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CNN LIVE EVENT/SPECIAL

Broken Government

Aired February 28, 2010 - 19:00   ET

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


JACK CAFFERTY, CNN ANCHOR: Good evening. This country of ours is beginning to circle the drain. Almost nine out of 10 Americans think our government is broken. Seventy-five percent think that our government officials are dishonest -- that's great.

The question is whether it can be turned around before it's too late? Here's a little bit of a wish list. Politicians on both sides of the aisle stop playing games, stop trying to score cheap political points and instead try doing your jobs. You can begin by tackling the huge generational problems of education, health care and the national debt that is rapidly approaching being unfixable. During the next hour, we'll show you why things are a mess and see how we go about trying to fix our "Broken Government".

We begin tonight with one of the root causes of all the paralysis in Washington. A recent poll found just eight percent of Americans think that incumbents should be reelected. But the fact of the matter is way too many of them get reelected term after term after term. Here's CNN's Jason Carroll to explain why.

(BEGIN VIDEOTAPE)

JASON CARROLL, CNN CORRESPONDENT (voice-over): Partisan bickering, Republicans and Democrats unable to find common ground. Searching for reasons why? California State Senator Alan Lowenthal says before looking at Washington, try looking much closer to home, in your own district.

(on camera): Do you think most people out there who, you know wherever they may be, really have a keen sense of how their districts are drawn?

ALAN LOWENTHAL, CALIFORNIA STATE SENATE: No, this is very boring. This is -- this is a yawner. Most people don't really care about this.

CARROLL (voice-over): Lowenthal is working to change an old practice one he says has taken place next to his own district -- gerrymandering.

UNIDENTIFIED MALE: It's all been designed to protect the incumbents. People think that they're having a vote, a choice, but they don't.

CARROLL: Gerrymandering is named after Massachusetts Governor Eldridge Garry (ph) who signed a bill in the early 1800's redrawing a district looking like a salamander to give his party an advantage. Centuries later, it's still happening. Illinois' fourth district, held by a Democrat, carved like a Pacman, Pennsylvania's 18th, held by a Republican, a Rorschach blot. Lowenthal, a Democrat, says the shape of the district next to him, a sore thumb.

UNIDENTIFIED MALE: Is it true that my district was carved around my house? Yes, it was.

CARROLL: This is Lowenthal's home in Long Beach, California. Just across the street is the 46th district. It used to look like this, but it was changed in 2001, making it a Republican stronghold. How, using a narrow strip on the edge of largely Democratic Long Beach to link to traditionally Republican communities, Costa Mesa, Palos Verdes.

(on camera): To illustrate just how narrow this section of the district is I'm going to do it this way. I'm going to stand right in the middle of Temple Avenue. If you look right where that stop sign is, that's where the district starts. Now to show you where it ends, you look just right where the water is, just beyond that stop light. This section of the district is essentially just one block wide, just about 300 yards.

(voice-over): Forty-six district GOP Congressman Dana Rohrabacher did not agree to an interview, but Joel Epstein did. He's just a voter, a Democrat, who lives in Rohrabacher's district and just across the street from Lowenthal.

JOEL EPSTEIN, DEMOCRAT VOTER: I vote because I vote, but I know that my vote is really worthless.

CARROLL: Epstein blames Republicans and Democrats who hatched the deal to change the district and he says protect incumbents.

UNIDENTIFIED MALE: This makes the government stagnant. I mean there is no new blood in Congress because of this and we saw what's happening. Nothing is getting done these days.

CARROLL: Redistricting experts like Douglas Johnson (ph) also not surprised by Congress' unwillingness to compromise.

(on camera): These people don't have to worry about being reelected back at home because of the way their districts are drawn.

DOUGLAS JOHNSON, ROSE INSTITUTE FOR STATE & LOCAL GOVT.: Exactly. The grassroots movements, whether it's the Tea Party today or the Obama movement last year, you would think they'd have no influence, but really, the incumbents don't have to answer to them. They just answer to the voters they chose and so they don't respond.

CARROLL (voice-over): Lowenthal is responding by pushing for an initiative to have an independent commission redraw California's congressional districts.

(on camera): How do you think this issue is going to resolve itself?

LOWENTHAL: Well I think independently we will have independent commissions and we will draw our boundaries. You know this is a wonderful strength of our democracy. We move forward two steps and back one step.

CARROLL: And Lowenthal wants to take another step forward. He's hoping that initiative will get on California's November ballot. He says they've got half the signatures and so they are halfway there.

Jason Carroll, CNN, Los Angeles.

(END VIDEOTAPE)

CAFFERTY: Since Jason filed that report, Congressman Rohrabacher sent us a statement. Quote, "In 2008, the voters passed an initiative to create a commission to draw all districts in California except for congressional districts. I am supportive of a current initiative to add congressional districts to that commission's mandate", unquote.

Congressman Rohrabacher also said he had nothing to do with the shape of his district. The system works well for the politicians. In the last election 94 percent of House incumbents, 83 percent of Senate incumbents were reelected. What is wrong with us?

And if you think they're going to go voluntarily vote for term limits, you're dreaming. It's up to us to vote them out of office. There may be no better example of our "Broken Government" that what's being called the blanket hold. That's when a senator stalls a president's nominees to pressure the White House on an often unrelated issue. For example, the Obama administration blasted Senator Richard Shelby of Alabama for putting a hold on nearly 50 nominees. Dana Bash reports.

(BEGIN VIDEOTAPE)

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT (voice-over): A refueling tanker long overdue for retirement. This senator wants its replacement made in his home state: Alabama. But Richard Shelby says the Air Force competition is a sham. So in protest, he did something drastic. He blocked most of President Obama's nominees to an array of federal agencies that have nothing to do with his issue.

(on camera): Near blanket hold, near 50 nominees.

UNIDENTIFIED MALE: Forty-something that's right.

BASH: That's pretty extreme. Why did you do that?

SEN. RICHARD SHELBY (R), ALABAMA: Well I did it to get the attention of the administration.

BASH (voice-over): And did he ever. He made headlines and became a symbol of gridlock. But in his first TV interview on the subject, he makes no apologies.

(on camera): What it sounds like you were trying to do, very up front about it, is put money, put jobs back in your state of Alabama.

SHELBY: Well ultimately I'm a senator from Alabama, but I wanted to make sure there was fairness, because if there's fairness, the jobs will go there.

BASH (voice-over): Shelby eventually lifted his hold on all but three nominees for senior Air Force positions. Pentagon spokesman Geoff Morrell tells CNN "without these highly qualified professionals, we are not firing on all cylinders."

(on camera): Do you think the nominees that you have holds on are qualified?

SHELBY: Well I don't have any idea.

BASH: So they're leverage?

SHELBY: Well that's part of it, that's part of the life up here.

BASH: It is part of life here in the Senate. It's not in the official rules, but by tradition, any senator can put a hold on any presidential nominee for any reason. And both parties do it.

(voice-over): Hans Von Spakovsky was nominated by President Bush for the Federal Election Commission. A Democratic senator held him up over a voting rights issue.

(on camera): Which senator?

UNIDENTIFIED MALE: Senator Obama.

BASH (voice-over): That's right, then Senator Barack Obama.

HANS VON SPAKOVSKY, FORMER FEDERAL ELECTION COMMISSIONER: So it was not because I didn't have the qualifications, it was because he disagreed with me on a substantive issue.

BASH: Now the president has a different perspective.

BARACK OBAMA (D-IL), PRESIDENT OF THE UNITED STATES: Well qualified public servants shouldn't be held hostage to the pet projects or grudges of a few individual senators.

BASH (on camera): But take a look at Obama's first year success with his nominees before the Senate and it looks very similar to his predecessors.

(voice-over): In 2009, the Senate confirmed 353 of 569 major Obama nominations compared with 360 out of 513 during Bush's first year. Senate Historian Don Ritchie calls the hold a time-honored tradition.

DONALD RITCHIE, SENATE HISTORIAN: It makes them powerful individually, and it allows them to stop things that they feel need to be adjusted or were wrong to start with. BASH: That's Missouri Senator Kit Bond's argument for his controversial hold. He says the General Services Administration is dragging its feet on moving 1,000 federal employees out of a dilapidated Kansas City building so Bond blocked Martha Johnson for GSA administrator.

SEN. KIT BOND (R), MISSOURI: I have only one way of getting their attention and I put a hold on the nomination of Ms. Johnson.

BASH (on camera): But it has nothing to do with Martha Johnson?

BOND: No, Martha Johnson, I think will be a fine administrator. I voted for her.

BASH (voice-over): That's right when Democrats finally forced a vote after an eight month delay, Bond voted yes.

(on camera): People from outside looking in saying why did the senator hold up somebody who he thinks is qualified for a separate issue.

BOND: Because an unresponsive bureaucracy will not respond to the needs of the people we represent unless you have a means of getting their attention.

BASH (voice-over): Nominees in limbo, "Broken Government" to some, but to senators in both parties --

BOND: It's not a symbol of "Broken Government", it's how government works.

BASH: Dana Bash, CNN, Capitol Hill.

(END VIDEOTAPE)

CAFFERTY: Still ahead, who's really running Washington? It's all about the 25-1 ratio. I'll explain what that means. And why does health care cost so much? Dr. Sanjay Gupta will show us with the help of a $1,200 stapler -- next.

(COMMERCIAL BREAK)

CAFFERTY: Back now to our "Broken Government" special and the lobbyists who run Washington. There are over 13,000 registered lobbyists in Washington, D.C. That's more than 25 lobbyists for every single member of the House and Senate. They spend almost $3.5 billion, and their money, of course, buys a tremendous amount of influence. We've got the best government that money can buy. As a candidate, then-Senator Obama promised to keep lobbyists out of his administration, remember? But for all of his words, the president has not banned them outright. Here's Drew Griffin of CNN's Special Investigations Unit.

(BEGIN VIDEOTAPE)

DREW GRIFFIN, CNN SPECIAL INVESTIGATIONS UNIT CORRESPONDENT (voice-over): He was the surprise appointment that literally announced President Obama's first broken campaign promise.

BARACK OBAMA (D-IL), PRESIDENT OF THE UNITED STATES: So help me God.

UNIDENTIFIED MALE: Congratulations Mr. President.

UNIDENTIFIED MALE: Ladies and gentlemen the deputy secretary of defense.

GRIFFIN: William Lynn confirmed as the Defense Department's number two just weeks after Mr. Obama became president. A shock because William Lynn had spent much of the last decade as a top lobbyist for the major defense contractor, Raytheon.

(on camera): It is of course the same old revolving door we've seen from administration to administration except it was supposed to be different in this administration. Remember this?

OBAMA: I have done more to take on lobbyists than any other candidate in this race and I have won. I do not take a dime of their money, and when I'm president they won't find a job in my White House.

(APPLAUSE)

MELANIE SLOAN, CIT. FOR RESP. & ETHICS IN WASH.: Certainly having William Lynn who is a top Raytheon lobbyist to immediately turn around and go into the administration is the revolving door at its worst.

GRIFFIN (voice-over): By all accounts, the four government watchdog groups we consulted, including Melanie Sloan's Citizens for Responsibility and Ethics in Washington say William Lynn has not broken any laws. But they say he is a poster child for everything wrong with how business gets done in Washington. Mr. Lynn declined an interview with CNN.

A Pentagon official who tried to discourage CNN from reporting this story issued a statement saying that since returning to the Pentagon, Deputy Defense Secretary Lynn has not participated or sought to participate in any way whatsoever in any budget or contract decisions involving his former employer. The statement goes on to say that Lynn has scrupulously adhered to his ethics pledge and agreement.

It stated that there is absolutely no evidence of any impropriety or conflict of interest by Deputy Secretary Bill Lynn in carrying out his duties at the Pentagon. But how did this lobbyist get back to the Pentagon? In Washington government watchdogs like Steve Ellis say it's all about those revolving doors.

STEVE ELLIS, TAXPAYERS FOR COMMON SENSE: And certainly the revolving door is still spinning.

GRIFFIN: William Lynn's first government job was into the office of senior Democratic Senator Ted Kennedy back in 1987. He was Kennedy's liaison to the Senate Arms Services Committee. Six years later, with Democrat Bill Clinton in the White House, Lynn moved to the Pentagon, eventually becoming the undersecretary of defense in charge of the money.

UNIDENTIFIED MALE: Congratulations --

(MUSIC)

GRIFFIN: In 2001 a power shift and Lynn was heading to the revolving door.

(on camera): Early in the Bush administration, that revolving door brought him right here to this building, home of one of the biggest defense contractors where he became their big lobbyist.

(voice-over): Raytheon is a $25 billion a year defense contractor. It makes and sales guided missiles, including the Patriot and Tomahawk. As its top lobbyist William Lynn was paid pretty well. Last year "Washingtonian" magazine estimated his personal wealth at somewhere between two and $5 million.

(APPLAUSE)

GRIFFIN: But yet another election and yet another revolving door.

(on camera): With Bush gone and the Democrats in charge, that revolving door revolved again for Mr. Lynn who is now right back at the Pentagon.

(voice-over): The Pentagon also pointed out to us that the value of Defense Department contracts with the company haven't changed. Nonetheless, Raytheon's sales, which include overseas contracts that must be approved at the Pentagon, are up seven percent since its former lobbyist moved back to government service.

(CROSSTALK)

GRIFFIN (on camera): Drew Griffin --

(CROSSTALK)

GRIFFIN (voice-over): Leslie Paige with Citizens against Government Waste say Lynn's hiring by the Obama administration is an example of the same old "Broken Government".

UNIDENTIFIED FEMALE: Oh yes.

GRIFFIN (on camera): This is exactly what they, what he --

UNIDENTIFIED FEMALE: Yes.

GRIFFIN: -- said was not going to happen.

LESLIE PAIGE, CITIZENS AGAINST GOVT. WASTE: You know this town has a problem. This town is dysfunctional. I mean you get to say anything you want when you need to say it. But when it comes to actually commitments and making those commitments reality, there is a huge disconnect. It's not happening. GRIFFIN (voice-over): The Obama administration says it is adhering to its promise, granting a handful of waivers only to those lobbyists like William Lynn who are critical appointments. The Project on Government Oversight, another watchdog group, wants more details. In this freedom of information request to the Pentagon, the group asks if Lynn met with contractors and if so when. It's a letter the watchdogs at the Project on Government Oversight hoped they would not have to write.

(on camera): So the change didn't happen.

MANDY SMITHBERGER, PROJECT ON GOVT. OVERSIGHT: This is not the change that we hoped for, no.

GRIFFIN (voice-over): Drew Griffin, CNN, Washington.

(END VIDEOTAPE)

CAFFERTY: Over the last decade, defense contractors, including Raytheon, have consistently placed among the top 10 lobbying interests with spending of more than $135 million last year alone.

A $1,200 stapler, they're used in operating rooms all across the country, but $1,200? Dr. Sanjay Gupta adds up the hidden costs of some of the stuff in an operating room.

And Americans say they're fed up with Congress so why are we all paying so much for their pensions and perks? That story when we come back.

(COMMERCIAL BREAK)

CAFFERTY: A glaring example of "Broken Government" is the effort to overhaul health care. Costs are spiraling out of control. But what you see on your hospital bill is not the whole story. Dr. Sanjay Gupta takes us inside the operating room to break down some of the hidden costs of health care.

(BEGIN VIDEOTAPE)

DR. SANJAY GUPTA, CNN SR. MEDICAL CORRESPONDENT: One of the questions that comes up all the time is what about these hospital bills? How exactly do they break down? How do you make sense of it? It's no question it leaves a lot of people scratching their heads, so I want to give you a little bit of an example here by taking you inside this operating room.

This is the hospital where I work, where I'm a neurosurgeon. And just having an operation performed in a room like this costs about $3,000 an hour. That's for starters. Come on in. I'll give you a couple of quick examples. If you look at a hospital bill you might see an I.V. bag charge, it's an I.V. like this -- about $280 just for the I.V. bag. That might strike people as very high.

A stapler -- this is a stapler that's often used in surgery, something like this cost about $1,200. This is a chest tube. If someone has compression of one of their lungs they might need a chest tube like this. That costs about $1,100. And you'll find examples like that really all over a room like this. Suture, something that's used in just about every operating room in the world, this type of suture over here cost about $200.

And if you look at even -- even devices like -- this is a needle that's used for biopsies so if there is a concern that someone has a tumor, they would use a needle like this, and this is going to cost about $800. Now it's important to keep in mind if you ask the manufacturers of a device like this, why so much money? They'll say well it took years to develop something like this.

The research and development costs are significant. Also they're guaranteeing a certain level of effectiveness of this needle. That costs money as well. But something maybe you didn't know. When you look at a hospital bill, it's not just the cost of the supplies. There's also administrative costs that are built in. There's the cost of covering people who simply don't have insurance or can't pay. That's built into these costs as well. And finally keep in mind that what is charged and what is ultimately paid are two very different numbers.

RICHARD CLARK, HEALTHCARE FINANCIAL MGMT. ASSOC.: The typical hospital collects about four percent of every dollar that they -- about four cents of every dollar that they bill, so it's not coming out in massive profits, it's coming out as a result of underpayment from the government.

GUPTA: I'll tell you, you know the cost breakdown like I just gave you on lots of these different supplies, a lot of people simply never see. What we have found is a lot of people don't care as well. If you're insured, some people may not even open the hospital bill. But there are about 15 million people uninsured out there and they care very much about hospital bills like this. And what you can do is you can call the hospital and get a detailed breakdown, and while you're on the phone with the hospital, if the cost seems still too high or just hard to understand, you might be able to negotiate some of these prices down.

(END VIDEOTAPE)

CAFFERTY: Coming up next, we'll tell you about something that isn't broken in Washington, but you probably wished it was. Also the man who has been described as an incumbent's worst nightmare -- the always outspoken Ron Paul is here, next.

(COMMERCIAL BREAK)

CAFFERTY: At least one group of Americans would probably tell you the government is working just fine, thank you. Those would be the retired members of Congress. While the rest of us wonder whether we've saved enough for our retirements, former senators and representatives can count on a generous, guaranteed pension for life, and it comes right out of our pockets. Here CNN's Lisa Sylvester.

(BEGIN VIDEOTAPE) LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Paul Dobosz worked for more than 35 years in the auto industry. He was promised a pension when he retired. But after his former company, auto parts manufacturer Delphi, went bankrupt, Dobosz found out his pension, taken over by the Federal Pension Benefit Guarantee Corporation, was being cut by 30 percent.

PAUL DOBOSZ, FORMER DELPHI EMPLOYEE: I felt betrayed. I felt betrayed mostly because I put in 37 years in with a company, following the rules, doing everything I should, and then all of a sudden I found out that for the rest of my life, things would be changed. Come on, let's go.

SYLVESTER: Like many Americans, Dobosz is worried about how is he going to cover his bills in retirement? But one group doesn't have any worries, and that's members of Congress. They can draw on their pension beginning at age 50. Depending on the years of service, they can get as much as 80 percent of their final salary. There are cost of living adjustments added on, and they're still eligible to receive Social Security.

According to an analysis by the National Taxpayers Union, Senator Chris Dodd will have a starting pension of $125,500 every year starting next year when he retires. Senator Byron Dorgan counting his years in the House and Senate stands to get more than $116,000, Senator Gregg an average of $63,000, Senators Bond and Bunning, both taking away $58,900 in annual pensions.

PETE SEPP, NATIONAL TAXPAYERS UNION: Unlike even state and local pension plans, the federal congressional pension system is simply a direct line into the taxpayer's wallet. There are no investments that need to be made, no fund balances that get worried about. Whatever the liability is for a given year, taxpayers cough up the money for it.

SYLVESTER: We called the senators to get a response, but our calls were not returned. The Congressional Retirement System was reformed in 1984 to make the system less generous and more in line with that of other federal workers. Still, Representative Howard Coble says the system is broken. He's tried repeatedly to reform the pension program which hasn't won him many friends on Capitol Hill.

REP HOWARD COBLE (R), NORTH CAROLINA: Well, it's too lavish. It's too generous when you compare it with pensions across the country. I elected to refuse the pension on the ground that taxpayers are subsidizing my salary now. And I figure when I leave, they've taken good care of me and let me do the best I can once I leave after the service in the Congress has been accomplished.

SYLVESTER (on camera): And amazingly, up until recently, even if a congressional member committed a crime, they can still get their pension. But a 2007 law barred members convicted of felonies from receiving their pensions. Still, there are a number of members, like Congressman William Jefferson, his corruption offenses took place earlier that year, and he will still receive a pension paid by the taxpayer. Lisa Sylvester, CNN, Washington.

(END VIDEOTAPE)

CAFFERTY: A lot of Americans think the way to fix our broken government is to have less of it -- less government. But, is big government necessarily bad government? My next guest says it is, and I'm inclined to agree with him. Representative Ron Paul won the representative straw poll at last week's Conservative Political Action Conference, CPAC, much to the dismay of Mitt Romney and Sarah Palin and Tim Pawlenty and bunch of other mainstream Republican hopefuls.

Ron Paul is a congressman from the 14th district in Texas, he's a former presidential candidate and he's been warning a lot of us about all of these issues for a long time. We're delighted to welcome you to our program. Thank you for coming.

REP RON PAUL (R), TEXAS: Thank you, Jack. Good to be with you.

CAFFERTY: Let me bounce a few numbers off you. Recent CNN polls, 86 percent of Americans think our government is broken, 75 percent of Americans think government officials are dishonest. When you look to the future of this country, what do you see?

PAUL: Well, what I see is a bankruptcy coming. Yes, the government is broke and it doesn't work, but it's because we're broke. And the people now feel like they've been lied to, they call them dishonest and there is a lot to that. Politicians tend to say things and they don't follow through. Whether it's in the category of lying or not, but there is certainly a lot of untruths that are passed around out there.

But, I don't see any easy way out, because when a country or an individual is broke, they're supposed to quit spending money, and they're supposed to pay off their bills. But the only thing that we've done here in Washington, the admission that there is a crisis going on, is we've accelerated everything. We've expanded government, expanded spending, expanded barring, and, of course, expanded the function of the Federal Reserve and that is to create more money on credit to try to bail out the problems they created. So yes, we're in for a lot of trouble yet to come.

CAFFERTY: Do, present company excepted, do your colleagues in the nation's capitol have any idea the increasing degree of contempt in which they are held by the American public?

PAUL: Sometimes I don't think so because they continue to do the same things that have gotten them into trouble. So, no, I don't think so. I mean, the whole fact that, you know, I may do well at a CPAC poll just totally amazes them. And I think...

CAFFERTY: They actually booed when the results were announced, they were booing, right?

PAUL: Yeah, and I think you're aware that a lot of young people, as a matter of fact, the people who came to CPAC were young people, a lot of college people, and you would think that the leadership would say, well, what is it that attracts the young people to what you're saying? But, you know, I've never had anybody in the Republican Party ask me anything like that. So, they don't seem to be interested. They want me to just disappear, and yet I think I've tapped onto something and at least there's a lot of people responding. But, I have no political clout here in Washington. I don't have any power, so...

CAFFERTY: I don't understand that, either. I can remember during the primaries. I mean, I used to get e-mail from your supporters by the bushel basketful almost every day. It was a astounding to me the organization and the depth of the support you had. Why doesn't it message resonate with the establishment in Washington?

PAUL: Well, it challenges the status quo. It challenges what they've been saying for so many years. I don't think they want to say, oh, we made a mistake, we were at fault. Yes, we should have been more conscious about what we do overseas. They do not want me to have anything to say about foreign policy. And I take an older Republican position on this, the old right position and a constitutional position. I think we should be cutting back, I don't think we should be spending $1 trillion a year on militarism around the world. And you know, it's not only the Republicans, but the Democrats want to do it, too.

CAFFERTY: Let me ask you about something you said right at the beginning of the segment, that there's a bankruptcy. Our national debt is at $12 trillion. The expectation is that it will be $19 trillion at the end of the president's first term. That's three years, a little less from now. We have probably 35 to $50 trillion in unfunded liabilities for Medicare and Social Security, no clue where that money is going to come from. How long before this company goes belly up, and what form will it take, do you think, when we roll over?

PAUL: Well, that's a good question, and if we don't clean up our act, it can be very bad, very dangerous and political chaos could ensue. But, the fact that they don't do anything is the annoying part. But I just think that, you know, within two or three years.

The country is technically bankrupt. If you and I were in business and ran like this, we would have to declare bankruptcy. Governments print money so they can get away with it. But, we are insolvent and the debt will never be paid for. That's a hard thing to accept. But, you can't pay for this debt. But the debt will be liquidated. The market always liquidates debt. And governments always liquidate debt by destroying the currency. They pay off their debt with bad money and that's what we're in the process of doing. We took the bad debt of those banks and we dumped it on the American taxpayers deliberately. So, it's a transfer of wealth, right now, that's going on.

CAFFERTY: And ultimately it destroys everybody's savings and all of our assets, the work of all of our homes, businesses, et cetera. Congressman Paul, thanks for that uplifting discussion.

(LAUGHTER)

It's great to have you on the program. I wish you'd run again and I wish the American public would start listening to you, But I guess, you know, wishes are wishes, but anyway, thanks for sharing your thoughts with us today.

PAUL: Well, in spite of it, I'm still an optimistic because the young people are listening. Thank you.

CAFFERTY: All right. Thanks very much. Congress Ron Paul from Texas.

Still ahead, one of the most potent political forces in politics, right now. So, why are Independents having a hard time voicing their opinions and having it listened to?

And the missed warning signs of the Toyota mess. Another example of broken government? You bet -- when we come back.

(COMMERCIAL BREAK)

CAFFERTY: Welcome back to a look at our nation's broken government. Washington's inability to get anything done is firing up an increasingly powerful group of voters: Independents. Both major political parties want them, but in many states Independents are essentially locked out of the political process. Casey Wian reports about the battle to give Independent the right to vote when it matters.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): This mother and son rarely see eye to eye politically. He is an unabashed liberal, she is more conservative. But now, Jacob Carr and Nancy Corradini could find themselves in the same boat, as registered Independents -- which could essentially rob them to the right to vote in some very important elections.

JACOB CARR, DISILLUSIONED VOTER: I was one of the people who voted for Ralph Nader.

WIAN: In 2008, Jason registered as a Democrat to vote for Barack Obama. Today, he is disillusioned and disappointed.

CARR: I guess, throughout the year, my hope flame has been dwindling and dimming.

WIAN: Would you consider becoming an Independent and decline-to-state voter again?

CARR: Yes, you know, I'm definitely considering that or even maybe registering as some -- like a third party.

WIAN: Nancy beat her son to the punch. She became an Independent two years ago, after determining her party just didn't speak for her anymore. NANCY CORRADINI, INDEPENDENT VOTER: Sometimes, it's difficult to be a moderate Republican in the Republican Party. They call you "Republican in Name Only."

WIAN (on camera): RINO?

CORRADINI: Yes, I heard that buzz word the other night. RINO, I thought it was so insulting. I emotionally became detached from the Republican Party.

WIAN: But Nancy never considered that going Independent would actually take away her right to vote in some key elections, primaries. Here in California, political parties get to decide before each and every election whether to allow Independents to vote.

(voice-over): Joseph Holland is the elections registrar for Santa Barbara County.

JOSEPH HOLLAND, SANTA BARBARA COUNTY CLERK: Elections are not simple. They're -- every election is different. They -- believe it or not -- they do change from election to election.

WIAN: That can leave Independents like Nancy pretty confused. But that's not all.

(on camera): On a local level or even on congressional races, primaries are often where the key political decisions are made. Say you're an Independent living in a heavily Democratic district. If you can't vote in a Democratic primary, you're not going to have much influence over who wins the general election, it's probably going to be a Democratic candidate you had no role in choosing.

(voice-over): In the 2008 presidential primaries, Independents in 17 states and the District of Columbia were shut out of some crucial primaries. Those voters had no say at all in determining the major party candidates.

JASON OLSON, INDEPENDENTVOICE.ORG: We are second-class citizens when it comes to political representation and participation.

WIAN: Jason Olson is an Independent voter activist pushing to change the law in California. This June, there's a proposition on the state's primary ballot to eliminate party primaries entirely.

OLSON: All the candidates were on the same ballot. All the voters, regardless of party, vote for the best candidate, and then the top two vote getters will then go on to a run-off style election. So, there would be no more segregating voters by political parties and excluding Independents.

WIAN: That's how it's done in Washington state and Louisiana. In other states, party officials are trying to move things in the other direction. In Arizona, for example, the Republican Party is trying to close its primary so only registered Republicans can vote. Still, Olson sees momentum moving in his direction.

OLSON: We have a real shot to have Independents kind of crack over the doors, if you will, and start forcing some change.

WIAN: And newly Independent, Nancy Corradini, agrees.

CORRADINI: I think it's going to snowball; it's not going to stop.

WIAN: Casey Wian, CNN, Santa Barbara, California.

(END VIDEOTAPE)

CAFFERTY: One final note. As Casey reported, in 2008, Independents were not allowed to vote in 18 presidential primaries. That is flat out wrong. But their tax money was plenty good enough to help pay for all those elections. Now, this is called taxation without representation. And a few years back, you may recall in Boston the columnists expressed their disapproval. Maybe it's getting to be that time again.

One of the things I do every day in THE SITUATION ROOM on CNN is to read e-mails by viewers and I thought we'd share a few of those with you on this broadcast, here this evening.

Angela writes, "What's happened to your country where lies and cover-ups seem the norm? Whatever happened to honesty, good morals, respectability and good values? Why did putting yourself first to make a big profit at the benefit of cheating others become the norm?"

Aldo (ph) writes, "The system is not broken but the people running its are. We need to limit how long politicians serve

Nathan: "What seems broken beyond repair is common sense within our American society. We want no deficit spending, but how dare the government cut Social Security or Medicare. We want no new taxes, but we complain when cops are laid off. We say kick out all the incumbents, but then routinely give our local congressmen high marks. In other words, we each think we're OK, but our neighbors are sucking the country dry. What appears to be fundamentally broken is our collective logic."

Eric writes, "Don't worry, Jack, we'll fix the government in November. And incumbents? I recommend you beat the rush and buy your airfare now while it's cheap.

And "S" In Tennessee, "The government is a train wreck. Clear the debris, salvage what you can and then lay some new transparent rail."

These e-mails are part of THE SITUATION ROOM afternoon, early evening here on CNN. You can give us your thoughts by weighing into the "Cafferty File" at CNN.com.

Coming up next, our broken government's role in the Toyota fiasco. And can they ever get along? My next guess explains why bipartisanship doesn't have to be dead in Washington. But it is.

(COMMERCIAL BREAK) CAFFERTY: One thing our government is supposed to do is keep us safe. Countless government agencies full of countless bureaucrats busy enforcing countless rules, countless regulation while spending countless billions of dollars. So, how did the geniuses at the National Highway Traffic Safety Administration -- that would be NTSA for short -- did not notice that Toyota was making cars with accelerators that raced wildly out of control? Joe Johns reports.

(BEGIN VIDEOTAPE)

JOE JOHNS, CNN CORRESPONDENT: Toyota is on the hot seat in New York, but it's NHTSA, the National Highway Traffic Safety Administration the feds who were supposed to be looking out for motorists, who are taking a real beating here, accused of missing multiple warning signs and getting caught completely by surprise when the story blew up in their faces last year.

Joan Claybrook used to run NHTSA during the Carter administration. Now, she's a consumer advocate.

JOAN CLAYBROOK, CONSUMER ADVOCATE: I think they lack leadership. I don't think there was an enforcement mentality. This agency is a cop. It's a policeman. It should act like a cop.

JOHNS: So, just how asleep at the switch was NHTSA? The House Energy and Commerce Committee says that since the year 2000, NHTSA has received 2,600 complaints about sudden, unintended acceleration in Toyota cars, along with six petitions requesting investigations.

State Farm Insurance Company is now confirming that it first alerted the agency to problems with Toyota cars in 2004. That very same year, 2004, the committee says NHTSA did its only study of electronic throttle control systems in Toyota cars, a so-called "preliminary evaluation." And then shut the evaluation down, announcing, "A defect trend in the cars has not been identified at this time and further use of agency resources does not appear to be warranted."

An auto safety expert says NHTSA also conducted a technical test in 2007 and concluded that floor mats were causing sudden acceleration problems on Toyota cars. But, when the Center for Auto Safety asked for details about the test in a Freedom of Information Act request, they got few answers.

CLARENCE DITLOW, CENTER FOR AUTO SAFETY: NHTSA responded to that query by saying they had -- they don't know how they did the test. They don't know what they measured and they had no test data. In other words, they had nothing other than a conclusion.

JOHNS (on camera): The next question is why. Claybrook says NHTSA has long been considered severely understaffed and under-funded and the House committee report says NHTSA appears under-qualified to investigate safety on cars that have electronics rivaling the cockpit of a fighter jet.

But, the agency and Toyota have also been attacked for being too cozy with each other. For example, two Toyota officials who have handled safety issues involving NHTSA, actually used to work for NHTSA. The company's been defending them.

YOSHIMI INABA, PRESIDENT & COO, TOYOTA NORTH AMERICA: Whatever they have done is within the very good ethical sort of code.

JOHNS (voice-over): And Transportation Secretary Ray LaHood strongly denies that NHTSA has been taking it easy on Toyota or any other auto company it's supposed to be regulating.

RAY LAHOOD, SECRETARY OF TRANSPORTATION: We've been a lap dog for nobody. We've been a lap dog for the people who drive cars and want to do them safely.

JOHNS: LaHood says the agency is adding 60 people into its next budget, but the watchdogs want to know whether the new staff will be working on enforcing public safety issues or overseeing grants to the states, which is where most of NHTSA's money is going right now.

Joe Johns, CNN, Washington.

(END VIDEOTAPE)

CAFFERTY: CNN is partnering with "Time" magazine on our "Broken Government" series, "Time's" current issue titled, "Why Washington is Frozen." they say "frozen," we say "broken." Joining me now is Michael Scherer, a White House correspondent for "Time" and a regular contributor to "Time's" "Swampland" blog.

Michael, nice to have you with us, thanks.

MICHAEL SCHERER, TIME WHITE HOUSE CORRESPONDENT: Thanks for having me, Jack.

CAFFERTY: We had a story this week; there are 290 pieces of legislation that have gone through the House of Representatives that are sitting, collecting dust in the Senate. They're doing nothing with any of this. Has it always been this bad? What the hell is going on here?

SCHERER: Well, it's definitely true, the founding fathers did not design an efficient system, but it's not always been this bad. I think you've had, you know, over the last 10, 20 years, a steady drift towards this partnership. And there are a few factors at play here, one is, you no longer have geographical diversities in the parties. You use to have a lot of Southern Democrats who basically voted like Republicans and northeastern Republicans who voted like Democrats. That's gone, so the parties are more polarized now.

You have a media culture that rewards partisanship by basically going after people who work on compromise, and on top of that, you have an increased pressure on fundraising which also rewards stasis. I mean, it's a lot easier to fundraise on an issue that hasn't been resolved. You can go to a drug company and ask for more money than if you resolved the issues for them.

CAFFERTY: Now all of that being said, do you get a sense that any of these clowns understand how toughly fed up we're all getting with this dog and pony show they're doing?

SCHERER: Yes, they do, but the irony is that we're in sort of like a cynical death spiral, here. They're scared of the voter because they know the voters are upset, and they respond by acting in more cynical ways. They basically posture at trying to get more bipartisanship, and they end up deepening the stasis.

You had, this week, this, you know, day-long summit that the president held to find bipartisan support on health care and really, what that whole thing was about was getting some fire under the bellies of Democrats so they could push forward a partisan bill. So you know, the fear actually makes members of Congress less willing to compromise, less willing to work across the aisle. But they definitely know what's happening and they're definitely responding to it.

CAFFERTY: Now, a way to make them realize that their fear is, in fact, founded on something is to vote them out, isn't it?

SCHERER: That's right.

CAFFERTY: And maybe, maybe the voters will finally stop saying, well, my congressman is a great guy, because quite frankly, most of them aren't.

SCHERER: You know, and that's another thing, the one place there is -- ability in Congress over the last decade to get bipartisan compromise is on those little perks that reward your home district. So, Republicans and Democrats are fine with rewarding their own voters, and that's a big part of why you have that split in the polls. People hate Congress, but they don't mind their congressman. And that's because their congressman is bringing home the bacon.

CAFFERTY: Now, what about this Tea Party movement? You know, it's a sign of some sort of discontent out there. Does they matter? Is that going anywhere? And how will it affect the status quo, if at all?

SCHERER: Well, it's definitely a big factor going into the mid- term elections. You know, right now two-thirds of the American people don't really have a good idea what this Tea Party thing is all about, but you still have one-third who are either identifying with this outrage or actually being a part of this outrage. And as of right now, it's still a very unformed movement, it's not really affiliated with any party and it's not clear how long it's going to stick around.

CAFFERTY: Yeah, but you know what, in the meantime it gives guys like you and I something to do, right?

SCHERER: That's right.

CAFFERTY: Mike, thanks very much. Michael Scherer, "Time" magazine. Good to have you with us.

SCHERER: Yeah, thanks for having me.

CAFFERTY: All right, coming up next, we'll have some closing thoughts on all of this. Be right back.

(COMMERCIAL BREAK)

CAFFERTY: A final thought. At the beginning of the program, we told you that nearly nine out of 10 Americans say the government is broken. But there is a glimmer of hope -- 81 percent of you also believe that government that's supposed to be of, by and for the people can be fixed. We'll see.

One thing is for sure, though, nothing is going to change as long as we continue to send the same people to Washington to do the same things to us, not for us -- to us, over and over and over again. On that note, thanks for watching. Good night.