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AMERICAN MORNING

Steam Pipe Explosion; Brazil Plane Crash; Terror Money; Dow Run Ends; Loophole In Visa Program?

Aired July 19, 2007 - 06:00   ET

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


KIRAN CHETRY, CNN ANCHOR: Urban volcano.
(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Then they said, "get out. Get out. Everybody run."

UNIDENTIFIED MALE: Looked like a building was coming down.

(END VIDEO CLIP)

CHETRY: A nearly century-old steam pipe explodes.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I think it's a bus.

(END VIDEO CLIP)

CHETRY: Officials say it's age, not sabotage. Now the fallout. Traffic chaos. Fears of toxic dust. And worries of more time bombs under the street on this AMERICAN MORNING.

And good morning to you. It is Thursday, July 19th. I'm Kiran Chetry.

JOHN ROBERTS, CNN ANCHOR: And I'm John Roberts. Good morning to you. Thanks for joining us here on AMERICAN MORNING.

What an incredible scene yesterday in Midtown Manhattan, just outside of Grand Central Station, at the height of rush hour, an old steam pipe, about 83 years old, somehow suddenly blew. Take a look at this. This is some iReport video that we got in. Just the noise, Kiran, is amazing.

CHETRY: Yes, it really scared a lot of people that were in that area. In fact, it injured at least 30. One person lost their life because of the explosion. It happened just before 6:00. And still today, several blocks in that area - and this is right by Grand Central, as you said -- are still off limits. So we have dramatic pictures from the scene. They're coming in to us all morning long. Opening up any of the papers today, even on the front of the tabloids in New York, "The Earth Opened" from the "Daily News" showing this tow truck that was literally swallowed up by the ground.

ROBERTS: Right. And the fellow who was driving that tow truck, apparently only his second day on the job, according to some reports. He was burned over 80 percent of his body. The one person who died, died from a heart attack. "New York Post" has got this "Midtown Volcano." Take a look at this.

CHETRY: And that's really how peopled described it, urban volcano, midtown volcano because they said the eruption was exactly how they would picture it if it was a volcano.

ROBERTS: Even "The New York Times," above the fold here in "The New York Times," and then, as well, and they do this rarely, a special pullout section on the whole thing. And there you can see the devastation. The huge crater that opened up there on Lexington Avenue at 41st Street and the tow truck right there in the center. And again, the driver of that tow truck said to be in critical condition in the hospital today.

CHETRY: Yes, 30 other people also wounded. Most of them with minor injuries. But we also got some other iReports coming in. This happened, again, as we said, right in the heart of busy Midtown Manhattan. And here are some of the pictures that we got from people that were at the scene. Some of these taken with their cell phone cameras. Some of them taken with the digital cameras that they had on the scene.

ROBERTS: There's one of these shots here that is so eerily reminiscent of 9/11 and . . .

CHETRY: Even that one looks like it.

ROBERTS: But there were shots of shoes left in the streets as people just dropped everything and ran. We're going to be talking to an eyewitness, a guy who was working in the mobile building right next door. There's the shot of the shoes left in the street. And there were some video of people running, as well, which looks eerily reminiscent of what happens during 9/11 when those twin towers came down.

But we're going to be talking with an eyewitness who was in the building next door, the mobile building, up on the 37th floor. They had to evacuate it, run down 37 flights. And his -- he had a family member who survived 9/11 and he said it was so eerily similar to that whole thing.

But the NYPD almost immediately ruling out any idea of terrorism, saying that what might have happened here, because there was a heavy rain storm earlier in the day, that there might have been some condensation gotten on the inside of that steam pipe. It's a big steam pipe. About two feet in diameter. And what could happen when condensation builds up on the inside of those pipes is that the velocity of the steam picks up those little droplets of water, turns them into what they refer to as a slug and it can fire that slug at 100 miles an hour against a standing part of that pipe, like an elbow or something, and it can be like a hammer punch right to the inside of that pipe. And if it's old and if it's weak, it could blow it wide open.

CHETRY: And it looks like that's what happened yesterday.

ROBERTS: It's called water hammer.

CHETRY: Water hammer. Some may have felt it or had it happen to you in a certainly much smaller degree in your own home when you turn on a pipe like that.

By the way, we are going to be talking a little bit later to a security expert as well with some of the questions about the aftermath right now. There were concerns about asbestos. They were asking people in the area who were exposed to bathe carefully, close your window, turn on your air-conditioner. And also the question, how can you be so sure that it was not foul play or terror related. So we're going to talk more about that.

But right now, this happened at a busy commercial and residential hub right in the heart of the city, by right Grand Central, as we said. Tens of thousand of people pass through the area each day. The Chrysler Building, the Empire State Building, Grand Central and the whole area still shut down this morning. And right now, ConEdison workers are on the scene. They're trying to assess the situation, figure out, make sure that there's no other dangers, like the crater growing even larger at the edges of the pavement where that tow truck was 35, 40 feet in the ground. AMERICAN MORNING's Alina Cho is as close as she's been allowed to get to the area.

Hi. What are they telling you this morning, Alina?

ALINA CHO, CNN CORRESPONDENT: Well, Kiran, you mentioned the lock-down. And that's exactly what it is. The city is calling this a frozen zone for several blocks in every direction.

That's exactly what it is. We are on the outer edges of that frozen zone. If you are in this area already, you can stay here. But no one can come in from the outside.

Now there are several reasons for that. Chief among them, and you talked about this a bit earlier, this. Everyone in this area is being urged to wear a surgical mask. Why? Because the city has not determined that the air here is safe. They are conducting air quality tests right now. There is a big possibility that this explosion released dangerous levels of asbestos.

Now witnesses who saw this happen yesterday say that it sounded like thunder, felt like an earthquake and looked like a volcano. For a moment, there were echos of 9/11.

(BEGIN VIDEOTAPE)

CHO, (voice over): At the height of the evening rush, a massive, underground explosion sent a geyser of steam, water and debris shooting into the air.

UNIDENTIFIED MAKE: We heard this bus explosion. The building shook a little bit. And smart particles of rocks came to our window on the 27th floor. CHO: It happened near Grand Central Terminal, in the heart of Midtown Manhattan. A steam pipe, installed back in 1924, burst. The explosion erupted like a volcano out of the ground. It tore a huge hole in the street and sent people running for their lives.

UNIDENTIFIED MALE: Certain people panicked a little bit, were crying, shouting, because, obviously, everybody thinks of 9/11, you know, a repeat of this.

UNIDENTIFIED FEMALE: The whole street was chaos. People were running. Their shoes were falling off. They were pushing each other and pulling each other. And we looked up and there was smoke billowing out of this building.

CHO: New York Mayor Michael Bloomberg rushed to reassure the public.

MAYOR MICHAEL BLOOMBERG, NEW YORK CITY: There is no reason to believe that there was any terrorism involved whatsoever. It is probably just a failure of the -- part of our infrastructure.

CHO: Bloomberg said one person died of a heart attack, two dozen others were injured. The immediate concern for city officials and those who live and work in the area, was what was in the material shooting out of the ground.

UNIDENTIFIED FEMALE: People who are in the buildings, in the areas, close their windows. That they -- if there's air-conditioning in the building, that they turn it on to recirculate. That people stay out of the area -- stay out of the area. If people were exposed to any debris, they should wash with soap and water. They should remove their clothes and put them in a plastic bag.

(END VIDEOTAPE)

CHETRY: All right. So we were hearing from Alina Cho. It's hard to hear here, though, because you can hear sounds of construction work, including a jack hammer, taking place down there. They're trying to get the area fixed up again after what happened. But those who have been on the ground there say it really looks like a war zone. A lot more going on today with that and we're going to check in with Alina coming up in about 25 minutes.

John.

ROBERTS: An extraordinary tape just in overnight may help explain Brazil's worst air disaster. This is new video of the TAM Airlines plane landing in Sao Paulo, Brazil. You can see it just going off to the left-hand side of your screen. A brief flash as it crashes through a fence. And then look at that, oh, bright light as it hits the TAM warehouse building, part of the cargo facility there. It was landing at incredibly high speed. Much higher speed than you would normally see an aircraft on the runway at. Is that an indication that the pilot was trying to take off again? The flight recorders have been found and will be analyzed in the United States. More than 170 bodies recovered as a result of this tragedy so far. CNN's Harris Whitbeck is following the investigation. He's live for us this morning in Sao Paulo, Brazil.

What are we learning from this new tape, Harris?

HARRIS WHITBECK, CNN CORRESPONDENT: Well, John, it seems to indicate that at least somebody in the airport leaked that tape. We had heard about the existence of this tape yesterday. A Brazilian senator, who's a member of a congressional commission who's looking into air traffic safety here, told us that he had seen that tape. That tape is part of a camera system that is trained on the runways here at Lagonias (ph). And he indicated that normally a plane takes 11 seconds to traverse that portion of runway. In this case, the TAM plane took only three seconds to traverse that same portion. So it does seem to indicate that the plane was coming in too fast.

What's interesting is that the tape appears to have been leaked to local media last night. Yesterday, throughout the day, the conjecture was that the length of the runway, the condition of the runway, might have had something to do with the accident. But now the blame seems to be shifting towards the pilot or the plane itself.

Again, this is going to take months. Officials here say it could be up to 18 months before there's a final conclusion as to what happened here. But the blame game certainly seems to have started this morning.

John.

ROBERTS: So, Harris, just tie that theory together for us a little bit. You suggest that this tape was leaked to show that this may not have been a problem with the runway. This may have been a pilot decision. May have been pilot error. Yet yesterday the reports were that the pilot may have had to try to take off again because he couldn't stop the plane in time.

WHITBECK: Well, that's the implication. The implication is that the pilot was coming in too fast. And when he realized that he was coming in too fast, he tried to abort his landing and that's why he would have taken off again.

So, again, the implications there is that the size, the length of the runway, wasn't necessarily the cause of the crash. Again, at this point, John, this is all conjecture. The black boxes have been recovered.

NTSB investigators are on the ground here. We also understand investigators from France and Germany and from AirBus itself will shortly be aiding Brazilians in investigating the cause of this crash. But again, the fact that the tape was leaked on the heels of conjecture yesterday that the length of the runway had something to do with it seems to indicate that somebody here is trying to shift blame.

ROBERTS: Yes. All right. A lot of fingers being pointed in a lot of different directions.

Harris Whitbeck for us this morning from Sao Paulo, Brazil.

Harris, thanks. We'll get back to you a little bit later on.

Kiran.

CHETRY: To India now where rescuers are digging frantically for survivors of a building collapse in Mumbai. There are at least two dozen people confirmed dead after this seven-story building collapsed. Four people were rescued overnight from underneath the mounds of concrete, twisted metal bars and mud. Right now, crews are digging for 10 other people feared trapped in the rubble. Relatives are looking on, hoping that they're going to be able to be pulled out alive. They still have no word on what caused the building to come down.

Tensions rising this morning again in Pakistan. Police say that a bomb targeting Chinese engineers exploded near a bus stop. Twenty- four people were killed. Eight people died when a suicide bomber drove a car full of explosives into the gates of a police training center. Pakistani President Pervez Musharraf blames Islamic militants and says he will not declare a state of emergency.

It was an emotional evening for Defense Secretary (ph) Robert Gates at the U.S. Marine Corps dinner in Arlington, Virginia. He spoke last night and he broke down when he talked about the loss of American lives in Iraq and Afghanistan. People like Doug Zembiec, a Marine Corps captain, who was killed in Baghdad last May.

(BEGIN VIDEO CLIP)

ROBERT GATES, DEFENSE SECRETARY: Every evening I write notes to the families of young Americans like Doug Zembiec. For you and for me, they are not names on a press release or numbers updated on a website. They are our country's sons and daughters.

(END VIDEO CLIP)

CHETRY: Gates went on to say that the key to victory in Iraq is working with local Iraqis to help them take back their country from insurgents.

Well, the U.S. wildfire alert is at its highest level and international fire crews could actually be called in to help the battle in the west. Nearly 70 large fires are burning right now in 12 states, including this one in Gem County, Idaho. Forecasters are expecting dry, windy conditions, thunderstorms and triple digit temperatures, making matters work throughout the week.

ROBERTS: Coming up to 13 minutes after the hour. Our AMERICAN MORNING teams of correspondents is working stories, other stories that are new this morning for you.

Homeland Security grants are always controversial. Fallout today over how much cities are getting to help prepare for a possible terrorist attack. Chris Lawrence now with a breakdown of the funds.

Good morning, Chris.

CHRIS LAWRENCE, CNN CORRESPONDENT: Good morning, John.

You know, if you ask the average guy on the street, how do you think the government makes its decision to allocate its money to cities so they can protect themselves against a terrorist attack? First thought might be, well, threat, risk, the likelihood that city would get attacked. You'd be wrong.

Coming up, we're going to get in to exactly how the government makes these decisions and why maybe how your city gets money one year and loses it the next. Or why the next big city, just a couple hundred miles away, maybe gets more or less than the city that you live in, all coming up later in the hour.

John.

ROBERTS: OK. Chris Lawrence for us from Glendale, Arizona, this morning.

Chris, thanks very much.

The Dow slips after a four-day record setting run. Ali Velshi with more on that.

Ali, it nearly made it and then, whoa, big slip.

ALI VELSHI, CNN CORRESPONDENT: A wise man once said, the Dow giveth and the Dow taketh away. I think that might have been you and you might have said it yesterday. Ben Bernanke took a walk over to Capitol Hill yesterday and talk about the economy. And he poured a little water on the Dow.

For the first time in several days, it broke its record. The Dow not down by so much, but Bernanke's a little bit worried about inflation, about earnings. That's what you see there. Fifty-three points lower, to 13,918.

Futures are pointing to a higher open this morning. And I've got a lot to say about what you should do if you're an investors in the market. What the advantages and headwinds are. And I'm going to come back and talk about that through the course of this show.

John.

ROBERTS: Looking forward to that, Ali. We'll see you soon.

VELSHI: OK.

ROBERTS: Yesterday, a tremendous amount of rain here in New York City might have been responsible, according to officials, for that steam explosion and also responsible for a rare tornado that touched down out on Long Island. Chad Myers live in the CNN Center with more.

Good morning to you, Chad.

(WEATHER REPORT)

ROBERTS: It was, to say the least, Kiran, a stinky day in New York yesterday. It was the type of day that I know you really hate.

CHETRY: Oh, it sure was, especially when you're talking about the humidity and the steam and not from the steam explosion that we were talking about.

Well, in other news right now, making imported food safer. Your "Quick Hits" now. A cabinet level panel will make recommendations to President Bush in two months. The administration says that it's all about imports. It's not a slap at China, in particular, for the recent contaminated food scares like with the fish, the pet food, as well as the toothpaste.

And a change in the way prescriptions are given may be about to cause chaos for senior citizens. There is a new law that will require doctors to write prescriptions on tamper proof paper. If it goes into effect on October 1st, pharmacists say that they want to push that back to give doctors more time to get on board to ensure that seniors will be able to get the daily medications that many of them need.

And a senator known for his hair. His aides call him "Hair Force One." Ben Nelson got a new do, though. See, we're used to seeing him there with his nice, thick mane of silver. Well, he no longer has that hair. We're going to show you his new locks and we're going to explain what happened, coming up.

(COMMERCIAL BREAK)

CHETRY: And welcome back to the most news in the morning. Amid new terror warnings, there is some concern that terrorists could gain entry into the U.S. by taking advantage of the visa waiver program. Now that program allows citizens of 27 U.S. allies to travel here without visas.

So here's a scenario of what some say could happen. A potential terrorist attends a training camp, let's say in Pakistan. They travel to a country that is part of the U.S. waiver program. Then, using their own passport from that country, or even one they obtained illegally, they enter the U.S. with little scrutiny. Supporters say that the waiver program actually builds strong ties with allies, but critics say it should be eliminated.

Clark Kent Ervin is a former inspector general at the Department of Homeland Security. He joins me from Washington this morning.

Good to see you this morning.

CLARK KENT ERVIN, FORMER DHS INSPECTOR GENERAL: You, too, Kiran.

CHETRY: You know, when we paint a scenario like the one we just showed, it seems like a huge gap in security. Why hasn't it been addressed before.

ERVIN: It's a gaping hole in America security, Kiran. The reason why it hasn't been closed is because of the fierce opposition of the travel industry, the business industry. It costs $75 billion to $100 billion in earnings from that industry each year. And also because of opposition from our allies around the world. It's a huge benefit to them. The president wants to expand the program and there are others in Congress that want to do so in order to reward allies in eastern Europe, in particular, that have helped us in Iraq.

CHETRY: All right. So President Bush believes that the program should be strengthened, but kept in place and you believe it should be eliminated entirely. Explain why.

ERVIN: Sure. If I thought that it could be strengthened, I'd be for that. But it actually can't be. The difference is this, really.

If you come from a country that requires a visa to enter the United States, you've got to apply in person at one of our embassies or consulates abroad. You've got to be interviewed. And the interviewers are familiar with your language, your customs. They're trained in fraud detection techniques. You've got to give a lot of information, including your fingerprints and your digital photographs. All of that is compared with you and your information when you arrived at an American airport.

By way of contrast, if you are coming from a country that does not require a visa, then the first encounter that the United States government has with you is at the airport. Airport inspectors are required to clear international flights very, very quickly. They don't have time to scrutinize people very quickly. So there's much less scrutiny given to visa waiver travelers than travelers from visa countries.

CHETRY: I got you.

Well, here's what Conservative Heritage Foundation says about the need to keep the program. They say, "we can't win the war on terror by trying to sealing America off from the rest of the world. Winning must include safe, open travel." They make the argument, as some do, that eliminating the program would actually hurt our ties with allies and possibly hurt us economically. Do you see that side?

ERVIN: Well, it needn't be that way. If we had more consulate officers around the world, we could process visas in a speedy fashion. I believe that the Department of Homeland Security and the Department of State have been underfunded for a long time, point one.

Point two, the visa waiver program should not be regarded as a reward. There are other ways to reward our allies. The president could invite them to his ranch or to the family compound. We could increase economic aid to those countries. But this is a hole in security. It's not for nothing, for example, that Richard Reid, the shoe bomber, came on a British passport or that Zacarias Moussaoui came on a French passport.

CHETRY: No, you bring up good points there.

I want to ask you about this, though. The steam explosion in New York City. How can they be so sure so fast that it was infrastructure break down and not terror? And does this expose a vulnerability that we may not have thought about before? ERVIN: Well, it certainly does expose a venerability, Kiran. One of the problems is that critical infrastructure, like these steam pipes, are old and they're crumbling in cities like New York that are older cities. If terrorists targeted that infrastructure, there could be devastating loss of life, injury, economic damage.

We don't know yet really what the cause here. The authorities, as you say, were quick to dismiss terrorism. I tend to trust them on that.

But certainly we need to be suspicious. And that's why this announcement yesterday that New York City has been given more counter terrorism funding by the Department of Homeland Security, but not as much as in 2005 and not as much as its requested, and we're spreading this counter terrorism around, all these many years after 9/11, is a cause for concern.

CHETRY: Right. Police Commissioner Ray Kelly of New York also not happy with that -- with the doling out of that money as well.

Clark Kent Ervin, thank you for your insight this morning.

ERVIN: Thank you, Kiran.

ROBERTS: Coming up to 23 minutes after the hour now. A big section of the heart of New York City shut down this morning after a steam pipe explosion. You're looking at a live picture there of crews trying to work to repair the damage. What happened, how long until it's fixed and is the area contaminated with asbestos? Some answers ahead on AMERICAN MORNING.

(COMMERCIAL BREAK)

CHETRY: A bit of a makeover for one senator. Nebraska Senator Ben Nelson looking a little bit younger this morning.

ROBERTS: A little bit of a hair disaster, yes.

CHETRY: Yes. His trademark silver hair, he has nice, thick silver hair. Well, he says that, you know, his hairdresser retired and that he was, you know, looking for a new one and trying out new ones and this latest one said, hey, how about a rinse?

ROBERTS: And there's the -- he rinsed that gray right out of his hair.

You know, Nelson is known as "Hair Force One" because he's got such a fantastic ahead of hair. And now it's turned that brown color.

But, you know, can I tell you something? Full disclosure here. All right. Same thing happened to me a number of years ago. When I was working at the White House, the gray hair was looking a little too bright against the white of the White House. The lady who cuts my hair for like $35, no $400 hair cuts here, said, hey, let's shade it down just a little bit.

CHETRY: Shade it down.

ROBERTS: Boom, I looked just like Ben.

CHETRY: All right. Well, you know what, you stick with your gray, your silver . . .

ROBERTS: President Bush was even making fun of me.

CHETRY: Hey, I bet he had a new nickname for you after that. Hopefully it wasn't brownie.

By the way, the quote from Senator Nelson was, "it was a hair- raising experience. It wasn't a $400 haircut, but I was prepared to pay $400 to get it straightened out." So good luck. Stuck with the gray.

ROBERTS: I was prepared to go with the Ali Velshi look there for a little while.

CHETRY: Well, also "On Our Radar" this morning, coming up, this is a story. You know, your dog sometimes gets into things, eats something he's not supposed to. What if your dog ate a grand in cash.

ROBERTS: What would you do?

CHETRY: Well, this woman went through extraordinary lengths, and we mean extraordinary lengths, to get that money back.

ROBERTS: There's the pieces. Where do the pieces come from after a dog has eaten your $100 bills?

CHETRY: We'll talk much more about that coming up when AMERICAN MORNING returns.

(COMMERCIAL BREAK)

ROBERTS: A look this morning at that crater where that steam pipe explosion happened yesterday. That's a tow truck right in the middle of it there. The driver of that truck, who apparently was only two days on the job, is in critical condition in the hospital with burns over 80 percent of his body. And you can see the size of that hole there.

This happened yesterday around rush hour, just outside of Grand Central Station in downtown New York. And it blew this giant hole. There were people all around. Up to 30 people injured this morning.

CHETRY: Right, and there are all the crews out there today. That's a 35-to-40-foot crater in the ground, and they say there are some fears that they could see it grow this morning because of the edges. That there could possibly be a collapse there. So they're working on that, as well.

There were several cables that were around that area that were damaged. They're going to try to clear out the debris and then start laying cables again. But, boy, it's a very, very busy part of Midtown Manhattan, right where Grand Central Station is. There's a subway train that ferries in so many people back and forth to work and back home again.

They're not making stops in that area. So really, the ramifications are still going on this morning and will probably be felt for some time in the nation's busiest and most traveled city.

ROBERTS: At any rate, that's why we're starting this morning.

Good morning and welcome back to you.

It's Thursday, the 19th of July.

I'm John Roberts, here on this AMERICAN MORNING.

CHETRY: And I'm Kiran Chetry.

We're glad you're with us.

(NEWSBREAK)

CHETRY: Well, last year it was the subject of a whole lot of controversy and this year it's no different. Just what cities are getting the most money from Homeland Security to fight terror and what cities are getting shortchanged? Well, the state that ranked in the grants this time around, Arizona. And not everyone is happy about it.

CNN's Chris Lawrence is live now from Glendale, Arizona, with more.

And the papers today in New York have New York City police commissioner Ray Kelly furious, claiming that, you know, New York City once again was shortchanged.

CHRIS LAWRENCE, CNN CORRESPONDENT: Yes, Kiran, and he's not alone. But Phoenix officials say they needed every dollar they got, you know, especially since they're hosting the next Super Bowl right here.

But this is really shaping up as a battle between those who believe major international cities are the most likely terrorist targets -- think New York, D.C., London, Madrid -- and those who say smaller areas, like Glasgow and Oklahoma City, are just as likely to get hit.

(BEGIN VIDEOTAPE)

LAWRENCE (voice over): Los Angeles International, Chicago skyscrapers, and New York bridges, think of them as Homeland Security's children and Michael Chertoff is the parent trying to keep them all satisfied and safe.

MICHAEL CHERTOFF, HOMELAND SECURITY SECRETARY: My job is about hard choices.

LAWRENCE: Chertoff decides who gets more or less money. And this year, Arizona was the big winner. Tucson went from off the list to $5 million. And Phoenix tripled its allocation to $12 million.

MAYOR PHIL GORDON, PHOENIX: This is a mayor of the fifth largest city that is very happy.

LAWRENCE: But like previous years, some bigger city mayors are crying foul.

MAYOR MICHAEL BLOOMBERG (R), NEW YORK: But I think the mistake that is always made is confusing what -- where you're vulnerable to where you're likely to be attacked.

LAWRENCE: Looking at the numbers, New York actually gained $10 million over last year. Contrast that to those who lost money, like Chicago. Boston officials are boiling at their cutbacks. And there's nothing laid back about L.A.'s response.

MAYOR ANTONIO VILLARAIGOSA, LOS ANGELES: The practice of awarding homeland security dollars based on any consideration other than risk has got to stop.

LAWRENCE: Risk is actually number two. Population carries the greatest weight in where the dollars go. And this year, a new index accounts for cities like Phoenix, that are close to the border or have military bases nearby. It's also home to the nation's largest nuclear power plant.

I spoke with Phoenix's emergency management coordinator about why his city lost so much funding last year only to get it back now.

MICHAEL DEBENEDETTO, COORDINATOR, PHOENIX EMC: And they simply prepared us for this. There will be years in which you will get less money. We didn't think we would get that much less money, but we did, and we had a bad year.

LAWRENCE: But they told you they would make it up to you this year?

DEBENEDETTO: They told us that if we were patient, that they hoped to make it up to us this year or soon.

(END VIDEOTAPE)

LAWRENCE: Now, that money can upgrade bomb squads and pay for surveillance cameras and communication systems. Washington, D.C., received a big increase, but officials there and in New York City are still pushing for a system based solely on risk -- Kiran.

CHETRY: Chris Lawrence, live for us in Glendale, Arizona.

Thanks.

ROBERTS: The reverend Al Sharpton says it's OK for Imus to come back. Sharpton led the charge to get Imus kicked off the radio for his racially and sexually insensitive remarks about the Rutgers women's basketball team. Now Sharpton says he hasn't changed his views, but Imus does have a right to make a living. Cracking down on sex offenders in California, more than 2,000 newly paroled sex offenders who live near schools and parks must move. They're in violation of Jessica's Law. The state will give them 45 days to find new homes. California's Proposition 83 was named for Jessica Lunsford, the 9-year-old Florida girl who was kidnapped, raped and suffocated by a convicted sex offender two years ago.

Wireless users are charged a surcharge on their cell phone bill to call 911. It's supposed to pay for continued improvements in the system, one of which is to be able to locate people who've called 911 on their cell phones. But does it work?

Greg Hunter investigates -- Greg.

GREG HUNTER, CNN CORRESPONDENT: Hey, John, if you dial 911 to the location I am now, not only will you get a 911 operator, but they will have a picture of where you are in most cases, and that's a picture of the Rochester 911 Center. But in 40 percent of counties across America, if you dial 911 from the cell phone, they won't be able to find you.

I'll tell you why as AMERICAN MORNING continues.

(COMMERCIAL BREAK)

(NEWSBREAK)

ROBERTS: Hey, when you dial 911, you expect someone to come and help you. But if you're on a cell phone in certain parts of the country, the help may not be able to find you.

Our Greg Hunter is standing by live at the 911 center in Rochester, New York.

Greg, what's this all about?

HUNTER: Well, John, I'm at a 911 Center that is pretty much state of the art. They have constant flow of information around us, up top. They have plenty of modern operators that can pinpoint your cell phone call with a map and a picture. But in 40 percent of counties across America, if you dial 911 from a cell phone, they don't have the technology to find you. And they should.

Here's why.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: 911 Center. May I help you?

HUNTER (voice over): One-third of all calls coming into 911 centers across the country are from cell phones.

UNIDENTIFIED FEMALE: Yes. My husband's just in here and abused me.

OPERATOR: What is your address? UNIDENTIFIED FEMALE: (SCREAMS)

OPERATOR: What is your address?

HUNTER: Nobody knows what happened to that Missouri woman because state 911 operators say they didn't have the technology to find her.

(on camera): Nationwide, about 60 percent of all counties can find you if you make a 911 call from your cell phone, but 911 experts say 60 million Americans still live in areas that are not able to track wireless callers.

(voice over): Most improvements to 911 technology have been paid for by surcharges on wireless phone bills.

UNIDENTIFIED FEMALE: OK. What town are you in?

HUNTER: But not Missouri, where cell phone surcharges are up to the people who have voted them down. That means operators at this Missouri 911 center near Lake of the Ozarks often see this, "no address information," from cell phone calls.

UNIDENTIFIED MALE: You have 80-some miles to check of shoreline times two.

HUNTER (on camera): Can you get to them quickly?

UNIDENTIFIED MALE: Not if they can't give us a good landmark to find them.

HUNTER (voice over): Even states that do have a 911 surcharge sometimes don't use all the money for that purpose. In 2003, Henry Badillo (ph) and three other teenagers died in a sinking boat in the Long Island Sound because at that time, New York City 911 didn't have the technology to pinpoint their cell phone, even though the state had been collecting a 911 surcharge for years.

(on camera): If the state would have been enhanced 911 back in 2003, would your son be alive?

UNIDENTIFIED FEMALE: I think so.

HUNTER (voice over): The Badillo (ph) family sued, but a court ruled the state could not be held liable for her son's death.

Since that tragic accident, New York State has spent more than $150 million upgrading its 911 system. Operators say things have gotten better.

UNIDENTIFIED FEMALE: And he's conscious? Breathing?

HUNTER: Now most New York counties have the ability to pinpoint cell phone calls, even to see a photo of the location. Though a quarter of the counties still aren't covered. But of the $1.20 surcharge that every New York cell phone user pays every month, the state says it still spends almost half on things that have nothing to do with 911.

UNIDENTIFIED MALE: I just think it's almost like a little bait- and-switch advertising. The state is taking the money and using it for a purpose other than what the public believes.

HUNTER: The state says, "We need more than (enhanced) 911 to keep New Yorkers safe. That's why the surcharge is also authorized to fund other important initiatives."

(END VIDEOTAPE)

HUNTER: Well, let me demonstrate the system here in Rochester, New York.

I just dialed 911. And it's going to take just a few seconds to get to one of these operators. It should be coming up.

Calling. Here we go. Here we go.

It's over here? Hello?

UNIDENTIFIED MALE: Hi.

HUNTER: 911?

UNIDENTIFIED MALE: Yes, it is.

HUNTER: OK.

Now, not only will you be able to talk to a 911 operator, but the 911 operator will have a photograph of where you are in most cases. In this case, this is where the Rochester, New York, 911 Center is. So not only will they have a map location, but they'll have a photograph location.

Now, listen, this is just part of the state-of-the-art upgrades that they've done to 911. And, of course, not everybody else has that.

The next level of 911 upgrades is going to be, you know, video sent from your phone and text messaging. One expert told us that there's probably no doubt the people at Virginia Tech were texting 911, but, of course, at this point, there are no 911 offices across the country that can accept a text. But that is coming, and that's what they want the continued funds for, to continually upgrade the system in 911 across the country.

Back to you guys.

ROBERTS: All right. Greg Hunter for us in Rochester, New York, this morning.

Greg, thanks very much for that -- Kiran.

CHETRY: Well, you know the age-old excuse, the dog ate my homework? How about a dog who ate $1,000 in cold, hard cash? There's the culprit. You will not believe the extraordinary and pretty gross lengths one woman went through to get her money back.

That story next on AMERICAN MORNING.

(COMMERCIAL BREAK)

CHETRY: Welcome back to the most news in the morning.

Here's one we just had to bring to you, though, because it was so strange.

A Minneapolis family had to do some pretty nasty repair work after their dog indulged in a very expensive snack. Pepper, a Lab/German short hair, has a bad habit of eating everything in sight. Labs will do that, but they're so sweet. A few days ago, she got into a purse and she devoured $975 in cash and then promptly threw up most of it in the back yard.

(BEGIN VIDEO CLIP)

DEBBIE HULLEMAN, DOG OWNER: My mom found little piles of money all over the place that she chewed up and spit out or something.

(END VIDEO CLIP)

CHETRY: Or something.

Well, Pepper's owner managed to rinse off, she said, and tape together most of the pieces. In fact, she took about $700 back to the bank.

So, what did Pepper only eat?

ROBERTS: $275.

CHETRY: $275.

In fact, some of the money, and they showed it, was only three- quarters. That's -- wait, what do you need, Ali, two-thirds of the equal bill and then you can get a new one?

ALI VELSHI, CNN CORRESPONDENT: Yes, and you need the serial number.

But that's less money than you pay for a good meal in New York.

CHETRY: Yes. But Pepper -- you know, can you imagine how much lamb and rice she could have gotten for $275?

Not that smart, Pepper.

ROBERTS: Hey, if you've got a little extra cash hanging around, you'll want to take a trip on a new airline. Virgin American making its debut.

VELSHI: Yes. This is the American business that has the same brand as Virgin Atlantic. It is going to start flying on August 8th. The first flight is going to be from New York's John F. Kennedy Airport to Los Angeles. It will go to San Francisco, in between L.A. and San Francisco, offering deep discounts. Tickets go on sale later on today.

Here's what you're going to get on there. You'll be able to order food from your seat on a little screen. You obviously can get the massages.

They tell you about how the mood lighting on the plane changes 12 times a day. It seems like a bit of a gimmick. But that little screen in front of you, you can -- you can listen to 3,000 songs, you can get movies. There will be a chat room so if others on the plane want to chat with you, you can chat. You can also have interactive games with them.

So, Virgin, you know, known for its service, is coming into this market. It's been a tough time for them. They faced a lot of regulation, but they are going to take off on August 8th, and tickets go on sale today.

The CEO of Virgin did say, however, these are introductory rates. And who knows what they're going to be. This is a very competitive market. And as you know, it's been hard for airlines to make money in the United States. So we'll see what happens with Virgin.

CHETRY: Also hard to get your hands on that "I'm Not a Plastic Bag" from Whole Foods. What happened yesterday?

VELSHI: That lineup yesterday -- they were sold out inside of the hour, inside of the first hour. And so were all the other stores in the region that were selling these bags. They're on eBay, well over $250 or $300...

ROBERTS: Unbelievable. Are they getting...

(CROSSTALK)

VELSHI: ... for the little cotton --- well, you know, on one level, it's the demand for these things. So, you know, if you start making 50,000 or 100,000 of them, maybe they don't have the same demand. But when that kind of thing happens, I don't know, the last time I saw 500 people lining up for anything in the driving rain in New York...

CHETRY: That's so strange. They actually...

VELSHI: ... including the iPhone.

CHETRY: The rain didn't keep them away.

VELSHI: Not at all.

CHETRY: And they actually put up a sign outside of Whole Foods I saw yesterday afternoon that said "WE ARE SOLD OUT..." in huge capital letters, "... OF THE BAG." VELSHI: Yes. It was driving rain. I was waiting for the crowds to start dissipating. Nobody. Umbrellas came out and they all stood there and waited for their bag.

ROBERTS: It's all about...

VELSHI: A guy came up to me and he said, "What are they giving away?" And I said, "Canvas bags." And he said, "What's in the bag?" And I said, "Nothing."

And he says, "So these people are lined up for a free empty canvas bag?" And I said, "No, it's going to cost them $15." He says, "These people are lined up for a $15 canvas bag with nothing in it?"

That's business in America.

CHETRY: Exactly.

ROBERTS: Only in New York.

VELSHI: Yes.

ROBERTS: Yes.

(COMMERCIAL BREAK)

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