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CNN NEWSROOM

Opening Act's Attack: McCain Apologetic Over Remarks; Light Bulb Dangers; Ohio Crucial Groups: Women, Youth, Blue Collar Voters

Aired February 27, 2008 - 11:00   ET

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


HEIDI COLLINS, CNN ANCHOR: You're with CNN.
Hi there, everybody. I'm Heidi Collins.

Developments keep coming into the CNN NEWSROOM on Wednesday, February 27th.

Here's what's on the rundown.

The Fed chairman signaling new interest rates cuts. But what about inflation? He outlines his battle plan live on Capitol Hill.

The Clinton/Obama debate in Cleveland, how did it play with Ohio's key voting blocs -- women, young people, and blue collar workers?

Well, they save you energy, but they may make you sick. What's inside those compact fluorescent bulbs?

Get out of the dark -- in the NEWSROOM.

Want to tell you a little bit about some information we're getting into the CNN NEWSROOM here. This is according to The Associated Press regarding the man you see there, Warren Jeffs.

He had one of his first court appearance today in the state of Arizona. As you may remember, he was convicted in Utah last year of rape as an accomplice for the role he played in the arranged marriage of a 14-year-old girl and her cousin. We had many of these stories here on CNN.

Well, we are understanding, again, according to The Associated Press, that Warren Jeffs has pleaded not guilty to those charges stemming from the arranged marriages. You may also remember, I'm sure, that Warren Jeffs is the leader of the fundamentalist Church of Jesus Christ of Latter-day Saints. It's based in Colorado City, Arizona. That is where we had done very many stories on polygamy and the people living there.

So, again, the news today from The Associated Press at this point is that polygamist sect leader Warren Jeffs has pleaded not guilty to sex charges stemming from those arranged marriages between teenaged girls and older men.

We'll keep our eye on that for you as we continue to get those photos in from inside the courtroom. Also unfolding this hour, fresh concerns over your money and the health of the U.S. economy. Just a few minutes ago, we heard from the nation's top economist. You see him there, Federal Reserve chairman Ben Bernanke. He's on Capitol Hill to confront a toxic mix of troubles that led to a decidedly downbeat assessment.

(BEGIN VIDEO CLIP)

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: The incoming information since our January meeting continues to suggest sluggish economic activity in the near term. The risk to this outlook remained to the downside. Those risks include the possibilities that the housing market or the labor market may deteriorate more than is currently anticipated and that credit conditions may tighten substantially further.

Consumer price inflation has increased since our previous report, in substantial part because of the steep run-up in the price of oil. Last year, food prices also increased significantly and the dollar depreciated.

Reflecting these influences, the price index or personal consumption expenditures increased by 3.4 percent over the four quarters of 2007, up from 1.9 percent in 2006. Core price inflation -- that is, inflation excluding food and energy prices -- also firmed toward the end of the year. The higher recent readings likely reflected some pass-through of energy costs to the prices of consumer goods and services, as well as the effect of the depreciation of the dollar on import prices.

(END VIDEO CLIP)

COLLINS: And speaking of energy prices, oil closed at an all- time high yesterday, almost $101 a barrel. And so gas prices are following too.

AAA says regular is selling at a nationwide average of $3.14 a gallon. That's up almost 80 cents from a year ago. Some people fear that we could see gas at four bucks a gallon coming this spring.

You know the old saying, a dollar is not worth what it used to be? Well, since you went to bed last night, the value of the dollar definitely took a hit.

Europe's main currency, the euro, gained more ground against the greenback. It hit an all-time high today of more than $1.50. And the British standard, the venerable pound, is approaching the $2 mark.

We do have a developing story to keep you updated on now out of Riverdale, Maryland, Prince George's County. A school bus full of children has overturned.

We learned there were as many as 18 middle-schoolers aboard. At least 11 of the youngsters and their bus driver were taken to the hospital. None of the injuries is considered life-threatening. We have heard from authorities there on the ground. Apparently one of the injuries is serious, but, again, not life-threatening. It's not clear actually what caused the accident, though. The bus driver -- or the bus overturned just blocks from the school as they were trying to get there this morning.

No classes again today at Ferrum College in Virginia. We brought this to you in the NEWSROOM, the school on lockdown after reports of a man who brought a gun into a dormitory there. Nothing was found.

Now students have been told to head out early for spring break. Police released a sketch of the suspect. They say they don't think he is a student.

Back on the campaign trail today after clashing in Cleveland last night, Democrats Hillary Clinton and Barack Obama trying to drum up votes in Ohio. Crucial primaries there and in Texas, now less than a week away.

In their debate at Cleveland State University, Clinton and Obama sparred over health care, free trade, and campaign tactics. Clinton accused Obama of misrepresenting her positions.

(BEGIN VIDEO CLIP)

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: I have a great deal of respect for Senator Obama, but we have differences. And in the last several days, some of those differences in tactics and the choices that Senator Obama's campaign has made regarding flyers and mailers and other information that has been put out about my health care plan and my position on NAFTA, have been very disturbing to me.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: Senator Clinton has -- her campaign, at least, has constantly sent out negative attacks on us, e-mail, mobile calls, flyers, television ads, radio calls. And, you know, we haven't whined about it because I understand that's the nature of these campaigns.

(END VIDEO CLIP)

COLLINS: Obama leads Clinton in the delegate race 1,360 to 1,269. That's according to CNN estimates. Next week's primaries are seen as make or break for Clinton.

A conservative radio talk show host was supporting Republican presidential candidate John McCain. Now he's calling him out.

The story from CNN's John Roberts.

(BEGIN VIDEOTAPE)

BILL CUNNINGHAM, RADIO HOST: John McCain threw me under the bus, under the "Straight Talk Express."

JOHN ROBERTS, CNN CORRESPONDENT (voice-over): Hours after serving his warm-up act in Cincinnati, radio talk show host Bill Cunningham had some decidedly cold words for the Republican frontrunner for president.

CUNNINGHAM: I've had enough to hear with John McCain. He's off the list. I'm joining Ann Coulter in supporting Hillary Rodham Clinton.

ROBERTS: Cunningham says he was just doing what the campaign asked him to do. Fire up the conservative crowd by tossing out some, in Cunningham's words, red meat. And he delivered a feast, taking aim at Senator Barack Obama.

CUNNINGHAM: Well, my fellow Americans, now we have a hack, Chicago-style Daley politician who's picturing himself as change. Peel the bark off Barack Hussein Obama. That day will come. Then you'll know the truth about his business dealings with Rezko when he got sweetheart deals in Chicago.

ROBERTS: But after McCain immediately denounced him...

JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: I will take responsibility and I apologize for it.

ROBERTS: ... the local radio legend turned his sights on the Republican senator and fired away.

CUNNINGHAM: I, for one, regret that John McCain is the nominee of the conservative party because John McCain is not a conservative. He ought to be attacking Obama politically and not attacking Bill Cunningham, Rush Limbaugh and Sean Hannity who's saying Obama...

ROBERTS: Cunningham stood by his repeated use of Obama's middle name, Hussein.

CUNNINGHAM: His name is proudly Barack Hussein Obama, and people that object to that, they're the racists.

ROBERTS: And despite denials from Senator McCain, Cunningham insisted he and the senator knew each other.

CUNNINGHAM: I met him twice. His people called me specifically. His people said you're the guy we want because you've met John.

ROBERTS: John Roberts, CNN, New York

(END VIDEOTAPE)

COLLINS: If you're in Florida, you've got to be appreciating your TV this morning. I'm sure you're loving watching our show. Right?

Electricity is back on a day after a massive outage knocked out power for up to three million people from Daytona Beach through the Keys. Traffic signals went dead, businesses closed, and even a nuclear power plant had to be shut down. The outage was traced to a substation malfunction and fire. Investigators don't know exactly what happened, but they don't think it was criminal.

(BEGIN VIDEO CLIP)

MAYOR CARLOS ALVAREZ, MIAMI-DADE COUNTY, FLORIDA: There's absolutely no indication or evidence that there's any foul play.

(END VIDEO CLIP)

COLLINS: Another question authorities are asking today, why did a backup system fail? Our Rusty Dornin is on the scene and is following that story for us, trying to get some answers as well.

(WEATHER REPORT)

COLLINS: Happening right now, arguments at the U.S. Supreme Court in the Exxon Valdez case. Plaintiffs want Exxon to pay them $2.5 billion in damages from the massive spill in Alaska's Prince William Sound. It happened, as you know, 19 years ago, but the case is still playing out in court.

Exxon claims the federal Clean Water Act protects it against punitive damages for oil spills. The company says it has already paid $3.5 billion for cleanup, fines and other settlement issues.

Building blocks for an Ohio victory -- the importance of women, young voters, and blue collar workers. We're going to talk to a guest from each of those groups.

(COMMERCIAL BREAK)

COLLINS: Health news now about those funky looking fluorescent light bulbs. They save energy and money, but apparently they contain a small amount of mercury, and there could be problems if they break.

CNN Medical Correspondent Elizabeth Cohen is here now to shed some light on this.

ELIZABETH COHEN, CNN MEDICAL CORRESPONDENT: And to show everyone what these look like.

COLLINS: Yes. So what's the deal?

COHEN: I promise not to drop this, because that would be bad.

COLLINS: Yes, please don't.

COHEN: Yes, that would be bad.

COLLINS: It would be bad.

So what are we talking about here? How dangerous?

COHEN: Here's the deal. There is a tiny amount of mercury in this bulb. Mercury is bad. You don't want to be exposed to mercury, you don't want to breathe in the vapors. You certainly don't want a child crawling around on the floor to ingest it. And so this tiny amount, will it make you sick if you've dropped the bulb and you've breathed in the vapors, or if a kid ate it? We asked experts that, and they said, you know, probably not. But it's never good to be exposed to something that can affect the brain, it's particularly problematic for children and for developing fetuses. But they said, look, you ought to do everything you can to make sure that you don't drop these things, and that if you do drop them, that you clean it up properly.

COLLINS: Yes. And so, how do you do that? I mean, obviously it sounds like there is a good way to handle, you know, breakage.

COHEN: Right.

COLLINS: You probably don't want to be throwing it out in your trash can?

COHEN: Right. Prevention is the best cure. You want to prevent things.

COLLINS: Don't be clumsy.

COHEN: So, for example, some expert -- right, don't be clumsy. And some experts we talked to, don't put them -- like, If you had a table lamp right here, you know, you wouldn't want to put it right there, because a kid can reach up and get it. You want to put it in a lamp that's far away from the kid.

You wouldn't want to put it in your child's bedroom. That's another piece of advice that an expert gave.

But we have -- if it breaks, there are certain precautions that you want to take. There are some very specific things that you want to do.

When you go to clean it up, the last thing you want to do is sort of get it out in the air -- is to get it out in the air, because then you could end up breathing it in. So, you want to use gloves. You want to -- first of all, you want to leave the area for 15 minutes.

COLLINS: Oh, really?

COHEN: You just want to get out of town -- not out of town, but get out of the room. You want to use rubber gloves and paper. You want to put it in a glass container with a lid.

COLLINS: Really?

COHEN: You don't want to spread it around. You want to make sure that you're getting it into that container. And you want to avoid having any chlorine or ammonia around the spill. And you want to take it to a landfill.

And there are places where you can -- you can go and tell them, I want to -- this is what this is, and we want to handle this in a certain way. And open up the windows and ventilate the room. That's also really, really important.

COLLINS: Wow. That's an awful lot of steps. I mean, I don't mean to be a naysayer, but at that point, with all of that effort, it seems like maybe some people will say, I'm not going to use these.

COHEN: Right, sure. But it's a balance between the environment and...

COLLINS: Yes.

COHEN: ... it's a teeny, tiny possibility that something is going to happen. And if, for example, you don't have kids and you never have kids in your house and you're not clumsy and you've never broke an light bulb in your life, you're probably OK.

COLLINS: You're OK.

COHEN: You probably don't have to worry. But if you're a worried mom and your kids are kind of rambunctious...

COLLINS: Sure.

COHEN: ... and you're worried about what could happen, maybe you don't want to buy these.

COLLINS: All right. Well, glad you did the story. I was unaware.

COHEN: There you go.

COLLINS: Thank you, Elizabeth. Appreciate it.

COHEN: Thanks.

COLLINS: Meanwhile, if you would like to get your "Daily Dose" of health news online, you can do that just by logging on to our Web site. You'll find the latest medical news, a health library, and information on diet and fitness.

That address, CNN.com/health.

John McCain under fire from a conservative radio talk show host. It started with Bill Cunningham's remarks calling Barack Obama a "hack Chicago-style politician," and repeatedly using Obama's middle name, Hussein, before a McCain rally. McCain quickly repudiated the remarks.

Dana Bash is with the McCain campaign in Tyler, Texas.

So, Dana, what is John McCain saying now about this controversy this morning?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Hi, Heidi.

Well, Senator McCain just wrapped up a quick press conference here with us in Tyler, Texas, and we asked him about the controversy, and more specifically about the fact that after that event yesterday in Cincinnati, Bill Cunningham went on his own radio show and blasted Senator McCain, the man who he had endorsed just a few hours earlier, saying that he would instead vote for Hillary Clinton. We asked Senator McCain about that, and he said, well, you know, it's a free country, he's entitled to his opinion.

But the point that he made about the controversy yesterday, he said -- Senator McCain said he stood by his decision to immediately disavow Cunningham's remarks, and he said that his concern was not what he said necessarily, but that he said it at one of his own events.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: This is a free country. People are free to voice their opinion.

What my concern yesterday was, this was an event sponsored by my campaign. I don't intend in any way to tell talk show hosts or anyone else in America what they should say or not say. This is a country that people believe in free speech. The reason why I had to repudiate that was because it was a campaign event associated with my campaign.

(END VIDEO CLIP)

BASH: Now, McCain advisers know that they are already and probably will continue to take a beating from those conservative talk radio hosts who Senator McCain has had a problem with, certainly in the primary season, and still continues to. But they're trying to find a silver lining inside the McCain campaign, Heidi, suggesting that this could help him with those Independents that he will need in the general election to make the point that he is, from their perspective, a decent guy who is going to stand up for having a campaign that is on the issues.

We'll see if that sticks to it -- Heidi.

COLLINS: Yes, we will see.

But John McCain hitting Obama actually pretty hard on some of the comments last night that he made about Iraq. What more can you tell us about that?

BASH: This is the thing that Senator McCain wants to talk about, Heidi.

COLLINS: Yes.

BASH: That's the message that he wants to talk about, not Cunningham. And it was really interesting.

We've seen over the past week or so Senator McCain hit more and more on Barack Obama, and from his -- from McCain's perspective, his inexperience, particularly in national security. Well, Senator McCain came out of the box here at a town hall and talked about comments that Obama made last night in a debate where he suggested that if troops come out and if it turns out that al Qaeda is still Iraq, well, he would allow troops to go back in of some sort.

Well, Senator McCain pounced on that and he said, you know -- really kind of mocked Senator Obama, saying that there already is al Qaeda in Iraq. He said it's called al Qaeda in Iraq.

So he was trying to make the point basically that he doesn't think that Obama doesn't get it. It is along the -- it's fed -- it was a talking point to feed into the main message that you were hearing from the McCain campaign, which is Senator Obama simply is not experienced on national security, particularly on issues like the war -- Heidi.

COLLINS: All right. CNN's Dana Bash with the McCain campaign, Tyler, Texas, this morning.

Thank you, Dana.

The drumbeat of Detroit.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Very impressive. I'm going to go and cut my car up now.

(END VIDEO CLIP)

COLLINS: An odd orchestra. It used to have a steering wheel.

(COMMERCIAL BREAK)

COLLINS: This information just in to us here at the CNN NEWSROOM. We are learning that U.S. author and editor William F. Buckley Jr. has died. You can see his picture there. Life span, 1925 to now, of course, 2008.

We will keep our eye on this story for you and try and bring you a little bit more information about his background. Boy, what a background it is, too.

Again, we are hearing reports that William F. Buckley Jr. has died.

And now they are crucial voting blocs in next Tuesday's Ohio primary, and this morning we're talking with representatives from each group.

Michael Connery is author of "Youth to Power" and is a Barack Obama supporter. He's in New York to talk about young voters this morning.

Tim Burga is the chief of staff of the Ohio chapter of the AFL- CIO. He is with us from Washington to talk about the blue collar vote.

And Patricia Murphy of CitizenJane Politics joins us to talk about women voters. She is also in Washington. Thanks to the three of you for being with us this morning.

Michael, I want to begin with you if I could.

A February 25th opinion poll -- this is from the University of Cincinnati -- shows these results, if we can put them up on the screen for everybody to see for young voters in specific. In those -- that age group we're talking about is 18 to 29 years old.

For Clinton, 49 percent. For Obama, 49 percent. And Senator Obama has pretty much been the one to get overwhelming support from young voters up to this point, but you say, Michael, that Hillary is actually making inroads with a different age group, which is 25 to 29.

Does that explain these close numbers in Ohio?

MICHAEL CONNERY, AUTHOR, "YOUTH TO POWER": Well, without having seen the poll, I couldn't really say, but it's true that for the most part, Senator Obama has captured young voters, both age cohorts. But when Hillary Clinton has done well among young voters, in tends to be among certain sects, and that's the 25-to-29-year-olds, which helped her win in New Hampshire. And it's non-college and lower-income young voters. And her lead with those could be explaining that.

COLLINS: Yes. Why do you think she's resonating with them?

CONNERY: You know, I don't know. I think maybe people remember a better economic time during the Clinton years when they were growing up with their parents. It could be that they feel Senator Obama isn't speaking enough specifics about economic issues. It could be a number of reasons.

COLLINS: All right.

Well, Tim, we're looking at the blue collar workers, obviously a huge force in Ohio politics. And we can see that in all of the NAFTA and trade discussions that went on pretty much right out of the box last night in the debate. In fact, let's go ahead and listen for just a moment and we'll get your comments.

(BEGIN VIDEO CLIP)

CLINTON: We need to have a plan to fix NAFTA. I would immediately have a trade timeout.

OBAMA: We have to stop providing tax breaks for companies that are shipping jobs overseas and give those tax breaks to companies that are investing here in the United States of America.

(END VIDEO CLIP)

COLLINS: So, Tim, you say that jobs and, of course, the economy are number one in Ohio politics. Do you think the candidates are doing enough to address these issues?

TIM BURGA, OHIO CHAPTER AFL-CIO: Well, good morning, Heidi. Absolutely, jobs and the economy are the number one issue in the state of Ohio. The good thing about this primary meaning something in Ohio is it has the candidates there talking about the issues that matter. And very encouraged that Senators Clinton and Obama both talked about putting real worker and environmental standards in place, and trade laws, once they're elected and making sure that it's enforceable. And if not, if they're not satisfied, to opt out of these trade agreements.

So, for the first time in quite some time, the voters in the state of Ohio have connected the dots. And they have made the connection between unfair trade that sees Ohio jobs being sent to Mexico, and ultimately over to China, in far too many cases. They're making that connection that unfair trade is costing them their jobs. So very pleased with what we heard out of the debate last night.

COLLINS: Well, but when the Ohio voters actually connect all of those dots on this issue, where do they end up, in the camp of Hillary Clinton or Barack Obama?

BURGA: Well, I mean, that's why we have elections, but certainly...

COLLINS: Come on.

BURGA: Certainly, it's our job at the Ohio AFL-CIO to inform our members and working families across Ohio, where the candidates stand on the issues that are most important. Trade is the number one issue related to jobs in the economy.

It's very encourage that the Democratic candidates, Senators Obama and Clinton, are talking very tough about standing up for America's workers and Ohio's workers. The most productive workforce in the world is the American worker, and the Ohio workforce is right there.

On the other side, when you're looking at Senator McCain's records, he still seems to be standing with the old free-trade argument. IN a recent comment that he made to "The Des Moines Register," he's talking in glowing terms about the benefits to the American workforce of NAFTA. So we know in Ohio that's not the case.

COLLINS: All right. Well, there is another voting bloc, or at least a portion of the demographics, if you will, that everyone seems to be following from the get-go, and that is women.

So, Patricia, I want to get this question to you. That same Ohio poll we have been showing actually did break things down for female voters. If you take a look with me. Clinton got 52 percent. Obama, 34 percent. You actually say Ohio women will be the deciders of the Ohio primary. Does that mean Hillary Clinton wins?

MURPHY: Well, if the election were to happen today, she would look really good. Right now, she is, as you said, polling very well among women. She has a 17-point lead in another poll that I saw. And also, she is focusing right now on the issue that is very important to women, which is the economy; 91 percent of women in Ohio said they feel the economy is poor or not good. That is very bad news for women in Ohio. But Hillary Clinton is managing to connect with them on that issue in particular.

COLLINS: OK, quickly, I want to ask all three of you the same question. So, Mike, I'll start with you. How energized is your group, the group that you talk about, which is the young voter, at this point in the race?

CONNERY: They are incredibly energized, more so than at this time in previous elections. Rock the Vote released a poll just yesterday that showed that 80 percent of young people are paying attention. It measured the excitement level for the three major candidates. Barack Obama supporters, it was up at 89 percent; Hillary Clinton, 69 percent; McCain, 51 percent. So young people across the board are really energized for this elections.

COLLINS: And they're getting out there. All right, that's good to hear. What about blue-collar workers? How energized are they, Tim?

BURGA: Well, by Election Day, Heidi, this November, we'll have over two million registered voters that are part of organized labor and our affiliate programs. They are in desperate need for change. They see it coming. They want to be a part of it, and they want to be able to stand with the candidate that's going to stand for workers.

COLLINS: OK. And, Patricia, I think you may have already answered this question, but I'll ask you anyway. Women voters, very energized. Yes?

MURPHY: Very energized, and they're crucial, again, to this election. They're the majority of Democratic voters in Ohio, and they've been the majority of voters across the states, and a pattern has emerged that if you win the women, you win the state in almost every election. And so if Hillary Clinton can hold on to this lead with women, she'll do better in Ohio than she has in some of the other states where she lost that women's vote and could not make up the difference among men.

COLLINS: All right, well, we will all be watching, of course, next week. To the three of you, thanks so much, Michael Connery, Patricia Murphy and Tim Burga. Thanks, guys.

ANNOUNCER: Live in the CNN NEWSROOM Heidi Collins.

Welcome back, everybody, 11:30 now, Eastern Time. We are getting a little bit more information on that developing story out of Riverdale, Maryland that we've been telling you about this morning. A school bus full of children overturned, and authorities are now saying there were 44 middle-schoolers aboard. Most of those students and the driver were taken to the hospital. This is a significantly higher number than we had heard earlier, which I believe the last time we reported this was 15 to 18. So, again, that number jumping quite a bit. We are being told 44 middle-schoolers on board, many of them with complaints of neck and back injuries. Police say none of the injuries is considered life-threatening.

Right now, still not clear what caused the accident. The bus overturned just a few blocks from the school.

The upside-down mortgage mess.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: This is my house that when I first moved in here my mortgage started at $1, 300 a month.

(END VIDEO CLIP)

COLLINS: Homes worth less than the mortgages on them and how millions of families are facing crushing choices.

(COMMERCIAL BREAK)

COLLINS: We want to give you a little bit more information about the death of William F. Buckley Jr. You see his picture there. He was born November 24th, 1925, in New York City. He was drafted in the Army, spent time working for the CIA, went to Yale. I could go on and on with all of his books and so forth as well.

But for the time being, I want to go ahead and read you the statement that has been put on "The National Review" Web site. Let's take a look at that. It says, "I'm devastated to report that our dear friend, mentor, leader, and founder, William F. Buckley Jr., died overnight in his study in Stanford, Connecticut. After years of illness, he died while at work. If he had been given a choice on how to depart this world, I suspect that would have been exactly it, at home, still devoted to the war of ideas."

"As you might expect, we'll have much more to say here" -- again, this is from "The National Review" Web site, and in "National Review" -- "in the upcoming days, and weeks and months. For now, thank you, Bill. God bless you. Now with your dear Pat. Our deepest condolences to Christopher and the rest of the Buckley family and our fervent prayer that we continue to do William F. Buckley's life's work, justice."

Again, the death of William F. Buckley today.

A growing nightmare now to talk about for home owners. Many of you are finding you owe more on your house than it is worth.

CNN's Christine Romans reports.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): This is the house of Worcester, Massachusetts, Heather Distefano says her family can no longer afford to live in. HEATHER DISTEFANO, HOMEOWNER: This was my house that when I first moved in here my mortgage started at $1,300 a month. And now my mortgage is now up to $3,100 a month.

ROMANS: She and her husband bought the house in 2005 for $306,000. After months on the market, today the only offer is for $240,000. Her adjustable-rate mortgage payments have increased. She knew they would but not this much, and she never figured the value of her home would decrease. Their $79,000 household income isn't enough for them to hold on for the housing market to improve. After rising monthly payments, annual heating bills, taxes and health insurance, her family of three --

DISTEFANO: We were just drowning in debt.

ROMANS: There are almost nine million other Americans like her, who owe more than the homes are worth, according to analysis from moodysecononomy.com, the largest share of homeowners since the Great Depression. Goldman Sachs forecast some 30 percent of all mortgages will be upside down by the end of year. That's 15 million homeowners. Some tapped the equity in their homes. Some bought homes they could never afford in the first place. Others want to sell, but are trapped by falling home prices.

LAWRENCE SUMMERS, FMR. TREASURY SECY.: We're in territory the likes of which we have not seen in this country in a very, very long time. Loans have been extended with much more generous terms, much smaller more down payments than had been traditional. And the fact that we're seeing an unprecedented break in house prices means we're going to have more people with negative equity than we've ever seen before.

ROMANS: Summers says the voluntary plans from lenders and the federal government so far have not done enough to help homeowners. Heather Destefano says she spent three months calling banks and government hot lines, to no avail.

DESTAFANO: I want somebody from the government to state somebody -- to please help us people that can't afford our homes.

ROMANS: Christine Romans, CNN, New York.

(END VIDEOTAPE)

COLLINS: Message in a bottle or a truckload of bottles, that is. The mayor of Chattanooga's idea of a joke for a drought-stricken neighbor.

(COMMERCIAL BREAK)

COLLINS: Another day and more troubling signs about the economy. But you have the power to make the right decision. CNN's Gerri Willis is hosting a week of hour-long specials, it's the CNN "FINANCIAL SECURITY WATCH" and Gerri is joining us now with a preview of what's coming up at the top of the hour.

The show has been going great, a lot of people responding. What are you going to be talking about today?

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: We've got a lot on tap today. First off, we're going to have Senator Chris Dodd talking about his plan to fix the mortgage meltdown. It's pretty dramatic, we'll describe that.

Then, we're going to take on those sneaky fees that really got you, $1,000 to $4,000 in fees every single year for every single consumer, whether it's credit card bills or cell phones, you name it. We'll tell you how to attack those.

And we're also going to talk to you just a little bit about finding a job and keeping it in this market. It's really tough as you know, Heidi.

COLLINS: Yes, very tough. What about people who really want to call in and ask you specific questions, or they can also e-mail you, right?

WILLIS: They can do that, that's right.

COLLINS: OK.

WILLIS: Let me give you the phone number here, it's 866-792- 3399. We also have an e-mail address, FSW@cnn.com. We want to hear from you. We will be answering your questions live on the air with a panel of experts. Call in, let us know what you're thinking about. Is it your mortgage, it it your job, is it debt? We want to know what your concerns are, we want to help you solve those problems because the hour is about solutions.

COLLINS: Yes, well that's terrific news. And you know, I bet a lot of people will be calling in wanting to know more about what Fed Chairman Ben Bernanke just said and is still testifying on Capitol Hill this morning, so.

WILLIS: Well, we will be talking about that, too, Heidi.

COLLINS: Yes, yes, good. All right, Gerri, thanks so much. We look forward to it, coming up in about 15 minutes or so. Thank you, Gerri.

WILLIS: My pleasure.

COLLINS: Meanwhile, want to talk a little bit more about the comments, at least in the opening testimony that we just witnessed here in the CNN NEWSROOM from Federal Reserve Chairman Ben Bernanke.

And Allan Chernoff is standing by now in New York with a little bit more on that. Allan, what did you hear as the headlines today?

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Heidi, the Fed Chairman is really putting out a warning signal. He's saying the economy is in very, very serious trouble. We already know that the housing market is falling apart. We know that people are cutting back on their spending. He's saying now that we're also going to see businesses cut back and he's saying non-residential construction is also on the downswing. So, he's basically saying the whole economy is coming down and all this happening at a time when inflation is dramatically heating up. And that really creates a horrible dilemma for the Fed here.

But he's saying he's still going to cut interest rates. So, a real difficult spot for the Federal Reserve here.

COLLINS: Yes, you know, it's funny, when you compare, because sometimes you can't help it when you compare Greenspan and Bernanke, it seems like a lot of times people sort of joke that Greenspan talked in these terms that people really didn't understand. Bernanke just kind of lays it out and says here's what we're going to do.

CHERNOFF: No more Greenspan-speak, that's for sure. I mean, the Fed is no longer cryptic. Bernanke is laying it down right on the table. He's telling the markets, yes, I will be cutting interest rates more. And historically, the Federal Reserve has responded to increases in unemployment, so if unemployment keeps going up, the Fed will keep on cutting.

Now, that's really historic, because not only have the cuts been dramatic over the past few weeks, but also this Federal Reserve is cutting in the face of huge inflation that's picking up. Only yesterday, we heard that wholesale inflation had risen during the past year by 7.5 percent.

And it's happening everywhere. Oil is still trading over $100. Wheat, the price of wheat has gone up four-fold in the past year. Dairy prices are soaring. Consumers are really, really getting hit in the pocketbook. We have a very, very troubled situation here.

COLLINS: So, as you listen to everything he said, and as you sort of evaluate all of this, what's the biggest economic problem, I should say, that's really likely to drive federal policy?

CHERNOFF: Well, it's likely going to be, as I said, unemployment.

COLLINS: Yes.

CHERNOFF: I mean, that is something that historically has really pushed the Federal Reserve to cut.

COLLINS: And when you're unemployed, it's hard to keep your house, and it turns into this vicious cycle.

CHERNOFF: Yes, you know, it's a recession when your neighbor loses his job. When you lose your job, it's a depression. And the Fed Chairman really wants to prevent a recession here. It's not clear that he's going to be able to do that. A lot of economists of course saying we may already ...

COLLINS: Right.

CHERNOFF: ...be in a recession at a time when inflation is going way up.

COLLINS: All right, CNN's Allan Chernoff coming from our New York Bureau for us this morning. Allan, thank you.

Well, the White House isn't too happy about the latest plan aimed at helping out homeowners. Susan Liscovicz is at the New York Stock Exchange now with details on this.

Hi there, Susan.

SUSAN LISOVICZ, CNN CORRESPONDENT: Hi, Heidi.

Well, the plan from Democrats is meant to stem a wave of foreclosures but President Bush is concerned it would make the housing crisis worse. The White House promising to veto a bill that would allow judges to cut interest rates on mortgages and to reduce what's owned on a home.

The bill also provides $4 billion for communities to purchase and rehabilitate foreclosed homes. It also provides more notification when someone applies for a subprime mortgage, warning that interest rates will reset higher, something obviously that did not happen for many people at an earlier time, Heidi.

COLLINS: Yes, yes. Well, why is the White House opposed?

LISOVICZ: Well, the White House feels this could slow the recovery on the $4 billion to buy foreclosed homes. The Bush administration says it's too much money, it will turn into a buyout, the lenders and speculators while doing little to help actual struggling homeowners.

On the plan to allow judges to separate, the White House believes lenders will tighten credit standards further and will raise interest rates. Lenders theoretically would do this because allowing judges to reset rates creates more risk for the lender.

Democrats say they'll limit what judges can do by only allowing them lower the rate to the prime rate plus a risk premium. The last chapter in this debate clearly not yet been written.

Also on our radar today, of course as you and Allan were just talking extensively, the Fed Chairman's continuing testimony on Capitol Hill. His remarks indicate a continued willingness to cut interest rates. Those comments helping to offset some bad news, continuing bad news on the economy.

A weak read on durable goods that came out before the opening bell. A weak read on new housing sales that came out after the opening bell, and that caused an early slump. But check it out, we have perhaps a fourth straight winning session. The Dow right now up 56 points. The NASDAQ's up 14 or about .67 percent.

So, it could be a fourpeat, Heidi, and that's the power of the Fed, you know, cutting interest rates and indicating that it's going to continue doing so, even though as Allan told you, the Fed's really stuck in a very ...

COLLINS: Tough spot.

LISOVICZ: ...very tough situation right now.

COLLINS: Yes, yes. All right, well, of course we were watching it all very closely. Thanks so much, CNN's Susan Liscovicz ...

LISOVICZ: Your welcome.

COLLINS: ...from the New York Stock Exchange.

Treading water across the pond, the dollar takes a major hit in Europe. And that's not only the concern for your wallet today. "FINANCIAL SECURITY WATCH" is coming up with Gerri Willis in just a few minutes.

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COLLINS: Once again, we want to report here that we have gotten word of William F. Buckley Jr. has died. He was born on November 24th, 1925. Apparently, he died while at work. We read just a few moments ago from the Web site of "National Review," which, of course, he founded.

Right now, we want to bring in Bill Bennett to talk a little bit more about the life and times of William F. Buckley Jr. Bill Bennett with "Morning in America."

Bill, how are you? How well did you know William F. Buckley Jr.?

VOICE OF WILLIAM BENNETT, CNN CONTRIBUTOR: Hi, Heidi.

I knew him very well. I was on his editorial board at one point. We used to go to something called agonies, that's where people wrestled out the issues and ideas they wanted to discuss. And they were not really agonies, they were great intellectual bouts, though. He was quite an intellectual and a great loss to us, but, you know, he made his point and he has had enormous success (ph).

COLLINS: If you had to narrow it down, and I know that his work is long and vast, what would William F. Buckley's points be?

BENNETT: I suppose -- well, I would say first of all, he may be the guy for whom the phrase "a man of parts" was invented. I mean, this guy could discourse intelligently on any number of topics. But I think most important for the times in which we live now, he gave birth to post-war conservatism and did so -- gave an intellectual birthright.

You know, some people, critics might think conservatism is kind of a primitive thing made up of primitives, but if you rember modern conservatism, post-war, how it was born and came to have influence largely through person of Bill Buckley ...

COLLINS: Yes. BENNETT: ...who was a first-class intellectual. He was the midwife, his magazine was the instrument, "National Review."

COLLINS: Yes, which he started after at least, what I'm reading here with aggravations, if you will, the Eisenhower administration when he started the "National Review."

BENNETT: That's exactly right. And the influence on people such as Barry Goldwater, perhaps most significantly Ronald Reagan, who was devoted to the magazine. It was about the only place he could go on television in those days to get a clear, conservative point of view, his show "Firing Line" ...

COLLINS: Right.

BENNETT: ...where he would go on back and forth with a young man named Michael Kinsley. I mean, a very young man. And it was a great set of intellectual bouts. But if you were -- I would say that, too, given the academy, you know, the universities, Heidi, if you were a conservative and you got an opportunity outside of the university to do something, it was probably because of Bill Buckley.

And here, I have to confess that that was my situation personally. When people wanted me to be chairman of the National Endowment for the Humanities, the first job I had, the first call that was made was to Bill Buckley. He wanted to get it done, chances were you could get it.

COLLINS: He was the man to call. Well, we appreciate your insights. Bill Bennett from "Morning in America." Thanks so much, Bill, on the death of William F. Buckley Jr.

And unfortunately, that is all we have time for today. CNN NEWSROOM continues just one hour from now, and "FINANCIAL SECURITY WATCH" with Gerri Willis is coming up next, taking your questions and your phone calls, too.

I'm Heidi Collins. We'll see you tomorrow, everybody.

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