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ANDERSON COOPER 360 DEGREES

Detroit's Road to Ruin; California Battles Wildfires

Aired November 17, 2008 - 22:00   ET

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


ANDERSON COOPER, CNN ANCHOR: Tonight, breaking news and best frenemies, John McCain and Barack Obama together for the first time since the campaign. Was their today just a photo-op or something more? Hear what the president-elect says about putting Republicans in the Cabinet.
And what about Hillary and Bill? Late new word on her status as a possible secretary of state, but will his big-money foreign dealings undo the deal?

Also tonight, access Barack Obama -- our first look since the election on what he's planning, who he's listening to, and how he's facing up to perhaps the country's toughest challenge since the Great Depression.

And Detroit's road to ruin. What role did the unions play? Did their demands end up killing the golden goose? We're "Keeping Them Honest."

Plus, throughout the hour, breaking news from the California fire lanes, with hundreds of homes destroyed and all eyes on the weather.

We begin, though, tonight with Barack Obama's transition to power, the notion of team of rivals, and late news on Hillary Clinton- secretary of state front -- new reports tonight that Obama advisers have started the vetting process.

CNN's Ed Henry is working the story, has more shortly, but, first, how it fits into what may be the bigger picture, which today included Mr. Obama reaching out to another rival, John McCain.

(BEGIN VIDEOTAPE)

ED HENRY, CNN WHITE HOUSE CORRESPONDENT (voice-over): This is a president-elect who believes in keeping your friends close and your enemies closer, whether it's mulling Hillary Clinton for secretary of state or making nice with John McCain in Chicago.

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: We're just going to have a good conversation about how we can do some work together to fix up the country, and -- and also to offer thanks to Senator McCain for the outstanding service he's already rendered.

HENRY: The two former rivals privately discuss some controversial issues they plan to work on together next year, as they turn the page on a bitter campaign. A senior Obama transition official told CNN they talked about trying to revive the immigration reform plan that fell apart last year and finding a way to close the military prison at Guantanamo Bay, Cuba.

Those are hot-button issues that will be hard to find common ground, especially since their body language suggested it's not easy to heal their divisions.

B. OBAMA: Hey, guys.

HENRY: This moment had awkward written all over it. So they did what guys do, talked football.

SEN. JOHN MCCAIN (R), ARIZONA: I notice that yesterday's football...

B. OBAMA: Oh, see there...

MCCAIN: ... was not greeted with...

(CROSSTALK)

B. OBAMA: They brought up the bears.

HENRY: They're trying to show they can bury the hatchet, but there are limits. People on each side insist McCain will not get a Cabinet post.

SEN. HILLARY RODHAM CLINTON (D), NEW YORK: I'm not going to speculate or address anything.

HENRY: Speculation is only intensifying, however, about a place in the Cabinet for another former rival.

Two Obama transition officials confirm they have started looking at former President Bill Clinton's finances and post-presidential dealings, including his charitable foundation and presidential library, to identify potential roadblocks to his wife being nominated as secretary of state.

The president-elect has still not made a formal job offer. But senior Democrats believe the vetting shows he's serious about considering it.

(END VIDEOTAPE)

COOPER: Ed joins us now.

Ed, Politico.com is claiming that Obama's team is exasperated that Bill Clinton is dragging his feet on some of these financial matters.

Politico says -- quote -- one Democratic official -- quote -- "The ball is very much in her court, but the president's finances have been a major point of sensitivity from day one."

What are your sources saying?

HENRY: Well, they're saying the latter is true. Very senior Democrats are saying this is a very sensitive point and that both sides are going through sort of a diplomatic dance, which may be appropriate, given the potential job here of secretary of state.

But senior Obama people are insisting that they are not exasperated. They are saying that Bill Clinton is not slow-walking this. They say, look, he was out of the country giving a speech for a couple days over the weekend. They want to give him some time.

They say, so far, they have been given some information. They're expecting more information, but they do not think Bill Clinton is dragging his feet. Nevertheless, this is a big potential bone of contention. It could spike any potential nomination for Hillary Clinton if not enough records are turned over. There are a lot of questions still out there. And a lot of people in the Obama camp are waiting for this information. But they insist that they're not worried at this point. They think that the information is forthcoming and they're taking it day by day -- Anderson.

COOPER: All right, Ed -- Ed Henry, thanks very much.

More now on the complications, whether or not Mr. Obama offers the job and Senator Clinton accepts it, more, as Ed just mentioned, on the Bill factor, as some are calling it, those complications of marriage to an ex-president who has spent the last eight years traveling around the planet for a lot of good causes, we would point out, and asking global leaders to write big checks.

The "Raw Politics" now from Tom Foreman.

(BEGIN VIDEOTAPE)

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: Great to see you. How are you?

TOM FOREMAN, CNN CORRESPONDENT (voice-over): Bill Clinton's charitable foundation has waged a widely praised global battle against AIDS, malaria, and climate change, for economic and educational development. And it has raised a lot of money, $81 million in contributions last year alone, some from foreign interests.

And that could be a problem. If Hillary Clinton becomes secretary of state, some political analysts say Bill Clinton's connections could pose a conflict of interests. It's not just a theory.

H. CLINTON: I believe that the president should not attend the opening ceremonies, because that is giving a seal of approval by our United States government.

FOREMAN: Back in the spring, before the Olympics, while she was speaking out against China's crackdown on Tibetan protesters, "The Los Angeles Times" reported that her husband's foundation was taking money from a firm accused of collaborating in that censorship. In addition, Politico.com and others cite donations from officials in Saudi Arabia, Morocco, the United Arab Emirates, and Kuwait, each one a contact for Bill Clinton and a potential conflict for the Obama White House.

JEANNE CUMMINGS, LOBBYING AND MONEY CORRESPONDENT, POLITICO.COM: I think that he knows a lot of world leaders and he has informal conversations with those world leaders. And those will be conversations that the administration will not be able to track, nor can they control.

FOREMAN: Of course, all those Clinton connections could also buy enormous goodwill for Obama, and provide him with a wealth of international experience. Besides, the former president recently told Philanthropy.com, he guards between any conflicts between a donor's intentions and his wife's job as a senator.

(BEGIN AUDIO CLIP)

B. CLINTON: If there is even any kind of question we try to do exhaustive vetting. I can recall some money we haven't taken, and also some we did, but only after more than a year of efforts to make sure that everything was OK there.

(END AUDIO CLIP)

FOREMAN (on camera): Still, the Clinton foundation has never named all of its donors. And while many charities guard the identities of their benefactors, not many are so close to being hard- wired to the White House.

(voice-over): Neither the Clintons, nor Obama, are talking publicly about all they could gain or lose in this. But, privately, it looks like Bill Clinton is once again casting a long shadow.

Tom Foreman, CNN, Washington.

(END VIDEOTAPE)

COOPER: Well, let us know what you think of Secretary of State Clinton, with Bill Clinton somewhere in the background.

Join the live chat at AC360.com. It's happening now. I will be blogging throughout the hour with you.

Also, you can check out Erica Hill's live Webcasts during the break.

Up next, our political panel weighs in.

And Barack Obama speaks out on "60 Minutes" and for the first time on YouTube.

(BEGIN VIDEO CLIP)

B. OBAMA: Make no mistake, this is the greatest economic challenge of our times. And while the road ahead will be long and the work will be hard, I know that we can steer ourselves out of this crisis.

(END VIDEO CLIP)

COOPER: The political and the personal, the kids, mother-in-law and more, Obama covers it all -- what the future first couple has to say about the history they're making.

Also tonight, some possible news on Sarah Palin front -- two words, a book deal. Coming up, I will tell you two words: How much?

Later, a live check on the fires in California, crews getting a bit of relief from the weather -- no rest, though, from the work -- breaking news and more tonight on 360.

(COMMERCIAL BREAK)

COOPER: Barack Obama, Hillary Clinton campaigning last summer in Unity, New Hampshire.

We're talking tonight about the possibly and the complications of bringing her into his Cabinet. They're talking about it. And so is the president-elect with "60 Minutes"' Steve Kroft.

Take a look.

(BEGIN VIDEO CLIP, "60 MINUTES")

STEVE KROFT, CBS CORRESPONDENT: You met with Senator Clinton this week.

B. OBAMA: I did.

KROFT: Is she on the short list for a cabinet position?

B. OBAMA: You know, she is somebody who I needed advice and counsel from. She is one of the most thoughtful public officials that we have. Beyond that, you're not getting anything out of me, Steve.

KROFT: Will there be Republicans in the cabinet?

B. OBAMA: Yes.

KROFT: More than one?

B. OBAMA: You're not getting more out of me.

(LAUGHTER)

(END VIDEO CLIP)

COOPER: That was part of the first interview Obama has given as president-elect. It provides the best window into what has been happening with the transition thus far. And we're going to be playing you extensive clips from that interview throughout the program night. Let's dig deeper with our panel.

"TIME" magazine's Mark Halperin is here, the current cover featuring Barack Obama as FDR -- Mark, of course, appearing as himself, and not Scotty Reston. Also with us, CNN contributor and "New York Daily News" columnist Errol Louis, and Jennifer Donahue of Harvard University, by way of the New Hampshire Institute of Politics.

Good to have you all.

So, what about this, Hillary Clinton as secretary of state, Mark?

MARK HALPERIN, CNN SENIOR POLITICAL ANALYST: Steve Kroft kind of blew that interview. He should have said, will your Cabinet members be bigger than a bread box?

(LAUGHTER)

(CROSSTALK)

HALPERIN: It's definitely a possibility.

I think what's happening now is, she's talking it over with her husband and her advisers. I'm not 100 percent sure that an offer has been made. But I suspect that, if she wants to be secretary of state, she can be and she will be.

COOPER: A formal offer may not have been made, but it was made apparent that he was interested if she was interested. He's not going to make something -- kind of an offer unless it's clear she's -- wants it.

HALPERIN: Yes.

If you -- if you make up a political balance sheet both for Hillary Clinton and for Barack Obama, this makes a lot of sense. It makes a lot of sense in terms of her ability to do the job. It makes a lot of sense in terms of his ability to bring the Democratic Party together and to have a secretary of state who can work with Joe Biden.

I think the most underrated element here in this is, Joe Biden is going to cast such a big shadow on foreign policy, it has got to be someone in the secretary of state's job who Biden likes and respects and can work with. And Hillary Clinton can do that.

COOPER: Jennifer, Bill Clinton's finances and his overseas business dealings are apparently a big obstacle -- or the major obstacle to Hillary Clinton becoming secretary of state.

Do you think that's going to be a deal-breaker, or is there some sort of negotiations that they can come up with, you know, any -- any future donations would have to be accounted for, but past negotiations, they will kind of move on from?

JENNIFER DONAHUE, SENIOR ADVISER FOR POLITICAL AFFAIRS, NEW HAMPSHIRE INSTITUTE OF POLITICS AT SAINT ANSELM COLLEGE: Well, I was talking to Mayor Menino in Boston tonight and some other players tonight, who tell me that, basically, it can be gotten around and that that's where the negotiation is going right now, that, basically, Hillary Clinton is looking like she wants this post of secretary of state, and that this large questionnaire that could be very problematic for Bill Clinton is something that they can work around.

They want to show transparency in government. And, yet, on the other hand, they think that Hillary Clinton wants relevance. I mean, today, senator Kennedy basically said: "I'm going to be the legacy person on health care and I'm going to take the lead. You are not going to be the subcommittee post chairman on health care."

Hillary Clinton doesn't have that many places to turn in the Senate right now. So, I think, realistically, secretary of state is looking better to her by the day. And I think Obama clearly wants to keep her happy.

COOPER: Yes.

DONAHUE: I mean, this is in his interest. That's why he met with McCain today. This is a person who understands how to build a coalition.

COOPER: Errol, I want to play for our viewers something else that he told Steve Kroft last night about what he has been reading and what it kind of looks -- how it kind of shapes his thinking. Let's take a look.

(BEGIN VIDEO CLIP, "60 MINUTES")

B. OBAMA: Yes. I have been spending a lot of time reading Lincoln. There is a wisdom there and a humility about his approach to government, even before he was president, that I just find, find very helpful.

KROFT: Put a lot of his political enemies in his cabinet.

B. OBAMA: He did.

KROFT: Is that something you're considering?

B. OBAMA: Well, I tell you what, I find him a very wise man.

(END VIDEO CLIP)

COOPER: By now, I mean, we have all heard about this "Team of Rivals." Everyone has heard about Doris Kearns Goodwin's book, even if no one -- no one has actually read it. But...

ERROL LOUIS, COLUMNIST, "THE NEW YORK DAILY NEWS": Not yet.

(LAUGHTER)

COOPER: But it's all out there.

What do you make... DONAHUE: I'm reading it.

COOPER: Oh, you're reading it. OK, good.

(LAUGHTER)

LOUIS: That's what Thanksgiving vacation is for.

(LAUGHTER)

COOPER: Yes.

What do you make about this notion, and where does Hillary Clinton fit into it?

LOUIS: Well, if he says that is what he's going to do, then it's all in -- it's in everybody's interests to figure out what he means by it, although, you know, just a cursory look at the history, William Seward is brought into the Cabinet. He goes out, he buys Alaska for -- for Abraham Lincoln. It's known as Seward's folly, sort of controversial.

It worked out in the end, I guess. But, in the short term, you know, it's going to be a job to manage Hillary Clinton, to manage the Clinton establishment.

COOPER: Do you think McCain -- I mean, he met with McCain today. Do you think McCain could have a role?

LOUIS: Oh, no.

(CROSSTALK)

LOUIS: I don't see -- I don't see that happening.

Now, listen, they were never friends, even before the campaign. They went at each other pretty bitterly. As you -- as your correspondent showed it, it didn't look like they were getting along all that well. They sort of put the best show on things, but they have to create a relationship, not repair one.

DONAHUE: You know, I heard something different today, actually.

I spoke to someone who spoke to McCain and Obama after the meeting. And their report was that it was very collegial, that Obama really feels he -- he needs McCain's support, and that McCain feels that, with the action of Republicans in leadership moving out of the Senate, that having not been successful, and with Franken looking like he might pick up Minnesota, that the powers shift is really going towards the governors, and that McCain's interest is in hugging Obama.

COOPER: Mark, to what degree do you think Obama trying to kind of build his own -- I don't know if coalition is the right word, but sort of separate from Harry Reid and Pelosi, I mean, sort of trying to build his own links to -- to former rivals on the House and in the Senate? HALPERIN: Oh, there's no question that he has got a lot of power and influence right now. And he's trying to time everything, so that, when he gets to January 20, conditions are ripe to pass legislation in a hurry.

That's going to take having the Democratic leaders on board. It's going to take having the public board. But the key, in many respects, is having enough Republicans on board to pass things with bipartisan solutions. You cannot solve, as Barack Obama knows, the major problems facing this country with party-line votes. He needs Republicans.

COOPER: We're going to have more with Mark and Errol and -- and Jennifer as well coming up throughout this hour. And we will also more from that "60 Minutes" interview coming up tonight, including the personal side of making the White House a home for their family, the kids' daily routine, and whether it might include a live-in grandmother.

Plus, some words that excite book publishers, but may strike fear into the hearts of copy editors everywhere, Sarah Palin, author -- new reports tonight of a book deal. And guess how much could she make on that? Find out ahead.

That and a new wave of layoffs -- how much worse could it get, and what can you do about it? "Fortune"'s Andy Serwer joins us next.

(COMMERCIAL BREAK)

COOPER: New numbers, new fears about the economy. Today, the Dow Jones industrials fell more than 220. At the same time, Citigroup made a stunning announcement. The banking giant says it's going to cut more than 50,000 jobs. That's nearly percent of its work force, dire economic challenges for president-elect Obama.

During his "60 Minutes" interview yesterday, Obama put the crisis in historical perspective. Take a look.

(BEGIN VIDEO CLIP, "60 MINUTES")

B. OBAMA: Well, keep in mind that 1932, 1933, the unemployment rate was 25 percent, inching up to 30 percent. You, you had a third of the country that was ill-housed, ill-clothed, unemployed. We're not going through something comparable to that.

But I would say that this is as bad as we've seen since then. And if we don't take some significant steps, then it could get worse.

(END VIDEO CLIP)

COOPER: The question is what those steps should be. It's your money, your future we're talking about.

Let's see what Andy Serwer thinks. He's the Managing Editor of "Fortune" magazine. He joins us now. The U.S. loss nearly 1.2 million jobs this year so far. I mean, that is a terrifying amount of jobs, as Citigroup eliminating 50,000 jobs. How bad is it?

ANDY SERWER, MANAGING EDITOR, "FORTUNE": It's bad.

And the scary thing, Anderson, is that it's getting worse. The unemployment rate is 6.5 percent. And the really scary thing is, is that, usually, when the unemployment rate is coming up for the next month, you know, the economists sort of play guessing names. Where's it going to go? How high is it going to be?

We all know, sadly, that it's going to be higher next month, and higher the next month after that. That's the scary thing.

COOPER: No end in sight.

SERWER: There's just no end in sight at this point.

And the unemployment rate got up to 10.8 percent in 1982, just about 26 years ago, November, December of 1982. And, thank people say it can't happen again. Well, sorry to say, it could happen again. And -- and that's really a very high number, and dire.

COOPER: Congress -- Congress met today to talk about the -- the bailout of the big three automakers. It may go to a vote on Wednesday. Democrats say they don't have enough votes for it.

Obama talked about this last night on "60 Minutes." Let's watch.

(BEGIN VIDEO CLIP, "60 MINUTES")

B. OBAMA: For the auto industry to completely collapse would be a disaster in this kind of environment, not just for individual families, but the repercussions across the economy would be dire.

So, it's my belief that we need to provide assistance to the auto industry. But I think that it can't be a blank check.

(END VIDEO CLIP)

COOPER: He also went on to say he didn't believe bankruptcy was an option, which other critics say, you shouldn't bail them out. You should just let them go bankrupt and let it all get sorted out. Who's right?

SERWER: Well, you know, this is a really tough one, quite honestly.

But you have to look -- let's look at Japan, for instance. I mean, this is a country that is also in a tough shape right now. But, you know, you don't see Toyota asking the government for a bailout there, because Toyota is not in bad shape, the way GM is. GM has been a systemic failure, for about 20, 30, 40 years now. They have done a bad job. There's no way the government should write this company a blank check, as president-elect Obama suggests. So, in order to give any money to this company, there needs to be constraints; there needs to be oversight; there needs to be guidelines. They need to make green cars. There needs to be a new board, something like that.

I disagree, frankly. I mean, I do think bankruptcy is an option. But this is going to be a political football here.

COOPER: It's seems like Ford -- I'm not sure all three are in equally bad straits.

SERWER: Right.

COOPER: It seems like Ford for has cars they are bring over from Europe or can bring over from Europe that are more fuel-efficient, whereas GM, they don't have anything.

(CROSSTALK)

SERWER: That's right.

(CROSSTALK)

SERWER: That's right, Anderson.

I mean, the problem is consumer demand. I mean, people don't want GM's cars, for the most part, and they haven't for quite a long time, certainly not relative to Toyota's cars, and, as you suggest, even Ford's cars as well.

COOPER: Obama also talked yesterday about the -- the economy and trying to restore confidence and also helping homeowners. Let's take a look.

(BEGIN VIDEO CLIP, "60 MINUTES")

B. OBAMA: One area that I'm concerned about, and I have said this publicly, is we have not focused on foreclosures and what's happening to homeowners as much as I would like. We have the tools to do it. We've got to set up a negotiation between banks and borrowers, so that people can stay in their homes. That is going to have an impact on the economy as a whole.

And, you know, one thing I'm determined is that if we don't have a clear, focused program for homeowners by the time I take office, we will after I take office.

(END VIDEO CLIP)

COOPER: Why isn't that already being done, if that is the solution?

SERWER: Well, I think you're starting to see a real break here, sort of a philosophical break, between Obama and the Bush administration, I mean, as if there aren't any already. COOPER: Right.

SERWER: But, right now, the Bush administration is saying, you know, let us give the money to banks and the financial system, and then they can use leverage to amplify, to magnify the amount of money that we put in, number one.

Number two, the government needs to get a return on its investment. So, that's what they're saying. That's why they're not putting it directly into the system -- to homeowners, I should say. And they're also saying that they wouldn't have enough money to really make a difference.

But I think what president-elect Obama is saying, you know, we need to do this, if not for just optics, to show the country that we can give money directly to homeowners, and that in itself would make a difference.

And he's saying -- he's drawing a line in the sand and saying, if this president doesn't do it, I will in January.

COOPER: All right, Andy Serwer of "Fortune" -- thanks, Andy. Appreciate it.

SERWER: Thanks, Anderson.

COOPER: Up next, breaking news -- we're going to take you live to the front -- the front lines of the fire, a massive firefight in California. More than 40,000 acres and hundreds of homes burned. The fires are far from under control right now.

Also, the president-elect gets personal, what he says he's worried most about when his family moves into the White House. We will go up close coming up.

(COMMERCIAL BREAK)

COOPER: Southern California tonight, the battle to contain three ferocious wildfires continues. Firefighters have been working for days to put out the blazes, which have been fueled by intense winds

Erica Hill joins us with some more in a 360 bulletin -- Erica.

ERICA HILL, CNN CORRESPONDENT: Anderson, another grueling day for those crews battling those blazes. Two of the wildfires are burning near Los Angeles. A third is raging in Santa Barbara County. Now, together, they have destroyed close to 1,000 homes and at least 40,000 acres.

Today, those strong Santa Ana winds, though, did ease up a bit.

CNN's Chris Lawrence is in Sylmar, where the fire destroyed hundreds of homes.

So, Chris, where you are tonight, is there still a fire burning?

CHRIS LAWRENCE, CNN CORRESPONDENT: Yes, Erica, the fire is still burning, both here and down in Orange County.

But it's not immediately threatening homes right now. And the firefighters hope to have it under control by the end of the week. You know, a big reason why is, we finally caught a break on the weather. It is significantly cooler tonight, and the winds nothing more than a mild breeze at this point.

You know, compare that to those 85-degree days and winds gusting up to 70, 80 miles per hour. You know, I watched these -- these winds push these embers a few hundred feet, these -- these huge flying pieces of fire just hitting the roofs and igniting one home after another.

Up in Santa Barbara, that fire is now 100 percent contained. But the actor Christopher Lloyd, from the "Back to the Future" movies, his house completely burned to the ground. And investigators say they have eliminated all accidental causes of that fire. At this point, they're looking for an arsonist up there -- Erica.

COOPER: Wow.

I know, in the area where you are, in Sylmar, that some of the folks there actually got a chance to get in and see their homes today. What did they find? Did they actually have homes left?

LAWRENCE: Not many.

I mean, take a look around me. You know, take a look at this one home, and then just multiply. You know, out of about 600 mobile homes here, nearly 500 were completely burned to the ground. Now, some of the residents -- or all -- I should say, all the residents are going to get a chance to come back in tomorrow morning and actually look through what's left of their property.

But Governor Arnold Schwarzenegger said that California learned a hard lesson from this fire. And that is that mobile homes need to be built with the same fire-retardant materials that a lot of the permanent homes are now being built with -- Erica.

HILL: Not the way you want to learn that lesson.

Chris Lawrence, for us live tonight, thanks -- Anderson.

COOPER: Erica, thanks.

Word that at least one of the fires may have been set intentionally raises the inevitable question. What kind of person does that, actually starts a fire knowing the damage it will do?

CNN's Ted Rowlands went looking for answers from lawmen and a convicted fire-starter in Washington State. His report is tomorrow on the program. Here's a quick preview.

(BEGIN VIDEOTAPE)

TED ROWLANDS, CNN CORRESPONDENT (voice-over): An arsonist, most likely someone from the area, was starting fires at a furious pace just outside the town of Ellensburg.

UNIDENTIFIED MALE: The public was stressed out. We had people not wanting to leave their homes.

WADE KIRKWOOD, CONVICTED ARSONIST: Deep down, I didn't want anyone to get hurt but I took that chance when I set the fires.

ROWLANDS (on camera): It was a risk you were willing to take?

KIRKWOOD: At that point, yes.

ROWLANDS: For your gratification?

KIRKWOOD: Yes.

(END VIDEOTAPE)

COOPER: Again, Ted Rowlands' complete report, tomorrow night on 360.

Coming up next, Obama's solution to saving the economy. Speaking out about his plan, and it comes with a heavy price. Hear his proposal and judge for yourself, next.

And later, all in the family, Barack and Michelle Obama sharing details from life at home and whether politics puts a strain on their marriage.

And reports of a big payoff for Sarah Palin: what could be a big multi-million dollar book deal ahead.

(COMMERCIAL BREAK)

COOPER: We learned today that Washington dipped into the $700 billion bailout account, again handing out around 300 -- $33 billion to 21 banks, but the Democrats may be losing their effort to try to pump $25 billion into the auto industry. That is the big bailout question: who gets what and when do you draw the line?

President-elect Obama says a key to ending the crisis is using more cash. Here's what he told "60 Minutes" yesterday.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: You actually have a consensus among conservative, Republican-leaning economists and liberal, left-leaning economists. And the consensus is this, that we have to do whatever it takes to get this economy moving again, that we have to -- we're going to have to spend money now to stimulate the economy, and that we shouldn't worry about the deficit next year or even the year after.

(END VIDEO CLIP)

COOPER: So spend money to stimulate the economy, don't worry about the record deficit, is the president-elect's approach to the future. Or so it seems, right now, at least.

Joining me again, Mark Halperin of "TIME" magazine; "New York Daily News" columnist Errol Louis; and Jennifer Donahue, the political director of the New Hampshire Institute of Politics, and a resident fellow at Harvard University's Institute of Politics.

So does that mean, essentially, Barack Obama saying essentially, we shouldn't worry about the deficit at this point?

HALPERIN: Well, it's certainly one of the political advantages he has, compared to, say, Bill Clinton when he came in in 1993 and had to worry about his spending priorities and tax cut priorities compared to deficit pressure.

There was not a lot of debate about the deficit during the election. I don't think the voters have that on their mind nearly as much as they have had in past years. So I think as a political matter and probably as an economic matter, he's right.

COOPER: Jennifer, there is -- I mean, there's limited things that Barack Obama can do right now, I mean, as president-elect.

DONAHUE: It's true. There are limited things he can do. He's not president yet. And I think what you see is John Podesta really working on the policy front, working with economists on both sides of the aisle, trying to figure out what a middle ground is, thinking about what the voters said, trying to think about what to do next.

Then you've got Rahm Emmanuel looking at the political side, looking at the makeup of the Senate and the House, realizing that there's got to be stuff that can be passed. And you know, every economist that I've talked to from every different persuasion, as Obama said, believes something further has to be done.

That's less about the money that needs to be spent and more about the fact that the first bailout plan didn't have an enforcement mechanism in it. And that's a real problem, and they need to go back now, address that problem and provide further relief for the economy.

COOPER: How beholden, Errol, is Barack Obama or the Democrats to the unions in Detroit? They want to have some sort of a bailout. There's probably not going to be enough votes for -- if it comes to a vote on Wednesday? But you know...

LOUIS: They're certainly -- they're certainly concerned about the unions, but they're also concerned about a catastrophic failure. You know, can you imagine if they inject $25 billion or even more -- and it might well be more -- $100 billion, $200 billion, only to see the bankruptcy occur anyhow. You know, so I think they have to be very careful about this.

They also, I think, have this question of, if they prop up this major piece of manufacturing, American manufacturing, what do they do when the textile people come to them right after that? You know, what do they do when the construction industry comes? Right. Where do you draw the line? And so he wants to do something big, Obama does. He has to. The Democrats all support that. And there is a consensus among the economists that there has to be deficit spending. Situations like this are why you do deficit spending. This is one of the few times when you're supposed to.

COOPER: So Mark, what happens? If they can't get the votes on Wednesday for the Democrats, do they just wait until Obama comes into office?

HALPERIN: It's looking increasingly likely that that's going to be the case, that the major remedies are going to have to come from President Obama. He's got a lot of challenges that he'll face. I said before, he needs to come into January 20 with Republican support, with the Democratic leadership on board and public support.

I think the big problem, the big challenge for him, is to figure out how big to do these things. All economists would agree on most issues, these are interconnected problems. There's a health care piece. There was a deficit piece. There's -- or rather a credit piece. There's worker retraining. There's short term loans. There's all sorts of things.

How big can he go and still get something through quickly? The bigger it is, the more likely Congress is going to want to tinker, hold hearings. The longer it will take. He needs to find the right size pieces to match the public mood and the congressional mood to say as big as possible but can move with all deliberate speed.

COOPER: Obama was asked by Steve Kroft about why, after spending some $300 billion, this rescue fund, things haven't turned around. Take a look what he said.

(BEGIN VIDEO CLIP)

B. OBAMA: I think that part of the way to think about it is things could be worse. We could have seen a lot more bank failures over the last several months. We could have seen even more rapid deterioration of the economy, even a bigger drop in the stock market. So part of what we have to measure against is what didn't happen, not just what has happened.

Having said that, there's no doubt that we have not wean able yet to reset the confidence in the financial markets and in the consumer markets and among businesses that allow the economy to move forward in a strong way. And my job as president is going to be to make sure that we restore that confidence.

(END VIDEO CLIP)

COOPER: Does he seem changed -- Mark, does he seem changed to you already? To me, he looks older. I mean, it looks like he's got more gray hair. He looks tired.

HALPERIN: What's wrong with gray hair?

DONAHUE: He's got some gray hair now.

COOPER: No, nothing's wrong with gray hair.

HALPERIN: Just making sure.

DONAHUE: No doubt.

HALPERIN: He's been through a very long, hard, you know, process that tests all human beings running for president. And I think he's -- I think he's really tired.

DONAHUE: Yes.

HALPERIN: He's not taken a full extended break since winning the election. He'll do that, almost certainly, in December. And I think we'll see him come back a little invigorated. But the physical pounding that you take when you run for president is showing on his face.

COOPER: Jennifer, when you think back to those pictures of George Bush when he was running for office and the way he looks now, I mean, the transformation looks hulk over four years. To me, it looks like it's already begun with Barack Obama.

DONAHUE: I think it has already begun. I mean, this was a grueling campaign. This was not something he was able to walk through in any way, shape or form. He did look gray to me, also, in the "60 Minutes" interview.

I think the other part that's key, though, and you saw this, I think, with Bill Clinton, brown-haired and then he became gray-haired as he came out of the election cycle.

I think Barack Obama has matured a lot and I think you can see that in the things he says and the way he says it. He appears more mature. I mean, this man is 47 years old. He is not very old. He has now the trust of a whole country, in fact a whole world, placed in his hands.

COOPER: And we saw that, Errol, even the night of -- that he got the win. I mean, you could see it was a different man.

DONAHUE: You really could.

COOPER: The weight of the office was already on his shoulders.

LOUIS: Yes. The gravity starts to settle on him, the somber tone of it. And in the words of the interview last night, he talked about how now he doesn't have to run around frenetically, as he did during the campaign. All of the problems now come to him. He just stays still. He didn't seem too happy about that observation.

COOPER: We've got to leave it there. Jennifer Donahue, Errol Louis, thanks so much. Mark Halperin, as well.

Before we go any further on the Obama story, there's a certain buzz building around Sarah Palin, though she's been out of the limelight for -- well, actually she hasn't been out of the limelight at all. She may be on the verge of -- that's right -- a book deal.

"The Sunday Times of London" is reporting the possibility, though without even a hint at sourcing, we should point out, that literary agents are already, quote, "queuing up," unquote, to sign her up to a tune of $7 million. Somewhere, a publisher is smiling.

Next on 360, getting personal with the Obama. From Michelle Obama's biggest worry to what President-elect Obama thinks about having his mother-in-law move into the White House.

And what is killing the big three auto makers? A look at why they are bleeding money. We're "Keeping Them Honest," coming up

(COMMERCIAL BREAK)

COOPER: ... tonight by the future first family. In their "60 Minutes" interview, the Obamas give us new details about their personal lives and how they're trying to keep it as normal as they can.

Three-sixty's Erica Hill has more.

(BEGIN VIDEOTAPE)

ERICA HILL, CNN ANCHOR (voice-over): From the outside, the Obamas appear to be your typical American family, except that Barack Obama is about to become president of the United States. And in his first interview since winning the election, Mr. Obama was candid with CBS "60 Minutes" about the realities that come with his new job.

B. OBAMA: That that's something I don't think I'll ever get used to, the loss of anonymity. And this is not a complaint. This is part of what you sign up for. But being unable to just wander around the neighborhood. I can't go to my old barber shop now. I've got to have my barber come to some undisclosed location to cut my hair. You know, the small routines of life that keep you connected, I think, some of those are being lost.

HILL: Other routines, though, will be coming back once the Obamas move to Washington, a welcome change for the future first family.

B. OBAMA: That was one of my biggest worries and remains one of my biggest worries when we think about, Michelle and I have talked about this a lot, how do we just maintain that precious normalcy in our two girls?

MICHELLE OBAMA, WIFE OF BARACK OBAMA: I envision the kids coming home from school and being able to run across the way to the Oval Office and see their dad before they start their homework and having breakfast. And he'll be there to tuck them in at night.

HILL: Something Mr. Obama on the campaign trail for the past two years hasn't been able to do regularly. CBS's Steve Kroft asked about the strain on their family.

STEVE KROFT, CBS'S "60 MINUTES": I know that, from talking to you -- and you've said this has put a lot of -- you know, that Barack's involvement in politics has put strains on your marriage from time-to-time.

M. OBAMA: This -- this entire year and half has brought us closer together as a family.

HILL: There were lighter moments in the interview, including this exchange about who would be living in the White House.

KROFT: You talked about your mother-in-law. Is she moving in with you?

B. OBAMA: Well, I don't tell my mother-in-law what to do. But I'm not stupid. That's why I got elected president.

KROFT: So you'll have a new dog and your mother-in-law moving in?

B. OBAMA: Steve, I'm not going to compare my mother-in-law to a new dog.

HILL: OK, so no leads on the mother-in-law. What about that dog?

M. OBAMA: When we settle, get in a routine, we think about late winter, early spring, we're going to get the dog.

B. OBAMA: We're getting a lot of suggestions though.

M. OBAMA: It's very sweet. People are very sweet.

B. OBAMA: I mean, people are sending suggestions and we're taking it all under advisement.

(END VIDEOTAPE)

HILL: Actually, it has to be rough in some ways to be in that position, as the Obamas, with people hounding you -- no pun intended -- with dog suggestion.

I do want to go back to one thing that you were talking earlier with Mark Halperin and Errol Louis about how could see sort of the weight of the world on Barack Obama's shoulders. And he did mention, too, in that interview one thing that stood out to me. Steve Kroft asked him -- Kroft asked him about meeting with former presidents. And he said they all sort of intimated to him that there really is this loneliness to the office, and he was already starting to feel it.

COOPER: Interesting. Erica, thanks. Appreciate it.

Next, our Beat 360 winners, our daily challenge to viewers to come up with a caption better than the one that any of us around here could think of.

So here's the picture tonight: Senator John McCain meeting with President-Elect Barack Obama in Chicago. It happened today, their first meeting since Barack Obama won the election.

Our staff winner tonight is Ted. His caption: "After her Katie Couric interview, our poll numbers dropped like this."

(SOUND EFFECT: GROANS)

COOPER: They did. Our viewer winner is Sandy from Pennsylvania with this caption: "Expect your approval ratings to start nose-diving on February 1 if you haven't gotten everything straightened out by then."

(SOUND EFFECT: "OOOH!")

HILL: No pressure.

COOPER: Your "Beat 360" T-shirt is on the way. Congratulations. And check out all the other entries we received at AC360.com. That's where you can play along tomorrow, as well.

So still ahead, the big three car companies on the verge of bankruptcy, while workers are still collecting 96 percent of their pay after they've been laid off. Have cushy labor contracts cost the auto industry? Has it played a role? We're "Keeping Them Honest."

(COMMERCIAL BREAK)

COOPER: Democrats today unveiled a bill to rush aid to struggling U.S. automakers. The measure faces strong opposition, and no one doubts that Ford, Chrysler and GM are in serious trouble. GM has said it could run out of cash in a matter of months.

The question is, how did things get so bad from the big three? We looked at some of the issues last week. Some blame now for -- some blame the labor contracts that the unions have been able to demand for years.

"Keeping Them Honest," here's Randi Kaye.

(BEGIN VIDEOTAPE)

RANDI KAYE, CNN CORRESPONDENT (voice-over): It is the engine that's supposed to keep automakers running, but some say the United Auto Workers Union has helped bring the big three to a grinding halt. UAW workers earn as much as $75 an hour, including pension and future health care.

James Sherk from the Heritage Foundation, a conservative think tank, calls the contract greedy.

JAMES SHERK, HERITAGE FOUNDATION: Every so often management will try and insist on more competitive contracts, and then you'll have the unions go on strike, rather than take billions and billions of dollars in losses, the management caves.

UNIDENTIFIED MALE: We called a strike at 11 a.m.

KAYE: That was last year when 70,000 GM workers walked off the job, shutting down operations in 30 states. The union did make concessions in the contract negotiated during that strike. It let the company buy out about 20 percent of the work force and replace them with lower-paid workers.

Senior research economist, Don Grimes.

DON GRIMES, SENIOR RESEARCH ECONOMIST, UNIVERSITY OF MICHIGAN: The concessions that they negotiated in last year's contract were too little, too late.

KAYE (on camera): "Keeping Them Honest," we checked. The union's health care coverage cost GM about $1,600 per vehicle, compared to about $200 per vehicle over at non-unionized Toyota. That, some economists say, is killing the big three.

(voice-over) That, plus the U.S. companies' reputation for producing inferior vehicles. Grimes believes the industry may be doomed.

(on camera) Doomed because of deals like the jobs bank, set up back in the 1980s. It's an unprecedented agreement that continues to pay workers 96 percent of their salary after they've been laid off. It costs GM $900 million a year.

GRIMES: It's one of the reasons General Motors is on the verge of bankruptcy. You can't pay workers to do nothing, to sit in one of these rubber rooms and fill out crossword puzzles.

KAYE (voice-over): In last year's contract, the union did agree to put a two-year limit a two-year period on the length of time laid- off workers can stay in the jobs bank.

UAW president Ron Gettelfinger.

RON GETTELFINGER, PRESIDENT, UNITED AUTO WORKERS: We're willing to put our wages and all of our benefits out on the table, let (UNINTELLIGIBLE) put theirs out there. We have sister unions in our corporations we will continue to work with. Our job is build a quality product.

KAYE: Gettelfinger says the contracts are fair.

GETTELFINGER: I don't think that the auto-workers have been greedy. I think we corrected a lot of the things in the past.

KAYE: Grimes calls the contracts unsustainable.

GRIMES: When the foreign producers came into the country, the great benefits that the UAW had achieved, the gig was up. They could no longer sustain those benefits.

KAYE: The days of the fat contracts are over. Union members are lobbying Congress, along with the automakers, for a bailout.

GETTELFINGER: This wasn't brought on by the industry, and it's not a bailout. It's a low interest loan, and that's simply what we're looking at. The industry needs it. I think it's fair to say that we're in a crisis.

KAYE: At stake for union members, not just jobs but health care for retirees. That could leave as many as 250,000 employees and their families without a job and without any health care.

Randi Kaye, CNN, New York.

(END VIDEOTAPE)

COOPER: "Keeping Them Honest."

Just ahead, why one woman cannot stop dancing. Yes. Though many wish she would. Eight years ago, she allegedly channeled "Flash Dance" in public at a heavy price. They sued, she settled. It's "The Shot," coming up.

Plus, the new president-elect and the man he beat, face to face today. No dancing there. They had their game faces on, but that did not make it any less awkward. So we'll tell you what happened, coming up.

(COMMERCIAL BREAK)

COOPER: All right, Erica. Time for "The Shot." Remember the movie "Footloose"? And frankly, who can forget it?

HILL: I remember Footloose.

COOPER: The story is making news, but without Kevin Bacon. This is how Rebecca Willis fights authority: by dancing.

HILL: Oh, yes. Show your moves, girl.

COOPER: That's right.

We couldn't actually get the music to the video so we chose some beats of our own. Trying to kick it old school with the Sugar Hill Gang.

HILL: All right.

COOPER: Anyway, she danced outside a community center in Marshall, North Carolina, eight years ago. This is her recently, and these are not the dance moves in question. Back then, we're told she wore a miniskirt and opted for some more, shall we say, risque moves.

HILL: It was a little more "Flash Dance."

COOPER: Exactly. She loved her performance, but apparently, the town hated it. So much so that it actually banned her from dancing. She sued and now, as part of the settlement, the town has to pay Willis $275,000.

HILL: You show them, girl.

COOPER: And that's why she's dancing now.

Now of course, when the 360 crew heard about her moves and her dilemma, they did what they always do.

(BEGIN VIDEO CLIP)

(MUSIC: "PROUD MARY")

(END VIDEO CLIP)

HILL: Yes.

Those moves never get old.

COOPER: I'll tell you, that was shot 20 years ago, and it still holds up.

HILL: It's amazing how none of them have aged either. There you go, Bob, shake it.

COOPER: Every time I see it, I see new little nuances there.

HILL: It's true.

COOPER: Little things that...

HILL: It does. It's the gift that keeps on giving.

COOPER: Exactly.

You can see all the most recent "Shots," you can see all the dancing at AC360.com.

HILL: And there's much dancing over there.

COOPER: You know there always is. Yes, there is.

Coming up on the program, the politics behind a picture of political rivals sitting down together. Is it a hint of how Barack Obama's planning to govern?

Also along those lines, the latest on Hillary Clinton as secretary of state and the complications of a globe-trotting, money- raising ex-president. That and more ahead on 360.

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