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American Morning
Barack Obama Tries to Put Pastor's Comments in the Past; Affairs of State; Government Report on Housing Starts
Aired March 18, 2008 - 08:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KIRAN CHETRY, CNN ANCHOR: Barack Obama tries to put his pastor's comments in the past.
The most politics in the morning.
Meltdown. The Fed tries to tackle issue number one. New numbers on the housing crisis coming out this hour.
Plus, affairs of state.
The new governor of New York to address the past trouble in his marriage on this AMERICAN MORNING.
I guess that statement took on a whole new meaning this morning. Welcome back to AMERICAN MORNING this Tuesday. I'm Kiran Chetry. Alina Cho and Ali Velshi with me this morning.
All the papers, including the tabloid "The Daily News" talk about this affair that the new New York governor sat down and spoke with him about from his past. So we're going to tackle that issue this morning as well.
John Roberts has the week off.
We have a lot to cover this hour, including the delegate dilemma in Florida. That state now deciding not to have a mail-in vote. What's next and what happens to those votes from the January primary?
Also, it's a showdown over your right to carry a gun. It's on the docket on the Supreme Court today. Does the second amendment apply to individuals or local or state governments and are handgun bans, as we see in some places like Washington, D.C., legal? The Supreme Court has a big decision to make today.
Also, big news from the medical world this morning, a startling new report on Alzheimer's disease, who could develop it and what it means for their family. Elizabeth Cohen joins us with that.
First though the economy; issue number one for a lot of you out there and a lot of big economic news due out this hour.
First, any minute we're set to get an earnings report from Lehman Brothers. Lehman brothers, an investment bank that is going to be talking about their earnings. Losing almost 20 percent of their stock yesterday on worries that it would be the next brokerage to face a liquidity crisis. We saw what happened with Bear Stearns when people made moves to take all of their money out of that investment firm and then what happened with this sale of $2 a share to a rival bank.
We're going to get a read on the housing market as well and find out how many homes started construction last month. One survey of economists expects this number to be at a 17-year low. We're going to find out in about 30 minutes.
Also at 8:30, Goldman Sachs' turn in the spotlight. The brokerage will announce its earnings.
If that's not enough in economic news for you, we also have a fed meeting today where they are expected to cut rates once again. What does it mean for you and your wallet. Ali Velshi tracking it all for us.
Is there concern as we take a look at earnings for companies like Lehman Brothers and Goldman Sachs?
ALI VELSHI, CNN CORRESPONDENT: Here's the thing. Even though people don't think they have anything to do with these big brokerages, they are a major, major part of the stock market which means for most Americans who have mutual funds, most of the major mutual funds, financial services are a big part of this.
So when a company like Bear Stearns or Lehman Brothers, their stock goes down, a lot of other stocks move in sympathy and it starts to affect your portfolio. So yes. It absolutely affects the sentiment, the mood out there about what is going on. The mood is not fantastic. We call it issue number one, the economy. It really is issue number one.
A new poll taken by CNN and Opinion Research Corporation over the weekend shows that the economy is issue number one by a long shot. 42 percent of people call it the most important issue in the presidential election followed by Iraq at 21 percent. Then health care, also an economic issue at 18 percent, terrorism at 10 percent and below that, immigration, again, an economic issue.
Now of those people, who think it's an issue, take a look. Of all Americans, 74 percent of Americans think we are in a recession right now. Not heading for one, in a recession right now. That number continues to increase month after month when we call on these numbers.
Then today at 2:15 eastern p.m., we will expect to hear from the Federal Reserve. We are expecting to hear about a rate cut. Some have thought it's .5 percent. Some have thought .75 percent. Some have even thought 1 full percent. We will stay on issue number one all day. We'll be live when that comes out. We'll also be back for those housing reports and Goldman Sachs and Lehman Brothers.
CHETRY: Busy.
VELSHI: It is busy.
CHETRY: 8:00 hour here on the east coast. Don't go anywhere. Ali, thanks.
Also coming up in half an hour, Gerri Willis will be joining us with a look at how a fed rate cut could affect your mortgage. What you need to be looking for especially if you are in an adjustable rate or you're looking to refinance. She's going to be trying to answer those questions for you.
Also, this could be a critical morning for Senator Barack Obama. He is in Philadelphia, Pennsylvania, to give what his campaign is calling a, quote, major address on race, politics and unifying our country. Obama's expected to address the racially charged sermons of his former pastor in Chicago, Jeremiah Wright. Some of Wright's sermons have made the rounds on You Tube, raging against racism, as well as criticizing America.
(BEGIN VIDEO CLIP)
REV. DR. JEREMIAH A. WRIGHT, TRINITY UNITED CHURCH OF CHRIST: Barack knows what it means to be a black man living in a country and a culture that is controlled by rich white people. Hillary can never know that. Hillary ain't never been called a [ bleep ].
(END VIDEO CLIP)
CHETRY: Obama says he outright rejects the remarks made by his former pastor. Earlier, I spoke with Obama's national campaign chair and Virginia's governor Tim Kaine about whether Wright's remarks threatens Barack Obama's message of unity.
(BEGIN VIDEO CLIP)
GOV. TIM KAINE (D), VIRGINIA: The comments of Pastor Wright were raising some questions. I think the senator will address them. But he is going to continue to run this campaign as a unifier to try to bring our nation together at a time when we desperately need that.
(END VIDEO CLIP)
CHETRY: We also asked Governor Kaine about the plan to redo Michigan's primary. He says the Obama campaign would agree to it as long as the Democratic National Committee overseas that revote.
Here's how any redo primary would go in that state. It would happen on June 3rd. It would be paid for by money raised by the Democratic Party. And both Senators Hillary Clinton and Barack Obama would be on the ballot. Anyone who voted in Michigan's Republican primary back in January would not be allowed to vote in the Democratic redo primary.
Different story for Florida, though. They may be back to square one as Florida leaders abandon their efforts to try to hold a new primary for the Democrats. So the question now is what happens to Florida delegates.
Here's CNN's Joe Johns.
(BEGIN VIDEOTAPE)
JOE JOHNS, CNN CORRESPONDENT: It's like a walk through a mine field. One wrong step could be devastating. Hanging in the balance, the will of the record 1.7 million Florida Democrats who voted in the state's primary. You know, the one that didn't count. After exhausting various options, including a mail-in primary, the Florida Democratic Party drew up the white flag and surrendered.
KAREN THURMAN, FLA. DEMOCRATIC CHAIRMAN: What we did was put it on the table and said, look. Here's the last party option that we have. Anything after this, I don't know what it is.
JOHNS: Indeed, several voters we spoke with in Tallahassee last week said they had little appetite for a redo.
JORGE LOPEZ, FLORIDA VOTER: We have voted already. The energy and time and money have been invested. This is a great lesson for the national Democratic Party to learn.
JOHNS: The Clinton campaign sounded unhappy with the decision not to hold a do-over. "Today's announcement brings us no closer to counting the vote cast in the Democratic primary."
The Obama campaign said it hoped the decision would lead to a fair seating of the Florida delegates at the convention. Though what's fair for Obama might not be viewed that way by the Clinton campaign. Clinton won the January primary, though neither candidate really campaigned in the state.
(END VIDEOTAPE)
JOHNS: It's the Democratic National Committee, of course, that took away Florida's delegates in the first place, punishing the state for moving up its primary date. And now Florida is telling the DNC to figure a way out of this mess.
(BEGIN VIDEO CLIP)
JOHNS: For Floridians like writer Dianne Roberts, this whole drama is more like a recurring nightmare.
DIANNE ROBERTS, WRITER: Now we're looking at yet another set of disenfranchised Florida voters and that leaves a bitter taste in the mouth. We don't want to go back there. 2000 might seem like a long time ago to some people, but it isn't around here.
(END VIDEO CLIP)
JOHNS: So now what? It's back to the original problem. Either the party accept accepts the results of the botched primary and senator Clinton picks up valuable delegates or the nominee is chosen without any input from the 1.7 million Democrats who turned out in January.
Joe Johns, CNN, Washington.
CHETRY: We'll have to see how that goes as we get closer to the convention for Florida and Florida's Democratic voters.
Alina Cho is here meanwhile with other stories new this morning including breaking news out of Yemen.
ALINA CHO, CNN CORRESPONDENT: Yeah, you touched on it a couple of minutes ago, Kiran, good morning. Good morning, everybody.
We begin with that breaking news out of Yemen. The U.S. is shutting its embassy in that nation's capital. It happened after a number of explosions hit a girl's school near the embassy. Reports say three mortar rounds went off. The U.S. embassy says there are reports of injuries at the school. No word yet of any injuries at the embassy in Yemen.
High-level meetings are going on in Russia this morning. U.S. Secretary Of State Condoleezza Rice and Defense Secretary Robert Gates are trying to reassure the Russians the U.S. missile defense shield is not a threat to the world. Today they meet directly with outgoing Russian President Vladimir Putin and President-Elect Dmitri Medvedev. The meeting comes just one day after Secretary Rice met with Kremlin opponents and criticized the Russian political system.
A French court has ordered the release of a bank trader accused of perpetrating a massive fraud. You may remember this story. Jerome Kerviel has been in jail for more than a month now. He's accused of execute category unauthorized trades that cost French banking giant Societe Generale more than $7 billion. The suspect is now under judicial control. A judge can restrict his movements or contacts. No trial date has been set just yet.
A showdown at the U.S. Supreme Court to tell you about. The justices take up the right to bear arms and whether the second amendment covers individuals. This landmark case concerns Washington, D.C.'s 32-year-old ban on handguns. We're going to get a live report from CNN's justice correspondent Kelli Arena from the Supreme Court at the bottom of the hour. So stay tuned for that.
A potential traffic nightmare along one of the busiest highways in America. A two-mile stretch of I-95 in Philadelphia shut down this morning after inspectors apparently found a four-foot crack in a support pillar. How scary is that? Officials are hoping to have it repaired within two days.
And a man in San Diego found a surprising visitor camped out on his porch. Take a look at these pictures. A baby sea lion. The man thought it was a dog at first. The sea lion had to leave the beach, cross a busy street and climb a picketed fence to get there. That's one determined sea lion.
CHETRY: And he gets thrown in a net. How nice.
CHO: That's where the homeowner found it on Sunday. Take a listen.
(BEGIN VIDEO CLIP) CHRIS GUIMOND, FOUND SEA LION: I looked to my left. I thought, is that a dog on my porch? And it kind of came out and saw it was a sea lion.
(END VIDEO CLIP)
CHO: Listen to the screaming.
CHETRY: Why does it sound so mad?
CHO: A rescue team from Sea World is checking the pup out. But I was just looking on the Internet and I found, Kiran, that sea lions apparently can survive out of water for long periods of time and they can even walk a mile on their own, as evidenced right here.
CHETRY: How about that. My childhood dream to have an animal like that in the bathtub. Very cute. Thanks, Ali.
CHO: You bet.
CHETRY: As more baby boomers age, more and more of them are likely to develop Alzheimer's disease. A report released today estimates that 10 million boomers will get the disease in their lifetime, which can place a huge burden on families in an already struggling health care system.
Medical correspondent Elizabeth Cohen joins us with the details. When you hear about this you think, are more people getting it or is the disease changing or are we just --
ELIZABETH COHEN, CNN MEDICAL CORRESPONDENT: No, we're changing as a population. The disease hasn't changed. But as the baby boomers are getting older, that's more people who will get this disease that is so devastating. So we're talking about a much bigger burden on families and on the health care system. One in eight baby boomers will get Alzheimer's. So if you add those numbers up, it gets huge.
Let's look right now as we speak. There are 5 million Americans with Alzheimer's disease. Fast forward to 2030 and that number grows to 8 million people who will have Alzheimer's disease. Then in 2050 it will be 11 to 16 million with Alzheimer's disease. Those are huge, huge increases. And what experts tell us is that the system is just not ready to handle that many people. The investments that need to be made have not been made.
CHETRY: And the other question also is have they made advancements in treatment? Have they been able to find a way to deal with this? When you talk about that many people getting Alzheimer's and needing that long-term treatment, it's scary.
COHEN: It is scary. There is research in the pipeline. There are researchers all over the country who are looking into drugs not to cure Alzheimer's disease. That's not so much the hope. Even just to postpone it by five years so that someone who otherwise, let's say, would get it at 70, gets it at 75. Even just that five-year delay can really help. So far the drugs aren't quite there yet. So they are working on it. And they are also trying to work on getting more facilities, getting more manpower to take care of these people.
CHETRY: That's right. Of course people are all ears as we talk about little things you can possibly do or studies that show this may help with preventing or staving off Alzheimer's, even though they haven't come up with any major --
COHEN: Right now as we speak not a whole lot but hopefully in the future there will be something.
CHETRY: All right. Elizabeth, thanks.
Well, a tornado watch this morning in Texas. Powerful winds blowing a lid right off of this building in El Paso yesterday. Our Rob Marciano is tracking extreme weather for us. He's going to bring us the latest on the watches in Texas.
Also, divorce wars, public lives. The strange twist in the breakup of the former governor of New Jersey and his estranged wife.
That's next on AMERICAN MORNING.
(COMMERCIAL BREAK)
GOV. DAVID PATERSON, NEW YORK: This transition today is an historic message to the world that we live among the same values that we profess and that we are a government of laws and not individuals.
CHETRY: David Paterson is swearing in as New York governor, the new governor, succeeding disgraced Governor Eliot Spitzer.
Now Governor Paterson is facing questions about infidelity in his marriage in the past. Paterson told this morning's "New York Daily News" that he and his wife Michelle bold had extra marital affairs during a rocky time in their marriage some years back. "The Daily News" says that Paterson carried out the affair at the Days Inn on New York's upper west side and that the Paterson's agreed to talk about their marriage once rumors started circulating over the past few days.
Paterson was sworn in yesterday as the first African-American of New York and the first legally blind governor in U.S. history. "The New York Post" also reports that Paterson will be holding a news conference to talk about the new revelations this morning.
Meantime, former New Jersey Governor Jim McGreevey and his estranged wife are speaking out about allegations of a third person in their sexual relationship.
Our Alina Cho is following this morning.
Hey, Alina.
CHO: Hey there, Kiran. Good morning. You literally could not turn a TV on last week without seeing Dina Matos McGreevey. She talked about how she could easily relate to what Eliot Spitzer's wife Silda was going through in the wake of that political scandal. Since 2004, the McGreeveys have been in the middle of a bitter divorce battle. She always claimed she didn't know her husband was gay. Now there are doubts.
(BEGIN VIDEOTAPE)
CHO: Dina Matos McGreevey put herself into the media spot light last week in the midst of the Eliot Spitzer scandal. She claimed a special understanding of the shock wife Silda Spitzer felt.
LARRY KING, LARRY KING LIVE: Did you see that side of your husband, Dina?
DINA MATOS MCGREEVEY: No, I did not. Yeah, I was as stunned as I believe Mrs. Spitzer was.
CHO: But was she? A former driver for ex New Jersey Governor James McGreevey gave details of what he claims was his sexual relationship with the couple. Teddy Pedersen told "The New York Post" and the "Newark Star Ledger" he engaged in sexual relations with the McGreeveys, only having contact with her from 1999 until 2001, before the McGreeveys got married. He said he's coming forward now because he saw Mrs. McGreevey, quote, on television playing the victim, trying to make this a payday for herself. CNN has made repeated efforts to reach Pedersen, but to no avail. McGreevey's marriage became news in 2004 when he announced his resignation as New Jersey's governor.
JIM MCGREEVEY (D), FORMER NEW JERSEY GOVERNOR: My truth is that I am a gay American.
CHO: Like her husband, Mrs. McGreevey fwrote a best selling book "Silent Partner, a Memoir of My Marriage." She issued a statement Monday saying Pedersen's sexual claims are completely false. Prompted by her estranged husband as a way to, quote, discredit me in the media. The former governor also issued a statement saying, quote, this happened. This happened in the past. He said he had referenced the relationship in an early draft of his book but then decided to remove it.
RAOUL FELDER, DIVORCE LAWYER: Whenever you represent a celebrity, these things do pop up.
CHO: High-profile divorce lawyer Raoul Felder told CNN such accusations and denials are not uncommon.
FELDER: Sometimes they are true. Sometimes somebody is smoking something funny. Sometimes people are crazy or they really believe it.
(END VIDEOTAPE)
CHO: Mrs. McGreevey says her estranged husband is trying to steal the spotlight from her. Just before her book was published, he issued a false claim that she knew he was gay before they were married. Of course, she claims it's untrue. A lot of he said/she said/he said going on. They are still embroiled in this bitter divorce battle and they have a 7-year-old daughter in the middle of it.
CHETRY: You feel for the child.
You were reading something earlier. I think we were both thinking the same thing. This is just too much information. Is this what we want -- the sordid details of the private lives of some of our officials, it's mind boggling.
CHO: On both sides of the river in New York and New Jersey. It's something on the cover of the tabloids. Something we're watching very closely. You got to wonder. Is it too much information? But I think everyone agrees it's certainly an interesting time in politics here.
CHETRY: I'll never look at a Days Inn the same way again. All right. Alina Cho, thanks so much.
Meanwhile, that brings us to this morning's quick vote question. If a politician is unfaithful in his or her private life, do you think that impacts their ability to be honest in their public life? This is dropped, actually, from our 6:00 viewers on down now to a 55 percent of you saying yes, 45 percent say no. About two hours ago it was in the high 60s saying yes. Cast your vote. CNN.com/am. Still plenty of time to weigh in. 40 more minutes and we'll tally your votes throughout the rest of the show.
Still ahead, Florida Democrats say no to a primary do-over. Where does that leave Hillary Clinton? Pennsylvania Governor Ed Rendell, Clinton supporter is going to be joining us to talk more about the battle over Michigan and Florida. And also weigh in on the speech her rival Barack Obama will be delivering later today.
Also, with the economy in trouble, the fed meeting today and will probably cut interest rates again at the afternoon meeting, we're going to tell you what another cut could mean for your mortgage.
(COMMERCIAL BREAK)
CHETRY: Less than 150 delegates separating the two leading Democratic candidates for president. And Florida Democrats are saying they have been forced to pull the plug on any primary do-over saying they really don't think they can make it happen. While Michigan may be moving closer to holding a new vote in June. Can this fight over delegates be resolved without damaging the party or leading to voters feeling like they were not counted?
Pennsylvania Governor Ed Rendell is a Hillary Clinton supporter and he joins me from the governor's residence at the capital in Harrisburg, Pennsylvania.
Governor, great to see you.
GOV. ED RENDELL, CLINTON SUPPORTER: Morning, Kiran.
CHETRY: You were once the DNC chair. I'm sure you are glad you aren't this year. If you were, what would you try to do with these voters in Florida and Michigan who may not have their votes counted toward this extremely tight race?
RENDELL: Well, I think it's essential that Florida and Michigan get the chance to not only vote but have their votes counted. And I would do everything we can to effectuate that. It looks like it's going to come together in Michigan. The Michigan legislature, I think is going to vote this week to hold a primary on June 3rd.
We have agreed, Governor Corzine, myself and other leading Democrats to fund that primary, to give -- raise money for the treasury of Michigan. $12 million all told, to pay for the cost of holding a regular primary. And hopefully the DNC will agree that the votes will count.
We'd like to do the same thing in Florida. I think Florida got tripped up by trying to do something new. I would urge the Florida Democrats to try to do a regular primary, just a do-over for what they did in January. We'll try to raise money for that as well. But it's essential that two states, as crucial to the fall election as Florida and Michigan, have their votes counted towards selecting the nominee.
CHETRY: It's a tough situation. Yesterday the two campaigns traded some barbs over the vote in Michigan. Obama's campaign saying that Clinton's campaign on -- campaign's view on voting are dependent on their own political interest. In this situation, you had Senator Clinton winning Michigan and the Florida primary. Even though everyone was told these votes would not count. Is there some aspect of trying to change the rules as you go along depending on which side would benefit?
RENDELL: Well, I'm not sure that the votes should count. In Michigan, only Senator Clinton won on the ballot. In Florida, everyone was on the ballot. Remember, Florida Democrats didn't do anything wrong. They wanted to move their primary up to February 4th, which would have been allowable. But the republican governor and republican legislator moved it up to January.
So the DNC is punishing Florida, even though the Democrats there tried to comply. They just didn't have the legal power to do it because they didn't control the legislature.
So I think there's differences between Florida and Michigan. But the best way to settle this is, let's have a revote. You cannot disenfranchise two out of 50 states in picking the nominee, particularly two states like Michigan and Florida.
When I was DNC chair, Kiran, the big four states in the fall were Pennsylvania, Ohio, Michigan and Florida. Democrats had to carry three out of four or else we couldn't win the electoral college. We can't disenfranchise the voters in two key states like that.
CHETRY: Governor, it's interesting, though, because you said essentially the DNC is punishing Florida voters for something the republican leaders in that state did. So do you think that Howard Dean and the DNC need to rethink this refusal to seat the Florida delegates? RENDELL: Well, I would urge -- again, I think that would be controversial. I think it's a fair thing to do, but that would be too controversial. I think the DNC leadership should do everything it can to get do-over primaries in Florida as well as Michigan.
CHETRY: Let's talk a little bit about Hillary Clinton's big competitor Barack Obama. He's set to deliver a major speech today about race. Some of this having to do with the controversial remarks of his longtime pastor Reverend Jeremiah Wright. What do you think voters need to hear from Barack Obama as he tries to distance himself from some of these controversial statements?
RENDELL: Well, I think Senator Obama has done a great job during this whole campaign in distancing himself from any questions about race. Race is inevitable and politics in every facet of what we do. But I think he said to the American people, judge me for who I am, what I've done and what I've planned to do. I think he's got to reiterate that message. He's got to say that he as is Senator Clinton, are unified. No one wants to split race against race in this country, certainly not the Democratic Party which has stood for inclusion for so long. I think that's the message Senator Obama has to get across.
CHETRY: You have seen first hand what can happen when you discuss race. In February, you said to a paper, I think there are some whites who are probably not ready to vote for an African-American candidate. You took some heat for that. Can campaigns talk about race without being criticized?
RENDELL: Well, it's interesting. I think the subject is one that is inescapable. And I think we've got to get to the point in America where we can discuss those issues without everyone being quite so sensitive, and we've got to get to the point where a black candidate can criticize a white candidate and a white candidate can criticize a black candidate without everybody saying, oh, they are being racial or racist. That's crucial for our development.
I think Senator Obama give him tremendous credit. He has advanced that ball dramatically. It's unfortunate that his supporters make some comments. It's unfortunate that Senator Clinton's supporters make some comments. But I think the two candidates have done a terrific job in trying to say, judge me for who I am and for what I've done, not for where I come from or what background I have. And that's the important thing. And I think Senator Obama is going to reinforce that message today in Philadelphia.
CHETRY: Well, you'll be there in the state. Governor Ed Rendell, a Clinton supporter and thanks for being with us this morning from Philadelphia. I mean from Harrisburg. Sorry. Obama will be in Philadelphia. And you are in Harrisburg this morning. Thanks for getting up with us. We appreciate it.
RENDELL: Absolutely.
CHETRY: And still ahead, you are watching the most news in the morning. Extreme weather. Snow and icy roads. And it's leading to an unscheduled meeting between a semi truck and an SUV. We're going to show you how that one turned out. Coming up.
Also, a landmark case before the Supreme Court right now. There are court watchers lined up this morning. It's a very contentious issue. The second amendment and questions about it. Do individuals have the right to bear arms? Can municipalities and cities take that decision away? A live report in today's headlines when AMERICAN MORNING comes right back.
(COMMERCIAL BREAK)
CHETRY: Welcome back to AMERICAN MORNING. I'm Kiran Chetry. John Roberts has the week off. We have a lot of key economic data coming into us right now. In fact, the Federal Reserve meeting today. Another interest rate cut is expected. We're going to talk about what that can mean for you. And after the collapse of Bear Stearns, brokerages are in the spotlight. Results from Lehman Brothers and Goldman Sachs due out this morning. Both companies reported sharply lower earning. Goldman's CEO says market conditions are clearly very difficult. Lehman's CEO says we're in a challenging operating environment.
Also coming up out right now, a government report on housing starts. It's another key indicator of the home market. So as we said, numbers and reports coming in fast and furious in this half hour. You'll want to stick with us. Ali Velshi joins us with a look at some housing numbers. And also some prices as it relates to wholesale goods.
ALI VELSHI, CNN, SENIOR BUSINESS CORRESPONDENT: Inflation. Yes, you see. There's a couple of numbers coming in. One is the housing number, which we were expecting to be - once again we measure housing starts and building permits. That's important because we want to know how many houses got under way, the construction of houses and how many building permits were applied for because that tells us in the months going forward what sort of activity they'll be.
Well, in both cases, the housing starts and the building permits, we were expecting them to be lower. They are lower. And that's not a big surprise. What we also got was wholesale inflation. Now, wholesale inflation is the inflation that producers and manufacturers and storekeepers, everybody else gets. The decision that they have to make is whether they pass that inflation over to the consumer and in most cases they do.
For instance, when an airline pays more for gas prices and they pass it over to you, when they pay more for it it's wholesale inflation.. When they give you a fuel surcharge, then it's retail inflation. Anyway, the wholesale inflation numbers out. If you look at the overall numbers, it's up three tenths of a percent for the month. If you strip out food and energy, you look at the core number, it's up even more than expected. 0.5 percent. That is the fastest inflation growth in 15 months. So it all goes into that same pie of problems. We've got continued slowdown on the housing front. We've got inflation which continues to be a major concern. And we still have gas and oil at those high levels. Kiran. CHETRY: All right. So we're going to check in with that and also as we said, the earnings reports coming from some big investment banks.
VELSHI: Goldman, Lehman, we got those in. They were both -- earnings were down but they were, in fact, better than was expected. So, that's a piece of good news. In fact, Dow futures went up on the news that, wow, it's not terrible news.
CHETRY: Right. It's not Bear Stearns part two today.
VELSHI: That's correct. That's absolutely right.
CHETRY: All right. Thanks a lot, Ali.
And meanwhile, the Federal Reserve is again expected to cut its key interest rate by maybe as much as 1 percentage point this afternoon. So, how will that affect you and your home loan? CNN's personal finance editor Gerri Willis joins us now. So they are expected to cut this key rate.
GERRI WILLIS, CNN, PERSONAL FINANCE EDITOR: That's right.
CHETRY: A meeting at 2:15 this afternoon. But as we've seen, it hasn't always followed in terms of --
WILLIS: No, it's not that easy, Kiran. Don't you wish that you see the rates just parlay into lower rates for borrowers. But I have to tell you, the experts out there say whatever rate that we get, whether it's a half, three quarters, a full percentage point, you are probably looking at higher fixed rate mortgages. That's right. Higher 30-year fixed rate mortgages going forward.
Let's take a look at what's happened in the past six months since the Fed began cutting rates. Right now, 30-year fixed rate mortgages at 6.37 percent. Six months ago, it was 6.25 percent. So, we haven't seen a big improvement there even though the Fed has been working hard to get rates to go lower. That's because mortgage rates are tied to long-term treasuries, not to short-term investments. So at the end of the day, it doesn't really matter what the Fed is doing it seems right now.
Now if you are thinking about getting an adjustable rate mortgage, watch out, too. Even a one-year adjustable rate mortgage actually went up 0.9 percent at 6.72 percent. That's from the Mortgage Bankers Association. Their weekly report. So you know, you'll be looking at lots of different products out there. If you are thinking about getting a loan. And that could be a real problem for you. Now, there is some good news out there. If you have an adjustable rate mortgage that is resetting, you will get a break here because those rates tend to be tied to shorter term rates out there.
So good news for folks out there who are worried about that adjustable rate mortgage reset. Home equity lines of credit. You'll get a benefit there. Some credit cards probably get a benefit. It's a little debatable whether the credit card companies are going to jump on board with this. Student loans. And I know there are a lot of people out there with really high college debt, student loan debt. Big worry for people. You may see a benefit here. So that's good news for folks with student loans.
CHETRY: Does all of that reset automatically or do you have to make any --
WILLIS: It resets automatically. You don't have to call. Although if you want to call your credit card company and ask for a lower rate, you can always do that and they often help you out. I've done it myself. It's an easy thing to do. I think we've got everybody in America doing that now. Because on "Issue number one" we talk about doing that almost every single day.
CHETRY: It's a proactive move. It can save you money in the long run so why not.
WILLIS: That's right.
CHETRY: So, why not.
WILLIS: One other thing I just want to mention quickly about the rates. A little noticed that part of the stimulus package is that there will be a benefit out there for people with jumbo mortgages. If you have a large mortgage out there, over $417,000, the government is going to give you a break here. HUD will get behind, the government will get behind those loans. That means those rates will come down but it depends on where you live. Go to HUD.gov Web site. There you can get information on what's going to happen to those rates if you are looking to refinance a jumbo mortgage loan. The limits on those are rising to as much as $793,000. You'll be able to get a better mortgage thanks to the stimulus package. So, if you are worried about an adjustable A.R.M. resetting on a big loan, it's something to think about right now.
CHETRY: All right. You may want to take advantage of that and refinance as well. Gerri, thank you.
By the way, don't forget all week long CNN has continuing coverage of "Issue number one," the economy. Ali Velshi, Gerri Willis and the entire CNN money team. Every day this week, noon Eastern, right here on CNN. You guys got a head start with all the news.
VELSHI: Yes.
CHETRY: All right. Thanks.
Well, the Supreme Court hears arguments today in a landmark case involving the second amendment's right to bear arms. We get a live report from the Supreme Court coming up.
Also, pediatricians, they're your best source for information when it comes to the health of your children, right? Well, what happens when medical fact can sometimes turn into medical opinion? We're going to tell you when it's OK to challenge their advice, ahead on AMERICAN MORNING. (COMMERCIAL BREAK)
CHETRY: In just about an hour, the Supreme Court will hear arguments concerning the constitution's second amendment. Does it give individuals the right to own guns? Well, the issue centers on D.C., Washington, D.C.'s 32-year-old handgun ban. The case has provoked anger and emotion on both sides of the issue. This is new video right now. So much so that spectators want to hear the arguments, started lining up outside of the high court early this morning. Our justice correspondent Kelli Arena is there as well with more on just a testament to how strongly people feel on both sides of this. They are out there waiting to be present when that hopefully when the Supreme Court makes a decision.
KELLI ARENA, CNN, JUSTICE CORRESPONDENT: Kiran, no joke. There were people started to line up last night out here. And it's cold. It's not like it's a balmy day in Washington. Our camera crew got here at 5:00 a.m., the line was already long and it's still very long. It's all the way down about three blocks in length. So really an emotional, quite a personal issue, Kiran. Much more than an argument over the interpretation of that second amendment of our constitution. And you know the more you talk to people, the more you realize that their life experience really has a lot to do with where they stand on this issue.
(BEGIN VIDEOTAPE)
ARENA (voice-over): Drug dealers. Gunshots at night. Constant threats.
SHELLY PARKER, GUN RIGHT'S PLAINTIFF: I had my front window broken. I had the back window of my car broken in, a camera stolen off my house. I was routinely threatened as I was walking around the neighborhood with my dog.
ARENA: Shelly Parker wanted a gun for protection to feel safe.
PARKER: I believe that the second amendment was written for the purpose of allowing individuals to have a gun.
ARENA: When Parker became too afraid, she moved to a safer neighborhood. But she doesn't want to live in fear again and she still wants that gun. The problem is, she lives in Washington, D.C., where handguns are banned. Elilta Habtu lives just outside of the city and comes in often. But the last thing she wants is more guns.
ELILTA HABTU, GUN CONTROL ADVOCATE: How many more lives do we have to wait before we take action.
ARENA: Habtu is a survivor of the Virginia Tech massacre and still has a bullet lodged close to her brain. She says no one should ever have to live through what she did and is now an advocate for tighter gun laws.
HABTU: I am still suffering and the pain and mental torment from that day. I will always live with this forever. ARENA: Two women with a common goal. A safer city and completely different ideas about how to get there.
(END VIDEOTAPE)
ARENA: Kiran, we thought we'd show you a little bit about the line and the number of people that are waiting to hear this blockbuster argument. Believe it or not, Kiran, this is the first time that the Supreme Court is really dealing with this basic constitutional question of whether individuals have a right to bear arms. And we expect a ruling sometime in June, Kiran.
CHETRY: All right. And it will be interesting to see, as we talked about with you earlier, you said it's still split as to where the court may decide on this one. Kelli -- go ahead.
ARENA: As I said, many legal experts think that the justices will uphold an individual's right to own a gun, but that they'll also rule that it is reasonable to have some sort of government regulation on that front.
CHETRY: Kelli Arena for us outside of the busy Supreme Court steps this morning. Thank you.
VELSHI: All right. You know what, it's Fed day. Happy Fed day to you and for us.
CHETRY: 2:15 the meeting.
VELSHI: 2:15. And for those of us who follow business news, this is one of the biggest days going. Although these days in business, everything has been busy. So if the Federal Reserve does cut interest rates today, as expected, what impact, if any, is it going to have on the economy? Joining us now from Washington is Vincent Reinhart. He's a resident scholar of the American Enterprise Institute for Public Policy and Research, formerly with the Federal Reserve. Vincent, thank you for joining us. You are here because you have the view that -- of the things that can help the economy like the stimulus package that we're seeing. We're seeing those checks going out in the first week of May and the Fed rate cuts. You actually think these Fed rate cuts aren't helping. Why?
VINCENT REINHART, AMERICAN ENTERPRISE INSTITUTE: Well, they are going in the right direction. Financial conditions have otherwise tightened. Think of what would have happened had the federal funds rate not been low. And so, we'll get some ease today, again, probably in the neighborhood of 0.75 percent to 1 percent.
VELSHI: That would be kind of historic to make those kinds of moves there. There used to be a time when people thought if the Fed does that kind of drastic action, it will send people into a panic. Seems to me, our numbers on the economy indicate not panic but that people are pretty seriously concerned about the economy. 74 percent of our respondents say so. How concerned are you? Where is this economy going? How long is this recession going to last if we're headed to one? REINHART: So, we're quite likely in or about to enter a recession. But, remember, the U.S. economy has some advantages. The dollar has depreciated on foreign currency markets. That has provided some stimulus to exports. Residential construction, given the numbers again today, is a drag on spending, but at some point, that drag lessens. And we'll have fiscal stimulus with the checks going out in May. And if the financial sector gets more capital and financial conditions improve, we're setting the stage for a rebound late, late this year and into next.
VELSHI: So, you're thinking by the time we have a new president elected, this could be -- we could be on the upswing? The new president could inherit not a recession but maybe just the tail end of it and some growth in the economy?
REINHART: That's quite possible, provided that the financial system gets more capital. If the financial key players in our financial markets get more capital, then financial conditions improve, if financial conditions improve, then the monetary stimulus of the Federal Reserve will show through to the economy.
VELSHI: Really quickly, Vincent, which of the presidential candidates has in your opinion, the best plan to deal with the economy if it's still a problem when they get into office?
REINHART: Well, I think they aren't really talking about those issues. I don't think they should. By the time, as you already said, they get into office, the economy should be improving. But we have to think about the long term issues. The unfunded liabilities. The complexity of our tax system. It's the long -- those long-term issues that are really going to matter.
VELSHI: Vincent, good to talk to you. Thank you very much, Vincent Reinhart with the American Enterprise Institute. Like he says, Kiran, the issues that really probably people should make decisions on when they are voting, taxation, health care, trade, they're not the sexy ones. Right now, it's gas prices. It's inflation. It's jobs. It's houses. Unfortunately, these candidates may or may not be able to do much.
CHETRY: Right. How much impact can they have on those everyday issues and problems. Thanks a lot, Ali.
VELSHI: OK.
CHETRY: Well, CNN NEWSROOM just minutes away. Tony Harris at the CNN Center with a look at what's ahead. Good morning, Tony.
TONY HARRIS, CNN, ANCHOR: Kiran, good morning to you. Barack Obama's speech on race live in the NEWSROOM for you this morning. Today's address prompted by divisive remarks on race by the Reverend Jeremiah Wright, Obama's friend and pastor of 20 years.
We watched the markets ahead of today's expected interest rate cut. Analysts predict aggressive action by the Fed and the Las Vegas casino robbery. Is this suspect linked to the murders of five people at a clothing store outside of Chicago? Breaking news anytime it happens right here in the CNN NEWSROOM, top of the hour on CNN. Kiran, back to you.
CHETRY: All right. Thanks a lot , Tony.
Parents, how do you know when to follow the advice of your pediatrician or maybe it's when to question it. Our medical correspondent Elizabeth Cohen joins us with what you need to know ahead.
(COMMERCIAL BREAK)
CHETRY: Welcome back to AMERICAN MORNING. Some new information about human growth hormone. Millions of Americans take these drugs thinking that it could boost their muscle mass and their athletic ability but Stanford University researchers have found that it doesn't necessarily enhance performance. It can actually hinder performance. They looked at 27 separate studies on human growth hormone and found that it actually decreases muscle strength as well as metabolism and aerobic fitness.
Well, as a parent, you are bombarded with information and advice about how to best raise your child. So how do you separate fact from opinion and when should you challenge your pediatrician? CNN medical correspondent Elizabeth Cohen joins us with this week's empowered patient report. And you know, many people feel they are the medical experts. So anything that they say goes. Is that always the case.
ELIZABETH COHEN, CNN, MEDICAL CORRESPONDENT: No, it's not always the case. And I think moms have quietly said, well, my pediatrician said to say this but do I really have to? And I was surprised, Kiran, at how out in the open pediatricians were, when I called them, I said pediatricians say things like they are dogma. Do we really have to listen to everything you say and they quite honestly said, you know what no. Sometimes we make the mistake of saying things as if you have to do it when really you don't.
So, let's take a look at two things where if a pediatrician says something like, a have to, you ought to question them. For example, some pediatricians will say do not pick your baby up at night when she cries for food if she's beyond a certain age. She should be sleeping through the night. Don't pick her up. Don't feed her. That's not true. You can do what you want as long as you understand the ramifications of what you are doing. And the second thing is apparently pediatricians are still saying this. Babies should be home with mom. Some pediatricians are saying day care is bad. The baby ought to be home with mom or with a nanny or someone but day care is bad.
And the pediatricians I talked to say there's absolutely no evidence that that's true. And in fact, there's some evidence that being in a group setting can be helpful for a child. So that's just one example. And we have more examples of things where you can challenge your pediatrician on cnn.com/empoweredpatient. You can see the mom we talked to right there. CHETRY: Now, Because you pointed out that there are some things where you really should just, I mean, if your baby is running a high fever and they say come into the office, then come into the office. If you are talking about vaccines and you know, things like immunizations, you should listen to what they say. But on some of those where it's partially opinion, maybe you should, just, maybe ask them a second time or ask for a second opinion?
COHEN: You can say it this way, say, doctor, I hear what you are saying, but I would like to do it a different way. Can I do it this way? And that's the best way to say it so that you are respecting your pediatrician. You aren't dissing them but at the same time you're letting them know that you have a different way of doing it and is that OK with them? Does that make sense to them? And if the doctor is honest, they'll say, you know, you're right there is more than one way to feed a baby, there is more than one way to get a baby to sleep.
CHETRY: Right. And now, you know, a lot of the things that seems to also go around are these rigid time frames for when babies should be off the bottle, eating solid food, throwing away the pacifier. Are those also set in stone or are those more up for debate?
COHEN: They are not set in stone, they are up for debate. And that's really, really important. So, when it sounds like it's set in stone, question them. Say, it that set in stone or do we have some flexibility here?
CHETRY: All right. Sounds good. And we'll check it out online as well. Elizabeth Cohen, great to see you in person.
COHEN: Thanks.
CHETRY: Thanks for visiting with us this week.
We're going to take a quick break right now. When we come back, we're going to hear from Rob Marciano. He has your weather forecast coming up.
(COMMERCIAL BREAK)
CHETRY: And a reminder, in just about an hour and 15 minutes, we're going to hear from Democratic presidential candidate Barack Obama giving a speech on race in America. It will be at 10:15 Eastern time. He's doing it from Philadelphia, Pennsylvania, this morning. Of course, the site of the big contest coming up in just about five weeks. So, when Pennsylvania voters will choose. Meanwhile, live coverage here on CNN. So be sure to stick around. Meanwhile, Rob Marciano is at the CNN Weather Center. He is tracking extreme weather for us this morning. Earlier we had talked about those tornado watches. I believe they were expiring right about now.
ROB MARCIANO, CNN, METEOROLOGIST: Another hour for this guy, Kiran, and, you know, we're just getting started. This will probably be extended. The storm prediction center is thinking about issuing one for eastern Texas. So, as all of this marches eastward, this one will expire in the next hour and then we'll probably issue some down the pike. The other issue is going to be thunderstorms with heavy, heavy rain. Not so much severe but from Oklahoma City south to Springfield, Missouri, we've got tremendous amount of rain in training, say rainfall coming over the same areas. So flooding is going to be becoming more prevalent, I think, over the next 12 to 24 hours. And that may very well become the bigger story. We'll watch both that and the threat for tornadoes throughout the afternoon.
CHETRY: And you have a safe trip. You're going to be joining me the rest of the week here on AMERICAN MORNING here in New York. So, we'll be glad to have you with us. Thanks, Rob.
MARCIANO: All right. See you then.
CHETRY: Meanwhile, a final check of this morning's "Quick Vote" question. And it comes on the heels of some new revelations from the new New York governor saying that he, too, had an affair. If a politician is unfaithful in his private life, do you think that impacts the ability of that politician to be honest in their public life, 53 percent of you say yes, 47 percent say no. To all of you who voted, thanks so much. And we want to thank you for joining us on this AMERICAN MORNING. See you back here tomorrow.
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