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ANDERSON COOPER 360 DEGREES

Senate to Vote on Bailout Plan; The Alaskan Island Next to Russia

Aired September 30, 2008 - 23:00   ET

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


ANDERSON COOPER, CNN "AC360" ANCHOR: We begin with "Breaking News" from Washington. A word tonight the senate is getting ready to act on the financial crisis, a new bill slightly altered to be voted on tomorrow.
Wall Street had already close when word from the Senate got out but still stocks had already rallied, the DOW up nearly 500, the third biggest point gain ever just 24 hours after the worst plunge ever. Don't let the big gain fool you; the same problems with credit still exists. We'll show you why in a minute.

First though the "Breaking News" of the minute, Jessica Yellin is live in Washington with the latest -- Jessica.

JESSICA YELLIN, CNN CORRESPONDENT: Hi Anderson.

Well the Senate has announced that they are going to vote on their version of this bailout package tomorrow night; that means they'll be voting before the House gets a crack at this again.

They've changed the legislation slightly and they're going to include a few more measures that they think will be sweeteners, encouraging other members of the House to vote yes. This includes an increase in the amount of insurance, the amount of money that the federal government will insure you for on a bank account.

So it is $100,000 now and will increase that amount to $250,000; that's designed to help small businesses. Other add-ons include new measures to make things like mental health coverage at an equal rate that physical illnesses are covered and a whole bunch of tax packages including an extension of the way we do the alternative minimum tax.

All these things, it sounds odd to add to a bailout package. They are all things that are considered popular by different people in the House of Representatives.

And the Senate's hoping if they pass this bill with all of that attached, it'll go through the House. So that's their hope.

COOPER: Is the hope that what, it's going to pressure House members to pass it? I mean just yesterday, House members didn't pass their version of the bill.

YELLIN: Right and it is not a done deal. I've been talking to Congressional aides all night, who are scratching their heads, wondering certain measures are going to cause them to lose votes, will they pick up as many votes and more, because they need to do more than they did before obviously. And folks at this hour just aren't sure how this will go down in the House of Representatives.

COOPER: Is this basically the Senate kind of watching the news last night, hearing from their constituents and hearing the outrage, that just basically the complete failure of leadership that was seen in the House yesterday and just deciding they needed to do something?

YELLIN: A few things going on; in a sense, yes, they want to continue to take action to keep the markets from falling tomorrow. So this continual motion is a positive thing, in their view, for the markets.

You'd be surprised, though you're asking about outrage, you might be surprised to know that still the majority of the calls members on both sides are getting are from voters who want them to vote no.

It's slightly changing, they're getting a few more calls from people saying vote yes. But still the overwhelming momentum is from voters who do not think this is essential. So the pressure is still on members because many of their constituents aren't behind them.

COOPER: All right, Jessica Yellin thanks.

As we mentioned at the top, we've now seen two record days on Wall Street, one bad and one good. And the fact is though folks seem too much on either one it might be a fatal mistake. There are bigger things to worry about and the daily fluctuations of the stock market.

Much bigger as Ali Velshi is here to explain, Ali there is a tendency today on the paper, you were on television and you see oh it's up 400 or so points, and you think oh the problem is over. But it isn't over.

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Not even. It's a convenient number because we can track the DOW, but we can't track the credit markets. I'm sure I sound like a broken record telling people the problem is in the credit markets. The rate at which banks have to borrow money from each other on an overnight basis is now the highest it has ever been today.

So these rates continue to go up there is a credit freeze. And frankly, it was very unusual last week when you heard politicians setting sort of that deadline or getting this done by the weekend before markets opened on Monday. It would be advised the people and not try and satisfy the markets on this.

We need to fix this problem for the bigger problem that it is. Markets are following Washington right now, it's not the other way around. So at this point, the credit markets are bigger and the stock market is a weak barometer of the economy at this point.

COOPER: So we're already seeing what businesses not able to borrow money or individuals and I have to borrow money?

VELSHI: Right now, it's the banks but the banks need to borrow money in order to get that money to flow to businesses that need those loans. And we've already seen major corporations having issues with being able to raise money. And that starts to flow all the way down. The system all the way down hasn't come to a halt.

If you have a mortgage and you happen to have a great credit and a lot of money down in a good neighborhood, you'll still get that loan but you may not be able to sell it this easily because your buyer may not be able to get that loan.

It's slowly trickling down. If there's word that there's a deal and it's a real deal this time you may see that opening up.

COOPER: But there's still a chance that whatever the deal is, it's not going to actually free up credit markets.

VELSHI: Well, absolutely, and that's why I think the -- it might be a bit of a head fake that the Senate is going first because we didn't really think the Senate was the problem in this; it's the House. And that deal may be on Thursday that vote it maybe later than that. That's when you'll start to see credit markets opening up when we really think that some of that $700 billion is actually going to flow to businesses that are in trouble and that'll start to flow down to individuals.

But it still is a Main Street issue and Washington has got a big selling job to convince Americans of that.

COOPER: All right, Ali Velshi thanks very much.

Coming up, after watching politicians fail yesterday and point fingers at one another. Today, Obama and McCain seemed to be taking a different approach. We'll show you what happened on the trail.

And later personal financial guru Suze Orman, taking your questions, you can send them in. She's here right now or catch our web cast during the commercial breaks by going to ac360.com and follow the links.

That, and we also have new statements from Sarah Palin, and what she has to say about what she reads to make sense of the world. The simple question from Katie Couric and the answer might surprise you ahead tonight on "360."

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, (R) PRESIDENTIAL NOMINEE: We've got a severe crisis of confidence among the American people that this is a system that doesn't take care of the fat cats on Wall Street but takes care of people like yourself on Main Street.

SEN. BARACK OBAMA, (D) PRESIDENTIAL NOMINEE: There's plenty of blame to go around; and many in Washington and Wall Street deserve it. All of us now have a responsibility to solve this crisis because it affects the financial well-being of every single American. (END VIDEO CLIP)

COOPER: Candidates today both trying to sound like problem solvers, not partisan politicians. Tomorrow, they'll be on the senate floor, both of them and vice-presidential candidate, Biden, voting on a financial rescue plan, something they both say they support.

Now, yesterday, you might remember, they were pointing fingers at each other. So why today the sudden peace outbreak on the campaign trail?

Ed Henry has the "Raw Politics."

(BEGIN VIDEOTAPE)

ED HENRY, CNN CORRESPONDENT: Even aides to John McCain admit he's been pummeled over his role on the failed bailout. So on the ropes he decided to fight back. But instead of delivering jabs at Barack Obama, McCain chose a shift in tone.

MCCAIN: I think I need to talk to America and hear what their solutions are because we're going to have to get the support of all Americans to address this together.

HENRY: One day after charging excessive partisanship from Obama sunk the deal, McCain didn't even mention his rival by name, instead talking non-stop about bipartisanship and only reaping into to Congress in general.

MCCAIN: The country and the world look to Washington for leadership and Congress once again came up empty-handed.

HENRY: But it was McCain who came up empty-handed after putting so much political capital into the bailout talks. So Democrats are skeptical of his new tact.

JENNIFER PALMIERI, DEMOCRATIC STRATEGIST: I think that it was folly from the beginning to think that as a presidential candidate you can have actually have a positive impact on the Congressional negotiations in any sort of real way.

HENRY: But Barack Obama is recalibrating his rhetoric on the trail, too, shifting focus away from the blame for the crisis to also go to bat for the bailout.

OBAMA: There will be time to punish those who set this fire. But now is the moment for us to come together and put the fire out.

HENRY: A rare time where the nominees agree, because both men realize Monday's partisan meltdown on Capitol Hill turns off the small part of the electorate but still undecided.

JOHN FEEHERY, REPUBLICAN STRATEGIST: If you call names and start pointing fingers, it doesn't do you any good going after the independent voters. HENRY: Supporting the rescue plan is risky for both nominees. Voters are overwhelming the Capitol switchboard and e-mail servers with angry protest against any bailout. But Republican strategists say McCain in particular has little choice but to push for a solution even if it's controversial.

FEEHERY: I think that for John McCain not only does he have to look like he's fixing the problem, he has to fix the problem. Because at the end of the day if the economy completely tanks that's not a different thing.

(END VIDEOTAPE)

COOPER: Ed, as you reported though the majority of the calls the lawmakers are getting are against the bailout. So why would McCain support this in such a high profile way?

HENRY: Two big reasons. He's running his campaign on the theme, country first. And right now, it would be pretty hard for him to say, oh the politics of this is a little sticky, we're getting a lot of calls, and he's got to stand behind this and take a chance. He's rolling the dice obviously.

But as you heard from the Republican strategist, the economy is a big problem for Republicans right now. He's got to take that chance.

And secondly, as you know he tries to portray himself as a maverick on the campaign trail and it also doesn't necessarily hurt him to show him standing up to some of his fellow Republicans when they're saying look, this bailout is a bad idea. To say we've got to give it a shot. It's not a perfect bill, but we're in a crisis right now and something needs to be done -- Anderson.

COOPER: All right, Ed Henry thanks.

Up next, "Digging Deeper" with our panel on the politics to bailout debate.

And later, how Sarah Palin is getting ready and Joe Biden for Thursday's debate. There's a new picture of her there what they're calling debate camp in Arizona and practicing at the podium on the McCain compound in Sedona, Arizona. We'll also show you some more surprising moments from Palin's interview with Katie Couric.

Also ahead in this hour with the market going up and down and the way it has lawmakers going back and forth. What should you be doing with your money? Suze Orman answering your questions. Send them in to ac360.com. We'll be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL, (R) MINORITY LEADER: One thing is clear any solution will be a bipartisan solution. Both sides have to work together and we will stay here until the answer is yes. (END VIDEO CLIP)

COOPER: Senate Minority Leader Mitch McConnell updating you on our breaking story tonight. And looking like a senate bailout package could come up for a vote tomorrow in the evening with markets going up and down and credit markets on the brink. The thing is as a philosopher once said you stare into the abyss, and it stares back. You have to wonder what if anything the candidates are learning from it.

"Digging Deeper" is CNN's senior political analyst, David Gergen, senior political contributor, GOP strategist and McCain supporter, Ed Rollins, also political contributor, Hilary Rosen, of the "Liberal Huffington Post," and an Obama supporter.

Good to have you all with us.

David, what about that, what do you think McCain and Obama are learning from this abyss that they are staring at?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: I don't think either one of them wants to wrap himself too much around this package and around this whole issue. But I think mainly, they've got different reasons from where they were today. And that is John McCain swerved off the road a couple times last week and went into the ditch. And he paid a heavy price for it, that's the perception. And he knew he had to change those perceptions.

He got back on the road today and he was much smoother, I think he had the best -- one of the best days he's had the past two weeks.

And now, if he gets a bill done, if there's a bill vote on by the Senate in the House and they think this thing is rescued -- the rescue bill is rescued, and Palin has a good interview on Thursday night, maybe he can get his whole campaign back on track and get some momentum again.

Well, I think that's why he's quite conciliatory.

Barack Obama has been a little more conciliatory throughout this except for attacking Bush, not McCain. And Barack Obama has been more hands off; he's coming back on Wednesday night. He wants to be associated with getting it done.

But he is going to continue laying off a lot of the problem on the Republicans and argue as he did today, elect me and we'll have a much bigger attack on the overall economy, and not just this bill.

COOPER: Ed, that is -- I mean, even if there is a bailout bill by the end of this week, Thursday night say if the House votes on and this thing passes, the Congress and the President, if Obama still hammers away at it, where does McCain -- I mean, does this still hurt McCain even if there is a bailout bill if he's been instrumental in getting it done?

ED ROLLINS, CNN SENIOR POLITICAL CONTRIBUTOR, GOP STRATEGIST: I mean, I think it hurts him less; it's not the topic of the week as it is today. I mean, I think he's had -- I agree with David totally, he's sort of getting back on track.

The critical thing for McCain, he has to make his ads match up with his rhetoric. He's out there today, talking about bipartisanship and his ads are tearing the heck out of Democrats. So that's not bipartisan. I think the key thing --

COOPER: But isn't that pretty common, the candidate even wants to look presidential and said something where the dirty works being done and the ads are --

ROLLINS: Except the reality is the ads are diminishing capacity and I think there's been a lot of highlighting on the negativism in the ads. I think for John McCain's sake, he has to basically make his case against Barack Obama based on Obama's perceived record.

I mean he is a liberal. There was a lot of things there that the Democratic Party is for and a lot of things that obviously McCain has going to have to defend. But I think at this point, the country would like the rhetoric to be a little bit lower.

Once this economic crisis, the short term, which is the financial package, the crisis is still there, then I think they ought to go talk about the difference between them and governing styles and all the rest of it.

COOPER: It is interesting Hilary, when you see their styles, they are very different. And John McCain yesterday was criticizing Obama and others have criticized Obama for his being too hands off, or not really showing leadership, for not necessarily running his party, for not making calls to folks in the House to try to convince Democrats who weren't going to vote for this thing to vote for it.

HILARY ROSEN, CNN POLITICAL CONTRIBUTOR: Well, let's remember, we didn't need more Democrats to vote for it if the Republicans have done what they said. But I think we ought to step back.

Barack Obama's been pretty consistent over the last two weeks. He has been on the phone regularly with Secretary Paulson who had asked him not to inject presidential politics into this, and he didn't.

I think that folks have to understand the Congress this week didn't, like invent this out of whole cloth. Essentially, kind of the parents are away and the children were fighting. Congress reacts to the country, which was overwhelmingly against this package.

Frankly, you know, if Suze Orman and Ali Velshi have made this speech instead of the president the other night for why we needed an economic package, it likely would have passed. The problem is that nobody was really making the case to the country and that's the president's job. And I think that Barack Obama is right in saying, this really does fall at the president's feet.

In the most nonpartisan way, if there is a crisis in the country, if there is a crisis in the markets, apparently the Treasury Department has known about this and been working on it for a couple months. That's really where the communication should have been; otherwise we were just never going to get out of sort of the election squabble which I think everybody realized today made no one look good yesterday.

COOPER: David, though is this just an albatross that's going to be around John McCain's neck from here on -- for these next 40 some odd days? I mean, can he get away from this?

GERGEN: I think he can get away possibly from the events of the last two weeks. If the Congress passes the bill and things get a little better. But I think his problem is when -- he has a two-fold problem, Anderson.

And one is over the last two weeks the dynamic of the race has changed. And that is it has change -- the momentum has gone to Obama, he has a 4 or 5 point lead now if you look across the polls. And in many states, things are looking better for him than they were. So McCain has to reverse the momentum of the race.

The second problem he's going to face is, as you were just stressing earlier at beginning of the show, this bill is not going to solve everything magically in the overall economy. We're going to have a jobs report Friday, which means the last jobs report before the election which is likely to show, according to economists, we're going to have another 100,000 jobs lost over the past month.

And you're going to have other economic news over the next 30 days it's going to keep the focus on the economy. And that helps Obama. So McCain coming out of this, even though he gets it back on the road he now faces a much tougher fight than he did a couple if weeks ago.

COOPER: Very quickly, does the debate Thursday night really matter?

ROLLINS: Sure it matters tremendously. It's a judgment call. If she turns out to perform much better than people anticipate at this point in time, then she moves on and she can do the other things that she should going to do in the campaign.

If she bombs, which I don't think she will, I think she's going to be fine, but if she bombs, then it's a judgment call and it's just one more ding on the side.

COOPER: Hilary, do you agree with that?

ROSEN: I don't think she's going to bomb. I think the format of the debate is very non-confrontational. Five minutes, they each get to answer the question. Anyone can do that if they work at it enough. We've seen her be poised before like at the Republican convention.

I think in the end the debate will be interesting as a character study but I don't think it's going to end up making much difference. People are going to focus right back on the future of the economy again.

ROLLINS: As they should.

COOPER: Hilary Rosen, Ed Rollins and David Gergen thank you; always interesting.

Coming up, personal finance guru, Suze Orman, taking your questions in how to ensure your money is safe or safer as it can be this days. Send us your question to ac360.com and follow the links to the live chat.

Also debate night, Thursday night Sarah Palin and Biden and we'll tell you how she is getting ready. And Joe Biden and show you more of her interview with Katie Couric and what newspapers and magazines does she read? The answer may surprise you.

And we sent our correspondent to the one spot in Alaska where you actually can see Russia. Sarah Palin cites the closeness as one reason she has foreign policy experience, surprisingly some in the remote island have no idea who Sarah Palin is.

Gary Tuchman has wandered around the island; 150 people live there. We'll meet some of them when "360" continues.

(COMMERCIAL BREAK)

COOPER: Coming up, Suze Orman with ideas on how to weather this financial crisis. She's answering your questions, just go to ac360.com follow the links.

But first, Randi Kaye joins us with a "360 News and Business Bulletin" -- Randi.

RANDI KAYE, CNN CORRESPONDENT: Hi there Anderson.

They are voting for president in the crucial battleground state of Ohio. Yesterday, a court refused to let Republicans challenge a ruling that allows Ohioans to register and vote on the same day. So early voting is already under way in more than two dozen states.

Across the U.S. home prices continued decline tumbling 16 percent in July the sharpest annual drop ever. And though the monthly rate of decline is slowing, there is no upturn in sight.

And in parts of the southeast, it seems like a full time job just trying to get a gallon of gas. A shortage that was expected to last only a few days is dragging into its third week and could go on a few weeks more. The problem began when hurricanes Gustav and Ike shut down refineries all along the Gulf coast; as you well know, Anderson.

COOPER: Randi thanks very much.

Up next, personal finance expert Suze Orman answering your questions and the ups and downs of Wall Street. How this all impacts your wallet and what you can do. You can send in your questions, go to ac360.com and follow the links. Also Governor Palin seen here debating in 2006, now gearing up for her biggest face-off yet; Thursday's VP debate.

And tonight some new statements from Palin, simple questions to Katie Couric -- by Katie Couric and the answers might surprise you.

When "360" continues.

(COMMERCIAL BREAK)

COOPER: Look at the DOW's climb tolled on Wall Street finishing up 485 after yesterday's record loss of 778, that's it obviously speeded up.

Updating our "Breaking News," the senate supposed to vote on a bailout plan tomorrow night. Personal finance expert Suze Orman joins us to answer your questions about the wild ride in the markets.

First of all, the bill that the Senate is going to vote on tomorrow night is going to raise from $100,000 to $250,000 the amount the FDIC will protect in a bank. What does that mean to people? I mean, is that a good thing?

SUZE ORMAN, PERSONAL FINANCE EXPERT: Yes, it's a good thing, only in that people don't have to go to many of other different banks if they have more than $100,000 or if they're confused on how it works.

Does it help the little people? Not that much to tell you the truth. Because who has $50,000? They have maybe $50,000 of credit card debt. But very few people really that we're talking about really that's going to affect.

But for large banks, for large businesses rather, it makes it's easier for them to possibly meet their payroll and things like by dealing with just one bank.

COOPER: We've got a ton of questions on ac360.com web site.

Jon writes: "I'm 28 years old with no credit card or student loan debt. My condo is paid off. I have a great job and am pointing some money away in my 401(k). Should I be taking advantage of the 'great bargains' that you discussed in your article on the 360 web site yesterday?"

ORMAN: Yes, my dear Jon.

Of course, he should be taking advantage of it, because he doesn't have to use his money to get out of debt. He's got everything going for himself. So, how does he take advantage?

How do you take advantage of what's going on here? It's very simple.

Just continue to, every single month, keep putting your money in the market in something that is giving you a good dividend, something that is maybe like an exchange-traded fund, like the DVYs, for instance, that buy the Dow Jones industrial average. You can get a 4.7 percent yield.

If you do it in little amounts of money over a long period of time, you will be fine. But, if you have a large amount of money and you're going to put it in right here, all in one lump sum, oh, you will be making one of the biggest mistakes in your life, if you ask me.

COOPER: Let's see.

Julie asked, "Is it a total mistake to take out my husband's $70,000 401(k) to pay off our credit cards? We have three kids in college and have racked up debt, which now hurts. We want to start over and won't do it again. I have around $100,000 in my 401(k), which will stay put."

ORMAN: Are you kidding? You are not to touch a penny in your 401(k). Why? Number 1, when you take it out, if you're not of age, 59 1/2 years of age, what's going to happen? You're going to pay not only ordinary income taxes on it, but you're going to pay a 10 percent penalty, as well.

The $70,000 that you have in there or the $100,000 that you have in there, when it's all said and done, you'll have $50,000. What are you doing? You're going to be taking out the money while everything is low here. Don't you dare touch it.

And here's the other thing. Remember, 401(k)s are protected against bankruptcy. So are retirement accounts. So if you ever have to claim bankruptcy, keep the money in the 401(k). Don't use it to pay off credit card debt.

COOPER: Maureen writes, "My bank closes. How quickly by law can I obtain my money?"

ORMAN: The weekend. The bank close, the FDIC will come in. They'll usually close the bank on the weekend, like a Friday or Saturday. You'll have your money on Monday. Don't worry about it.

Sheila Bair, chairman of the FDIC, smart, smart woman. Now I think she should run for president.

COOPER: Chelsea writes, "I'm 14, and I graduate high school in 2012. What can I do right now to ensure I get a college loan, and will organizations and colleges become stingier with scholarships?"

ORMAN: I'm not sure there's anything you can do to guarantee that you're going to get a student loan except this. Go out there and talk to everybody. And in my opinion, tell them, why don't we pass something like this bill so that we can free up money so it will be easier for people to lend you money when you need it?

COOPER: Dee writes, "We use two credit cards, pay off the balance in full each month. Our credit history is impeccable. I am hearing that our credit card companies may reduce our lines of credit, thus lowering our FICO score. Is this true and why would the companies do this?"

ORMAN: They're doing it because they don't want you to use your credit card, run up these lines of credit and then all of a sudden say to them, "Sorry, I can't pay you back."

So credit cards will be lowering their lines of credit. Home equity lines of credit will be taken away from many of you. That will increase your debt to credit limit ratio, which is 30 percent of your FICO score, and your FICO score will go down. And that will hurt you and then what happens? Your car insurance premiums will go up. Is that true? Oh, you bet you. It is.

COOPER: All right. Sandra writes, "I currently bank with a local credit union. The bank is NCUA and ASI insured. Do I have the same security as a FDIC insured institution?"

ORMAN: You absolutely do. Don't worry about it.

COOPER: And Tanaka writes, "In light of the economic crisis, I am concerned for my parents, who are both receiving Social Security benefits. In a worse-case scenario, would they continue to receive these benefits?"

ORMAN: They're going to continue to receive Social Security benefits. Does Social Security have problems for many of us years to come? It does. But you know what? Let's get through today before we worry about our Social Security of tomorrow.

COOPER: Also, a lot of people wrote to me today that, you said in the past that, if you're in it for ten years in the stock market, it's the best investment. In -- back in 1998, the Dow Jones was at 7,632. It's now -- yesterday, it was down to around 8,000.

Wouldn't it have been better for someone to be in municipal bonds getting 5 percent and...?

ORMAN: It could, yes. If -- who could predict what's going to happen? So if you had known back then, should you have been in municipal bonds at 5 percent tax rate? Possibly.

But here's the thing. I went back for almost ten years. And if you had put money in the Standard & Poor's 500 index, and you had done it every single month for the past 10 years, you actually would be up on your money today, if you did it every single month, even though the market is far lower today than where it was back then.

COOPER: Suze Orman, it's always good to have you on. Thank you.

ORMAN: Any time.

COOPER: Appreciate it.

The economic mess sure to come up in Thursday's vice-presidential showdown. We just got these pictures from the McCain campaign of Sarah Palin prepping at John McCain's ranch in Sedona, Arizona. Joe Biden is practicing his answers with Michigan Governor Jennifer Granholm, we're told.

Up next, Palin and Katie Couric went for another round of questions. And they always have been, these ones are fascinating, as well.

And later, we'll take you here to a place in Alaska where you actually can see Russia. It's an island way out in the Bering Sea. Sarah Palin's never actually been there, but Gary Tuchman is there right now. A live report, coming up.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GOV. SARAH PALIN (R-AK), VICE-PRESIDENTIAL NOMINEE: I do look forward to Thursday night and debating Senator Joe Biden. We're going to talk about those new ideas, new energy for America. I'm looking forward to meeting him, too. I've never met him before, but I've been hearing about his Senate speeches since I was in, like, second grade.

(END VIDEO CLIP)

COOPER: Clearly, the audience kind of saw that as a dig at Senator Biden. Palin today said she didn't mean it that way. Interestingly, she's now casting the choice between herself and Biden as a question of experience versus change. Here's what she told Katie Couric on CBS.

(BEGIN VIDEO CLIP)

KATIE COURIC, CBS ANCHOR: When you have a 72-year-old running mate, is that kind of a risky thing to say, insinuating that Joe Biden's been around a while?

COOPER: Oh, no, it's nothing negative at all. He's got a lot of experience and just stating the fact here that we've been hearing his speeches for all these years. So he's got a tremendous amount of experience. And you know, I'm the new energy, the new face, the new ideas, and he's got the experience.

(END VIDEO CLIP)

COOPER: Joining us now, James Carville, Democratic strategist and CNN political contributor, and Bay Buchanan, CNN political contributor and former senior adviser to Mitt Romney.

Bay, during her interview with CBS, Palin was asked what materials she read that helped shape her world view. I want to show our viewers her response.

(BEGIN VIDEO CLIP)

COURIC: What newspapers and magazines did you regularly read before you were tapped for this, to stay informed and to understand the world?

PALIN: I read most of them, again, with a great appreciation for the press, for the media.

COURIC: Which ones specifically? I'm curious what you...

PALIN: All of them. Any of them that have been in front of me over all these years.

COURIC: Can you name a few?

PALIN: I have a vast variety of sources, where we get our news. Alaska isn't a foreign country where it's kind of suggested, it seems like, "Wow, how could you keep in touch with the rest of what Washington, D.C., maybe thinking and doing when you live up there in Alaska?"

(END VIDEO CLIP)

COOPER: You know, all along, people have been saying -- or conservatives have been saying, you know, that they're over coaching her; they just need to let Palin be Palin. She couldn't actually name any magazine or newspaper that she read. Is that a problem, or do you think that it's just sort of...

BAY BUCHANAN, CNN CONTRIBUTOR: No. I don't think it's anything. I think her statement that the media really looks upon Alaska as if it's, you know, some third-world nation up there and doesn't have access to these kind of mainstream newspapers is ridiculous.

COOPER: But Katie Couric wasn't saying -- wasn't implying that. She was just asking her what newspapers she reads. It's a question I've been asked a million times.

BUCHANAN: Yes.

COOPER: Don't you think it's odd she couldn't answer?

BUCHANAN: She could have answered it more specifically, but she answered the question: lots of them. And she obviously reads different magazines and newspapers or whatever.

COOPER: I believe she said all of them.

BUCHANAN: I don't think it's a big deal, Anderson.

COOPER: OK. She said all of them.

BUCHANAN: Well, I think she said she has access to all, anything that's put in front of her.

COOPER: OK. All right.

James, is the problem that Palin is not being allowed to be Palin?

JAMES CARVILLE, CNN CONTRIBUTOR: Well, I think she was probably Palin there who we were listening to. I mean, I think that was Palin unfettered. That was the real Sarah Palin. And look, it has nothing to do with being from Alaska. Alaska has the Internet. You can read anything. She can read anything she wants.

From everything we have heard and seen of Governor Palin, she's a woman who's supremely uninterested in the world around her. She may know a lot about Alaska. She may know a lot about moose hunting or fishing or even governing Alaska.

But she has no interest in -- no demonstrable interest in foreign policy. She didn't have a passport until she was 47. She has no interest in economics policy, as evidenced by her answers. And I think that's what people are saying. This idea that somehow or another it's anti-Alaska certainly is absurd. In this day and age, you can live in Alaska and get information just like you get it anywhere else.

BUCHANAN: You know -- you know what makes her different and why people responded to her. It's because she's a true populist. She really does understand what the American people think and feel, because she's lived their challenges.

To suggest she has no interests, just because her interests aren't the same of those in Washington does not mean she's not an extraordinarily competent leader.

Look what she did in two short years as the governor. She focused on the issues that were of concern to the people of Alaska, and she turned things around. She's remarkable.

COOPER: But Bay -- Bay, it's interesting. In 19 -- in 2006, she was asked about the surge, and she basically said she had heard about it, you know, on the news but didn't really have much of an opinion about it. I mean, does that concern you at all that, I mean, in 2006, if someone had asked you about the surge, you could have formed an opinion about it. I'm sure you had an opinion about it.

BUCHANAN: I'm sure I did, because I do this for a living. I read the issues and study them. And I have strong opinions, and I come on to CNN and I express them. But that's not what she did for a living.

COOPER: She was commander in chief of the National Guard.

BUCHANAN: Yes. That has been pointed out. And she -- look what she did in Alaska. I mean, when she focuses, she has those real natural leadership skills.

COOPER: Let's just show our viewers, she was also asked, and Katie Couric also asked Palin about her -- some of her social views, including her thoughts on the morning after pill. Let's watch.

(BEGIN VIDEO CLIP)

PALIN: Well, I'm all for contraception, and I'm all for any preventative measures that are legal and safe and should be taken. But, Katie, again, I am one to believe that life starts at the moment of conception. And...

COURIC: Ergo, you don't believe in the morning after pill?

PALIN: I would like to see fewer and fewer abortions in this world. And again, I haven't spoken with anyone who disagrees with my position on that.

COURIC: I'm sorry. I just want to ask you again: do you condone or condemn the morning after pill?

PALIN: Personally, and this isn't a McCain-Palin policy...

COURIC: That's OK, I'm just asking you.

PALIN: But personally, I would not choose to participate in that kind of contraception.

(END VIDEO CLIP)

COOPER: She's clearly been a bonus in terms of energizing the base, or at least, you know, several weeks ago when she first emerged, really energized an awful lot of voters out there. Is she now helping winning over moderates and women, do you think?

CARVILLE: I think the question that American people are interested in, and particularly American women, is not whether or not she would take a morning after pill but whether she would prohibit other women from taking it. I never got -- I never heard an answer from that in that exchange. Do you know what her position is as President of the United States?

BUCHANAN: Yes. James...

CARVILLE: Does she -- does she oppose to allow women to take the morning after pill?

BUCHANAN: James, she is very clear. She's opposed to all abortion, because she believes life begins at conception. And if the morning after pill aborts a child that has been conceived, then she is opposed to it. That's a very public position she holds.

COOPER: Do you think people are underestimating her debating skills?

BUCHANAN: Well, there's no question they're underestimating her right now. She's enormously competent, as we saw at the convention. I've seen tapes of her before she was chosen, as a governor, speaking on television. She is extremely good.

What -- she has been over-handled. She has been pumped up with facts and figures and made -- told to memorize answers. And somebody who's a great natural communicator as she is can't memorize and answer questions that way. You lose your spontaneity, your authenticity, which is what makes her so good.

And they were successful of doing that, Anderson, to a Ronald Reagan, when he lost his first debate against Mondale. They pumped him full of facts.

CARVILLE: I remember one Republican once famously who said, "Don't confuse me with the facts. I have my mind made up." And Bay, you'd better not confuse her with any facts.

BUCHANAN: You know, James, that's so foolish. You're so much smarter than that. Ronald Reagan -- you only need a few facts to tell people and give the sense of that you know what you're talking about. Then you speak with your heart. You don't speak with your mind if you want to reach American people. That's what makes a great candidate.

Ronald Reagan could tell story after story, and people just came to him because they knew he understand what they were about. You don't throw facts and figures at him. Policy wonks make lousy candidates.

CARVILLE: It's not for me to defend Reagan. Reagan thought a lot about the world around him. He had written extensively. He was twice governor of the largest state in the union. He'd come within two delegates of being president in 1976. He was a man who was supremely interested in public policy. He was interested in the world around him. I didn't agree with him.

Sarah Palin showed no interest at all in the world around her and national issues, and it's demonstrably true when you watch her in these interviews. And that's my single problem with her. It's not as a person or her values or anything like that. Again, I just think that she is supremely and uniquely unqualified to hold the office to which she aspires.

BUCHANAN: It is your ability to be a leader, and she's born with that. And she's shown it time and again, demonstrated enormous confidence as she goes up against much, much more powerful people than she is and takes them right on. You name one person in his own party that Obama or Biden have taken on face to face and beat them. One. You name one.

CARVILLE: Hillary Clinton. Just off the top of my head, I would say he took on -- he took on Hillary Clinton and beat him, who is a minor figure in the Democratic Party.

BUCHANAN: My God. I mean, I'm talking about over an issue. I'm talking about an issue or a movement.

CARVILLE: You asked me -- asked me a question.

BUCHANAN: That was for himself.

CARVILLE: And you said who has he beaten. Joe Biden, another one right off the top of my head or John Edwards.

BUCHANAN: All right, all right. All right. So he does. When it comes to himself...

CARVILLE: He's actually... BUCHANAN: When it comes to himself, he's very good at promoting himself. He's excellent, and he knows a lot of facts and figures. He's very smart. Professors are lousy candidates.

COOPER: We're going to have to leave it there.

Man, you two should be debating Thursday night. James Carville, Bay Buchanan, thanks.

BUCHANAN: Take it easy.

COOPER: It's always interesting with those two.

Up next, Sarah Palin has made headlines for saying you can see Russia from Alaska. Tonight, we'll show you what she means. We're going to take you, actually, to the tiny, remote island that is just two miles from the border with Russia.

Does it give Sarah Palin or any governor foreign policy experience? We'll ask some of the 150 or so people who live there what they think.

And at the top of the hour, more on our breaking news. The Senate getting set to vote on bailout bill, the latest from Capitol Hill when 360 continues.

(COMMERCIAL BREAK)

COOPER: Well, Sarah Palin often cites the proximity of Russia as the reason she has foreign policy experience. So here's what she told Katie Couric on that subject.

(BEGIN VIDEO CLIP)

COURIC: Have you ever been involved with any negotiations, for example, with the Russians?

PALIN: We have trade missions back and forth. We do. It's very important when you consider even national security issues with Russia, as Putin rears his head and comes into the airspace of the United States of America, where do they go? It's Alaska. It's just right over the border. It is from Alaska that we send those out to make sure that an eye is being kept on this very powerful nation, Russia, because they are right there. They are right next to -- to our state.

(END VIDEO CLIP)

COOPER: Well, we thought we'd send Gary Tuchman to actually find the spot where Russia is right next to our state, where you can see Russia. It's a small remote island -- there it is on the map -- whose residents are, frankly, somewhat surprised to suddenly be in the headlines. Gary Tuchman is there -- Gary.

(BEGIN VIDEOTAPE)

GARY TUCHMAN, CNN CORRESPONDENT: This is the island, a piece of Alaska that Governor Sarah Palin cites as evidence of her foreign policy experience. No streets, no cars, no airstrip. A helicopter is the only practical way to get here.

Nome is the nearest city on the mainland, Anchorage, 550 miles away.

This is the city of Diomede, Alaska, on an island known as Little Diomede, about 25 miles off the western Alaska coast. This is basically a rock dropped in the Bering Sea.

Only about 150 people live on the entire island. There are no hospitals, no hotels, no restaurants. And what's most unique about it is this. This is the Bering Sea, the Bering Straits. A half mile in front of me is the international dateline. And this rock in front of me, that is the nation of Russia.

Right now, it's Tuesday afternoon in the United States. There in Russia, it's Wednesday afternoon.

The smaller island in front is Little Diomede, and then the division between eastern and western hemispheres, with Russia's Big Diomede Island only two and a half miles behind it.

Since World War II, it's been a Soviet and now Russian military installation. Twenty miles in the background, you can see the Russian Siberian mainland.

UNIDENTIFIED FEMALE: Well, you can pick the lines without the check marks.

TUCHMAN: The 25 students in the Little Diomede school may be in the United States, but Russia dominates their view. And yes, you can see it from every house.

Is Big Diomede in the United States of America? Where is it?

UNIDENTIFIED FEMALE: Russia.

TUCHMAN: Governor Palin may be talking about this island, but she has never been here. Patrick Oniac (ph) is the tribal chief of the native Alaskan community on Little Diomede.

Since Alaska has been a state, which is almost 50 years next year, have you had a governor come visit here?

PATRICK ONIAC, TRIBAL CHIEF, LITTLE DIOMEDE: No.

TUCHMAN: The only statewide politician ever to come here is current U.S. Senator Ted Stevens. So regarding Sarah Palin...

UNIDENTIFIED MALE: She's making a comment that she shouldn't have made in the first place about seeing Russia. She should have come out here beforehand and then made the comment.

TUCHMAN: While some here feel Sarah Palin is doing a good job as Alaska governor, others are nowhere near getting swept up in her new national fame.

What's the governor's name?

THELMA AKHVALUK, LITTLE DIOMEDE RESIDENT: Sarah Palin.

TUCHMAN: There is no television on Little Diomede Island, so many here don't keep up with the news.

Do you know that she was picked by John McCain, who's running for president, to be the vice president of the United States possibly?

UNIDENTIFIED MALE: No, I did not know that.

TUCHMAN: Diomede mayor, Andrew Milligrock, does know of her but does not believe that Russia's proximity to Alaska provides foreign policy experience.

Has this governor, Palin, or any other Alaskan governor ever said to the mayor of this city, "We need to work hand-in-hand dealing with the Russians if A happens or B happens?"

MAYOR ANDREW MILLIGROCK, LITTLE DIOMEDE, ALASKA: No.

TUCHMAN: Never have? No discussions with the state capitol about that?

MILLIGROCK: No.

TUCHMAN: In fact, nobody we talked with here feels threatened with Russia being about the same distance from them as the White House is from the U.S. Capitol.

The Palin campaign defends the way the governor deals with this foreign policy issue.

MEGHAN STAPLETON, MCCAIN-PALIN CAMPAIGN SPOKESWOMAN: Her experience as CEO of this state is unlike many others, and her experience as CEO of this state with regard to international affairs is like any other governor, including Governor Ronald Reagan, Governor Bill Clinton and Governor Carter before they took office.

TUCHMAN: On Little Diomede, many would be happy to welcome the governor some day. They're a proud people, but the poverty rate is above 40 percent. There is little running water, and occasionally, residents dump their garbage into the sea.

And depending on the currents?

UNIDENTIFIED MALE: It's going down to the Russian side.

TUCHMAN: Going to the Russian side.

UNIDENTIFIED MALE: The Russian tank yard (ph).

TUCHMAN: So far, no international incidents.

(END VIDEOTAPE)

COOPER: Gary joins us now from Anchorage.

You talked to the Palin campaign today. Any indication the governor is going to visit the island?

TUCHMAN: Well, yes, we talked to spokeswoman Meghan Stapleton. And we did not expect her to say, no, she won't visit because that would sound insensitive. We didn't expect her to say, yes, she will visit, because that would sound like it's a result of our story. So we got the answer we expected, Anderson, and that was Sarah Palin would like to visit, but there are many rural outposts in this huge state that she would also like to see sometime.

COOPER: Understandable. Gary Tuchman, thanks very much.

"The Shot of the Day" is next. If you compare me to a dog, which dog would you pick? How about one of these, you know, kind of tough canines or sleek dogs? We're going to find out what one viewer thinks. It's tonight's "Shot."

(COMMERCIAL BREAK)

KAYE: All right. It is time now for tonight's "Shot," which answers a question that probably not too many people may have ever asked before. If you were to be compared to a dog, Anderson, what dog would that be?

COOPER: I think about this often, actually. I was thinking about this today. I think, you know, sort of like a cool dog, like a Doberman or -- I like Dobermans, or maybe a wolf hound or a sleek and fast greyhound.

KAYE: Yes. That's kind of you.

COOPER: With my hair color. Or maybe even a pit bull. I like pit bulls. They're much maligned.

KAYE: Yes.

COOPER: But I think they're kind of cool dogs.

KAYE: That might be what you think, but Gerri (ph), a very loyal viewer of "AC360" from Ontario, Canada, has named a dog after you.

COOPER: That's cool.

KAYE: And she said it's because it was so sweet and good looking. There it is.

COOPER: Wow.

KAYE: Do you see yourself there? Because this little guy, Gerri named him Nanking Anderson Cooper.

COOPER: Wow. KAYE: Nanking Anderson Cooper.

COOPER: I'm wondering what about this dog Gerri feels represents me.

KAYE: Well, I don't know. There's a slight similarity maybe with the hair? No? No, you don't think? Maybe the blue eyes. Does Nanking Anderson Cooper have blue eyes?

COOPER: I'm sure Nanking's a great dog. I mean, that's -- you know, it's a beautiful example of the breed.

KAYE: Maybe we should think about renaming the show NANKING "AC360." What do you think?

COOPER: What is that, like, a thing in the hair? Like a barrette? Is that a barrette?

KAYE: I think it's a ponytail. We could try that on you one night.

COOPER: Thank you very much. I appreciate you naming the dog after me. It's very kind.

You can see all the most recent shots on our web site, ac360.com. You can also see other segments of the program, read the blog, check out the "Beat 360" picture, check out the Web casts, the live blog. Again, ac360.com.

That does it for this edition of "360." Thanks for watching.

"LARRY KING" starts right now. Have a great night and I'll see you tomorrow night.