner.Dr. Scheiner is a Chicago doctor. He treated President Obama for morethan two decades. He says the president's health care plan will notwork because it's too expensive and too compromised.

Doctor, it's great to have you with us here. You know I think alot...

DR. DAVID SCHEINER, PRESIDENT OBAMA'S FORMER PHYSICIAN: Thankyou very much.

DOBBS: I think a lot of people are going to be surprised that --you know, you spend two decades with your patient and now you're alittle disappointed, to say the least, with his health care plan. Whyso? SCHEINER: Well, you know, I have tremendous respect for him.He's incredible, maybe the best president I've been living through andI go back to Franklin Roosevelt. But on this issue I think he's wrongand I think...

DOBBS: And we're only six months in.

SCHEINER: Well, I think on this particular I think he's wrong.

DOBBS: No, I'm just kidding with you.

SCHEINER: He is extraordinarily bright. I mean the man isincredible.

DOBBS: Right.

SCHEINER: His knowledge. Once I told him a joke the last time Isaw him, and he remembered that I told him the same joke, and hecriticized me. If he can remember dumb jokes this guy has got amemory.

DOBBS: Yes, he's got a memory but what's his vision? And that'sthe issue here. You say this plan is too expensive and doesn't go farenough in the sense that it isn't sufficiently universal, isn'tsufficiently nationalized? In what way?

SCHEINER: Well, you know, there's a number of areas. Forexample, one area that really bothers me is Medicaid. One of thethings that he wants to do is to increase Medicaid.

And Medicaid -- the states can't afford it right now. And howare they going to afford it if he increases the size of Medicaid. Ican't understand.

Medicaid is also not a good system. Most doctors won't takethem. And many hospitals won't take Medicaid patients, and thepatients are treated often in a third-class fashion. That's not theAmerican way of life when we're supposed to be more egalitarian.

Medicaid is bad.

The other thing is that the private insurance companies willstill be driving the car and private insurance companies -- I've had,you know, 40 years of dealing with them. People keep saying, well,the government will get in the way between you and your patient.

The government never gets in the way. In Medicare, 40 years ofMedicare, they've never interfered with me giving care. Privateinsurance...

DOBBS: But Medicare...

SCHEINER: ... is constantly.

DOBBS: All right.

SCHEINER: Constantly interfering.

DOBBS: Medicare is -- I'm sorry, which is interfering?

SCHEINER: Medicare never interferes. If anything, Medicare istoo permissive. There's too many things they allow that they shouldnot. They should tight en it up. Private insurance tells me whathospital, what laboratory, what medication, whether I can admit thepatient, whether I can't admit the patient. It's incredible.

DOBBS: But the argument is, as you know, Doctor, that withgovernment-run health care that there would be great intrusion by thegovernment and the government, you mentioned Medicare, is 35 percentmore expensive over the past 30-some-odd years than all of the otherprivate programs combined per patient.

So that's not a very likely model either. So what would be thetwo...

SCHEINER: Well, except Medicare is treating old people.Medicare is treating old, sick people. They're going to have -- youknow, great amounts of costs the last two years of one's life. It hasto be more expensive.

DOBBS: So my question is, what are the things you would like tosee done, the top two requirements for successful health care reform?I know there are many more. Just the top two because we're out oftime.

SCHEINER: The first one would be universal Medicare so thateveryone is covered and there is no difference between differentpatients.

DOBBS: Right.

SCHEINER: The second thing, I think is we've got to address theissue of the pharmaceuticals. This is getting way out of balance. Wehave to negotiate the fees for the...

DOBBS: So you're talking price controls for pharmaceuticals?

SCHEINER: Not cost controls but it has to be -- you know, part"D" was a disaster, it was so expensive.

DOBBS: Right.

SCHEINER: There has to be negotiation.

DOBBS: All right. Well, Dr. David Scheiner, good to have youwith us. And maybe you should call up your former patient and talkabout maybe a beer at the White House to get this thing resolved.

SCHEINER: I wouldn't mind a glass of water.

DOBBS: You've got it. Dr. Scheiner, thank you very much.

Coming up at the top of the hour. Campbell Brown -- Campbell? CAMPBELL BROWN, CNN ANCHOR: Hey there, Lou. If your kidsdownload music, well, you may want to make sure they are doing itlegally. Coming up, we're going to talk with one college student whois being forced to pay $675,000 to the record industry for his illegaldownloads.

But does the punishment fit the crime? We're going to talk aboutthat ahead.

Also Ryan O'Neal's very bizarre behavior at Farrah Fawcett'sfuneral. He says he actually hit on his own daughter. We're going tohave the details plus all our -- plus, rather, our mashup of all theother top stories of the day coming at the top of the hour -- Lou?

DOBBS: All right, Campbell. Thank you. We'll be right back.

(COMMERCIAL BREAK)

DOBBS: A quick reminder to join me on the radio, please, Mondayto Friday for "The Lou Dobbs Show." Go to Loudobbs.com to get thelocal listings in your area and follow me, if you will, on Lou DobbsNews on Twitter.com.

We thank you for being with us tonight. And join us heretomorrow. For all of us, thanks for watching. Goodnight from NewYork. Next, Campbell Brown.

ANNOUNCER: CNN Prime Time begins right now.