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American Morning

Asian Markets Plunge; Senate Pushes for More Economic Stimulus; Florida Fight: Candidates Focus on Economy; Super Tuesday Battleground: Fight for Delegates; SAG Awards; Show Goes On

Aired January 28, 2008 - 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: I'm Kiran Chetry here in New York, and we begin with a heads up on Wall Street. It could be another volatile week of trading. There are still persistent fears about the U.S. economy. It actually sent the Asian markets tumbling for a second straight Monday. We'll take a look at the numbers right now.
Hong Kong's Hang Seng index losing 4.25 percent. In Japan, the Nikkei was down nearly four percent, and China's Shanghai composite index plunged more than seven percent. Also, European markets trading lower as well, and U.S. stock futures are down, suggesting that Wall Street will be heading south when the markets open again this morning.

JOHN ROBERTS, CNN ANCHOR: President Bush is going to 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 economy. The stimulus plan hammered out with the houses has hit a snag in the Senate. CNN's Brianna Keilar is here now with more on that. The White House, members of the House who negotiated this bill, are saying hey, we like it the way it is. Members of the Senate are saying, oh, no, we have to ring in here first before it gets passed. What are they looking for?

BRIANNA KEILAR, CNN CORRESPONDENT: Well, Senate Democrats are floating a lot of ideas, among them unemployment benefits, extending those, as well as food stamps, as well as quick infrastructure repairs, even summers jobs, programs for young Americans among other ideas. But some of the Republicans also have their priorities, basically corporate tax rate, lowering that, extending the president's tax cuts and making them permanent. And the Senate is really, it's an independent legislative body. It doesn't want to just rubber stamp the House plan.

ROBERTS: And did 100 people got the wrong ideas about what should happen? The president has agreed not to call for making these tax cuts permanent, at least in this bill, but does plan before the end of this year to try to make them permanent. Henry Paulson, the treasury secretary, warned yesterday in his appearances on television including "Late Edition," against Christmas-treeing up this bill. Here's what he said about that.

(BEGIN VIDEO CLIP)

HENRY PAULSON, TREASURY SECRETARY: Now, the Senate needs to take action, and I'm optimistic here. I don't think the Senate is going to want to derail this program. And I don't think the American people are going to be anything but impatient if we don't enact this bipartisan agreement quickly.

(END VIDEO CLIP)

ROBERTS: Christmas treeing up, you know, there's a tendency here in Congress to hang little ornaments on whatever bill, hence, making it look like a Christmas tree. But how much pressure are members of the Senate going to be under to not put too many add-ons in this bill?

KEILAR: Well, they are a lot of pressure from Secretary Paulson, also from President Bush. And what's interesting, they're under pressure from the leaders in their own party. You've got Senate Majority Leader Harry Reid. You've got Republican leader Mitch McConnell, and they are committed to a February 15th deadline to put legislation on President Bush's desk. So pressure from all around.

ROBERTS: The economy will be a large part of the "State of the Union." What else do we expect that the president to talk about?

KEILAR: Well, the economy will be a large part of the "State of the Union." It's also going to be a large part of the Democratic response to the "State of the Union." Kansas Governor Kathleen Sebelius is going to be giving that. But check this out. It's going to be -- bipartisanship is going to be the main thing that she is talking about. In terms of the economy but other issues as well, the war in Iraq, for instance.

ROBERTS: Right. OK. Bipartisanship in an election year may be difficult to come by.

KEILAR: Certainly.

ROBERTS: So they did seem to reach agreement on the stimulus package?

KEILAR: Really an unusual effort here. Yes.

ROBERTS: Very quickly, too. Brianna Kielar, thanks very much.

Let's send it up to New York, and here's Kiran now.

CHETRY: Thanks, John. The race for the White House now, an all- out fight for delegates. The Florida Republican primary is tomorrow, and the candidates are focusing on that economy as they stump in that state. Frontrunners Mitt Romney and John McCain campaigning hard and trading verbal blows. Romney attacking McCain over economic experience saying his expertise should make him the easy choice. Congressional correspondent Dana Bash is following the candidates. She's live in Orlando with a look at just how tight this race is getting in Florida. Good morning, Dana.

DANA BASH, CNN CORRESPONDENT: It could not be any tighter. Good morning, Kiran. And, in fact, let's show our viewers just how tight it is. We have what we call a poll of polls here in Florida for the Republican race. Check it out. John McCain at 27 percent. Mitt Romney at 26 percent. Right there behind him. Virtually, a tie there. Then, there is a race for third, a distant race for third. 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 is making it so intense.

Particularly over the weekend, Kiran, Mitt Romney, even for a split second, accused John McCain of lying about his record but quickly caught himself and said well, he's just being dishonest. That is just one example of how intense it's getting between these two men -- Kiran.

CHETRY: There was a lot of talk about Senator McCain's comments, talking about where Romney stood on the war, and talk about whether or not it was just an attempt to sort of shift focus off the economy. What's been the response from the McCain camp on that?

BASH: It is interesting. You know, I think, the big picture, what's going on and what is really fascinating to watch is what's developing is a fight between Mitt Romney, who is saying what should be and what is most important to voters is the issue of the economy. And he says, I'm the man who is the best for that. And you have John McCain who says he thinks what should be and what is most important to voters is national security. And he says because he is a war hero, because he has had years and years of experience with military matters, he is the best for that.

So that is really what you're seeing play out on the campaign trail as we get closer to tomorrow's primary here. And you have on the issue, you talked about on the issue of the Iraq war, John McCain tried to get himself back on that issue of national security going after Mitt Romney, really picking a fight with him, accusing him of being for a timetable for withdrawal back earlier this year, which wasn't exactly the case is essentially what Mitt Romney said is that he said perhaps there should be some benchmarks, private benchmarks. But that is just one example of how the two men are trying to get the issue back where they think they are best to appeal to voters. Kiran, it's going to be fascinating to see which one actually wins out in the end tomorrow.

CHETRY: And we'll be watching for sure. Dana Bash this morning in Orlando, Florida for us. Thanks.

BASH: Thank you.

ROBERTS: The Democrats are looking at Florida despite their pledge not to campaign there. Senator Hillary Clinton says she will visit the state tomorrow, but not until after the polls close. The Democratic National Committee said it would refuse to allow Florida's delegates to be seated at the national convention because they moved up the state's primary prior to February 5th, but Hillary Clinton says those delegates need to be there.

(BEGIN VIDEO CLIP)

SEN. HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE: I'm going to try to seat the Florida delegates. I have said that the people of Florida deserve to be represented in the process of picking a president for the Democratic Party. I've never seen such intense interest as we're seeing across our country. And I think it's fair to say based on our recent experience that Florida will once again be a battleground state.

(END VIDEO CLIP)

ROBERTS: Senator Barack Obama's campaign also says it disagrees with the National Committee's ruling and says whomever the nominee is will fight to get Florida's delegates involved in the convention.

Obama is building on the momentum from his decisive win on Saturday in South Carolina. Last night, Senator Obama sat down with CNN's Suzanne Malveaux and explained why he thinks all of the bitter talk of race last week didn't hurt him with the voters.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: 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.

(END VIDEO CLIP)

ROBERTS: We'll have much more of Suzanne Malveaux's interview with Barack Obama. That's coming up at the top of the next hour. And Senator Barack Obama will receive a key endorsement, a huge one today from Massachusetts Senator Ted Kennedy. Kennedy is expected to announce his endorsement at a Washington rally. He's planning to campaign hard for Obama as the candidates gear up for Super Tuesday. Strategists say the endorsement will add to Obama's credibility with union members and Hispanics, as well as the party's base. Both Obama and Hillary Clinton had actively sought the endorsement of the Massachusetts senator.

And tonight at 9:00 p.m., President Bush gives his final "State of the Union" address. The economy will be a key issue for the president who'll focus more on the economy this time than in any of his previous six addresses. He is expected to talk about the $150 billion stimulus plan, as well as some other unfinished business that he wants to accomplish before he leaves office.

We're going to hear more about tonight's "State of the Union" from the president's press secretary, Dana Perino, in the next hour at 7:30 Eastern. And if you can't watch it on your television, catch the president's address online at CNN.com/live with multiple live screening angles.

And a reminder that we are hitting the battleground states for the road to Super Tuesday talking with voters and candidates to help you choose a president. Tomorrow, we're going to be in Florida for the primary there. Then, we head across the country for CNN's back- to-back debates with the Democrats and the Republicans in southern California. That will be Wednesday and Thursday -- Kiran.

CHETRY: Sounds good. Thanks so much, John. Well, our Alina Cho is here with a look at the other stories making news this morning. Good to see you this Monday morning.

ALINA CHO, CNN CORRESPONDENT: And good to see you, too. Kiran, good morning. Good morning, everybody.

The man who led the Mormon Church for more than a decade has died. Gordon Hinckley was 97 years old. He died from complications from old age. He was the president of the Mormon Church for nearly 13 years. Hinckley is credited with using the radio and even YouTube to spread the Mormon word to more than 13 million members around the world. Flags in Utah are flying at half staff.

Saddam Hussein's secrets revealed. The FBI agent who interrogated the former dictator after his 2003 capture is 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: He told me that most of 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 destroy?

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: Now, 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, the New York City police say they will not question actress Mary Kate Olsen in connection with the actor's death. Masseuse Diana Wolozin called Olsen three times before calling 911, after finding Ledger unconscious. Police are waiting for Ledger's toxicology report before deciding whether to charge Wolozin for practicing without a license, Licensed massage therapist are supposed to be certified in CPR.

And you already buy soda and candy in the vending machine. What about marijuana? Well, starting today in Los Angeles, patients can buy the legal medical marijuana at an herbal nutrition center. Here's how it works. All they have to do is pass through security, submit their prescription, of course, and then pay. The machine will take their fingerprints and pictures for I.D. purposes. California is starting with two machines but could and likely will add more. How about that for a contest?

CHETRY: Well, the blonds are going crazy for that.

CHO: Oh, yes.

CHETRY: San Francisco said, I can't believe L.A. beat us to the punch on this one. We thought San Francisco would be the first inner city to do this.

CHO: That's right. And the owners of the machine say, you know, hey, one day they could be as popular as soda and candy machines. So we shall see.

CHETRY: Alina, thank you.

CHO: You bet.

CHETRY: Well, we're following extreme weather this morning. Central and southern California on alert this morning for potentially deadly mud slides. Back-to-back thunderstorms over the weekend dumping more than four inches in Malibu and Orange Counties. The Los Angeles County and Orange County fire departments are on standby at a major highway shut down between Ramona and Escondido, the same area that burned last year in the wild fires in the San Diego area.

Well, Reynolds Wolf is in for Rob Marciano. He's tracking extreme weather for us this morning. You know, it's a little bit ironic. I know this is the rainy season, but it's when they needed it about three or four months ago.

REYNOLDS WOLF, CNN METEOROLOGIST: Oh, absolutely. And then when you couple it with all the areas that were just roughed up by all the fires, of course, you've all that bare dirt, and then we have the rain that continues to come down, it's falling as we speak. We are going to see more issues in terms of mudslides, some flash flooding. It's just a big mess still in parts of southern California.

The good news is that it should begin to fizzle out as you get to the afternoon hours. Things will improve. But as it stands, as we go to weather computer, you'll see the rain and dust indeed continue to fall. Everything sweeping from the coast moving inland. And we're not just seeing some rainfall in the L.A. basin, but high up in the San Gabriel Mountains, we're actually seeing some snow. We could see several inches of snow here today especially in spots of the grapevine.

Now, we're going move a little bit more to the east and take you into Arizona where just in the Phoenix area, we continue to have all that moisture that just sweeps diagonally across the city from the southwest to the northeast. And what it's doing is it's really having a training effect through Phoenix and back over to Scottsdale. The water is really beginning to pile up. We've had some high-water rescues already this morning, certainly an area of concern for us.

Meanwhile, we're going to shift our focus even more to the east up into parts of Massachusetts, where out in Hyannis, south in Cape Cod, where we're dealing with air early this morning. Winter storm warning will remain in effect until about 8:30 local time. However, at this point, much of the wintry weather has now moved farther to the northeast, and thankfully out of harm's way. But certainly, we like to talk about weather-wise today. We're going to be here to deliver to you all the latest. That's coming up more in just a few moments. But, Kiran, for now, let's send it back to you.

CHETRY: Reynolds, thanks.

Well, here she is -- Miss America. It's not -- really? Thank you, guys. I bet -- just kidding. Anyway, we'll get the video coming up.

Still ahead, the campaign trail meets the information superhighway. We're talking about that as well. We're going to explain some of the most popular Web sites and how they're helping the various campaigns. Right now, we're going to head over to John. Or, we're going to take a quick break.

(COMMERCIAL BREAK)

CHETRY: The race for the White House is now an all-out fight for delegates. We're going to take a look right now at where the candidates stand heading into Florida's GOP primary, which is tomorrow. Mitt Romney has 73, John McCain, 38, and Mike Huckabee with 29. There you see it right there. The fight for the delegates. That's the breakdown for the GOP.

Now, let's switch over and talk about the Democrats including the so-called Super Tuesday delegate. Hillary Clinton with 230. Barack Obama with 152, and John Edwards with 61 delegates so far. Mark Halperin is a senior political analyst at "Time" magazine. He also writes for "The Page," He also writes "The Page," by the way, for Time.com. Mark, good morning, and good to see you this morning.

MARK HALPERIN, SR. POLITICAL ANALYST, "TIME": Good morning.

CHETRY: So explain why this is a very unique election year when it comes to this state-by-state fight for delegates in the primary.

HALPERIN: Well, Super Tuesday is bigger than it's ever been all over the country. Up until now, you've seen the candidates go one state by one. To Iowa campaign, go to towns, spend a lot of time, go to New Hampshire, South Carolina, Florida. Now, next Tuesday, it blows wide out across the country. Candidates have to accumulate as many delegates as they can in all different places. You showed the delegate numbers, little tiny baby numbers right now. You need 1,000 to beat the Republican nominee, 2,000 to be the Democratic nominee. We've got a long way to go.

CHETRY: And how does the strategy change when you're dealing with that many states all going to the polls on the same day?

HALPERIN: Up until now, winning the state, getting that headline, you know, Clinton wins New Hampshire, McCain wins South Carolina. That's what matters. What matters going forward as you said is getting those delegates. And what people have to realize is on the Democratic side, it is not winner take all. People like to think about winning California. You get all the electoral votes in the general election?

CHETRY: Right.

HALPERIN: Not now. State-by-state, you get delegates depending on how you do, particularly on the Democratic side. So they're going to want to go to individual states. And again, it's a real chess game. You can't just go camp in one state. You've got states in the far west, in the far east, in the middle of the country. Where they can go to harvest as many delegates as possible?

CHETRY: So the magic number, 2,025 to become the nominee.

HALPERIN: For the Democrats.

CHETRY: For the Democrats.

HALPERIN: There's a lot of delegates to go. And on Super Tuesday, about half of those are at stake. What makes this seem likely, if it's going to go beyond Super Tuesday, is Obama and Clinton are both going to get a lot of delegates on Super Tuesday, but not enough to have a majority.

CHETRY: What happens then to the third tier, to John Edwards and to the delegates that went to him?

HALPERIN: For John Edwards to get delegates, he needs to get 15 percent of the vote in an individual state.

CHETRY: Right.

HALPERIN: It's going to be tough for him to get that.

CHETRY: If he doesn't -- does he decide who they go to?

HALPERIN: Well, in a state, his delegates disperse if he doesn't get 15, and they go evenly between the other two. The delegates he does get, I think most of the people who are his delegates will follow his lead. If he says I want you to go with Obama, they'll go with Obama. That's down the road. For now, Clinton and Obama think and hope they can get a majority without having to rely on John Edwards.

CHETRY: What is the significance of Florida's votes sort of being canceled out at this point? I mean, the Democratic National Committee is saying we're not sanctioning this race.

HALPERIN: That's right.

CHETRY: So, what does that mean for the millions of voters?

HALPERIN: No delegates at stake, at least not right now in Florida. But the Clinton campaign is hoping if she wins big and that the press says, look, she won in Florida. That's the view of the people in Florida. A lot of people have already voted early there. There's great interest in the Democratic race. The Obama campaign is saying, look, this is just about delegates. Pay no attention to the man behind the giant orange.

CHETRY: They got half a million absentee votes on a normal year in Florida. They might get 50,000, 60,000 by this point. So, are all those votes going to be ignored?

HALPERIN: Well, again, the Clinton campaign is saying, look, watch the Florida result for an indication of what people in a big megastate think of these two candidates. The Obama campaign is saying don't pay any attention. It's only about delegates. Again, this is one of these cases where the press will have a big say. The Republican race, though, is deadly serious. The winner there is going to be the Republican frontrunner going into Super Tuesday.

CHETRY: We haven't seen frontrunners up to this point.

HALPERIN: That's right.

CHETRY: At least, or changes every state.

Mark Halperin, great to see you, senior political analyst for "Time" magazine. You also wrote the book "The Undecided Voters Guide to the Next President". There's going to be a lot of those.

HALPERIN: Super Tuesday.

CHETRY: ... undecided

HALPERIN: That's the Super Tuesday states, a lot of undecided voters still.

CHETRY: Mark, great to see you. Thanks.

HALPERIN: Thanks.

CHETRY: John?

ROBERTS: Some business headlines now, Kiran. A new exit deal for the CEO of Countrywide Financial. Angelo Mozilo has been criticized for failing to warn investors about Countrywide's problems. He has now agreed to give up $37.5 million and some perks, including the use of a private aircraft that he was supposed to get when he retired. Mozilo's retirement package, though, is still worth $40 million. Countrywide posted more than a $1 billion in losses in the third quarter last year. It recently agreed to be bought by Bank of America.

The price of gasoline now below $3 a gallon, average nationwide. The Lundberg Survey shows the average price per gallon now at $2.98. That's down a dime in the past two weeks. Drivers in Tulsa, Oklahoma, are paying even less, only $2.70 a gallon.

Download all the music you want, don't pay a dime and don't get a subpoena in the mail. Sound too good to be true? Well, it might be. The Web site qtracks.com sent out a press release claiming that it would have 30 million tracks available from all the major record labels. But now Warner Music says it never gave qtracks permission to post its content.

A CNN exclusive. Our hidden cameras follow undercover agents as they try to sneak a bomb past airport security. We'll have the results just ahead.

And it could be the only action on the red carpet this awards season. Our Lola Ogunnaike has got the winners and the glitz. Plus, what it could mean for Oscar night ahead on AMERICAN MORNING.

(COMMERCIAL BREAK)

ROBERTS: It's coming now to 25 minutes after the hour. And time for our "Hot Shot." You got to crawl before you can walk. Take a look.

This polar bear cub trying to take its first steps. You may remember a couple of weeks ago when we showed you Flaca opening her eyes for the very first time. Now, she's frolicking around. Flaca is frolicking. The frau (ph) line is frolicking. Zoo keepers at the Nuremberg Zoo kept her happy with a belly rub and her favorite, a bottle as well. Just so cute, that little beast.

And if you've got a "Hot Shot," send it to us. The address is amhotshots@CNN.com. Be sure to include your name, where you're from, a little bit about the picture or video. And one more thing, please make sure that the image is yours and not someone else's -- Kiran.

CHETRY: All right. Well, A-list star sightings in Hollywood last night. The Screen Actors Guild Awards went on as planned, and they had a red carpet. It may not be such a huge deal any other year, but with the writers strike, this was it. And it could be the only time the stars get to shine during the award season. Our Lola Ogunnaike is here to tell us who won, who lost, and how the show managed to go on. Typically, how big are the SAG Awards on any other given year?

LOLA OGUNNAIKE, CNN CORRESPONDENT: On any other given year, they're not usually that big at all. They're usually like the step cousin. But this year, because there were no Golden Globes and that there was a threat that the Oscars may not happen, the SAG Awards were really huge this year, and that all the stars came out. Finally, some glitz and glamour. You had dresses. You had hair. You had jewelry. So it was a real show.

CHETRY: Why were they able to come out for this one?

OGUNNAIKE: Well, because the Screen Actors Guild has been in real support of the writers guild, and they were granted a waiver and that's essentially why.

CHETRY: All right. And tell us about who won and who lost.

OGUNNAIKE: Well, I mean, there were no big surprises. I think other than Ruby Dee who won for Best Supporting Actress, she beat out Cate Blanchett and Tilda Swinton, and she came out of nowhere really. She had a really small role in "American Gangster." No one was really expecting her to win. She had a little screen time, but really, really worked that role and managed to win.

CHETRY: Who decides who wins these awards?

OGUNNAIKE: Oh, they are voted on by their peers, by their peers. The other big actors of the night -- Daniel Day-Lewis. He won for "There Will Be Blood," dedicated his award to Heath Ledger. Julie Christie won for "Away From Her." Javier Bardem, of course, won for "No Country for Old Men," and Alec Baldwin and Tina Fey won for "30 Rock".

CHETRY: Wow! All right. Well, let's get to the dresses.

OGUNNAIKE: Yes.

CHETRY: While we can. What was the red carpet looking like?

OGUNNAIKE: Everyone was talking about Angelina Jolie's dress. It was huge and fuelling rumors that she may be pregnant.

CHETRY: Do we have a shot of it?

OGUNNAIKE: I think we have a shot of it.

CHETRY: And there it is.

OGUNNAIKE: I mean, look, it's strapless. She looks a little heavier and the dress is just massive. I mean, she could be hiding a whole African village underneath that thing. Who knows?

CHETRY: And what about Sandra Oh? She didn't get the highest marks for her outfit?

OGUNNAIKE: I would say that that was a miss. I think the giant bows sort of made her look like a Christmas package. I don't think that works. But you know, the other trend of the evening.

CHETRY: Wow, that's a heck of a bow.

OGUNNAIKE: Yes. That's a big old bow, right? The other trend of the evening where a lot of women wearing strapless gowns with no necklaces, which was very interesting. Also, the asymmetrical dresses were also really big that evening.

CHETRY: All the better to show off the collarbone, right?

OGUNNAIKE: It's all about the collarbone. That's the hot new body part.

CHETRY: Glenn Close, by the way, looks fantastic.

OGUNNAIKE: I thought America Ferrera was just stunning. I loved, loved her dress. She really brought it home.

CHETRY: Very pretty. All right.

OGUNNAIKE: Cleans up well. "Ugly Betty" cleans up well.

CHETRY: Oscar, still up in the air as to whether or not we'll be having a big ceremony.

OGUNNAIKE: They're saying that the show will go on, but no one knows what it will look like. If they don't settle the strike, the actors may not show up. They didn't show up for the Golden Globes, and they could very well not show up for the Oscars. If it looks anything like the Golden Globes, that's pretty scary.

CHETRY: All right. Lola Ogunnaike, great to see you. Thanks -- John.

ROBERTS: You're watching "The Most News in the Morning" here on CNN.

Some bar owners in California want to help their customers avoid DUI check points, so they're picking up their cell phones and getting creative. We'll have that story coming up for you.

And a CNN exclusive. Our hidden cameras follow undercover agents as they try to sneak a bomb past airport security. How will this screener react to the ultimate test? The results and today's headlines when AMERICAN MORNING returns.

(COMMERCIAL BREAK)

JOHN ROBERTS, CNN ANCHOR: Picture this morning of the Rotunda at the Cannon House Office Building here. And if you're saying, boy, that looks an awful lot like the Senate side. It's because it is. I mean, this one and the rest of the building are pretty much mirror images of each other.

This one, again, though, being on the House side. Not a bad day here in Washington right now. Cloudy, 37, expected to go up to 47 today. We're able to stand out here this morning in just a jacket. Because we've got the doors open here at the Cannon Building. All the warm air from inside is blowing out.

Good morning, Kiran. How are you this morning?

KIRAN CHETRY, CNN ANCHOR: Great to see you on this Monday. A lot going on. And we're glad to see you're in the nation's capital this morning and you're getting warmth, at least. You're not stuck in one of the cities where you're freezing your little hands off.

ROBERTS: It's so completely different than it was in Myrtle Beach and you would expect Myrtle Beach to be warmer. Hey, we're in the capital today because tonight, it's President Bush's final State of the Union address. It's the seventh of his presidency.

The economy expected to be an important part of tonight's speech as the President Bush's $150 billion stimulus package as well. He'll be talking about it Iraq. And he also has some new measures to propose on earmark, so-called pork that goes in to all of those spending bills that come out for Congress.

First, though, a CNN exclusive. Brand new, hidden-camera video that shows a man sneaking a bomb past airport security. The bomb isn't real and the man is an undercover agent from the TSA, but circumstances could be all too real. Homeland security correspondent Jeanne Meserve has the report that you'll only see here.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: This is a back support. I am putting the detonator into the plastic explosive.

JEANNE MESERVE, CNN CORRESPONDENT: 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: Can't see anything?

UNIDENTIFIED MALE: I think we're ready to go.

MESERVE: Then they head Fort 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: But I would ask that you not speak to any of your staff to alert them to this test.

MESERVE: At the check point, the tester is waded 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.

(END VIDEO CLIP)

MESERVE: Now, at that point, the test team breaks cover. They let the screener know that he failed. Then they give remedial instruction to every screener at the check point. The point here, not just to improve screener performance, but also to expose holes in the screening system so those can be plugged. Back to you.

ROBERTS: Jeanne, I could understand that may be some viewers out there who are looking into saying, hey, wait a minute, you've just gave away a bunch of secrets. You shouldn't be doing that. We're not, in fact, giving away any secrets here, Jeanne. And in fact, the TSA supported the test and our story, correct?

MESERVE: That's absolutely correct. We agreed not to expose the testers by showing their faces or giving their name. In addition to that, threat objects that you saw, that was based on current Intelligence. We aren't telling the terrorists anything. The terrorists have told -- have said things that have led to the development of that very item.

ROBERTS: All right, Jeanne Meserve for us at Reagan National Airport. A frightening report, Jeanne, for us this morning. Jeanne, thanks. And that brings us to this morning's "Quick Vote" question. Do you feel that the current airport security system is enough to keep us safe? Cast your vote at cnn.com/am. We will have the first tally of votes later on this morning.

Right now, though, back to New York and here's Kiran.

CHETRY: All right. Also, new this morning. Another rough start to the trading week, John. Asian markets plunging overnight. Hong Kong's Hang Seng Index losing more than 4 percent, Japan's Nikkei also down nearly 4 percent and China's Shanghai Composite Index down more than 7 percent. Dow futures also pointing down this morning.

And all signs point to another interest rate cut when the Federal Reserve meets this week. This morning's "Wall Street Journal" reporting that some investors are concerned the markets didn't have a bigger rebound after last week's big rate cut.

The Fed slashed a key interest rate, .75 percent. The largest cut since 1982. And we didn't see a big rebound with the Dow and with stocks at large after that rate cut happened.

Well, Chicago's O'Hare now has the dubious distinction of more cancellations than any other airport in the world. The airport ranked last four on-time departures last year. More than 30 percent of its flight left late. But more than 13,000 flights never took off at all. That's according to the Federal Bureau of Transportation's statistics.

Some bar owners in California are getting creative to help their regulars avoid being busted for drunk driving. Police in Fresno have stepped up their DUI check point leading to dozens of arrests and a drop in business at local bars, which is why bar owners have began texting their customers of locations of police checkpoints. They say it's not meant to help people to get away with drunk driving. They just want their customers to be safe.

ROBERTS: Well, Mitt Romney fighting back against charges leveled at him by John McCain. And speaking to reporters about it. McCain has accused Romney of supporting a timetable for withdrawing U.S. troops from Iraq. Romney put McCain's honesty into question, calling him a liar, but quickly dialing back on that.

(BEGIN VIDEO CLIP)

UNIDENTIFIED REPORTER: Governor, are you concerned about John McCain's recent attacks on your record?

MITT ROMNEY, (R) PRESIDENTIAL CANDIDATE: Not at all? He's doing everything he can to divert the attention from his lack of understanding of the economy, and there's no way somebody's going to lead our nation who doesn't understand how the economy works and he's admitted he just doesn't.

UNIDENTIFIED REPORTER: He's attacking you on your pulling gout of Iraq timeline.

ROMNEY: I don't have one. Never have.

UNIDENTIFIED REPORTER: He says you do.

ROMNEY: Well, he's lying. He's dishonest. He's being dishonest in that regard. That's not accurate.

UNIDENTIFIED REPORTER: You're calling him a liar?

ROMNEY: No, I'm not. He made a dishonest comment, I misspoke.

(END VIDEO CLIP)

ROBERTS: Both candidates have been campaigning in Florida in a tight race for the state's primary tomorrow. Romney, meanwhile, is getting the endorsement of Vice President Cheney's daughter, Elizabeth. Liz Cheney says she's going to start working for the Romney Campaign. She had been working for Fred Thompson, you'll remember.

Coming up in our 8:00 Eastern hour, Liz Cheney is going to join us live to talk about why she thinks Mitt Romney should be president and why she chose to side with him after the Thompson campaign folded.

Today, Senator Barack Obama is expected to receive the endorsement of Massachusetts Senator Ted Kennedy. Kennedy will announce his endorsement at a Washington rally. He's playing the campaign hard for Obama as the candidates gear up for Super Tuesday. Strategist says Kennedy's backing will add to Obama's credibility with union members and Hispanics as well as members of the party's base.

Former President Bill Clinton partially to blame for his wife's trouncing in South Carolina and what now? That is the big debate among Democrats inside and outside of the Clinton campaign this morning. Some strategists say Mrs. Clinton is already moving toward pushing Bill, back into the role of supporting spouse.

His hard attacks on Barack Obama earned him a lot of criticism among many Democrats which say it translated into a bigger defeat for the Clinton campaign.

We're going to hear about tonight's State of the Union address from President Bush's press secretary, Dana Perino. That's coming up in our next-hour in 7:30 Eastern.

And if you can't watch it on television tonight, catch President Bush's State of the Union address on-line at cnn.com/live with multiple live streaming angles so you can catch it from every direction.

Kiran?

CHETRY: Well, here she is. Miss America.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Here it is, ladies and gentlemen. The winner, Miss America 2008 is -- Miss Michigan! Kirsten Haglund.

(END VIDEO CLIP)

CHETRY: 19-year-old, Kirsten Haglund, Miss Michigan, crowned the new Miss America over the weekend in Las Vegas. She won a $500,000 scholarship. She also plans to raise awareness about eating disorders. Haglund dedicated the victory to her grandmother who is Miss Michigan back in 1944, congratulations.

Well, news this morning. American tourists attacked by a rampaging elephant. He was tossed with his trunk, sent to the hospital. The wild story, we'll bring you more just ahead.

Also, the campaigns and the new tools on the web. Underground websites that help the candidates keep track of voters and how voters keep track of the candidates. That's ahead on AMERICAN MORNING.

(COMMERCIAL BREAK)

CHETRY: Well, while the candidates shake hands and kiss babies, campaign staffers are working on-line. They are monitoring YouTube hits, Facebook friends like they do the latest poll numbers. Our Polly Labarre joins us now with a few under the radar tech tools that are changing how campaigns get the word out and how voters shout back.

Is this the election year? Good to see you, by the way. Happy Monday. Is this the election year where the Internet is a game changer for first time.

POLLY LABARRE, CNN CORRESPONDENT: This is clearly the first web 2.0 campaign. I mean, every campaign plunged into this world of on- line digital network tools from YouTube to Facebook to courting bloggers, to sending out text messages. I think the interesting story, though, is not have a campaign that using technologies but how these technologies might start using them. It works both ways.

CHETRY: Yes and tell us a little bit about that. When you think of Facebook or MySpace, it comes to social networking. But there's another site, this eventful.com. What is that?

LABARRE: Sure. Eventful, was originally started for fans of music and performers to help them promote, discover, and create new events around the world. And the central feature of it is this thing called "The Demand Service." Where any user with a couple clicks can demand, hey, you, Bon Jovi, come to my hometown to play.

It's become a force in the world of politics where you have voters demanding Obama, I want you in Littleton, New Hampshire or I want you in a specific city coming up in the primaries. And we have this now, a leader board of demands by candidates. And of course Barack Obama as he leads in every other digital technology from YouTube to Facebook friends to MySpace friends leads in terms of the number of demands.

CHETRY: And Ron Paul right there. LABARRE: Exactly. Now, this is not a direct indicator of who's going to win, which primary. Although, it's an indicator of how engaged a youth voted. It's a really targeted way to reach an engaged audience at a local location.

CHETRY: And what is twitter? How's that working?

LABARRE: Twitter is this micro-blogging tool. As if we didn't know enough about everyone. Where you can update -- you can create a community of friends or followers, update them, moment-to-moment with 140-character or less post on what you're doing, what you're thinking, what you're seeing.

Candidates are using these to post, hey, I'm in South Carolina or Elizabeth, looks great on "LARRY KING" last night. And then, users are doing it to track and follow every single move of candidates as they move around the country. So, it shows that you could really have to be really very accountable moment-to-moment in a micro way about what you're doing with your time.

CHETRY: Wow. That is very, very fascinating.

All right and there's also some fact check websites which we'll talk a little bit more about later, Polly. But very, very interesting how the Internet is changing the way the game is played in Washington.

LABARRE: Thank you.

CHETRY: Polly Labarre, great to see you, thanks.

ROBERTS: It could be the worst news in New England since the British are coming. The latest on the Patriot quarterback's bum ankle and what it could mean for the Super Bowl. We'll tell you what Tom Brady is now saying about it. That's just ahead.

And an American tourist picked up by and thrown by an elephant. What happened? And how is he doing now? The latest, next on AMERICAN MORNING.

(COMMERCIAL BREAK)

CHETRY: Welcome back to the most news in the morning. Your "Quick Hits" now. Dry winds spanning several grass fires in Oklahoma. Those flames destroying an old school building along with at least one home near Oklahoma City. Other nearby homes were also evacuated before they were able to finally contain that fire.

Well, a different story from fire to rain. And days of drenching rains have Southern California on mudslide watch this morning. Hills that were stripped by wild fires have had about four inches of rain now. There's mud, minor rock slides, forcing authorities to shut a highway down through the San Diego area between Ramona and Escondido. And you can see from that one picture, a tree just right through someone's home.

Well, heavy snow and ice cutting power and closing schools in Eastern Washington State. 4,000 people may be waking up in the dark after a foot of new snow came down in some areas. Slick conditions made a southwest flight skid off of the runway. That happened in Spokane yesterday. And more than 100 people were onboard at the time.

The airline now says everyone is OK. It did cause a three-hour delay. And boy, all you can practically see in that shot is white but there is plane and some trucks back there as well. Heavy snow in Washington State.

Our Reynolds Wolf is in for Rob Marciano. He's tracking the extreme weather for us this morning. Lots to talk about this Monday.

(WEATHER REPORT)

ROBERTS: Kiran, an American teacher is recovering after a brutal elephant attack in China. Jeremy McGill teaches English in Central China. Security guards at a Chinese Nature Reserve found him unconscious. They think that an elephant grabbed him with its trunk and tossed him. McGill suffered several fractured ribs and stomach injuries. He maybe moved to a hospital at Thailand for further treatment.

And fisherman takes some drastic measures to save a friend who had been bitten by a shark. It happened in Australia. The 200-pound Mako Shark bit into a man's knee after he reeled it onto his boat deck. They get it off of him. The deckhands cut the shark's head off. That will work. Amazingly, the attack victim is in pretty good shape. He's expected to be OK.

"Quick Hits" for you now. A battle at the Box Office this weekend between "The Spartans" and "Rambo," but the epic spoof "Meet the Spartans" won out taking an $18.7 million. "Rambo" starring Sylvester Stallone took in about $500,000. "Less 27 Dresses" with "Grey's Anatomy" star actress Katherine Heigl who came in third.

And China unveils the swimming venue for this year's Olympics. The National Aquatics Center called the "Water Cube" looks from the outside like a box of bubbles. But inside, it's got a pool, and 17,000 seats. After the Olympics, the Water Cube is supposed to be converted into a shopping area.

He has been perfect so far this season, but Tom Brady may not be 100 percent for the Super Bowl. We'll tell you why, coming up.

And an important warning for diabetics. Cutting caffeine could help you get the disease under control. That's ahead on AMERICAN MORNING.

(COMMERCIAL BREAK)

CHETRY: That's a taste of what it's going to be like in Brazil. The big party less than a week away. People are already in the carnival spirit. Tourists, local residents, and performers passing the streets of Rio de Janeiro over the weekend for pre-carnival Samba Parade. The festivities officially begin on Sunday. Tom Brady now admitting that he does have an ankle injury, but the MVP Patriot's quarterback is promising he will be ready for the Super Bowl.

Speculations started after a photographer on the streets of New York spotted Brady, outside of his girlfriend's home last week wearing a protective boot, a soft cast on his right foot. Then there is no cast at all later in the day. Brady will try to lead the Patriots to the NFL's first ever 19-0 season in Super Bowl XLII. It's on Sunday and it's against the New York Giants.

There is a big standoff for the AFC champs in Foxborough, Massachusetts yesterday. The players along with Coach Bill Belichick and owner Bob Kraft greeted Patriots fans before they climbed aboard buses for the trip to the airport.

And of course, appropriately, it was snowing. There will be a week of game prep and press before the big game, which is Sunday in Arizona.

John?

ROBERTS: A U.S. spy satellite, Kiran, the size of a school bus is heading for a crash landing somewhere here on earth. Official say that it lost power and they cannot predict at this point where it's going to land. The fuel aboard is toxic. And if the tank survives re-entry, it could pose a danger. It is expected to fall in late February or early March.

You may remember the Mir space station that streaked toward earth back in 2001, but unlike the spy satellite, engineers were able to control Mir as it came down.

CNN's space correspondent Miles O'Brien is keeping an eye on the out of control satellite this morning. He's going to join us live in the next hour with more.

And a new warning about caffeine. Coming up, a medical report with an important reason for diabetics to cut back on caffeine. And the CEO of Countrywide Financial gives back millions of dollars. We'll tell you why he did it.

The next hour of AMERICAN MORNING starts right now.

Dead heat and getting dirty.

(BEGIN VIDEO CLIP)

ROMNEY: Well, he's lying. He's dishonest. He's being dishonest in that regard.

(END VIDEO CLIP)

ROBERTS: The fight for Florida on primary eve.

Plus, one-on-one with Barack Obama. (BEGIN VIDEO CLIP)

BARACK OBAMA, (D) PRESIDENTIAL CANDIDATE: I want the American people to be able to trust what I say.

(END VIDEO CLIP)

ROBERTS: The "Most Politics in the Morning."

CNN exclusive, testing airport security.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I am putting the detonator into the plastic explosive.

(END VIDEO CLIP)

ROBERTS: How screeners did when a fake bomb was smuggled through security. The scary results on this AMERICAN MORNING.

That's a story you got to see and one that you'll only see here on CNN. Welcome back. It's Monday, the 28th of January. From the nation's capital, I'm John Roberts.

Good morning, Kiran.

CHETRY: Good to see you this Monday morning. I'm Kiran Chetry here in New York. And right off the top, we're talking about the economy, Iraq, and the housing crisis.

President Bush getting ready to deliver his final State of the Union address. He's expected to push his economic stimulus plan which hit a recent snag in the Senate while investors hold their breath and prepare for what could be another volatile day on Wall Street.

Asian and European markets tumbled overnight and U.S. stock futures, right now are down. All of this leading up to another meeting of the Federal Reserve, which is happening this week where we could see another rate cut.

Last week, the Fed slashed a key interest rate, .75 percent, that's the largest cut since 1982. That's overseas markets tumbled.

John?

ROBERTS: 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 us now.

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