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CNN Live At Daybreak

Former Head of FEMA Shares His Regrets Before Congress; President Heads South Again

Aired September 27, 2005 - 06:00   ET

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


CAROL COSTELLO, CNN ANCHOR: It is Tuesday, September 27.
The president heads south again and he's got an energy plan that needs your cooperation.

Also, if he had to do it all over again, the former head of FEMA shares his regrets before Congress.

And Texas looks at what it could do better the next time a hurricane threatens.

ANNOUNCER: From the Time Warner Center in New York, this is DAYBREAK with Carol Costello and Chad Myers.

COSTELLO: And good morning to you.

We'll have more on those stories in just a minute.

Also ahead, the government has awarded huge contracts to help cleanup and rebuild the Gulf Coast ravaged by hurricanes. But are the rules being followed with your tax dollars?

And plenty of political opportunities as Capitol Hill haggles over how to pay for hurricane recovery.

But first, now in the news, there has been another suicide bombing in Iraq and again police are the targets. Just about four hours ago, a suicide bomber killed nine police recruits and injured 23 others. It happened in Ba'qubah. That's about 35 miles north of Baghdad.

Separate attacks in Afghanistan leave two U.S. service members dead and a third injured. One was killed in a ground assault operation west of Kandahar. Another soldier was wounded. A Marine was killed when a U.S. base near Asadabad came under fire.

The Israeli prime minister, Ariel Sharon, has won a key vote of confidence. Voters decided against early elections aimed at ousting Sharon as leader of the ruling Likud Party. The vote was pushed by opponents unhappy with Sharon's Gaza withdrawal plan.

To the Forecast Center and Chad.

Are you interested in knowing the average price of a gallon of gas?

CHAD MYERS, CNN METEOROLOGIST: You know...

COSTELLO: Hot off the presses.

MYERS: It went up yesterday. I bought gas yesterday when I got home at 2:58 and I drove by this morning and it was $2.69.

COSTELLO: Very observant of you because this morning, according to AAA, the average price of a self-serve unleaded gallon of gas averaged $2.81 a gallon. That's up more than $0.01.

MYERS: Yes, so. And then -- and it didn't get hurt. I mean didn't we just learn yesterday that there wasn't as much damage as we thought?

COSTELLO: Yes, the oil refineries only took a glancing blow.

MYERS: OK.

COSTELLO: But gas prices are going up.

MYERS: I'll just scratch my head and forget about it and just give them my credit card.

Good morning, everybody.

(WEATHER REPORT)

COSTELLO: More frequent flier miles for President Bush. Today, he's getting an aerial tour of the destruction from hurricane Rita. The president leaves Washington in just about two hours. He'll head to Beaumont, Texas. He'll be briefed by officials in charge of relief operations there and then he'll get a tour of the areas hit by Rita.

Also on his itinerary, Lake Charles, Louisiana, also one of the cities that suffered extensively from Rita. And then from Lake Charles, the president returns to the White House. That'll happen some time late this afternoon.

Now, on his trip, the president will review damage to oil refineries in the area. The president has indicated that he may release more oil from the strategic reserve. But the president also called on Americans, as in you, to limit unnecessary trips as a way to conserve fuel.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We can all pitch in by using -- by being better conservers of energy. I mean people just need to recognize that these storms have caused disruption and that if they're able to maybe not drive when they -- on a trip that's not essential, that would be helpful.

(END VIDEO CLIP)

COSTELLO: President Bush released oil from the strategic reserve after hurricane Katrina. Four Louisiana refineries still shut down as a result of that storm.

Crews are working overtime, though, to restore power to the homes along the Gulf Coast. More than 1.2 million customers are without power in the wake of both hurricanes, Rita and Katrina.

Hurricane Katrina ranks as the third deadliest storm in U.S. history. More than 1,000 people died in five states as a result of the hurricane. Louisiana reported the most deaths, with 864.

Louisiana officials do report no deaths from hurricane Rita, though. Six people did die in Texas as a result of the storm. A tornado spawned by Rita killed one in Mississippi. And that doesn't count the 24 people who died in a bus fire during the evacuation in Texas.

As many as 5,000 head of cattle drowned along the Louisiana Gulf Coast. The Army now using Black Hawk helicopters to search for more cows stranded in flooded areas. The commanding general, Russel Honore, says the focus is on keeping those animals alive. An official with the Agriculture Department says many of the dead cows won't be seen since they were washed out into the Gulf of Mexico.

Former FEMA chief Michael Brown has faced plenty of criticism and now he's going to face Congress. Brown will be asked in a House hearing today about the agency's handling of the hurricane Katrina disaster. His testimony comes a day after he revealed that he's still on FEMA's payroll. He's being paid as a consultant.

CNN Radio's Dick Uliano joins us now from Washington.

What is he expected to say in Washington today -- Dick?

DICK ULIANO, CNN RADIO CORRESPONDENT: Good morning, Carol.

Well, one thing that ousted FEMA Chief Michael Brown could be expected to tell this select investigative committee today is that he wishes he had pushed for federal troops earlier to restore order in New Orleans. And that's what a source says, Carol, that he told congressional investigators yesterday, as this committee prepares for today's public hearing.

And, by the way, this select House committee is investigating the federal, state and the local response to Katrina. And aides say that the hearing will cover the gamut of questions, ranging from Brown's qualifications for the FEMA job to this decision to keep him on the federal payroll after his ouster.

COSTELLO: Well, Dick, we're also hearing that Mr. Brown will criticize the mayor of New Orleans and the state's governor for infighting, and that caused many of the problems.

What more have you heard about that?

ULIANO: Well, Carol, we know that Michael Brown gave an interview to the "New York Times" after his ouster and it was really his only public comments about what went wrong in New Orleans. And one of the things that he revealed in this interview was -- and I think that anybody who reads it would come away with the sense that there was chaos. There was chaos at all levels, federal, state and local, after Katrina struck.

And an example he gave in that interview, Carol, was that he said to the governor, what do you need? How can we help? How can FEMA help? And she said well, I -- you know, you tell us what we need. And he said well, we don't have your list. We need a list.

So apparently -- and President Bush has acknowledged -- there was a lot of bureaucratic bumbling.

COSTELLO: OK, well, let's talk about the bureaucracy for just a second and the hearing itself, because most of the questions are going to be asked by Republicans.

ULIANO: Well, last we checked, the Democrats had no submitted the names of their representatives to this committee. We have the list of Republicans who are on the committee. And, by the way, it's chaired by Tom Davis of Virginia. And you may recall he's the man who ran the hearings into baseball's steroids in the spring. He's the chairman of the Government Reform Committee.

So...

COSTELLO: And a Republican.

ULIANO: Yes, he's a Republican. Of course, the Republicans control the House, so they're going to control any of these official hearings into Katrina. And, by the way, there are going to be a lot more of these, not only this select committee, but other regular committees are conducting investigations.

COSTELLO: So the Democrats basically are still boycotting this particular hearing, is that correct?

ULIANO: Well, it's a select committee. It's supposed to be bipartisan. But, you know, we'll have to wait to see who shows up today. As I say, we have the list of Republicans, but we don't have the list of Democrats. The Democrats have been asked to provide a list of who's going to participate in the hearings and we'll see when the hearings open.

You know, we've had this polarization in Washington and in Congress. For example, recently we had only Democrats conducting sort of mock hearings, several months ago, into failures of the Iraq war. So it sometimes seems hard to even get the parties together in Congress, let alone conduct a bipartisan investigation.

COSTELLO: You know, Dick, it's just ironic. There's infighting in Washington and then the FEMA director, the former FEMA director, is going to talk about infighting himself as he testifies.

ULIANO: Well, you know, I mean everybody who's familiar with Washington and the federal bureaucracy knows that it doesn't always move swiftly. But there seems to be unanimity and agreement between Republicans and Democrats alike that the response to Katrina was slow- footed. And that's why they're having these hearings, to try and make things better in the future.

COSTELLO: Dick Uliano, I know you'll be following that hearing. And we'll check back with you tomorrow.

Dick Uliano reporting live from Washington, from CNN Radio.

The Texas governor, Rick Perry, expects to learn a few lessons from hurricane Rita himself. Perry is joining with officials from Houston to form an evacuation task force. Thousands of people streamed out of Houston and other East Texas cities and towns to avoid the storm.

(BEGIN VIDEO CLIP)

GOV. RICK PERRY (R), TEXAS: I consider the evacuation to be a success because it saved lives and removed millions of Texans to safety. By no means did the plan work flawlessly. Evacuating large urban areas is a complex effort and we should be under no illusion that it can occur in a matter of minutes.

But I do believe that we can learn from this experience and do it better the next time.

(END VIDEO CLIP)

COSTELLO: As you know, two million people tried to get out of there at the same time. Some of them ran out of gas and the gas stations were in short supply.

FEMA says it has set up 16 aid stations now in eastern Texas to help people who did not evacuate. Those aid stations include trucks full of water, ice and food.

Firefighters are heading out to the more remote areas of East Texas to on fire a different kind of assistance. They're passing out fliers that tell people how to apply for federal aid. But that same federal aid has become a sore spot in Louisiana.

CNN's Sumi Das in New Orleans this morning -- good morning.

SUMI DAS, CNN CORRESPONDENT: Good morning, Carol.

Well, President Bush will be in Texas today surveying damage from the storm and getting a progress report from local officials on relief coordination efforts.

Shortly after the storm made landfall, the president praised the U.S. military for their response to the storm. But now some say they can't do the same for the federal government.

(BEGIN VIDEO TAPE)

DAS (voice-over): FEMA facing some criticism again for its hurricane response. Residents in Vermilion Parish in southwestern Louisiana were hit hard by Rita and the sheriff says they need aid now.

SHERIFF MICHAEL COUVILLON, VERMILION PARISH, LOUISIANA: I wish for once FEMA would cut all the red tape and expedite these supplies and the services needed for all of these people that have lost their homes.

DAVID PAULISON, ACTING FEMA DIRECTOR: This is not going to be easy, folks. It's not going to be fast. Recovery is a slow, methodical process we have to go through and we are going to cut through the red tape.

DAS: People from the Algiers neighborhood in New Orleans are heading home again. New Orleans Mayor Ray Nagin gave the go ahead to return last week, but then retreated as Rita bore down. Now, lights are flickering back on as business owners...

UNIDENTIFIED MALE: Thanks for supporting us, ma'am. We really appreciate it.

DAS: ... are returning to the city, left mostly deserted after Katrina.

PAT BOSWELL, BUSINESS OWNER'S MOTHER: He needed to work and the people here needed food. And I said we can do this. And he said how? And I said we just serve cheeseburgers, cheeseburgers, cheeseburgers.

(END VIDEO TAPE)

DAS: Driving into New Orleans, you can get a sense of the spirit of the people who are here. Billboards along the Interstate urge the people of Louisiana to build back stronger -- Carol.

COSTELLO: Sumi Das reporting live from New Orleans this morning.

Firefighters from around the United States are giving the shirts of their backs, literally, to help crews in the Gulf Coast. The effort to get clean t-shirts to fire crews in the hurricane zone started small, but now it's gone big time, with firefighters everywhere donating official fire department shirts. It all got started with a staffer from the Web site firehouse.com. And there, they say, it's all about firefighters taking care of each other. You can check out that Web site if you would like to donate. And basically the t-shirts come in so the firefighters get a chance to change their shirts because they just don't have time to shower, they're so busy in that region.

Still to come on DAYBREAK, paying for the cleanup. How to do it -- taxes, cuts in spending? We'll take a look at the politics.

Plus, huge government contracts are being awarded but is the process fair? Are you being bilked?

And major credit cards -- this time the retailers are mad and they are demanding changes.

But first, here's a look at what else is making news this morning.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

WALTER UPDEGRAVE, SENIOR EDITOR, "MONEY": Life expectancy is pretty much the major factor in deciding whether to take Social Security at age 62 or whether to hold off to a later age. If you wait until after your full retirement age, you can get a larger benefit. For example, each year that you wait up until age 70, Social Security will add about 8 percent to your Social Security paycheck. So there is an advantage in that you do get this bigger check.

The possible disadvantage is that you're not going to be collecting as long. So ultimately when you take Social Security kind of comes down to what sort of life span you believe you have.

(END VIDEO CLIP)

COSTELLO: Your news, money, weather and sports.

It's 6:17 Eastern.

Here's what's all new this morning.

President Bush hits the road again today to tour areas hit by hurricane Rita. The president is expected to talk with local officials and review oil refinery damage during stops in Beaumont and Lake Charles, Louisiana.

In money news, Google is getting more ambitious with streaming video. Google Video is showing UPN's debut episode of the TV show "Everybody Hates Chris" in its entirety on the Internet. Yahoo! and AOL have done similar Web casts.

In pop culture, actor Don Adams has died. He's best known for his role as Agent 86 on TV's "Get Smart." But he's also known to millions as the voice of the cartoon characters Tennessee Tuxedo and Inspector Gadget. Don Adams was 82.

In sports, "Monday Night Football" now. And the Denver Broncos dominated the Kansas City Chiefs on their way to a 30-10 win. Both teams are now two and one on the season -- Chad.

MYERS: Good morning, Carol.

(WEATHER REPORT)

COSTELLO: That's a look at the latest headlines for you this morning.

Something else to possibly worry about this morning. Check this out. On a multiple choice test, doctors in training misdiagnosed diseases caused by bioterrorism more than half the time. Eighty-four percent of the medical residents misdiagnosed the plague. Fifty percent got it wrong on botulism. Forty-two percent thought a routine case of chicken pox was actually smallpox.

But the good news. After completing an online course and studying, they got the diagnosis correct 80 percent of the time.

Still to come on DAYBREAK, a popular discount retailer is looking to raise its profile with a high end clothing company. That's ahead in our "Business Buzz."

Also, retailers are taking the major credit card companies to court. Ooh, Carrie Lee tells us why and if it will be good for us.

But first, good morning, Washington.

(COMMERCIAL BREAK)

COSTELLO: Time now for a little "Business Buzz."

Wal-Mart may soon buy out clothing designer Tommy Hilfiger. The reported asking price is at least $2 billion. Researchers say the deal, if it happens, could benefit both companies. Wal-Mart would become more competitive in the apparel field and Hilfiger would get a whole new customer base.

Some of the nation's retailers are all charged up about fees charged by credit card companies.

Carrie Lee joins us with more on the lawsuit that could change the credit industry, but maybe not make it any better for us.

CARRIE LEE, CNN CORRESPONDENT: Well, it doesn't really matter for us as much here, Carol.

But the stores don't like the way credit card companies charge them when people use plastic to make transactions. So, the associations representing hundreds of thousands of drugstores, convenience stores and food stores want to stop the way credit card companies charge customers. We're talking about banks like visa, MasterCard and their associated banks.

And here's what they don't like. When you go into a store and buy something, the issue of credit cards, they charge the store's bank a fee. But the store's bank also charges a fee, so the store has to pay two fees.

Now, the stores say this acts as a hidden tax and that fees have increased rapidly over the past couple of years, to as much as 2 to 3 percent. The retailers want the federal court to overhaul this fee system.

The credit card companies say they aren't doing anything wrong.

An aside here, retailers also say high gas prices are leading to a windfall right at this time for the credit cards, because they charge a percentage fee and as prices rise, the credit cards make more.

Now, the "Washington Post" says credit card companies stand to make about $2 billion more this year in fees on gasoline sales alone.

COSTELLO: Wow!

LEE: So we're paying more for gas. The more gas prices go up, the more, on a percentage basis, or the more in real dollar terms the credit card companies stand to make so.

COSTELLO: Actually, in thinking about it, this could affect us, because a lot of stores don't accept American Express because of the high fees it charges for stores to use its credit card.

LEE: Well, I guess in theory some stores -- and you'll see this in some restaurants in New York City -- they'll take cash only, because they just don't want to pay the fee. Now, obviously an establishment has to be successful enough to pull that off. But I guess theoretically you could see companies say we don't want to deal with you at all.

COSTELLO: Oh, that would be...

LEE: Would they care? I don't know. They're so big.

COSTELLO: But if feels -- it kind of feels nice that the credit card companies would be mad because you know how I feel about them.

A quick look at the futures?

LEE: Yes, futures are looking pretty flat for today's session. We'll see what happens at 9:30. We have a couple of hours to go before the opening bell.

COSTELLO: Carrie Lee, thank you.

LEE: OK.

COSTELLO: It's been a month now since hurricane Katrina destroyed parts of the Gulf Coast region. The Bush administration is still tallying the cost of recovery and rebuilding. And the big unanswered question is still where will the government get the money?

CNN's senior political analyst Bill Schneider has more for you.

(BEGIN VIDEO TAPE)

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST (voice over): Louisiana's congressional delegation is proposing $250 billion in spending and tax breaks for hurricane recovery.

SEN. MARY LANDRIEU (D), LOUISIANA: This is an unprecedented natural disaster and national tragedy. And it's going to take an unprecedented response.

SCHNEIDER: Where's the money going to come from? Some Democrats talk about rolling back tax cuts for the wealthy, but they are the minority. Conservative Republicans see the hurricane crisis as an opportunity to cut spending on other things. Like what? UNIDENTIFIED MALE: We propose cutting NASA's newly moon and mars initiative.

UNIDENTIFIED MALE: The subsidy as it relates to Amtrak.

UNIDENTIFIED MALE: Virtually all of the United Nations budget.

UNIDENTIFIED MALE: The money that we give to Egypt each year.

UNIDENTIFIED MALE: The $10 million on the Citrus Canker Compensation Program.

UNIDENTIFIED MALE: I propose that we cut the Corporation for Public Broadcasting.

SCHNEIDER: And One big ticket item conservatives have never been enthusiastic about.

UNIDENTIFIED MALE: The big dollars are in the prescription drug bill.

SCHNEIDER: That's one of President Bush's signature commitments. Another nonstarter, $24 billions earmarked for local projects in the new highway bill. That helps protect incumbents.

Conservative spending cutters have run smack into opposition from Republican leaders, whose interest is to protect the GOP majorities.

REP. TOM DELAY, (R) MAJORITY LEADER: Everybody is looking for offsets. But, frankly, I doubt that we will be able to find offsets to pay for this.

SCHNEIDER: Unless they come up with a principal to sell the cuts as a package, says the director of the nonpartisan Congressional Budget Office.

DOUGLAS HOLTZ-EAKIN, CONGRESSIONAL BUDGET OFFICE: I think the key here is to enunciate a principle for offsets. Should there be a new federal role or not?

SCHNEIDER: If the government won't raise taxes or make other spending cuts, what's the alternative? Borrow.

HOLTZ-EAKIN: How much do you want to pass on to taxpayers, our children in the future, versus take care of now?

SCHNEIDER (on camera): But isn't the deficit a big enough principal to motivate serious spending cuts? Actually it's not. The deficit is a tax on future generations. And they are not around to vote yet.

Bill Schneider, CNN, Washington.

(END VIDEO TAPE)

COSTELLO: Still to come on DAYBREAK, we'll take you live to New Orleans as the city makes headway in its post-hurricane cleanup.

Also, multi-million dollar government contracts. Is FEMA following the rules?

(COMMERCIAL BREAK)

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