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CNN Live At Daybreak

Pope's Health; Church in Shock Over Arrest of BTK Killer; Hollywood Gold Rush; Wacky Taxes

Aired February 28, 2005 - 06:30   ET

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


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


KELLY WALLACE, CNN ANCHOR: And good Monday morning to you. From the Time Warner center in New York, I'm Kelly Wallace, in today for Carol Costello.
"Now in the News."

A suicide car bombing south of Baghdad killed at least 125 people and injured 150 to 200 more. Police say the car bomber drove into a crowd of people in the town of Hilla and detonated the explosives.

We are getting the latest word this morning on the pope's health. The Vatican says Pope John Paul II is recovering well at a Rome hospital after throat surgery last week. The Vatican says the pontiff does not have any complications and is breathing fine and eating regularly.

Thousands of demonstrators are now -- you're looking at live pictures -- in Beirut's Martyr's Square. They are protesting Syria's military presence in Lebanon. Opposition leaders are seeking a vote to bring down the pro-Syrian government.

Opening statements begin this morning in Michael Jackson's child molestation trial. CNN will bring you extensive live reports throughout the day and the trial.

And people in Palm Bay, Florida, are cleaning up from a tornado. Officials say the twister injured at least five people and destroyed at least 14 homes.

It's time to check in with Chad.

(WEATHER REPORT)

WALLACE: Well, as we were talking about, Pope John Paul's health appears to be improving. But was his health overall in question? There is some speculation about the future of the papacy.

Joining me for more on that is James Fisher of the Center for Catholic-American Studies at Fordham University.

Thanks for being here.

JAMES FISHER, CENTER FOR CATHOLIC-AMERICAN STUDIES: Thanks for having me.

WALLACE: First, let me get your quick reaction, the latest word that the pope's condition improving. He's breathing on his own, eating regularly. What do you make of that?

FISHER: He's a wonderfully enduring individual. And many people say that in a way the end of his life reflects much of the quality of his papacy; that is, something about the quality of suffering that he's enduring has a very spiritual dimension to it.

WALLACE: So, there is absolutely no talk or no question at all that he would, on his own, resign or step down.

FISHER: Well, there's...

WALLACE: Or is there?

FISHER: There has been a little speculation. That's the kind of thing that's rarely raised openly within the church. But there has been some discussion that this pope, who has done so many unprecedented things, might make another final unprecedented move and possibly consider retirement.

WALLACE: When you look at his legacy, his impact in terms of it, especially on the church and on Catholics in the United States, describe it, how powerful it is.

FISHER: It's been a message of global evangelization. This pope has taken more than 100 trips outside of Italy. He's had an enormous impact worldwide. He has truly brought the church to every corner of the world, and in that respect has shown American Catholics that they are, in fact, part of an international church with a very, very broad agenda. But he's been very consistent about certain issues.

WALLACE: All right. James Fisher, I wish we had more time. A busy news morning. James Fisher with Fordham University. Thanks for being here today. We appreciate it.

FISHER: Thank you.

WALLACE: Shifting our focus now. The suspected BTK serial killer is expected to go before a judge this week in Wichita, Kansas, perhaps as early as today. This man, 59-year-old Dennis Rader, is being held on $10 million bond in the killings of 10 people between 1974 and 1991.

BTK stands for "bind, torture, kill." Police say it was the killer's M.O.

Rader became president of his church's congregation in January. He is married and the father of two children.

Church members say they are stunned.

(BEGIN VIDEO CLIP)

BOBBY SMYSER, CHURCH MEMBER: I just saw the picture on the news, and my 5-year-old said, "Daddy, isn't that the -- that's the guy who collects money with you in the plates." I said, 'Yes, that's Dennis, and we usher together.' And he was fairly quiet, and I'm not sure what to tell him. I'm not sure what to tell myself. And he said, "Daddy, he tricked us, didn't he?"

(END VIDEO CLIP)

WALLACE: Church members were so shocked at Rader's arrest a crisis intervention team was called in to help them cope.

CNN's Bob Franken attended services yesterday at Rader's church in Wichita. Bob joins us now this morning.

Good morning, Bob. Thanks for being here.

BOB FRANKEN, CNN NATIONAL CORRESPONDENT: Good morning.

The services were sort of a reflection of the community. There's a sense of relief, obviously, in the community after something that had once again become subject to some terror in the community had arisen. And now, police say they have their man. I should point out here that it will be up to the court to decide if that's the case.

The legal complexities of this thing are, as you imagine, enormous. You mentioned just a moment ago that they weren't quite sure when they would have their hearing. Normally, in Kansas, you would have had a hearing within 48 hours of the arrest, which would be today. But we don't know yet if he even has a lawyer, if the lawyer is going to want more time to prepare. Even though this is quite perfunctory, the charges will be read, a permanent bond will be set.

So, at any rate, this is just beginning to get going. The investigators are still continuing. There is talk that they're looking at the other murders. A lot of false reports are going about. But the investigators, of course, want to see just what the scope of this alleged killer Dennis Rader's activities were.

WALLACE: All right, Bob, we have to leave it there. We'll look forward to your reports throughout the day. Bob Franken reporting from Wichita, Kansas.

And you heard one of Rader's fellow church members a moment ago. The congregation is in shock at the developments this weekend.

CNN's Bill Hemmer has more on that angle of the investigation this morning on "AMERICAN MORNING."

Good morning -- Bill.

BILL HEMMER, CNN ANCHOR: Hey, Kelly good morning to you.

What a story, following it over the weekend of Rader's arrest in the BTK. Shock in that community. That's an understatement, especially those very close to him.

We'll talk to two of his friends today. One is the pastor at the church where Rader attended, where he recently, just about two months ago, became president of the church council. The other is in the same congregation. We'll find out how they are coping today and how some are talking about Rader's darker side. Also, we'll have the police chief on with us today and try and get more details right now about what they are finding out. So, we'll have that for you starting this morning at 7:00 a.m. Eastern Time.

Kelly -- we hope to see you then at the top of the hour.

WALLACE: All right, Bill, we'll see you then.

HEMMER: All right.

WALLACE: That community is definitely in shock. We'll look forward to those interviews.

Well, two shopping giants, one mega-deal in the works this morning. And when it is all worked out, one company could own just about every department store in your favorite mall.

And who went to bed with a guy named Oscar last night? We're not being racy. This is all of the detail on the Hollywood big night called the Oscars. A live report straight ahead.

And that brings us back to our e-mail "Question of the Day" about the host of the Academy Awards, Chris Rock. What did you think? Love him? Hate him? Do you even care? Should he be invited back? Daybreak@CNN.com. And we'll read your responses.

We'll be back in a minute.

(COMMERCIAL BREAK)

CARRIE LEE, CNN FINANCIAL NEWS CORRESPONDENT: Good morning, everyone. I'm Carrie Lee at the Nasdaq Marketsite.

After weeks of "will they or won't they?," the deal is official. Federated Department Stores is merging with May Department Stores. A lot of people have been rumoring and talking about this deal for weeks, and the deal is officially expected to be announced later today.

Now, it's going to combine Federated's Macy's and Bloomingdale's chains with May's Lord & Taylor, Marshall Field's and other department store chains. The deal is valued to be about $11 billion. That's slightly less than what Kmart paid for Sears. And the combined company is going to have nearly 1,000 stores, helping it compete better with names like Sears and J.C. Penney.

So, what does this mean for consumers? Well, it could ultimately benefit shoppers, because a bigger company means more buying power. That could potentially lead to lower prices. And it's certainly going to step up the competition with competition from other big chains. Even Target and Wal-Mart are seen as rivals here.

The deal values May at a little bit of a premium to where that stock closed on Friday.

Meanwhile, looking at stocks in general, early indications are pointing to a flat to slightly higher open for this day's session. The Dow and Nasdaq saw fractional gains last week. The Dow getting a nice pop, up 92 points on Friday, putting it at new highs for 2005.

One stock to watch this morning is luxury retailer Tiffany. It will, later this morning, report profits for the recent quarter.

And that is the latest business news. I'm Carrie Lee at the Nasdaq Marketsite.

(COMMERCIAL BREAK)

WALLACE: Well, as you know by now, the statues have been handed out, and the acceptances speeches have been made. But the post-Oscar parties may still be going on.

For all of the Oscar news, let's go out to Los Angeles, where CNN's Chris Wolfe is standing by.

And, Chris, are the parties still going on?

CHRIS WOLFE, CNN CORRESPONDENT: From what I hear, Kelly, they're still going on. And unfortunately, I couldn't make it to any of them. I am covering all of this stuff, but I'm still having fun out here. What can I say? From what I hear, they are still going on, though.

It was, of course, Hollywood's biggest night, now just a memory, at least the actual awards show. We're just a few steps outside the Kodak Theater, where it all took place.

And this year was a real departure for the Academy of Motion Pictures Arts and Sciences in choosing the young, irreverent, brash comedian Chris Rock as host. That's because he's pretty much everything the Oscars are not.

(BEGIN VIDEOTAPE)

CHRIS ROCK, COMEDIAN: Sit your (EXPLETIVE DELETED) down!

WOLFE (voice over): The evening got off to a rocky start. We're talking about host Chris Rock.

ROCK: There's only four real stars, and the rest are just popular people. Who is Jude Law? Why is he in every movie I have seen the last four years?

WOLFE: At least one person didn't like the joke.

SEAN PENN, ACTOR: And I did want to answer our host's question about who Jude Law is. He's one of our finest actors.

(APPLAUSE)

WOLFE: Back to business, Penn handed Hilary Swank the Oscar for best actress for her role in "Million Dollar Baby."

HILARY SWANK, ACTRESS: I'm just a girl from a trailer park who had a dream.

WOLFE: "Baby" was golden Sunday night. The female boxing flick was named best picture, and 74-year-old Hollywood legend Clint Eastwood was named best director.

CLINT EASTWOOD, ACTOR/DIRECTOR: I watched Sydney Lamette (ph) out there, who is 80, and I figure, 'I'm just a kid.'

WOLFE: Another knockout for "Million Dollar Baby" was Morgan Freeman's win as best supporting actor.

Cate Blanchett took home a trophy as best supporting actress for playing another Kate, Katharine Hepburn, in "The Aviator."

And no surprise here, Jamie Foxx was honored as best actor for leading the Ray Charles' bio pick, "Ray."

JAMIE FOXX, ACTOR: I want to thank my daughter for telling me just before I got up here, "If you don't win, dad, you're still good."

(END VIDEOTAPE)

WOLFE: Jamie Foxx certainly is still good. And most people thought, from what we hear, that Chris Rock did a fine job as host. And he says, don't worry. He says he actually hugged Sean Penn backstage.

We're now reporting live in Hollywood. I'm Chris Wolfe.

Kelly -- back to you.

WALLACE: Well, Chris, I want you to stay with us, because our e- mail "Question of the Day" is about Chris Rock. Love him? Hate him? Do you even care? What do you think of the job he did last night?

And we can tell you, Chris, it's about 50/50 our e-mails coming in. On the positive side, you're getting people who say: "I am a white male and 50 years old. Chris Rock is not only the funniest man on the planet, but he has the ability to frame issues from the perspective of the average person. Inviting him back is a no- brainer."

On the negative side, we have this e-mail from Hot Springs, Arkansas: "I really enjoy Chris Rock, but I was disappointed. I expected more from him. It wasn't as funny as I thought it would be."

What do you make of that, Chris?

WOLFE: Well, Chris Rock actually said he felt he did a very good job, but he said he did abide by the constraints of this kind of a broadcast. It was on ABC Network. It was a broadcast network. He said he understands the constraints.

He didn't want to be as foul-mouthed and brash as he usually is. And he says he kept his language pretty much PG-rated, because he would never swear in front of his mother. And he says his mother was front-row center last night.

WALLACE: His mother watching.

WOLFE: So there you have it.

WALLACE: So, he had to be on his best behavior.

WOLFE: Yes, best behavior.

WALLACE: Now, we'll have to see, Chris, of course, how many viewers watched? We'll have to watch those numbers. Chris Wolfe, thanks for getting up bright and early for us on DAYBREAK. We appreciate it.

Coming up next here on DAYBREAK, some fun for those of who hate sharing your paycheck with Uncle Sam. Do you owe some wacky taxes this year? We'll tell you.

And you'd better hurry if you want to see "The Gates." They are fabulous in New York's Central Park.

This is DAYBREAK for a Monday. We'll be right back.

(COMMERCIAL BREAK)

WALLACE: News across America now.

Police responded to a loud argument between the families of Lacy and Scott Peterson outside the home the couple once shared. Lacy's mother, Sharon Rocha, confronted Scott Peterson's mother as the Petersons were removing boxes out of the house. There were no arrests. Scott Peterson is scheduled to be sentenced next month.

The search for two missing teenagers is expected to continue today along the North Florida Gulf Coast. The two 14-year-old boys became separated from their school group while kayaking along the coast Saturday. The Coast Guard and police have joined in the search.

And today may be the last day of an official search for a missing Florida girl. Nine-year-old Jessica Marie Lunsford was last seen at home Wednesday night. Hundreds of volunteers have been searching the woods north of Tampa Bay near her Homosassa Springs home. Police say they have few clues in the girl's disappearance.

Jessica Lunsford's family members have made passionate pleas for her safe return. "AMERICAN MORNING's" Bill Hemmer will speak to two of her relatives next hour.

Bill, they will be tough interviews, I'm sure.

HEMMER: Yes, Kelly, good morning.

We'll talk about the search for Jessica. If it ends today, where does that leave this giant search party that went out over the weekend? We'll also speak with Jessica's father. On Friday morning, he made an impassioned appeal to the country to give him help to find his daughter. He says he is convinced Jessica was kidnapped. The sheriff, however, has offered an opinion that apparently he does not think it was a clear abduction case. We'll talk to him this morning and try and sort out what that may all means.

Also, we'll ask the father why he is not sure she did not run away. And we'll find out this morning about more details about what we need to know in terms of letting the viewers know about whether or not they have information to pass along to that search party down in Florida.

We'll get to it in about nine minutes. A busy morning, by the way, here on "AMERICAN MORNING." We'll be following the news out of Iraq. There will also be Oscar hype from last night and the fallout today.

WALLACE: A busy news morning indeed, Bill.

HEMMER: yes.

WALLACE: OK, we'll see you at the top of the hour. Thanks so much.

And it is just about 52 minutes after the hour, and here is what will be making news today.

President Bush speaks to the National Governors Association this morning. The president and first lady hosted a state dinner for the governors last night. Top priorities for the governors in attendance are dealing with Medicare and Medicaid.

In New York's Central Park this morning, teams will begin the two-week process of removing "The Gates," that fabulous public arts project that cost $21 million.

And in Kansas, takeoff is scheduled this afternoon for the single-engine global flyer. Pilot Steve Fossett (ph) will attempt the first nonstop, around-the-world solo flight with no refueling. His menu for the 66-hour trip? Diet milkshakes.

All right. Well, as you fill out your tax forms, the dreaded process we know, you might be paying more than you realize. We are finding out that no sum is too small or too ridiculous for the tax man to charge.

Jeanne Sahadi is a personal finance writer for CNNMoney.com and "Money" magazine, and joins us here.

We don't love paying taxes, but wacky taxes, what are we talking about here?

JEANNE SAHADI, CNNMONEY.COM: Well, these are taxes you're going to encounter for the most bizarre things in various states. Some of them are passed on to the consumer, because they're imposed on the owners of businesses. Others are just kind of weird taxes that are -- you know, you just think -- they're basically a sin tax, a behavior- medication tax, a revenue generator or just "what were you thinking?"

WALLACE: Let's run through a couple. Illegal drug tax.

SAHADI: Right. This doesn't affect most people. It affects drug dealers. It's a bizarre tax, because 23 states, including Tennessee and North Carolina, basically say that if you are acquiring a large amount of drugs, the states wants a piece of the action. So, they want the drug dealer to go down to the Department of Revenue and say, listen, I acquired a lot of drugs today. How much do I owe you?

WALLACE: Hello.

SAHADI: Yes.

WALLACE: How often is that going to happen?

SAHADI: Not often. Not often. They actually don't -- they can't rat you out. But in North Carolina, for instance, only 79 people have actually come forward, you know, in the last 15 years since the law was enacted. But when you're busted for the drugs, you've still got to pay the tax. So, they've managed to raise about $78 million on this one.

WALLACE: All right. Here's one called the "sex sales tax." What are we talking about here?

SAHADI: Yes. This is a sin tax and a "what were you thinking?" In Utah last July, they passed a law that said, if you run a business where nude or partially-nude individuals are providing services -- so, I guess we're thinking topless bars and the like -- in addition to paying the state sales tax on transactions, the owners are subject to a 10 percent tax on sales, admissions, sales of food, merchandise and drink and so forth.

It sounds like a good revenue-generator, except there are only about two businesses in Utah that are subject to this.

WALLACE: We'll point out that there are only a couple of them that have to be subject to that tax.

SAHADI: Not too many, no.

WALLACE: Not bringing in a lot of money. OK, sparkler and novelties tax.

SAHADI: Yes.

WALLACE: Taxing our sparklers?

SAHADI: That's right. It's sort of a Fourth of July tax, you know, celebrate our independence but pay for it. It's also a tax on kids, I think, because the novelties are described as things like glowworms, explosive caps for toy pistols, which I haven't thought about those in ages, really. So, in West Virginia if you're a kid and you want to get those cool, gecky (ph) glowworms, you're going to pay the 6 percent sales tax plus a special fee.

WALLACE: What about a wagering tax?

SAHADI: A wagering tax, most people know if you win big or lose big at the casinos or the race tracks, you're going to have to report it on your tax return. But casino owners and track owners in a number of states, including Pennsylvania and Oklahoma and Illinois, are subject to a tax, everybody who comes into their establishment, whether those people gamble or not.

So, what's going to happen is they're going to pass that tax right along to the consumer in the casino or the race tracks. So, you're already at a loss the moment you walk in.

WALLACE: The moment you walk in. OK. Last one we're going to cover here.

SAHADI: Yes.

WALLACE: Fur clothing tax.

SAHADI: Right.

WALLACE: So, if I buy a fur, I'm taxed?

SAHADI: In Minnesota, which is really where you need the fur. You know, even if you're opposed to -- you know, people, there are a lot of animal rights activists who hate the whole fur issue. But I don't think that that's what this tax is about, because the Department of Revenue says that you can buy leather and suede, and there's no clothing tax. There is no sales tax on clothing in Minnesota. It's just the fur.

So, it costs you to be warm in a really cold state.

WALLACE: It's so complicated and so bizarre, we can say, right?

SAHADI: Yes, yes,

WALLACE: Jeanne Sahadi, CNNmoney.com. Thanks for being here. We appreciate it.

SAHADI: Thanks for having me.

WALLACE: Interesting information. And you can read more about the wacky taxes and other financial news online. The address is Money.cnn.com.

And we'll be right back.

(COMMERCIAL BREAK)

WALLACE: It's time now to reveal the winner, Chad, of the DAYBREAK coffee mug.

CHAD MYERS, CNN METEOROLOGIST: The answers from Friday, Lynn Swan and Kodak Theater. The winner, AnnMarie Abell from Leonardtown, Maryland. You have the brand new, and that is the new DAYBREAK CNN coffee mug, and there are many other colors to come. So congratulations AnnMarie from Leonardtown, Maryland.

And now the questions for today. What state -- we just talked about it. What state is now taxing fur? And who is the oldest recipient of a best director Oscar?

That's all the time we have for you for today.

WALLACE: So, Chad, if I know the answers, can I hurry up and e- mail in and get myself a new DAYBREAK coffee mug?

MYERS: You know, I'm sorry, but members and family of AOL Time Warner and the like are not eligible.

WALLACE: I see. We're disqualified. All right, Chad, it's great to be with you today. Have a great day.

MYERS: We'll see you.

WALLACE: From the Time Warner center in New York, I'm Kelly Wallace, in for Carol Costello. "AMERICAN MORNING" with Bill Hemmer and Carol Costello is starting right now.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.


Aired February 28, 2005 - 06:30   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KELLY WALLACE, CNN ANCHOR: And good Monday morning to you. From the Time Warner center in New York, I'm Kelly Wallace, in today for Carol Costello.
"Now in the News."

A suicide car bombing south of Baghdad killed at least 125 people and injured 150 to 200 more. Police say the car bomber drove into a crowd of people in the town of Hilla and detonated the explosives.

We are getting the latest word this morning on the pope's health. The Vatican says Pope John Paul II is recovering well at a Rome hospital after throat surgery last week. The Vatican says the pontiff does not have any complications and is breathing fine and eating regularly.

Thousands of demonstrators are now -- you're looking at live pictures -- in Beirut's Martyr's Square. They are protesting Syria's military presence in Lebanon. Opposition leaders are seeking a vote to bring down the pro-Syrian government.

Opening statements begin this morning in Michael Jackson's child molestation trial. CNN will bring you extensive live reports throughout the day and the trial.

And people in Palm Bay, Florida, are cleaning up from a tornado. Officials say the twister injured at least five people and destroyed at least 14 homes.

It's time to check in with Chad.

(WEATHER REPORT)

WALLACE: Well, as we were talking about, Pope John Paul's health appears to be improving. But was his health overall in question? There is some speculation about the future of the papacy.

Joining me for more on that is James Fisher of the Center for Catholic-American Studies at Fordham University.

Thanks for being here.

JAMES FISHER, CENTER FOR CATHOLIC-AMERICAN STUDIES: Thanks for having me.

WALLACE: First, let me get your quick reaction, the latest word that the pope's condition improving. He's breathing on his own, eating regularly. What do you make of that?

FISHER: He's a wonderfully enduring individual. And many people say that in a way the end of his life reflects much of the quality of his papacy; that is, something about the quality of suffering that he's enduring has a very spiritual dimension to it.

WALLACE: So, there is absolutely no talk or no question at all that he would, on his own, resign or step down.

FISHER: Well, there's...

WALLACE: Or is there?

FISHER: There has been a little speculation. That's the kind of thing that's rarely raised openly within the church. But there has been some discussion that this pope, who has done so many unprecedented things, might make another final unprecedented move and possibly consider retirement.

WALLACE: When you look at his legacy, his impact in terms of it, especially on the church and on Catholics in the United States, describe it, how powerful it is.

FISHER: It's been a message of global evangelization. This pope has taken more than 100 trips outside of Italy. He's had an enormous impact worldwide. He has truly brought the church to every corner of the world, and in that respect has shown American Catholics that they are, in fact, part of an international church with a very, very broad agenda. But he's been very consistent about certain issues.

WALLACE: All right. James Fisher, I wish we had more time. A busy news morning. James Fisher with Fordham University. Thanks for being here today. We appreciate it.

FISHER: Thank you.

WALLACE: Shifting our focus now. The suspected BTK serial killer is expected to go before a judge this week in Wichita, Kansas, perhaps as early as today. This man, 59-year-old Dennis Rader, is being held on $10 million bond in the killings of 10 people between 1974 and 1991.

BTK stands for "bind, torture, kill." Police say it was the killer's M.O.

Rader became president of his church's congregation in January. He is married and the father of two children.

Church members say they are stunned.

(BEGIN VIDEO CLIP)

BOBBY SMYSER, CHURCH MEMBER: I just saw the picture on the news, and my 5-year-old said, "Daddy, isn't that the -- that's the guy who collects money with you in the plates." I said, 'Yes, that's Dennis, and we usher together.' And he was fairly quiet, and I'm not sure what to tell him. I'm not sure what to tell myself. And he said, "Daddy, he tricked us, didn't he?"

(END VIDEO CLIP)

WALLACE: Church members were so shocked at Rader's arrest a crisis intervention team was called in to help them cope.

CNN's Bob Franken attended services yesterday at Rader's church in Wichita. Bob joins us now this morning.

Good morning, Bob. Thanks for being here.

BOB FRANKEN, CNN NATIONAL CORRESPONDENT: Good morning.

The services were sort of a reflection of the community. There's a sense of relief, obviously, in the community after something that had once again become subject to some terror in the community had arisen. And now, police say they have their man. I should point out here that it will be up to the court to decide if that's the case.

The legal complexities of this thing are, as you imagine, enormous. You mentioned just a moment ago that they weren't quite sure when they would have their hearing. Normally, in Kansas, you would have had a hearing within 48 hours of the arrest, which would be today. But we don't know yet if he even has a lawyer, if the lawyer is going to want more time to prepare. Even though this is quite perfunctory, the charges will be read, a permanent bond will be set.

So, at any rate, this is just beginning to get going. The investigators are still continuing. There is talk that they're looking at the other murders. A lot of false reports are going about. But the investigators, of course, want to see just what the scope of this alleged killer Dennis Rader's activities were.

WALLACE: All right, Bob, we have to leave it there. We'll look forward to your reports throughout the day. Bob Franken reporting from Wichita, Kansas.

And you heard one of Rader's fellow church members a moment ago. The congregation is in shock at the developments this weekend.

CNN's Bill Hemmer has more on that angle of the investigation this morning on "AMERICAN MORNING."

Good morning -- Bill.

BILL HEMMER, CNN ANCHOR: Hey, Kelly good morning to you.

What a story, following it over the weekend of Rader's arrest in the BTK. Shock in that community. That's an understatement, especially those very close to him.

We'll talk to two of his friends today. One is the pastor at the church where Rader attended, where he recently, just about two months ago, became president of the church council. The other is in the same congregation. We'll find out how they are coping today and how some are talking about Rader's darker side. Also, we'll have the police chief on with us today and try and get more details right now about what they are finding out. So, we'll have that for you starting this morning at 7:00 a.m. Eastern Time.

Kelly -- we hope to see you then at the top of the hour.

WALLACE: All right, Bill, we'll see you then.

HEMMER: All right.

WALLACE: That community is definitely in shock. We'll look forward to those interviews.

Well, two shopping giants, one mega-deal in the works this morning. And when it is all worked out, one company could own just about every department store in your favorite mall.

And who went to bed with a guy named Oscar last night? We're not being racy. This is all of the detail on the Hollywood big night called the Oscars. A live report straight ahead.

And that brings us back to our e-mail "Question of the Day" about the host of the Academy Awards, Chris Rock. What did you think? Love him? Hate him? Do you even care? Should he be invited back? Daybreak@CNN.com. And we'll read your responses.

We'll be back in a minute.

(COMMERCIAL BREAK)

CARRIE LEE, CNN FINANCIAL NEWS CORRESPONDENT: Good morning, everyone. I'm Carrie Lee at the Nasdaq Marketsite.

After weeks of "will they or won't they?," the deal is official. Federated Department Stores is merging with May Department Stores. A lot of people have been rumoring and talking about this deal for weeks, and the deal is officially expected to be announced later today.

Now, it's going to combine Federated's Macy's and Bloomingdale's chains with May's Lord & Taylor, Marshall Field's and other department store chains. The deal is valued to be about $11 billion. That's slightly less than what Kmart paid for Sears. And the combined company is going to have nearly 1,000 stores, helping it compete better with names like Sears and J.C. Penney.

So, what does this mean for consumers? Well, it could ultimately benefit shoppers, because a bigger company means more buying power. That could potentially lead to lower prices. And it's certainly going to step up the competition with competition from other big chains. Even Target and Wal-Mart are seen as rivals here.

The deal values May at a little bit of a premium to where that stock closed on Friday.

Meanwhile, looking at stocks in general, early indications are pointing to a flat to slightly higher open for this day's session. The Dow and Nasdaq saw fractional gains last week. The Dow getting a nice pop, up 92 points on Friday, putting it at new highs for 2005.

One stock to watch this morning is luxury retailer Tiffany. It will, later this morning, report profits for the recent quarter.

And that is the latest business news. I'm Carrie Lee at the Nasdaq Marketsite.

(COMMERCIAL BREAK)

WALLACE: Well, as you know by now, the statues have been handed out, and the acceptances speeches have been made. But the post-Oscar parties may still be going on.

For all of the Oscar news, let's go out to Los Angeles, where CNN's Chris Wolfe is standing by.

And, Chris, are the parties still going on?

CHRIS WOLFE, CNN CORRESPONDENT: From what I hear, Kelly, they're still going on. And unfortunately, I couldn't make it to any of them. I am covering all of this stuff, but I'm still having fun out here. What can I say? From what I hear, they are still going on, though.

It was, of course, Hollywood's biggest night, now just a memory, at least the actual awards show. We're just a few steps outside the Kodak Theater, where it all took place.

And this year was a real departure for the Academy of Motion Pictures Arts and Sciences in choosing the young, irreverent, brash comedian Chris Rock as host. That's because he's pretty much everything the Oscars are not.

(BEGIN VIDEOTAPE)

CHRIS ROCK, COMEDIAN: Sit your (EXPLETIVE DELETED) down!

WOLFE (voice over): The evening got off to a rocky start. We're talking about host Chris Rock.

ROCK: There's only four real stars, and the rest are just popular people. Who is Jude Law? Why is he in every movie I have seen the last four years?

WOLFE: At least one person didn't like the joke.

SEAN PENN, ACTOR: And I did want to answer our host's question about who Jude Law is. He's one of our finest actors.

(APPLAUSE)

WOLFE: Back to business, Penn handed Hilary Swank the Oscar for best actress for her role in "Million Dollar Baby."

HILARY SWANK, ACTRESS: I'm just a girl from a trailer park who had a dream.

WOLFE: "Baby" was golden Sunday night. The female boxing flick was named best picture, and 74-year-old Hollywood legend Clint Eastwood was named best director.

CLINT EASTWOOD, ACTOR/DIRECTOR: I watched Sydney Lamette (ph) out there, who is 80, and I figure, 'I'm just a kid.'

WOLFE: Another knockout for "Million Dollar Baby" was Morgan Freeman's win as best supporting actor.

Cate Blanchett took home a trophy as best supporting actress for playing another Kate, Katharine Hepburn, in "The Aviator."

And no surprise here, Jamie Foxx was honored as best actor for leading the Ray Charles' bio pick, "Ray."

JAMIE FOXX, ACTOR: I want to thank my daughter for telling me just before I got up here, "If you don't win, dad, you're still good."

(END VIDEOTAPE)

WOLFE: Jamie Foxx certainly is still good. And most people thought, from what we hear, that Chris Rock did a fine job as host. And he says, don't worry. He says he actually hugged Sean Penn backstage.

We're now reporting live in Hollywood. I'm Chris Wolfe.

Kelly -- back to you.

WALLACE: Well, Chris, I want you to stay with us, because our e- mail "Question of the Day" is about Chris Rock. Love him? Hate him? Do you even care? What do you think of the job he did last night?

And we can tell you, Chris, it's about 50/50 our e-mails coming in. On the positive side, you're getting people who say: "I am a white male and 50 years old. Chris Rock is not only the funniest man on the planet, but he has the ability to frame issues from the perspective of the average person. Inviting him back is a no- brainer."

On the negative side, we have this e-mail from Hot Springs, Arkansas: "I really enjoy Chris Rock, but I was disappointed. I expected more from him. It wasn't as funny as I thought it would be."

What do you make of that, Chris?

WOLFE: Well, Chris Rock actually said he felt he did a very good job, but he said he did abide by the constraints of this kind of a broadcast. It was on ABC Network. It was a broadcast network. He said he understands the constraints.

He didn't want to be as foul-mouthed and brash as he usually is. And he says he kept his language pretty much PG-rated, because he would never swear in front of his mother. And he says his mother was front-row center last night.

WALLACE: His mother watching.

WOLFE: So there you have it.

WALLACE: So, he had to be on his best behavior.

WOLFE: Yes, best behavior.

WALLACE: Now, we'll have to see, Chris, of course, how many viewers watched? We'll have to watch those numbers. Chris Wolfe, thanks for getting up bright and early for us on DAYBREAK. We appreciate it.

Coming up next here on DAYBREAK, some fun for those of who hate sharing your paycheck with Uncle Sam. Do you owe some wacky taxes this year? We'll tell you.

And you'd better hurry if you want to see "The Gates." They are fabulous in New York's Central Park.

This is DAYBREAK for a Monday. We'll be right back.

(COMMERCIAL BREAK)

WALLACE: News across America now.

Police responded to a loud argument between the families of Lacy and Scott Peterson outside the home the couple once shared. Lacy's mother, Sharon Rocha, confronted Scott Peterson's mother as the Petersons were removing boxes out of the house. There were no arrests. Scott Peterson is scheduled to be sentenced next month.

The search for two missing teenagers is expected to continue today along the North Florida Gulf Coast. The two 14-year-old boys became separated from their school group while kayaking along the coast Saturday. The Coast Guard and police have joined in the search.

And today may be the last day of an official search for a missing Florida girl. Nine-year-old Jessica Marie Lunsford was last seen at home Wednesday night. Hundreds of volunteers have been searching the woods north of Tampa Bay near her Homosassa Springs home. Police say they have few clues in the girl's disappearance.

Jessica Lunsford's family members have made passionate pleas for her safe return. "AMERICAN MORNING's" Bill Hemmer will speak to two of her relatives next hour.

Bill, they will be tough interviews, I'm sure.

HEMMER: Yes, Kelly, good morning.

We'll talk about the search for Jessica. If it ends today, where does that leave this giant search party that went out over the weekend? We'll also speak with Jessica's father. On Friday morning, he made an impassioned appeal to the country to give him help to find his daughter. He says he is convinced Jessica was kidnapped. The sheriff, however, has offered an opinion that apparently he does not think it was a clear abduction case. We'll talk to him this morning and try and sort out what that may all means.

Also, we'll ask the father why he is not sure she did not run away. And we'll find out this morning about more details about what we need to know in terms of letting the viewers know about whether or not they have information to pass along to that search party down in Florida.

We'll get to it in about nine minutes. A busy morning, by the way, here on "AMERICAN MORNING." We'll be following the news out of Iraq. There will also be Oscar hype from last night and the fallout today.

WALLACE: A busy news morning indeed, Bill.

HEMMER: yes.

WALLACE: OK, we'll see you at the top of the hour. Thanks so much.

And it is just about 52 minutes after the hour, and here is what will be making news today.

President Bush speaks to the National Governors Association this morning. The president and first lady hosted a state dinner for the governors last night. Top priorities for the governors in attendance are dealing with Medicare and Medicaid.

In New York's Central Park this morning, teams will begin the two-week process of removing "The Gates," that fabulous public arts project that cost $21 million.

And in Kansas, takeoff is scheduled this afternoon for the single-engine global flyer. Pilot Steve Fossett (ph) will attempt the first nonstop, around-the-world solo flight with no refueling. His menu for the 66-hour trip? Diet milkshakes.

All right. Well, as you fill out your tax forms, the dreaded process we know, you might be paying more than you realize. We are finding out that no sum is too small or too ridiculous for the tax man to charge.

Jeanne Sahadi is a personal finance writer for CNNMoney.com and "Money" magazine, and joins us here.

We don't love paying taxes, but wacky taxes, what are we talking about here?

JEANNE SAHADI, CNNMONEY.COM: Well, these are taxes you're going to encounter for the most bizarre things in various states. Some of them are passed on to the consumer, because they're imposed on the owners of businesses. Others are just kind of weird taxes that are -- you know, you just think -- they're basically a sin tax, a behavior- medication tax, a revenue generator or just "what were you thinking?"

WALLACE: Let's run through a couple. Illegal drug tax.

SAHADI: Right. This doesn't affect most people. It affects drug dealers. It's a bizarre tax, because 23 states, including Tennessee and North Carolina, basically say that if you are acquiring a large amount of drugs, the states wants a piece of the action. So, they want the drug dealer to go down to the Department of Revenue and say, listen, I acquired a lot of drugs today. How much do I owe you?

WALLACE: Hello.

SAHADI: Yes.

WALLACE: How often is that going to happen?

SAHADI: Not often. Not often. They actually don't -- they can't rat you out. But in North Carolina, for instance, only 79 people have actually come forward, you know, in the last 15 years since the law was enacted. But when you're busted for the drugs, you've still got to pay the tax. So, they've managed to raise about $78 million on this one.

WALLACE: All right. Here's one called the "sex sales tax." What are we talking about here?

SAHADI: Yes. This is a sin tax and a "what were you thinking?" In Utah last July, they passed a law that said, if you run a business where nude or partially-nude individuals are providing services -- so, I guess we're thinking topless bars and the like -- in addition to paying the state sales tax on transactions, the owners are subject to a 10 percent tax on sales, admissions, sales of food, merchandise and drink and so forth.

It sounds like a good revenue-generator, except there are only about two businesses in Utah that are subject to this.

WALLACE: We'll point out that there are only a couple of them that have to be subject to that tax.

SAHADI: Not too many, no.

WALLACE: Not bringing in a lot of money. OK, sparkler and novelties tax.

SAHADI: Yes.

WALLACE: Taxing our sparklers?

SAHADI: That's right. It's sort of a Fourth of July tax, you know, celebrate our independence but pay for it. It's also a tax on kids, I think, because the novelties are described as things like glowworms, explosive caps for toy pistols, which I haven't thought about those in ages, really. So, in West Virginia if you're a kid and you want to get those cool, gecky (ph) glowworms, you're going to pay the 6 percent sales tax plus a special fee.

WALLACE: What about a wagering tax?

SAHADI: A wagering tax, most people know if you win big or lose big at the casinos or the race tracks, you're going to have to report it on your tax return. But casino owners and track owners in a number of states, including Pennsylvania and Oklahoma and Illinois, are subject to a tax, everybody who comes into their establishment, whether those people gamble or not.

So, what's going to happen is they're going to pass that tax right along to the consumer in the casino or the race tracks. So, you're already at a loss the moment you walk in.

WALLACE: The moment you walk in. OK. Last one we're going to cover here.

SAHADI: Yes.

WALLACE: Fur clothing tax.

SAHADI: Right.

WALLACE: So, if I buy a fur, I'm taxed?

SAHADI: In Minnesota, which is really where you need the fur. You know, even if you're opposed to -- you know, people, there are a lot of animal rights activists who hate the whole fur issue. But I don't think that that's what this tax is about, because the Department of Revenue says that you can buy leather and suede, and there's no clothing tax. There is no sales tax on clothing in Minnesota. It's just the fur.

So, it costs you to be warm in a really cold state.

WALLACE: It's so complicated and so bizarre, we can say, right?

SAHADI: Yes, yes,

WALLACE: Jeanne Sahadi, CNNmoney.com. Thanks for being here. We appreciate it.

SAHADI: Thanks for having me.

WALLACE: Interesting information. And you can read more about the wacky taxes and other financial news online. The address is Money.cnn.com.

And we'll be right back.

(COMMERCIAL BREAK)

WALLACE: It's time now to reveal the winner, Chad, of the DAYBREAK coffee mug.

CHAD MYERS, CNN METEOROLOGIST: The answers from Friday, Lynn Swan and Kodak Theater. The winner, AnnMarie Abell from Leonardtown, Maryland. You have the brand new, and that is the new DAYBREAK CNN coffee mug, and there are many other colors to come. So congratulations AnnMarie from Leonardtown, Maryland.

And now the questions for today. What state -- we just talked about it. What state is now taxing fur? And who is the oldest recipient of a best director Oscar?

That's all the time we have for you for today.

WALLACE: So, Chad, if I know the answers, can I hurry up and e- mail in and get myself a new DAYBREAK coffee mug?

MYERS: You know, I'm sorry, but members and family of AOL Time Warner and the like are not eligible.

WALLACE: I see. We're disqualified. All right, Chad, it's great to be with you today. Have a great day.

MYERS: We'll see you.

WALLACE: From the Time Warner center in New York, I'm Kelly Wallace, in for Carol Costello. "AMERICAN MORNING" with Bill Hemmer and Carol Costello is starting right now.

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