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American Morning
State of the Union: Focus on Economy; Countrywide Payout: CEO Giving Back 37.5 Million; Fight for Florida: Focus on Economic Experience
Aired January 28, 2008 - 07:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KIRAN CHETRY, CNN ANCHOR: That's the largest cut since 1982 as overseas markets tumbled -- John.
JOHN ROBERTS, CNN ANCHOR: Well, let's get straight to the president's State of the Union address, Kiran. The economic stimulus plan appears to have run into some trouble in the Senate. CNN's Brianna Keilar joins me now. The economic stimulus package that was hammered out last week between Henry Paulson, the treasury secretary, and a bipartisan group from Congress in the House is going to be the centerpiece of the president's speech tonight. But the Senate is saying oh, wait a minute, this isn't a done deal yet. You got to watch it through us. What are people in the Senate saying?
BRIANNA KEILAR, CNN CORRESPONDENT: Well, you recall in the House, both sides gave up certain provisions so they could get this through, so they come up with a plan. Now, some of the Senate Democrats and Republicans both coming up, floating some ideas that they want. For instance, Democrats talking about extending unemployment benefits, food stamps, talking even about money for speedy infrastructure repairs, and Republicans in the Senate have their own priorities as well, making President Bush's tax cuts permanent, lowering the corporate tax rate.
Now, these are things, obviously, they want to legislate. They don't want to just rubber stamp the House plan. But they're facing tremendous pressure, not just from President Bush but even from Republican and Democrat leaders in the Senate, to get this done, to get legislation on the president's desk by mid-February, John.
ROBERTS: Yesterday, the treasury secretary was on some of the Sunday shows including "Late Edition" saying don't start hanging ornaments on this thing like it's a Christmas tree. You know, we've got a pretty good deal. Obviously, the Senate is going to want to ring it on, but you know, don't try to hold it up because people aren't going to be very happy if you hold back their checks. What else are we expecting in the State of the Union tonight? Obviously, a lot of it will be on the economy, but not everything.
KEILAR: A lot of it is going to be on the economy, on the economic stimulus package, but also other economic provisions. President Bush is also expected to talk about the Mid-East peace process. Obviously, something he's been concentrating a lot of his energy on at this time. Some people have said that it would be nearly impossible to pull off with such a short amount of time left in his term. But no doubt it would also be an amazing part of his legacy if he could pull that off.
And we've also just learned that he's going to be addressing earmarks. The White House says that he's going to be talking about unprecedented steps to reform and reduce earmarks to really bring in the debate out in the open. That's certainly going to be interesting to see specifically what he's talking about in his address.
ROBERTS: Yes. Well, certainly, they are a piece of business here on Capitol Hill and across the nation that's getting a lot of attention. So, we'll see what the president has got to say about that. Brianna Keilar, thanks very much.
Coverage of the president's "State of the Union" address begins tonight at 8:00's Eastern. And if you can't watch it on television, you can watch it online. Go to CNN.com/live -- Kiran.
CHETRY: Thanks, John. Well, as we said, overseas financial markets falling sharply overnight. There are some indications that Wall Street will follow suit today. Let's take a look at the Asian boards right now. Hong Kong Hang Seng index losing 4.25 percent this morning. In Japan, the Nikkei down four percent as well. China's benchmark hit a six-month low, dropping, I believe, seven percent, and European markets also trading lower this morning. Dow futures lower at this point as well. We're about 90 minutes away from the opening bell.
And there is news this morning from troubled mortgage lender Countrywide Financial. Its CEO is under fire over his multimillion dollar payout. Well, the company was more than $1 billion in the hole. Well, now he's giving up some of that pay. Personal finance editor Gerri Willis is here to explain. Good morning, good to see you.
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Hey, good morning, Kiran. Yes. Angelo Mozilo, the founding chief executive of Countrywide giving up $37.5 million in severance. He has, though, more money coming, as much as $40 million. He's still walking away within retirement benefits, so he's not going to be poor, not by a long shot, Kiran. As you know, Countrywide has been in the focus because this company was the nation's largest mortgage lender and now, of course, it's been taken over by Bank of America, which bought it out in a fire sale.
Mozilo has been criticized for the way that some of the loans that his company made were put into the marketplace -- very aggressive terms. Now, of course, he has -- he's saying that he thinks it's the right thing do. My primary focus today, he says, is to do what is in the best interest of Countrywide's employees, customers and shareholders. I believe this decision is the right thing to do as Countrywide works toward completion of its merger. Big story.
CHETRY: It's another -- it's another disconnect with main street because most people don't get rewarded when things go wrong at their job.
WILLIS: Right. CHETRY: And this is what we've seen with the CEOs.
WILLIS: Over and over and over again. Let's take a look at a couple other CEOs, as a matter of fact, who have gone through the same thing. Poor performance, they get rewarded. They forego severance, and people like Stanley O'Neal, who run Merrill Lynch, walks away with $161.5 million. Charles Prince, similar story here. Citigroup taking big losses. He walks away with $29.5 million. Both -- all three of these fellows forego severance, but still walk away with lots of money. And I think it's a big question for folks out there. Pay for performance? Maybe not.
CHETRY: Yes, doesn't seem fair.
WILLIS: No.
CHETRY: Gerri, thank you. Coming up in the next hour, Gerri is going to be showing us how much the crisis at home foreclosures has spread across the country. We've got your "Financial Security Watch." It's right here on AMERICAN MORNING in the next hour -- John.
CHETRY: Kiran, turning now to the race for the White House and the fight over Florida's delegates. The primary is tomorrow and today, the Republican candidates are talking about "Your Money." Frontrunners Mitt Romney and John McCain are trading verbal blows with each other. Romney attacking McCain over economic experience and McCain attacking Romney over wanting to set a timetable for withdrawal from Iraq. CNN's Dana Bash is following the candidates. She's live in Orlando for us now. Dana, just how tight is this race?
DANA BASH, CNN CORRESPONDENT: It pretty much couldn't get any tighter, John. In fact, we'll show our viewers just how tight it is in our so-called poll of polls here in Florida. John McCain is at 27 percent. Mitt Romney at 26 percent, and there is now a race for third between Rudy Giuliani at 16 percent and Mike Huckabee at 14 percent. But it is that 27 and 26 percent between John McCain and Mitt Romney that has made this so incredibly intense, even over the weekend. Much, much more intense between those two men.
Very interesting to see how they are trying to differentiate themselves for the voters. You have Mitt Romney presenting himself as somebody who is a venture capitalist, somebody who gets the private sector. Therefore, he says that he is in the best position to fix the economy. That is the issue he says should and does dominate for voters. And he says that John McCain simply doesn't get it on the economy. On the other side, you have John McCain saying, no, no -- the issue is national security. The issue is the war in Iraq. And I, John McCain, because of my experience in the military, because of my understanding of the military and national security issues, he says, that is why the voters in Florida should pick him.
Also, making the case in pretty stark terms, essentially picking a fight with Mitt Romney, as you know, John, over the weekend, trying to make the case that Mitt Romney wanted a timetable for withdrawal in Iraq. That isn't exactly what Mitt Romney said. But it certainly shows you the difference between these two men and how they are trying to present their case to the voters about why they should be the Republican nominee. Really interesting.
ROBERTS: And Dana, when you look at those poll numbers, Rudy Giuliani is 11 points off the lead there. He has put so much time, effort and money into the state of Florida. If he finishes third there, how is that going to affect his campaign going forward?
BASH: It is absolutely stunning to see what has happened to Rudy Giuliani, John, in the state of Florida because he was here, basically, with nobody running against him for a long time. He -- yesterday was his 56th day of campaigning. He says, to answer your question, that he is going to continue on to the Super Tuesday states that is February 5th. But, it is going to be interesting to see what in fact happens.
And I can tell you, just in watching him, to see how he has tried to shift his positions or more specifically, shift his approach to voters, even though he is a man who was leading here in the polls for months and months and months. Now, he is saying I'm the alternative to Mitt Romney and John McCain. You heard Mitt Romney is talking about the economy. John McCain is talking about national security. Well, what Rudy Giuliani is now saying is I'm the man who can bring you both. So the man who should be, if you look at the polls here, ahead here, now trying to represent himself as an alternative to the two men really vying for the top spot -- John.
ROBERTS: Well, we'll find out very soon how he stands. Dana Bash for us this morning in Orlando. Dana, thanks.
The Democrats are also looking at Florida despite their pledge not to campaign there. Senator Hillary Clinton says that she will visit Florida after the polls close tomorrow. The Democratic National Committee said it would not allow Florida's delegates to be seated at the national convention because Florida moved its primary up prior to February 5th, which was the DNC's cutoff date. But Hillary Clinton says those delegates need to be heard.
Senator Barack Obama is going to receive a key endorsement. This one's huge, from Massachusetts Senator Ted Kennedy. Kennedy is expected to make his announcement today at a rally here in Washington. He is planning to campaign for Obama heading into Super Tuesday. CNN's Suzanne Malveaux talked with Obama about the endorsement. We're going to have that for you, part of her interview with him in our next few minutes here on AMERICAN MORNING.
And a reminder that we're hitting the battleground states on the road to Super Tuesday, talking with voters and candidates to help you choose a president. Tomorrow, I'm going to be in Florida, in Orlando, where Dana is now, and then head across the country for CNN's back-to- back debates with Democrats and Republicans in southern California.
Our Alina Cho is tracking other stories new this morning. She's up there in New York. Good morning, Alina.
ALINA CHO, CNN CORRESPONDENT: Good morning, John. I'm glad you're going to get some warm weather in Orlando tomorrow, finally.
ROBERTS: Finally.
CHO: That's right.
ROBERTS: Finally, finally, finally.
CHO: Finally. Good for you. New this morning.
The average price of gas is now below $3 a gallon. The Lundberg Survey shows gas prices have fallen more than nine cents over the past two weeks to $2.98. Drivers in Tulsa, Oklahoma, have the best deal at $2.70 a gallon. Drivers in Honolulu pay the most, $3.35.
Saddam Hussein's secrets revealed. The FBI agent who interrogated the former dictator after he was captured in 2003 is now speaking out. FBI agent George Piro told "60 minutes," Saddam Hussein let the world think he had weapons of mass destruction to intimidate Iran and prevent that country from attacking Iraq.
(BEGIN VIDEO CLIP)
GEORGE PIRO, FBI AGENT: The WMD had been destroyed by the U.N. inspectors in the '90s, and those that had been destroyed by the inspectors were unilaterally destroyed by Iraq.
UNIDENTIFIED MALE: He had ordered them destroyed.
PIRO: Yes.
UNIDENTIFIED MALE: So why keep the secret? Why put your nation at risk? Why put your own life at risk to maintain the charade?
PIRO: It was very important for him to project that because that was what kept him, in his mind, in power.
(END VIDEO CLIP)
CHO: Piro was a field agent, but he led Hussein to believe he reported directly to President Bush. Piro also said the former dictator read poetry to him and celebrated his birthday by eating cookies made by Piro's mother.
Actor Heath Ledger's body is on its way back to Australia. His family held a private memorial ceremony in Los Angeles over the weekend. Meanwhile, New York City police say they will not question actress Mary Kate Olsen in connection with Ledger's death. Masseuse Diana Wolozin called Olsen three times before calling 911, after finding Ledger unconscious inside his Manhattan apartment. Police are waiting for Ledger's toxicology report before deciding whether to charge Wolozin for practicing without a license. You see, licensed massage therapists are supposed to be certified in CPR.
Get ready for marijuana in a vending machine. That's right. Starting today in Los Angeles, patients can actually buy legal medical marijuana in vending machines at an herbal nutrition center. All they have to do is pass through security, submit their prescription, and then they get that -- the green stuff. Of course, they have to pay, too. The machine will take their fingerprints and pictures. California is starting with two machines, but could and maybe will add more.
And the stars were out for the Screen Actors Guild Awards last night. Daniel Day-Lewis won "Best Actor" for "There Will Be Blood." He dedicated the award to Heath Ledger. Julie Christie won "Best Actress" for "Away From Her." And the "Sopranos" sweep the TV side, "Best Ensemble Cast Performance" and "Best Actor and Actress" for James Gandolfini and Edie Falco. Of course, the Writers Guild didn't picket the show. That's because the SAGA, a big supporter, of course, to the Writers Guild Awards. It's nice to see --
CHETRY: Yes. That might be the last hurrah.
CHO: Yes. We'll have to see if the Oscars actually happen in that sort of fashion. Nice to see the stars out in all their glory.
CHETRY: I'm in "Sopranos" withdrawal just thinking about it. I miss it.
CHO: Oh, yes. I was the "Sex in the City" girl.
CHETRY: Oh, that, too.
You got the movie to look forward too.
CHO: I know. I know.
CHETRY: All right. Thanks so much.
CHO: You bet.
CHETRY: Well, if you're a diabetic, that morning cup you're about to drink may not be the best thing for your health. Our medical correspondent Elizabeth Cohen joins us this morning with more on a new study talking about whether or not -- you know, how much caffeine contributes to spiking blood sugar.
ELIZABETH COHEN, CNN MEDICAL CORRESPONDENT: It is amazing because you don't think of it that way. I mean, you know that caffeine affects your body but you don't think of it that it could actually raise your blood sugar level. Well, what these researchers at Duke University did was fascinating. They gave people caffeine in pill form, the equivalent of four cups a day, and these were Type II diabetics, the kind of diabetes that you get later in life. And they found that their blood sugar levels spiked, and the numbers are really stunning.
Their daily blood sugar went up by eight percent. After breakfast, their blood sugar went up by nine percent. After lunch, 15 percent. And after dinner, 26 percent. Those are huge numbers. Now, again, they were given the equivalent of four cups of coffee and you might say, well, you know, I'm diabetic, but I don't drink four cups of coffee. The concern is that those numbers are so high that even with lower -- just a couple of cups of coffee, one or two, it would still have an effect. CHETRY: And, you know, many diabetics, I mean, they do the testing throughout the day. Don't you naturally see spikes also after meals because you are eating sugars?
COHEN: You do naturally see spikes, but these were even higher spikes because of the caffeine.
CHETRY: So what's the advice for doctors for people who are diabetics? Just try to stay away from it or try to severely limit your caffeine intake?
COHEN: Because this is just one study, they're not saying get off the caffeine now. But the author who did the study, he said, look, if you're concerned about it and you're having trouble getting your diabetes under control, go off caffeine. See what happens. It might work. It might help because the problem is that the glucose -- the caffeine that's causing the glucose spikes, it actually interferes with the drugs you're taking. So you're taking drugs to get your blood sugar down...
CHETRY: Right.
COHEN: ... but all that caffeine might be interfering with the drugs.
CHETRY: All right. Very interesting. People should be taking a second look. Certainly, for people who are diabetic have to really pay attention to a lot of this stuff.
COHEN: Right.
CHETRY: Elizabeth, thanks so much. Elizabeth is going to be back, by the way, later in the hour taking a look at the connection between memory loss and the amount of lead in your body. We're talking about lead that might have been there for decades. That's ahead.
ROBERTS: A frightening thought -- just how easy is it to get a bomb past airport security. We're going to show you in a CNN security watch exclusive. Our Jeanne Meserve watched the TSA put screeners to the ultimate test.
Plus, one-on-one with Barack Obama. An endorsement that he's picking up today and the role of race in this race. That's ahead on AMERICAN MORNING live from Washington and New York today.
(COMMERCIAL BREAK)
ROBERTS: A shot of Capitol Dome this morning. The sun just beginning to come up here in Washington, backdrop of clouds. The president giving his final "State of the Union" address tonight in the House Chamber. The Senate members and the members of the House of Representatives will all be there tonight, along with the Supreme Court. All eyes tonight on Washington to find out what the president has to say. Welcome back to "The Most Politics in the Morning." The Democrats are moving into high gear now for next week's 22-states Super Tuesday bonanza. Senator Barack Obama comes out of Saturday's big win in South Carolina with solid momentum and a look at the candidate with broad appeal to Democrats across the country.
And now, for the first time since winning South Carolina, CNN's Suzanne Malveaux sat down with the senator.
(BEGIN VIDEOTAPE)
SUZANNE MALVEAUX, CNN CORRESPONDENT: Congratulations, Senator, for your big win in South Carolina.
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: Thank you.
MALVEAUX: You got 80 percent of the African-American vote. You pretty much split the white vote with your other two opponents. There was a lot of discussion about race before this vote. Your campaign, the Clinton campaign, accusing each other of exploiting the issue. What happened?
OBAMA: Well, you know, I don't want to go over tit for tat what happened last week. I think it's fair to say that it's never been my style and never been my interest to run a race-based campaign. And that my whole message has always been that I want everybody included in the broad coalition to bring about change. I have dedicated a big chunk of my life to moving us beyond some of those old arguments. And I think the people of South Carolina responded yesterday in part because they don't want to go backwards. They want to look forward. And, that's part of the reason why we did so well.
MALVEAUX: CNN has confirmed multiple sources that you have a major endorsement under way -- Massachusetts Senator Ted Kennedy. Obviously, that's a very big deal for you. And does this perhaps signal that there is the Democratic establishment that seems to be turning in your corner? Turning your way?
OBAMA: Oh, you know, Ted Kennedy has not announced that he's endorsed me.
MALVEAUX: You can make news. You can break news on CNN.
OBAMA: Ted Kennedy, you know, speaks for himself and does so eloquently. So, I can confirm that I've actively sought his endorsement. I was honored to see Caroline Kennedy write a wonderful op-ed today in "The New York Times" evoking her father and talking about why she was supporting my campaign. But I'll let -- I'll let Teddy speak for himself.
(END VIDEOTAPE)
ROBERTS: Obama and his main rival, Hillary Clinton, are saying they will be able to put the bickering behind them and that the party will be unified behind whomever is chosen as the nominee -- Kiran.
CHETRY: All right. Thanks so much, John.
Well, a satellite the size of a bus on a collision course with planet earth. But where is it going to crash land? Well, that's anyone's guess. Our space correspondent Miles O'Brien is going to be joining us after the break with details.
Also, testing the TSA. Our hidden cameras watched as undercover agents try to sneak a bomb through airport security. Just how easy was it? Shocking results. And what can be learned from them in an exclusive report ahead on AMERICAN MORNING.
(COMMERCIAL BREAK)
CHETRY: Hopefully this sounds worse than it is. But it's as big as a school bus and it's headed for a crash landing on earth's surface. It's a broken U.S. spy satellite. It's expected to come crashing down in late February or early March. Now, you may remember the Mir Space Station. They had also streaked toward earth. There's a shot of it there in 2001. That was a controlled reentry. Officials this time say they will have no control over the spy satellite. So what does it mean for us, earthlings? Joining us to discuss how big of a threat it is, space correspondent Miles O'Brien. Good to see you this morning.
MILES O'BRIEN, SPACE CORRESPONDENT: Good to see you.
CHETRY: So what went wrong with the satellite?
O'BRIEN: Well, we don't know because it's operated by the National Reconnaissance Office, and they don't talk very much. This is a super secret spy satellite. I'll tell you. We have a rough idea of what it looks like. It's not unlike the Hubble Space Telescope. Of course, the Hubble is pointed to the most distant part of the heavens, trying to identify faint stars.
CHETRY: Yes.
O'BRIEN: This one, imagine a Hubble, pointed back at us trying to identify hair follicles, if you will, because that's what it's after. It's a spy satellite about the size of a school bus and about 45 feet in length. The Mir across is about nine to 10 feet. And it's pretty heavy. Now, it's unclear as to where it will hit.
CHETRY: Now, so here's the question. They take into account, obviously, that these satellites don't last forever. What is the correct way that this is supposed to happen?
O'BRIEN: Well, the correct way as you referenced Mir. Let's take a look at Mir one more time because that footage is pretty spectacular. Now, Mir is about 10 times heavier. Back in 2001, as it came in over the South Pacific, there you see it streaking in, it came in a controlled way.
In other words, the rocket thrusters were working. It responded to controls, and they drove it right into the spot where they wanted, kind of a hole in one, if you will, in the South Pacific. That was controlled. It did what it was supposed to do, and so there was less concern.
CHETRY: All right. So, now with this spy satellite, it's obviously not going to be a humongous bus, even though that's the size coming to earth because parts of it break apart. But what are the chances that it could hit a populated area?
O'BRIEN: Well, think of it this way. The earth is about 75 percent ocean. And then you take the land mass, it is by far -- you know, here we are New York City. It's hard to imagine, but it is thinly populated. I will tell you this, however. The spy satellite orbits are polar orbits. They go like this, and the earth, of course, rotates beneath them.
The idea is to maximize its time over land mass because that's what spy satellites do. So it does increase the chance that it will land. But I will tell you this, your odds of being struck by a piece of falling space debris are one in a trillion. Your odds of getting hit by lightning, one in 1.4 million. So I wouldn't lose too much sleep on this. Don't be a chicken little.
CHETRY: I won't be.
O'BRIEN: All right.
CHETRY: But when you say, you know, a huge bus is streaking towards earth, it makes me a little nervous.
O'BRIEN: Yes. People pay attention. We'll be watching it as we can.
CHETRY: All right. Miles, great to see you.
O'BRIEN: All right. Good to see you.
CHETRY: Thanks so much.
Well, just last week, a passenger brought a loaded gun through airport security at Reagan National Airport. TSA testers are now working to train screeners, and our Jeanne Meserve got an exclusive look as an undercover team from the TSA went to an airport with a fake improvised explosive device. How difficult was it to get that device past screeners? And what did they learn from that experience? Well, Jeanne is coming up with her exclusive report in just a few moments.
It also brings us to our "Quick Vote" question of the morning. Do you feel the current airport security system is enough, they're doing enough to keep us safe? Right now, 25 percent of you say yes. Seventy-five percent say no. Not enough is being done. Cast your vote, CNN.com/am. We're going to update the results throughout the morning -- John.
ROBERTS: Kiran, President Bush's last "State of the Union address" is tonight, and it comes at a critical time. We'll talk with White House Press Secretary Dana Perino about what we can expect coming up next. We know that the president is going to talk about the economic stimulus package, and there is word this morning about when you could start seeing those rebate checks.
Plus, she was panicked, screaming, and almost frozen to death. Coming up, a man is pulled from a frigid pond. We'll show you the rescue. That's ahead on AMERICAN MORNING.
(COMMERCIAL BREAK)
KIRAN CHETRY, CNN, ANCHOR: What a pretty shot this morning in Orlando, Florida, the sun shining through the palm trees at 7:30 Eastern time this morning. It's 45, fair right now, shaping up to be 68 degrees and sunny in Florida.
And it's Monday, January 28th. Glad you're with us this morning. I'm Kiran Chetry. Hi, John.
JOHN ROBERTS, CNN, ANCHOR: And good morning to you. I'm John Roberts from Washington, D.C.. Tonight, President Bush is going to deliver his seventh and final state of the union address with the approval ratings at their lowest since he took office. What will he say about the war in Iraq and growing fears of a struggling economy. White House Press Secretary Dana Perino joins me now live from the White House with a preview. Good morning to you, Dana, good to see you.
DANA PERINO, WHITE HOUSE PRESS SECRETARY: Good morning.
ROBERTS: So, the President is going to be talking tonight about his stimulus package as part of an overall focus on the economy. What is his message to the members of the Senate who would want to, well, let's say, negotiate their own package before this thing hits the President's desk.
PERINO: I think the President is going to say that the American people expect that we should be able to follow through on a bipartisan agreement that we reached last week and that the Senate should not do anything that would slow that down or blow it up. The President is going to call them to push forward and get this thing done so that we can make sure that we have an insurance policy against a possible economic downturn.
ROBERTS: The President is also going to be talking about earmarks tonight. What's his message for Congress going to be on that front?
PERINO: He's going to say enough is enough. And he's going to tell them that he will veto any appropriations bill if they do not cut the number of earmarks, these pet projects, that are slipped in to legislation at the last minute that are never voted on by Congress. So he'll say he'll veto that. And in addition to that, he will sign an executive order tomorrow that tells agencies not to fund any of these earmarks and not to spend money on these earmarks if they do not go through the explicit process in Congress and are actually voted on.
ROBERTS: And Dana, on the subject of the economy, there's a good chance that the President may leave the economy the same way he inherited it and that is in a recession. What does the White House say, that critics say that the president has spent too much time focused on foreign policy here while the economy has been suffering.
PERINO: Well, let's back up, John, you just said there's a good chance of that. Our forecasters are not saying that. The congressional budget office isn't suggesting that. And neither are many of the outside government economists forecasting a recession. What we have seen is a significant slowdown in growth over the past couple of months. So, the President working with the bipartisan members on the House has come to an agreement so that we can have a stimulus package to make sure we avoid any risk of a downturn. Because the long-term health of our economy is very strong. The President will talk about the most urgent thing that the Congress can do is work on this economic growth package. The most important thing they can do is pass and make the tax cuts permanent so that 116 million Americans don't see their taxes rise by $1,800 come 2010.
ROBERTS: The President is also going to be talking about Iraq tonight, Dana. He'll be talking, I guess, about the so-called surge, progress that's been made in terms of security and safety there. But there still has been little political progress. What's the President's message to Nouri Al-Maliki and the people who are in charge there in Iraq going to be tonight?
PERINO: The President will spend a significant amount of time in his speech talking about Iraq. Remember where we were a year ago. Iraq was something that even the President said he would not approve. But over the year, implementing the surge strategy, we've been able to significantly reduce the sectarian violence, civilian deaths are way down, our military deaths are down. And the President is going to say that we have to capitalize on those gains. We cannot run the risk of backsliding.
And on the political side of things, John, there actually has been some progress made on the Iraqi front. Certainly, they had their de-baathification law that's right in front of them right now. They are sharing money with the provinces. The federal government is sending money to the provinces, much like we do here in America. And actually that vote the other day on the flag, General Petraeus said that was something that we may see as minor but that was a very contentious issue and they were able to come together and get it done.
ROBERTS: Well, let me ask you this question, are you satisfied with the amount of political progress that's been made in Iraq?
PERINO: No, we're not satisfied. We continue to push them to do more. But they do have a commitment. They are trying to do more. And this security, the calmer situation in Baghdad is allowing them the space that they need in order to do it. But of course we're pushing them to do more.
ROBERTS: Now, on the political front, Dana, there are some people who say that President Bush has drifted away from the conservative principles that he espoused when he was running for office in the year 2000 campaign to the point where David Frum, who wrote that famous line for the 2002 state of the union address "the axis of evil," said that President Bush is going to leave office leaving the republican party on the brink of disaster. What do you say to that?
PERINO: You know, there are some people who are in the opinion business and that's his opinion. And I'll let him have that. From our perspective, this is a president who has stood for everything that he has -- he stood for in 2000, over the first seven years of his presidency. He is a compassionate person. We are helping to save lives all around the world. And in fact, tonight, in the first lady's box, we will have a single mother and her child of two years from Africa, who are treated with the President's HIV-AIDS program, the PEPFAR program. And they are now healthy and the daughter is HIV free and she will be in the box tonight.
And so that embodies a lot of what the President wanted to represent. He will see - in Africa next month, these programs working firsthand. And then the Americans can see that their dollars are being well spent.
ROBERTS: All right. Dana Perino for us this morning. Dana, thanks very much. Looking forward to the speech this evening. Good to see you again.
PERINO: OK.
ROBERTS: Coverage of the President's state of the union address begins tonight at 8:00 Eastern here on CNN. And if you can't watch it on television, you can watch it on-line. Go to cnn.com/live. Kiran.
CHETRY: Well, there's breaking news of a tense hostage situation, John. This is at a school in Pakistan, where police say 30 students and teachers are inside of a high school in Peshawar. Security forces have surrounded the building and police are talking with five or six gunmen who apparently ran into the school after a failed kidnapping. We will continue to keep you updated as we get more details on this situation in Pakistan.
Meanwhile, an American teacher is recovering after a brutal elephant attack in China. Jeremy McGill teaches English in central China. This is his myspace page. He posted hundreds of photos of his travels in the region. Security guards at a Chinese nature reserve found McGill unconscious on Thursday. And they think what happened was an elephant grabbed him with its trunk and tossed him. McGill suffered several fractured ribs and stomach injuries. He may be moved to a hospital in Thailand for further treatment. Several of his McGill's myspace friends have posted get well messages on his page.
And a fisherman in Australia taking some drastic measures to save a friend who was bitten by a shark. A 200-pound mako shark bit into his knee after he reeled it into his boat. Deck hands cut off the shark's head to save their friend. He's in remarkably good shape and is expected to be OK.
The first major report on November's San Francisco Bay oil spill and it criticizes the Coast Guard for failing to alert local authorities sooner about that 58,000 gallon leak. It said response crews arrived quickly on the scene to help clean up the mess. The report does not say why the container ship hit the bay bridge. And we're following extreme weather on the west coast right now. Heavy rains causing rock and mud slides across San Diego, forcing police to close dozens of roads. More than 800 families lost power, and several trees were knocked over by those strong winds.
And also some dramatic pictures of a rescue in Massachusetts. A 27-year-old man fell through the ice there. There you can see him. He is on 20-degree water for more than half an hour while rescue crews in the cold water survival suits made their way over to him. He is now in the hospital and it looks like he will be OK.
Time now is 38 minutes past 7:00 here on the east coast. We check in with Reynolds Wolf who's in for Rob Marciano today with a look at what's going on, weather-wise. Hey, Reynolds.
REYNOLDS WOLF, CNN, METEOROLOGIST: Hey, you know, you were talking on Massachusetts and of course that water rescue. Certainly, rough times there. Things are getting a little bit better in Massachusetts. This morning, we actually had a winter storm warning that was in effect down to Cape Cod. A lot of snow everywhere from six to 12 inches of snow from just last night. Right now, a touch of blowing snow on ground six. But thankfully for the most part, much of the winter precipitation is moving farther to the north.
However, farther on to the west, it's an entirely different scenario. The snow is going to get very high in parts of the Olympic Mountains, into the cascades, 1 to 2 feet possible into the Bronkies (ph). Looking at a potential 1 to 3 feet coupled with that some really strong winds topping 60, 70 miles per hour gusts. It's going to be a brutal time for you. And then into the northern plains, we're looking at the potential temperatures dropping some 20 to 30 degrees in an hour's time later today. So certainly rough conditions there.
Southern California, we've had every kind of weather story you want to cover right there. They had the rain, the sleet, the snow, the flash flooding, even the mud slides. Today, more rain continues to fall through the L.A. basin, to Pomona southwards to Long Beach. Certainly, an area we're going to keep a very sharp eye on to a good part of the day, getting into the evening. That's the latest. Let's send you over to John.
ROBERTS: Reynolds, thanks very much. A stunning new study. How exposure to lead when you were young may be connected to memory loss today. The details on that straight ahead.
CHETRY: Coming up on AMERICAN MORNING.
UNIDENTIFIED MALE: I'm putting a detonator into the plastic explosive.
CHETRY: An undercover investigation. Testing the screeners. How safe is your airport? Our cameras roll as undercover teams try to sneak a bomb through security. The devastating results in an exclusive report, ahead on AMERICAN MORNING.
(COMMERCIAL BREAK) ROBERTS: Why do Hispanic children are making gains compared to white kids? According to a new study that will be released tomorrow, the study looked at children from the years 1985 to 2004 using 28 different factors to come up with a child well being index. Overall, blacks and Hispanics closed the gap, but made particular improvements in health, safety, and income. Kiran.
CHETRY: Well, there is a new study out, John. A stunning one, really, that links exposure to lead with our risk of memory loss as we get older. CNN medical correspondent Elizabeth Cohen is here to explain. You know, a lot of us grew up in household with lead. We all remember being lead tested and they still recommend it for kids. What is the concern as we get older?
ELIZABETH COHEN, CNN, MEDICAL CORRESPONDENT: The concern is maybe it's affecting our memory. I mean as you get older you sort of notice you're forgetting names, you don't quite recognize people. It might have to do with the amount of lead. And doctors can actually look in your shin bone, believe it or not, and see how much lead you were exposed to over time. If you're over 30, you were exposed to lead. It was in toys. It used to be in water. It used to be in paint. It used to be all over the place. And these series of studies have found that the people who were exposed to more lead over time, and these people are now between 50 and 80, that they had more memory loss. And we're talking about memory loss that would turn a brain -- it would make it seem like the person was five years older than they really were.
Now, you add that to what we already know about what lead can do to a person, and it is not a pretty picture. We already know that lead can make adults irritable, poor muscle coordination, nerve damage, and it can give reproduction problems. So this is just unfortunately another thing to add to the list.
CHETRY: How much lead would you have to absorb to see these types of problems, though?
COHEN: You know, they don't know. They don't have a level where they say, OK, here's where you start to see problems. But it is clear no lead exposure is good. But there's really not much you can do about it. I mean this was something you were exposed to decades ago. So the damage is done.
CHETRY: Now, is there a way to get lead out of your body once they do test for it?
COHEN: There is a way to get lead out of the body. A series of drugs that doctors can give. But they only like to do it when the exposure is really severe. When you really have lots of lead and it's causing lots of problems. Because these drugs can be pretty harsh on the body. They can be pretty toxic. So, it's not something that the doctors do lightly. To some extent, this is -- what's done is done. There's not a whole lot you can do about it.
CHETRY: You said to me about a shin bone test. I mean for children, they test -- they take their blood and they test lead that way. Can they also do that for adults? Or how does that work with the testing?
COHEN: When you try to look at what you've been exposed to over decades and decades, it's much more accurate to actually look at the bones and see what's there.
CHETRY: All right. Elizabeth Cohen. Thanks so much. You can also read more about lead exposure and your health at cnn.com/health. John.
ROBERTS: Finally an explanation for what's going on. Kiran, thanks.
An airport earning a new nickname. It's not a good one. We'll tell you what it is. But it's got something to do with delays. And testing the TSA. Hidden camera watches as undercover agents try to sneak a bomb through airport security. Just how easy was it? The shocking results in an exclusive report coming up.
And news this morning about the trader in France accused of a $7 billion bank fraud. His case and the case against his bank ahead on AMERICAN MORNING.
(COMMERCIAL BREAK)
CHETRY: 49 minutes past 7:00 here on the east coast. And if you're just joining us, here's a look at what's making headlines this morning.
President Bush will address a joint session of Congress. It will be the last time he gives a state of the union address. The speech will focus on the economy and the war in Iraq. He'll also ask Congress to go back to a $150 billion - to back a $150 billion economic stimulus plan and to pass it quickly. And we will also be hearing the democratic response from the Kansas governor.
Republican '08-ers are focused on the economy. The candidates making a final push for votes in Florida ahead of tomorrow's big primary. Mitt Romney says he has the experience necessary to handle the economy. And claims that John McCain doesn't know how it works. Romney was responding to McCain's criticism of his position on Iraq.
And there's a new exit deal for Countrywide CEO Angelo Mozilo. He has been criticized for failing to warn investors about the mortgage firm's massive financial problem. He's agreed to give up $37.5 million and some of the perks that he's supposed to get when he retired. Countrywide posted more than $1 billion in losses in the third quarter of last year. It recently agreed to be bought by Bank of America.
And better late than never, I guess we could say, is a familiar refrain for passengers at O'Hare Airport. It's the nation's second busiest but it ranks number one for canceled flights. It also ranked dead last for on-time departures. But it now has the dubious distinction of being the world's -- having the world's most cancellations according to the government statistics. More than 13,000 flights never got off the ground at O'Hare last year. That represents nearly 4 percent of all of the scheduled departures. John.
ROBERTS: Kiran, thanks. And now a CNN exclusive, brand new undercover video, how TSA agents test airport security trying to smuggle a fake bomb through. Our Homeland Security correspondent Jeanne Meserve watched as TSA agents put their screeners to the ultimate test. She joins us now from Reagan National Airport. And Jeanne, this is a really troubling report.
JEANNE MESERVE, CNN, HOMELAND SECURITY CORRESPONDENT: Well, you know even more troubling is what happened here at this airport last week when a passenger got through a check point with a loaded gun. It was just one of many examples of how the screening system is less than perfect, but, there is a covert testing program designed to improve screener performance. We can't show you faces or tell you names, but our cameras did get an exclusive look at what it does.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: This is a back support. And I am putting a detonator in to the plastic explosive.
MESERVE (voice-over): It isn't an actual improvised explosive device. Just a very good copy. That should set off alarms just like the real thing. The very latest intelligence has been used to create it and conceal it.
UNIDENTIFIED MALE: Slide it in to get it deeper in there so that it's more difficult, it's concealed better.
MESERVE: This undercover team from the Transportation Security Administration applies a chemical that mimics explosive residue.
UNIDENTIFIED MALE: I think we're ready to go.
MESERVE: Then they head for Tampa International Airport. No one knows they're coming until the airport's top security official gets a call five minutes before the test begins.
UNIDENTIFIED MALE: I would ask that you not speak to anyone on your staff to alert them of this test.
MESERVE: At the check point, the tester is wanded and patted down right where the fake IED is concealed but the screener does not catch it. If this were a real bomb, it just made it past security. TSA won't give exact numbers, but screeners fail these tests more often than they pass them.
DAVID HOLMES, TSA ASSISTANT ADMINISTRATOR: We're designing our tests not so much to indicate or to show or highlight performance or absence of performance at a particular airport, but we're highlighting where the vulnerabilities exist at the airport.
MESERVE: At Tampa, the team breaks cover immediately to show the screener his mistakes.
UNIDENTIFIED MALE: We'll have you do it again. And we'll go over everything so I can show you exactly what -- what you were -- what you did wrong.
MESERVE: Again, wanding and patting misses the fake IED. Only when the tester tells the screener to go a step further and lift up the shirt does the screener find it?
UNIDENTIFIED MALE: Oh, I see it now.
MESERVE: Apparently aware of the consequences that if this had been the real thing, the screener appears devastated. But every screener at this check point will be taught today's lessons.
UNIDENTIFIED MALE: And we all have to be sharp to stop them from coming into the sterile area. You know that.
(END VIDEOTAPE)
MESERVE: Now, the TSA says we shouldn't find this disturbing, but encouraging, thousands of tests like this are conducted every year. And they say they're making it safer by improving their security systems. But, with report after report skewering screener performance, there will, of course, be skeptics. John.
ROBERTS: Jeanne, we want to point out for our viewers that we're not giving away any TSA secrets here by showing these test. And in fact, the TSA supports the tests and are following them through it, correct?
MESERVE: That's correct. And that device you saw, we are not giving a road map to terrorists. It's the other way around. That device was based on information that intelligence agencies have gleaned about what terrorists are looking at, what they're thinking of doing. So, quite the contrary. We're not giving them ideas, they're giving the TSA ideas.
ROBERTS: Jeanne Meserve for us this morning at Reagan National Airport with that troubling report. Jeanne, thanks very much.
That bring us now to our "Quick Vote" question. Do you feel the current airport security system is doing enough to keep us safe? Right now, 21 percent of you say yes but 79 percent say no. It's not enough. Cast your vote at cnn.com/am. We will update the results throughout the morning. And right now, let's go back to New York and here's Kiran.
CHETRY: Wow, all right, thanks, John. Well, Barack Obama getting a key endorsement today from Senator Ted Kennedy. And is Bill Clinton partially to blame for Hillary's loss in South Carolina? We're going to be talking to supporters of both frontrunners ahead on AMERICAN MORNING.
(COMMERCIAL BREAK)
ROBERTS: Riding the wave --
(BEGIN VIDEOTAPE)
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: People from every walk of life stood up and they said, yes, we can.
ROBERTS: Barack Obama set to get a key endorsement from the house of Camelot today.
Plus, will Bill back off? Questions for the Clinton campaign today as the race goes nationwide. It's the most politics in the morning.
And no appointment necessary, but the doctor is rarely in.
UNIDENTIFIED FEMALE: In and out through your mouth.
ROBERTS: Are these quickie clinics good for your health? On this AMERICAN MORNING.
(END VIDEOTAPE)
ROBERTS: Good morning and welcome. Thanks for joining us on this AMERICAN MORNING. It's Monday, the 28th of January. I'm John Roberts live from Capitol Hill in Washington. Good morning, Kiran.
CHETRY: Hey, John. Great to see you this morning. I'm Kiran Chetry, here in New York and we start off with what could be another beginning to a bumpy week for investors on Wall Street. There are still persistent fears of a U.S. recession and it caused the Asian markets to plunge over night. Hong Kong's Hang Seng index lost 4.25 percent. In Japan, the Nikkei was down nearly 4 percent. And European markets also trading lower.
Stock futures are down and that suggest that Wall street could head south again when the market opens in just about an hour and a half. There's also a new exit deal in the works for the CEO of Countrywide Financial. Angelo Mozilo has been criticized for failing to warn investors about Countrywide's problems. Well now he's agreed to give up $37.5 million from his retirement package. That package is still worth $40 million. Countrywide posted more than $1 billion in losses in the third quarter last year. And recently agreed to be bought out by Bank of America.
The price of gas is now below $3 a gallon. The Lundberg Survey showing that gas prices have fallen more than nine cents over the past two weeks to $2.98 a gallon on average. Drivers in Tulsa, Oklahoma have the best deal right now. They're at $2.70 a gallon while drivers in Honolulu paying at most $3.35 a gallon on average. But hey, they're in Hawaii, John, so...
ROBERTS: That's a lot more to get the gasoline out there as well. As you say, complain about lots of other things but sunshine certainly isn't one.
President Bush will focus on what the White House calls unfinished business in tonight's State of the Union address. At the top of that list is the stimulus plan that may hit a snag in the Senate. CNN's Brianna Keilar joins us now. So, what are the folks in the Senate saying that they want to do with this bill that has been hammered out already between the Treasury secretary and the House leadership.
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