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Fighting Rages in Iraq; Delta Cancels Flights for Inspections; Baghdad Security Plan Spokesman Kidnapped; Barack Obama Makes a Speech About the Economy
Aired March 27, 2008 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
TONY HARRIS, CNN ANCHOR: Good morning, everyone. Welcome to the CNN NEWSROOM. I'm Tony Harris.
BETTY NGUYEN, CNN ANCHOR: Hi there, everybody. I'm Betty Nguyen. Heidi is on maternity leave.
HARRIS: And watching what's coming to the NEWSROOM live this Thursday morning, March 27th, here's what's on the rundown.
NGUYEN: It is broken, but they say they've got the fix for. Democrats on the economy. Both candidates live in the NEWSROOM.
HARRIS: Iraqi forces struggling to crush militants today. President Bush live this morning looking ahead to peace.
NGUYEN: Another airline pulling planes out of service for safety check. Delta delays right here in the NEWSROOM.
HARRIS: Boy, off the top, I have to tell you it is shaping up to be a busy morning in the NEWSROOM. Glad you're with us and we are covering all of it for you.
In about 15 minutes we'll go on the campaign trail, Democrat Barack Obama confronts the economy. CNN's Suzanne Malveaux is there. And we'll check in with Dan Lothian. He'll take a closer look at Hillary Clinton's plans to repair the country's money mess. She outlines her ideas next hour.
Then, death and deadlines in Iraq right now. CNN's Kyra Phillips is there. Iraqi troops face their greatest test and militia fighters count down to tomorrow's ultimatum.
Then, planes on the ground, passengers in limbo. More flights are canceled as another airline launches new safety inspections. CNN's Miles O'Brien with us with what you need to know.
But first to Iraq, unfolding there now, explosions and gunfire echoing across country, battles raging between Iraqi forces and Shiite gunmen for a third straight day. Live now to Baghdad and our Kyra Phillips.
Kyra, if you would, update us on the fast breaking developments and then let's talk about it.
KYRA PHILLIPS, CNN ANCHOR: Well Tony, that's how I woke up this morning, to the explosions, to the gunfire, to the smoke. I could see from our cameras, you could smell it in the air. Attacks, mortar attacks, rocket attacks on the international zone.
Why did that happen? My sources in the military say it's a message to Prime Minister Nouri Al-Maliki to back off and take his Iraqi forces out of Basra. You know, that's where this all began, Tony. This in-fighting, Muqtada Al Sadr, his Mehdi army going at it with Iraqi forces in Basra.
Why Basra? It's an oil-rich city, everyone wants a piece of it and it's plagued with corruption and assassinations and theft and killing. It's been a constant thorn in the side of Nouri Al-Maliki, the prime minister here. Finally he said enough is enough. I'm stepping in, bringing in my forces. Now that violence is spreading throughout the country in Baghdad in particular.
What we saw this morning, Tony, saying that if Nouri Al-Maliki doesn't pull out forces, the Mehdi army and those groups that support Muqtada Al Sadr will protest and create more violence around the country.
HARRIS: OK. And Kyra, what role is the U.S. playing in the fighting right now?
PHILLIPS: Well, that's what's interesting to watch. As you know, the U.S. military has gotten involved in a number of campaigns, including Basra in the past, but right now, U.S. military stepping aside. Stepping out and saying Nouri Al-Maliki, this is your country, you're taking control. And Nouri Al-Maliki has said that's right, these are my forces. I'm in charge of this military operation.
At this point, U.S. forces not involved. They're back on the sidelines watching how this all goes down right.
HARRIS: OK. Kyra, let's leave it there for now. We'll talk to you often this morning.
President Bush highlights what he says is progress in Iraq. He gets his assessment during a speech this morning in Dayton, Ohio. See it live 10:15 a.m. Eastern Time in the NEWSROOM.
NGUYEN: Get you to this other big story tight now. Flights canceled. Passengers stuck in limbo. Delta Airlines suddenly drops more than 300 flights to inspect the wiring in MD-88 and MD-90 planes.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I was getting ready to board the flight, and they said it was canceled. So now we go up to the crown room and stand in line there for about and hour and they tell us it's not canceled. Go back down to the gate. Go back down to the gate, get there. They tell us it's canceled again.
(END VIDEO CLIP)
NGUYEN: All right. So, here's how it shakes out. Delta says that it expects to complete the safety check by the weekend. It says flights will be affected through early Friday, and the cancellations, well, they follow a similar move by American Airlines. There's concern over a bungled wiring that prompted a safety check.
Joining us from New York to help us understand this is our chief technology correspondents Miles O'Brien.
This wiring, let's get to the bottom of this. Why take the planes out of their regular schedule for something like this? How important is it?
MILES O'BRIEN, CNN CHIEF TECHNOLOGY AND ENVIRONMENT CORRESPONDENT: Well Betty, wiring is nothing to trifle with and it goes back to an air worthiness directive which are like tablets that come down from the mountains to the FAA, to the aviation industry. Here it is right here telling the airlines, telling operators of airplanes what to do to keep those airplanes safe.
Take a look at these images to give you a sense of what we're talking about here. We're talking about the miles and miles of wire that winds its way through every large commercial airliner. Specifically the focus here is on the wiring bundle which powers up an auxiliary hydraulic power supply for the airplane. If the engine fails, how do you get the landing gear down? This auxiliary hydraulic system is what you do.
How those wires are sealed, and protected, and how they're fastened down is the focus of all this. There is concern those wires could arc, could cause a spark and that of course, could lead to something very catastrophic, perhaps an explosion onboard an airplane. So it is nothing to trifle with.
The concern here is, why didn't they comply ...
NGUYEN: Exactly. They had time to do this. Right?
O'BRIEN: I've read this air worthiness directive and it's not well worded. There apparently might have been an honest misunderstanding on the part of the mechanics as to what to do and how to fasten down these wires. In the course of these FAA audits it came to light they weren't fastened down properly. So while that all sounds very minor, when it comes to the wiring on aircraft, the FAA does not want to allow any margin for error.
NGUYEN: Got you.
O'BRIEN: If it has to be an inch apart on the fastening, they want it an inch apart. That's what we're talking about today and that's what's leading to all of these problems.
NGUYEN: Well Miles, yesterday it was American Airlines, today it's Delta Airlines. Are we going to see this happening with other airlines as well?
O'BRIEN: I wouldn't be surprised if you do as they go through and look at this air worthiness directive which as I say, wasn't worded so well and a lot of airlines might have misinterpreted wording.
You have to wonder about these air worthiness directives. The airlines get about 250 a year. They are supposed to followed to the letter of the law. We're seeing problems with this, misunderstanding and then the Southwest situation where it turns out that air worthiness directives inspection orders were not being properly complied with, so it is alleged.
So there is some concerns here that the airlines might be cutting corners because they're under such financial pressure with fuel costs and the like, so much pressure to keep those planes going that they might be cutting corners on maintenance. That's the real underlying concern here.
NGUYEN: All right, Miles O'Brien, joining us live today. We'll speak with a Delta representative a little bit later in the show to find out how that's affecting passengers on the ground.
Thank you, Miles.
HARRIS: And more evidence this morning of the nation's sputtering economy, the Commerce Department reporting the economy gross domestic product increased about a half percentage point, actually .6 in the last three months of 2007. In the prior quarter, the economy was rocking along at almost five percent. The GDP is the value of all goods and services produced in the United States. The puny growth rate for the last quarter of '07 is pretty much what economists expected.
It is costing a little more to fill up your gas tank. AAA reports regular unleaded gas has risen less than a penny a gallon. The average nationally, $3.26. The highest, Hawaii, at $3.63. The lowest, Missouri, Minnesota and New Jersey, all under $3.10 a gallon. Diesel fuel prices down less than half a penny to $4.02. That's after diesel hit an all-time high of $4.03 on Saturday. Remember, buses, trains, trucks, delivering goods, produce, practically all of them run on diesel.
Keep watching CNN for the money team that has you covered talking about debt, housing or your savings. Join us for a special report called "ISSUE #1", the economy, all this week, noon Eastern all week only on CNN.
NGUYEN: The economy is of course issue number one for you and me, and for today at least the presidential candidates, well they want your vote and minutes from now we'll hear what they think about the economy; one from Barack Obama, also from Hillary Clinton. So speaking of Obama, what are his plans to help your wallet?
Let's turn to CNN Suzanne Malveaux setting the stage for his speech today. What do you expect to hear?
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Betty, there are going to be a lot of things he's going to talk about. Really he'll give a broad picture why he believes we're in the situation we're in now, but also talking about specific things that he would do to change this economic situation.
First, he says that he's going to give tax breaks for those making $75,000 or under. He's also saying he'll close the tax loop for the one percent, top one percent of wage earners. He's going to talk about education. Providing $4,000 for grants for college students, those types of things and he is also going to address the housing crisis. Talking about expanding, strengthening the role of the federal housing administration. Bankruptcy, reform, that type of thing.
And we expect that he is really going to skip ahead. Not necessarily deal so much with contrasting his plan to Senator Clinton's, but going directly for John McCain. He going to be a very critical of his plan and has already been criticizing McCain, simply setting him up, saying he believes that limited government is the way to go, but Barack Obama making this case that he believes is neglect.
Take a listen.
(BEGIN VIDEO CLIP)
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: George Bush called this the ownership society, but what he really meant was you're on your own society. If you lose your job, you're on your own. If you got lured in by deceptive mortgage practices, you're on your own. John McCain apparently wants to continue this.
(END VIDEO CLIP)
MALVEAUX: And Betty, of course, John McCain's folks may realize what is happening here. Pre-emptive strike, they have reached out to us outlining his speech already hitting back against Barack Obama.
I spoke with one spokesman who said this is about greater accountability, greater transparency when it comes to stabilizing the housing market. It is about punishing those lenders who engaged in bad behavior, certainly not rewarding them and theirs is a measured approach. They're not going to raise tax, be open to various proposals but they believe Barack Obama's proposal is nothing new. They believe that it's big government and big spending.
This is going to be a very heated debate as we go on to see how these candidates are going to deal with this housing crisis -- Betty?
NGUYEN: No doubt. CNN's Suzanne Malveaux joining us live. Thank you, Suzanne.
HARRIS: As we told you at the top of the newscast, this promises to be a very busy day in the CNN NEWSROOM.
We have some breaking news to report right now, further evidence of troubled days in Iraq. Let's get you quickly back to Kyra Phillips in Baghdad -- Kyra?
PHILLIPS: Tony, for days we've been talking about that fighting in Basra and how that has spread throughout the country and here in Baghdad this morning, waking up to those rocket and mortar attacks right into the international zone, could hear them, could smell them. Security even responding to us this morning telling us about these attacks happening all throughout the morning. It's been on our minds, we've been working it throughout day.
Now we're just getting word, you know we talked about how this fighting was threatening the U.S. surge. It is definitely now threatening the Iraqi side of that surge. We're getting word that the spokesperson for the Baghdad security plan, Tasheen al-Sheikhli, the Iraqi side of the surge that we've talked about basically this law and order campaign that the U.S. and Iraqis have been working on, the spokesman for this security plan, has been kidnapped. He works directly for Prime Minister Nouri Al-Maliki and it's Nouri Al-Maliki that militants are now calling the new dictator of Iraq and asking him to pull his Iraqi forces out of Basra.
Now response again, can't confirm who kidnapped him but I can tell you the conflict is between Muqtada Al Sadr, the radical Shiite cleric, his Mehdi army and the Iraqi forces. Now the spokespersons of the Baghdad security plan has been kidnapped. His house was burned down, three of his guards killed and weapons have been stolen from his home. Not quite sure if there was additional family members in his home, still working that information, he indeed has been kidnapped. We're following it up.
HARRIS: Beautiful. Kyra Phillips in Baghdad following fast moving, fast breaking developments there. Kyra, appreciate it, thank you.
NGUYEN: Politics and the economy, also intersecting on the Hillary Clinton campaign trail. Next stop, Raleigh, North Carolina. Clinton presents her own economic plan, that happens next hour.
Meantime, CNN's Dan Lothian is setting the stage for us from Philadelphia.
So, Dan what do you expect to hear from Clinton today?
DAN LOTHIAN, CNN CORRESPONDENT: Well, Senator Clinton is in Raleigh, North Carolina, kicking off a six-day tour that will focus on the economy, a tour across Indiana, North Carolina and here in Pennsylvania. The theme according to the campaign, will be how Americans can essentially roll up their sleeves to help with this problem.
She will also be highlighting initiatives that things that are working in North Carolina, job retraining and roll out a proposal there. A $12.5 billion five-year proposal job retraining program to help workers universally who have been displaced.
Last night, Senator Clinton was at a campaign event in Washington, D.C. again the focus was on the economy and she talked about in particular how the energy policy, smart energy policy, is needed in order to help Americans who are dealing with this tough economy.
(BEGIN VIDEO CLIP)
SEN. HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE: Think of what will happen to our economy if gas really does hit $4 a barrel in the summer. I mean, $4 a gallon. It's already $112 a barrel. What that's going mean is the people who commute to work, people who rely on their cars or their trucks to make a living, people who have to buy food, that have to be trucked in, everything's going to be increasingly expensive.
(END VIDEO CLIP)
LOTHIAN: So all this week, Senator Clinton really has been focusing on the economy. Near Pennsylvania talk be about the mortgage crisis how there should be some $30 billion to go to states and local communities, individuals, to help them fight foreclosure. She was also talking about perhaps some tax incentives that can help Americans save for retirement. Really, again, the focus on the economy is important because as you've pointed out are this is the number one issue for American voters.
NGUYEN: A lot of people looking very closely at these speeches to see how it will affect them. Dan Lothian joining us live from Philadelphia. Thank you, Dan.
Well, CNN is your place for all the latest on the economy, presidential politics and where they intersect on the campaign trail. Just minutes from now, more coverage of Barack Obama's economic plan when he takes to the stage and that microphone. We'll bring that speech to you live.
Also next hour, Hillary Clinton's turn. Live coverage of her economic address in North Carolina . That is scheduled for 10:30 eastern.
HARRIS: Americans likely to vote their wallets this presidential season. Barack Obama looking to cash in. His speech just minutes away in the CNN NEWSROOM.
NGUYEN: CNN is your place for all the latest news on the economy. Presidential politics and where they intersect on the campaign trail.
Now, minutes from now, coverage of Barack Obama's economic plan. Here's a live look in New York. In fact, it's going to be taking place at the Cooper Union for the Advancement of Science and Art. We'll hear more about his economic plan, and next hour, Hillary Clinton's turn. We're going to have live coverage of her economic address in North Carolina. That speech is scheduled for 10:30 eastern.
HARRIS: And 10 years ago, a little blue pill hit the market. Suddenly everyone was talking about erectile dysfunction. How did I end up with this segment today, Betty?
NGUYEN: I don't have any experience with it. Not that you do, but it's a male issue. Let's leave it to the guys.
DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: So, you know ...
HARRIS: Hi, Sanjay.
GUPTA: So funny right, because even now there's a little hesitation, if you will, Tony, to talk about this. Imagine what it was like 10 years ago before Viagra was there.
HARRIS: That's it. That's the question. How did this happen? Ten years ago. And now we're having conversations, can't turn on the television without getting a commercial, viva Viagra!
NGUYEN: Singing the song all the time.
HARRIS: I am not singing the song.
GUPTA: Look forward to this segment.
NGUYEN: Not at all.
GUPTA: It is very interesting, to think about it overall because there was a lot of stigma attached to erectile dysfunction. It is a lot less, the fact we can be up here having this conversation.
Fewer than one in 100 men who had erectile dysfunction were actually getting treated ten years ago and then Viagra changed everything. Happy birthday, Viagra.
What might be interesting to you, you may not know this but when it was originally formulated, it was formulated to treat chest pain and the men in the trial said chest pain not better but we'd like to hang on to the pill. So they had a side effect and the side effect was what it has become so famous for.
It has become very popular. Take a look at some of the numbers here. I found this very interesting. If you look around the world, three pills taken every second.
HARRIS: Come on.
GUPTA: One million tablets prescribed to date used by 35 million men around the world and it's a big moneymaker as you know, almost $2 billion in 2007 alone.
The other thing I'll add to that Tony is that men talk to their doctors about this, and sometimes erectile dysfunction can be a sign of something else. It can be a sign if there's something wrong with your heart. It could be a sign that you're at risk for stroke. You could have diabetes. It's an opportunity to possibly find another medical condition.
HARRIS: There you go. Glad to hear that.
Sanjay, just curious. We're talking about the benefits now, ten years later and the fact that men are going in and talking to their doctors is a huge step. We have a difficult time going in and talking to our doctors, but I'm wondering about side effects. Are we clear on the side effects the little blue pill ten years later?
GUPTA: Well, I'm always careful to say we know everything about everything. We don't. This is obviously a widely prescribed pill so side effects have started to occur as you might expect. We reported on some of those on your show, talking for example about the greenish- bluish hue that some men develop in their vision when taking this. There have been rare episodes of hearing loss as well.
And if you think about this idea that it causes blood vessels to open up, which is why they thought it might be effective for chest pain that can cause facial flushing. Some people might feel lightheaded. You can always have body aches as well. So there are some side effects, but in the percentage of things because so many pills are prescribed, they're relatively rare.
HARRIS: And here's what's amazing, this pill has spawned cousins and siblings. Just a whole, and brothers! A whole industry.
GUPTA: Yeah. You have at least see Cialis and Levitra, and obviously these are big moneymakers in the pharmaceutical companies. They're all pretty much the same in the way they work. Cialis is a little bit different because it has what's known in medical jargon as a longer half life.
HARRIS: Well, OK.
Betty, do you -- why ...
NGUYEN: I just am asking. That's what we do. What does that mean?
GUPTA: It works longer. For performance.
HARRIS: Here's the thing. Circle back, circle back, quickly circle back. For men who have been experiencing his condition for years and years, at least there is an option now and they're living a more enjoyable, better quality of life.
GUPTA: Yes. And they are, three billion pills.
NGUYEN: And three pills every second?
GUPTA: Every second.
HARRIS: Betty, will you stop?
NGUYEN: How many pills have been popped? It's only 9:20 in the morning East Coast.
GUPTA: Tony's taken at least 180 ...
HARRIS: And we're back now and we thank Dr. Sanjay Gupta. Sanjay, thanks. No thanks to you, Betty. NGUYEN: Goodness. All right. We're going to move on from that to this.
We are awaiting news about the economy from the two presidential candidates on the Democratic side. Barack Obama speaking up first. He's going to be speaking in New York, and then we will hear from Hillary Clinton at 10:30 in Raleigh, North Carolina. She, too, will be speaking about the economy. As soon as those happen we'll bring it to you live right here in the NEWSROOM.
NGUYEN: Developing this hour, bullets flying on the highway. Virginia state police searching for a suspect or suspects, who shot at cars on Interstate 64 overnight. Take a look at this. Police shut down a 20-mile stretch of the highway between Charlottesville and Waynesboro for six hours while he investigated. At least four vehicles were hit by bullets. Two people were sent to the hospital with minor injuries. Now, it's not clear whether the victims were hit by bullets or flying glass.
HARRIS: Barack Obama putting his mouth where his money is. How would president Obama turn the economy around? His speech right here in the NEWSROOM. We get a preview now from Jeanne Cummings. She is chief correspondent from Politico.com.
Jeanne, good to see you.
JEANNE CUMMINGS, CHIEF MONEY CORRESPONDENT, POLITICO.COM: Nice to see you.
HARRIS: I'm curious. You have heard anything from the candidates that is more than just sort of politics of the moment, when they talk about the economy? Here's what I'm getting at here. They seem to be talking about what I would be doing right now if I were president, but I'm curious if what they're talking about right now will have any real bearing on what they would do come January?
CUMMINGS: Tony, that's a really good point, and you're right. Many of the proposals that they have put out so far aren't the kind of things that need to pass today. Not six months from now or so, and so it is important in this speech for us to listen to what are those proposals that he is putting out that will, would be something that he'd be passing in a new administration.
HARRIS: Now let me stop you there because I want to really try to drill down on this and give folks at home something to really listen to in these speeches, because we've heard so many now.
What have you heard what have you read maybe from the Web site, maybe from other comments Barack Obama made about the economy, that feel to you like a forward-looking, forward-leading proposals that white have a long-term significant impact on the economic direction of the country right now?
CUMMINGS: Well, when it comes to the housing crisis, he has this immediate plan, but then he also has proposals of how to change lending laws to try to prevent this from ever happening again.
CUMMINGS: There's a fair amount of controversy about those kinds of proposals, because they're viewed as invasion of the private market, but those are things that he could -- he could propose and go forward with, if he were to win in January.
Also, when you talk about economic stimulus, he talks about investing in a green economy. You know, to create new jobs that are creating new information efficient manufacturing, that sort of thing. Those are all forward-looking.
HARRIS: Now, when we talk about for a moment, let's circle back and talk about housing crisis and his proposal. We heard from Senator Clinton, this idea of a $30 billion fund to help communities and municipalities buy some of these distress and foreclosed properties. I hear Barack Obama talking about a $10 billion fund. Is it basically to be used in the same way?
CUMMINGS: Yes. They're very similar in that regard. I mean, his, I think, would go down the more local level, and hers would go to states, but, you know, giving away money to these plighted areas may or may not be helpful.
HARRIS: Sounds like a block grant idea?
CUMMINGS: It does.
HARRIS: You remember the whole block grant proposals.
CUMMINGS: It does, and there are many economists who, especially if money is filtered down from the state to the county, to the local levels, you know, you have so many places in between where money can be filtered off into a bureaucracy. So, economists aren't thrilled about those kinds of plans, but they are there.
And it is -- they are the kinds of things out on the campaign trail that, you know, a candidate throws that out and sounds like, oh, OK. He or she's going to throw real money at this problem. And if you're a homeowner or a city in distress, that sounds really good to you.
HARRIS: Right, so Jeanne, how much of this -- what we're about to hear, because let's keep it in the present moment here. How much of what we're about to hear represents real talk to you, real programs or political speak because the candidates need to talk about the economy because the economy is struggling right now?
CUMMINGS: What we're going to get a little bit -- we're going to get three different things. We're going to get some real programs, we're going get a lot of politics and what we'll get is, perhaps, some insight into how they view the role of the presidency in managing the economy.
HARRIS: Nice. CUMMINGS: And that's important, because the Democrats both have obviously, a very active notion of how the White House and administration should interact with the economy, and that does contrast rather sharply with the kind of thinking that John McCain has laid out in the last few days, which is far less action.
HARRIS: OK, yes, yes. We can talk about that, but I'm wondering, are you sticking around for us, are you going to listen to the speech and maybe come back on the back side of the speech and offer some thoughts on -- how's your time? Are you OK?
CUMMINGS: I'm good, I'll be here.
HARRIS: OK, Jeanne, thanks for your time this morning. Appreciate it.
NGUYEN: And we are waiting for Barack Obama to speak today out of New York. Also, waiting for Hillary Clinton to speak out of Raleigh, North Carolina. That being at 10:30 Eastern time. Both will be talking about the economy.
Speaking of the economy, let's check out the numbers today, because ...
NGUYEN: ...they were down yesterday. The Dow was down 109 points, NASDAQ 16, but the opening bell, you know who that guy is? That is singer/songwriter and G.M. Chevy spokesperson Phil Vassar ...
HARRIS: Yes, I know him.
NGUYEN: ...ringing the opening bell today. And we will look to see how the markets do on this Thursday. Stay with us. CNN right now, looks like the Dow is up 40 points.
NGUYEN: We'll keep a check on it.
NGUYEN: Well, good morning on this Thursday, and you are in the CNN NEWSROOM.
Hello, everybody. I'm Betty Nguyen.
HARRIS: All the news happening in the NEWSROOM this morning.
Good morning, everyone. I'm Tony Harris.
Once again, we are waiting for Illinois Senator Barack Obama, maybe moments away now from making what his campaign calls a major speech on the economy this morning from New York City. He will be introduced shortly by New York's mayor, Michael Bloomberg. That to happen shortly and then Barack Obama will deliver what his campaign calls a major address on the economy.
Some breaking news just in to CNN. We've just learned from the White House that President Bush is inviting Palestinian Authority Leader Mahmoud Abbas to the White House. Clearly, this is an attempt by the president, who said he was going to be very active in the final year of his second term, of his presidency, to really jump-start the Middle East peace talks, and this is the latest evidence of that.
The White House announcing that President Bush is inviting Palestinian Authority Leader Mahmoud Abbas to the White House to get the talks going. I understand this will take place in May, around May the 1st. That development in the NEWSROOM just moments ago.
NGUYEN: And in the meantime though, we want to tell you about this. A major accident that's really caused a shutdown if you're heading into Phoenix today. Take a look at these fiery images.
Here's what happened. In fact, there were two collisions. One person is dead because of them, an unknown number of people hurt. The initial accident, though, again, there were two. The initial accident occurred around 3:00 a.m. and involved two trucks. Well, then a half hour later, there was a fiery six-vehicle collision in that same area. That was the video that you saw a little bit earlier.
Now, one person was killed in that accident. But traffic heading into the Phoenix area is being detoured. Eastbound Interstate 10 west of Phoenix is closed because of these two accidents, and we will stay on top of this story for you.
HARRIS: Flights canceled, passengers stuck in limbo. We're not talking about the situation with American Airlines yesterday, we're talking about Delta Airlines suddenly dropping more than 300 flights to inspect the wiring in MD-88 and MD-90 planes.
John Cater of our affiliate WSB checks of the wait at Atlanta's Hartsfield-Jackson International Airport.
JOHN CATER, WSB REPORTER (voice-over): Over night, America's busiest airport claimed title to most sleepy, frustrated, you name it and you bet you'd hear about it from these stranded passengers.
UNIDENTIFIED MALE: It's not, you know, it's not a pleasant way to travel. You know, but sometimes you get to a place where you kind of expect it.
CATER: A check of the arrival and departure screens at Atlanta's Hartsfield-Jackson International Airport and one word seemed to pop up more so than others, canceled.
UNIDENTIFIED FEMALE: They canceled I don't know how many flights.
UNIDENTIFIED FEMALE: And now, we're here at 1:30 a.m. with two toddlers. So, we're thrilled with it. CATER: Hours earlier, the airport was a navigational nightmare. People everywhere as no one quite knew what to do following the grounding of hundreds of flights among American and Delta Airlines due to inspections, a safety initiative.
UNIDENTIFIED FEMALE: That's understandable. What's not understandable is the management and the lack of communication following that.
CATER: The compliance is part of a directive from the FAA to ensure all aircraft are air-worthy, but in the process, some passengers say the airlines handling of the situation wasn't particularly conducive of praise.
UNIDENTIFIED FEMALE: My feet hurt, my legs hurt, my back hurts.
UNIDENTIFIED MALE: And there's very little communication with the people upstairs to the people at the ticket counter down here on what we should do, where we should go, and how this should be processed.
HARRIS: Boy, well, Delta says you can expect flight delays through early Friday, expects to complete those safety checks by the weekend.
NGUYEN: Well, back on solid ground, the crew of the space shuttle "Endeavour" came home last night, wrapping up a 16-day mission. Now, this rare night-time touchdown at Kennedy Space Center followed a pre-sunset landing wave off due to clouds. The crew accomplished everything on its space station to-do list, including putting together a giant robot and installing part of a lab.
NASA plans to finish its work on the space station over the next two years and then shift focus to manned missions to the moon.
HARRIS: And let's take a look at New York City right now. We are anticipating moments from now the start of a speech from Illinois Senator Barack Obama. There, you see New York Mayor Michael Bloomberg. He is the speaker who will introduce the Illinois senator. So, we are clearly just moments away. We'll continue to follow that picture, and bring you that speech in the NEWSROOM as soon as it begins.
NGUYEN: Well, there is severe weather outside today ...
NGUYEN: ...and we need to get straight to that. And for that, of course, we go to Rob Marciano.
ROB MARCIANO, AMS METEOROLOGIST: We'll get to Mr. Obama here quick (ph) you know. HARRIS: I know (ph), just a second.
MARCIANO: The more you talk about it, the less time I get. OK, here we go.
HARRIS: Barack Obama, onstage, New York City, to give what his campaign describes as a major speech on the economy. Barack Obama, as you can hear, being greeted with pretty rousing applause after a couple of days of R&R and a couple of campaign stops in North Carolina, the Obama campaign in New York City now.
Let's listen in.
(JOINED IN PROGRESS)
OBAMA: Thank you so much for being here.
Let me begin by thanking Dr. Drucker and Cooper Union for hosting us here today. I have to say that the last time an Illinois politician made a speech here it was pretty good. So...
... the bar is high. And I -- I want everybody to know right at the outset here that this may not be living for generations to come, the way Lincoln's speech did.
I want to thank all our elected supporters who are here. I want to -- there are a couple of special guests that I'm very appreciative for being in attendance: Paul Volcker, the former chairman of the Federal Reserve Board...
We appreciate his presence. William Donaldson, the former chairman of the U.S. Securities and Exchange Commission.
We thank you.
And finally I want to thank the mayor of this great city, mayor Bloomberg, for his extraordinary leadership. At a time...
At a time when Washington is divided in old ideological battles, he shows us what can be achieved when we bring people together to seek pragmatic solutions. Not only has he been a remarkable leader for New York, he's established himself as a major voice in our national debate on issues like renewing our economy, educating our children and seeking energy independence.
So, Mr. Mayor, I share your determination to bring this country together, to finally make progress for the American people. And I have to tell you that the reason I bought breakfast is because I expect payback at something more expensive.
I -- the mayor -- I'm no dummy.
The mayor was a cheap date that morning...
... and I figured there's some good steakhouses here in New York.
In a city of landmarks, we meet at Cooper Union, just uptown from Federal Hall, where George Washington took the oath of office as the first president of the United States.
With all history that's passed through the narrow canyons of Lower Manhattan, it's worth taking a moment to reflect on the role that the market has played in the development of the American story.
The great task before our founders was putting into practice the ideal that government could simultaneously serve liberty and advance the common good. For Alexander Hamilton, the young secretary of the treasury, that task was bound to the vigor of the American economy.
Hamilton had a strong belief in the power of the market, but he balanced that belief with a conviction that human enterprise, and I quote, "may be beneficially stimulated by prudent aids and encouragements on the part of the government."
Government, he believed, had an important role to play in advancing our common prosperity. So he nationalized the state Revolutionary War debts, weaving together the economies of the states and creating an American system of credit and capital markets. And he encouraged manufacturing and infrastructure, so products could be moved to market.
Hamilton met fierce opposition from Thomas Jefferson, who worried that this brand of capitalism would favor the interests of the few over the many. Jefferson preferred an agrarian economy, because he believed that it would give individual landowners freedom and that this freedom would nurture our democratic institutions.
But despite their differences, there was one thing that Jefferson and Hamilton agreed on: that economic growth depended upon the talent and ingenuity of the American people; that in order to harness that talent, opportunity had to remain open to all; and that through education in particular, every American could climb the ladder of social and economic mobility and achieve the American dream.
In the more than two centuries since then, we've struggled to balance the same forces that confronted Hamilton and Jefferson.: self- interest and community, markets and democracy, the concentration of wealth and power and the necessity of transparency and opportunity for each and every citizen.
Throughout this saga, Americans have pursued their dreams within a free market that has been the engine of America's progress. It's a market that's created a prosperity that is the envy of the world, and opportunity for generations of Americans; a market that has provided great rewards to innovators and risk-takers who've made America a beacon for science and technology and discovery.
But the American experiment has worked in large part because we guided the market's invisible hand with a higher principle. A free market was never meant to be a free license to take whatever you can get, however you can get it.
That's why we've put in place rules of the road: to make competition fair and open, and honest. We've done this not to stifle but rather to advance prosperity and liberty.
As I said at Nasdaq last September, the core of our economic success is the fundamental truth that each American does better when all Americans do better; that the well-being of American business, its capital markets and its American people are aligned.
I think that all of us here today would acknowledge that we've lost some of that sense of shared prosperity.
Now, this loss has not happened by accident. It's because of decisions made in board rooms, on trading floors and in Washington. Under Republican and Democratic administrations, we've failed to guard against practices that all too often rewarded financial manipulation instead of productivity and sound business practice. We let the special interests put their thumbs on the economic scales.
The result has been a distorted market that creates bubbles instead of steady, sustainable growth; a market that favors Wall Street over Main Street, but ends up hurting both.
Nor is this trend new. The concentrations of economic power and the failures of our political system to protect the American economy and American consumers from its worst excesses have been a staple of our past: most famously in the 1920s, when such excesses ultimately plunged the country into the Great Depression.
That is when government stepped in to create a series of regulatory structures, from FDIC to the Glass-Steagall Act, to serve as a corrective, to protect the American people and American business.
Ironically, it was in reaction to the high taxes and some of the outmoded structures of the New Deal that both individuals and institutions in the '80s and '90s began pushing for changes to this regulatory structure.
But instead of sensible reform that rewarded success and freed the creative forces of the market, too often we've excused and even embraced an ethic of greed, corner cutting, insider dealing, things that have always threatened the long-term stability of our economic system. Too often we've lost that common stake in each other's prosperity.
Now, let me be clear. The American economy does not stand still and neither should the rules that govern it. The evolution of industries often warrants regulatory reform to foster competition, lower prices or replace outdated oversight structures.
Old institutions cannot adequately oversee new practices. Old rules may not fit the roads where our economy is leading.
So there were good arguments for changing the rules of the road in the 1990s. Our economy was undergoing a fundamental shift, carried along by the swift currents of technological change and globalization.
For the sake of our common prosperity, we needed to adapt to keep markets competitive and fair.
Unfortunately, instead of establishing a 21st century regulatory framework, we simply dismantled the old one, aided by a legal but corrupt bargain in which campaign money all too often shaped policy and watered down oversight.
In doing so we encouraged a winner take all, anything goes environment that helped foster devastating dislocations in our economy.
Deregulation of the telecommunications sector, for example, fostered competition, but also contributed to massive over-investment.
Partial deregulation of the electricity sector enabled (INAUDIBLE). Companies like Enron and WorldCom took advantage of the new regulatory environment to push the envelope, pump up earnings, disguise losses and otherwise engage in accounting fraud to make their profits look better, a practice that led investors to question the balance sheets of all companies and severely damaged public trust in capital markets.
This was not the invisible hand at work. Instead, it was the hand of industry lobbyists tilting the playing field in Washington as well as an accounting industry that had developed powerful conflicts of interest and a financial sector that had fueled over-investment.
A decade later we have deregulated the financial sector and we face another crisis. A regulatory structure set up for banks in the 1930s needed to change, because the nature of business had changed. But by the time the Glass-Steagall Act was repealed in 1999, the $300 million lobbying effort that drove deregulation was more about facilitating mergers than creating an efficient regulatory framework.
And since then we've overseen 21st century innovation, including the aggressive introduction of new and complex financial instruments like hedge funds and non-bank financial companies, with outdated 20th century regulatory tools. New conflicts of interest recalled the worst excesses of the past, like the outrageous news that we learned just yesterday of KPMG allowing a lender to report profits instead of losses so that both parties could make a quick buck. Not surprisingly, the regulatory environment failed to keep pace. When subprime mortgage lending took a reckless and unsustainable turn, a patchwork of regulators were unable or unwilling to protect the American people.
Now, the policies of the Bush administration threw the economy further out of balance. Tax cuts without end for the wealthiest Americans. A trillion dollar war in Iraq that didn't need to be fought, paid for with deficit spending and borrowing from foreign creditors like China. A complete...
A complete disdain for pay-as-you-go budgeting, coupled with a generally scornful attitude toward oversight and enforcement, allowed far too many to put short-term gain ahead of long-term consequences. The American economy was bound to suffer a painful correction, and policy-makers found themselves with fewer resources to deal with the consequences.
Today those consequences are clear. I see them in every corner of our great country as families face foreclosure and rising costs. I see them in towns across America, where a credit crisis threatens the ability of students to get loans and states can't finance infrastructure projects. I see them here in Manhattan, where one of our biggest investment banks had to be bailed out and the Fed opened its discount window to a host of new institutions with unprecedented implications that we have yet to appreciate.
When all is said and done, losses will be in the many hundreds of billions. What was bad for Main Street turned out to be bad for Wall Street. Pain trickled up.
... and that's why -- that's why the principle that I spoke about at NASDAQ last September is even more urgently true today. In our 21st century economy, there is no dividing line between Main Street and Wall Street.
The decisions made in New York's high rises have consequences for Americans across the country. And whether those Americans can make their house payments, whether they keep their jobs or spend confidentially without falling into debt, that has consequences for the entire market.
The future cannot be shaped by the best-connected lobbyists with the best record of raising money for campaigns. This...
This thinking is wrong for the financial sector and it's wrong for our country. I do not believe the government should stand in the way of innovation or turn back the clock on an older era of regulation. But I do believe that government has a role to play in advancing our common prosperity, by providing stable macroeconomic and financial conditions for sustained growth, by demanding transparency and by ensuring fair competition in the marketplace.
Our history should give us confidence that we don't have to choose between an oppressive government-run economy and a chaotic, unforgiving capitalism. It tells us we can emerge from great economic upheavals stronger, not weaker. But we can only do so if we restore confidence in our markets, only if we rebuild trust between investors and lenders, and only if we renew that common interest between Wall Street and Main street that is the key to our long-term success.
Now, as most experts agree, our economy is in a recession. To renew our economy and to ensure that we are not doomed to repeat a cycle of bubble and bust again and again and again, we need to address not only the immediate crisis in the housing market, we also need to create a 21st-century regulatory framework and we need to pursue a bold opportunity agenda for the American people.
Most urgently, we have to confront the housing crisis. After months of inaction, the president spoke here in New York and warned against doing too much.
His main proposal, extending tax cuts for the wealthiest Americans, is completely divorced from reality, the reality that people are facing around the country.
John McCain recently announced his own plan. And, unfortunately, it amounts to little more than watching this crisis unfold.
While this is consistent with Senator McCain's determination to run for George Bush's third term...
... it won't help families that are suffering and it won't help lift our economy out of recession.
Over 2 million households are at risk of foreclosure. Millions more have seen their home values plunge. Many Americans are walking away from their homes, which hurts property values for entire neighborhoods and aggravates the credit crisis.
To stabilize the housing market and to help bring the foreclosure crisis to an end, I've sponsored Senator Chris Dodd's legislation creating a new FHA housing security program, which will provide meaningful incentives for lenders to buy or refinance existing mortgages. This will allow Americans facing foreclosure to keep their homes at rates that they can afford.
Now, Senator McCain argues that government should do nothing to protect borrowers and lenders who've made bad decisions or taken on excessive risk.
And on this point I agree. But the Dodd-Frank package is not a bailout for lenders or investors who gambled recklessly; they will take their losses. It's not a windfall for borrowers, as they will have to share any capital gain.
Instead, it offers a responsible and fair way to help bring an end to the foreclosure crisis. It asks both sides to sacrifice, while preventing a long-term collapse that could have enormous ramifications for the most responsible lenders and borrowers, as well as the American people as a whole.
That's what Senator McCain ignores.
For homeowners who are victims of fraud, I've also proposed a $10 billion foreclosure prevention fund that would help them sell a home that is beyond their means or modify their loan to avoid foreclosure or bankruptcy.
It's also time to amend our bankruptcy laws so families aren't forced to stick to the terms of a home loan that was predatory or unfair.
To prevent fraud in the future, I've proposed tough new penalties on fraudulent lenders and a home-score system that will allow consumers to find out more about mortgage offers and whether they'll be able to make payments.
To help low- and middle-income families, I proposed a 10 percent mortgage interest tax credit that will allow homeowners who don't itemize their taxes to access incentives for homeownership. And to expand homeownership, we must do more to help communities turn abandoned properties into affordable housing.
The government can't do this alone, nor should it. As I said last September, lenders must get ahead of the curve rather than just react to the crisis. They should actively look at all borrowers, offer workouts and reduce the principal on mortgages in trouble.
Not only can this prevent the larger losses associated with foreclosure and resale, but it can reduce the extent of government intervention and taxpayer exposure.
But beyond dealing with the immediate housing crisis, it is time for the federal government to revamp the regulatory framework dealing with our financial markets.
Our capital markets have helped us build the strongest economy in the world. They are the source of competitive advantage for our country. But they cannot succeed without the public's trust.
The details of regulatory reform should be developed through sound analysis and public debate. And so I won't try to cross every "t" and dot every "i" in this speech. But there are several core principles for reform that I intend to pursue as president.
First, if you can borrow from the government, you should be subject to government oversight and supervision.
Secretary Paulson admitted this in his remarks yesterday.
The Federal Reserve should have basic supervisory authority over any institution to which it may make credit available as a lender of last resort.
When the Fed steps in, it is providing lenders an insurance policy underwritten by the American taxpayer. In return, taxpayers have every right to expect that these institutions are not taking excessive risks.
Now, the nature of regulation should depend on the degree and extent of the Fed's exposure. But, at the very least, these new regulations should include liquidity and capital requirements.
Second, there needs to be general reform of the requirements to which all regulated financial institutions are subjected. Capital requirements should be strengthened, particularly for complex financial instruments like some of the mortgage securities that led to our current crisis.
We must develop and rigorously manage liquidity risks. We must investigate ratings agencies and potential conflicts of interest with the people that they are rating. And transparency requirements must demand full disclosure by financial institutions to shareholders and counter parties.
As we reform our regulatory system at home, we should work with international arrangements, like the Basel Committee on Banking Supervision, the International Accounting Standards Board, and the Financial Stability Forum, to address the same problems abroad.
The goal should be to ensure that financial institutions around the world are subject to similar rules of the road, both to make the system more stable and to keep our financial institutions competitive.
Third, we need to streamline a framework of overlapping and competing regulatory agencies. Reshuffling bureaucracies should not be an end in itself.
But the large, complex institutions that dominate the financial landscape don't fit into categories created decades ago. Different institutions compete in multiple markets. Our regulatory system should not pretend otherwise. A streamlined system will provide better oversight and be less costly for regulated institutions. Fourth, we need to regulate institutions for what they do, not what they are.
Over the last few years, commercial banks and thrift institutions were subject to guidelines on subprime mortgages that did not apply to mortgage brokers and companies. Now, it makes no sense for the Fed to tighten mortgage guidelines for banks when two-thirds of subprime mortgages don't originate from banks.
This regulatory framework...
This regulatory framework has failed to protect homeowners and it is now clear that it made no sense for our financial system.
When it comes to protecting the American people, it should make no difference what kind of institution they are dealing with.
Fifth, we must remain vigilant and crack down on trading activity that crosses the line to market manipulation.
On recent days, reports have circulated that some traders may have intentionally spread rumors that Bear Stearns was in financial distress while making market bets against the country. The SEC should investigate and punish this kind of market manipulation and report its conclusions to Congress.
Sixth, we need a process that identifies systemic risks to the financial system. Too often we deal with threats to the financial system that weren't anticipated by regulators.
That's why we should create a financial market oversight commission, which would meet regularly and provide advice to the president, Congress and regulators on the state of our financial markets and the risks that face them. These experts' views could help anticipate risks before they erupt into a crisis.
These six principles should guide the legal reforms needed to establish a 21st-century regulatory system, but the changes we need goes beyond the laws and regulation. We need a shift in the cultures of our financial institutions and our regulatory agencies.
Financial institutions have to do a better job at managing risk. There is something wrong when board of directors or senior managers don't understand the implications of the risks assumed by their own institutions.
It's time to realign incentives and the compensation packages so that both high-level executives and employees better serve the interests of shareholders.
And it's time to confront the risks that come with excessive complexity. Even the best government regulation cannot fully substitute for internal risk management. For supervisory agencies, oversight has to keep pace with innovation. As the subprime crisis unfolded, tough questions about new and complex financial instruments were not asked. As a result, the public interest was not protected.
We do American business and the American people no favors when we turn a blind eye to excessive leverage and dangerous risks.
And finally, the American people must be able to trust that their government is looking out for all of us, not just those who donate to political campaigns.
I fought in the Senate for the most extensive ethics reforms since Watergate, and we got those passed.
I've refused contributions from federal lobbyists and PACs.
I have laid out far-reaching plans that I intend to sign into law as president to bring transparency to government and to end the revolving door between industries and the federal agencies that oversee them.
Once we deal with the immediate crisis in housing and strengthen the regulatory system governing our financial markets, we have to make government responsive once again to all of the American people.
And our final task, in fact, is to make sure that opportunity is available to all Americans.
You know, the bedrock of our economic success is the American dream. It's a dream shared in big cities and small towns, across races, regions and religions, that, if you work hard, you can support a family; that if you get sick, there will be health care that you can afford; that you can retire...
... that you can retire with the dignity and security and respect that you've earned; and that your children can get a good education and young people can go to college, even if they don't come from a wealthy family.
That's our common hope.
That's our common hope across this country. That's the essence of the American dream.
But today, for far too many Americans, this dream is slipping away.
Wall Street has been recently gripped by gloom over our economic situation. But for many Americans, the economy has effectively been in recession for the past seven years.
We have just come through...
We have just come through the first sustained period of economic growth since World War II that was not accompanied by a growth in incomes for typical families.
Americans are working harder for less.
Costs are rising, and it's not clear that we'll leave a legacy of opportunity to our children and our grandchildren.
And that's why throughout this campaign I've put forward a series of proposals that will foster economic growth from the bottom up and not just from the top down.
And that's why the last time I spoke on the economy here in New York, I talked about the need to put the policies of George W. Bush behind us, policies that have essentially said...
... policies that have essentially said to the American people, "You are on your own."
We need policies that once again recognize that we are in this together. And we need the most powerful, the wealthiest among us -- those who are in attendance here today, we need you to get behind that agenda.
It's an agenda that starts with providing a stimulus that will reach the most vulnerable Americans, including immediate relief to areas hardest hit by the housing crisis and a significant extension of unemployment insurance for those who are out of work.
If we can extend a hand to banks on Wall Street when they get into trouble, we can extend a hand to Americans who are struggling, often through no fault of their own.
Beyond these short-term measure, as president, I will be committed to putting the American dream on a firmer footing.
To reward work and make retirement secure, we'll provide an income tax (sic) of up to $1,000 for a working family and eliminate income taxes altogether for any retiree bringing in less than $50,000 per year.
To make health care affordable for all Americans, we'll cut costs and provide coverage to all who need it. To put Americans to work, we'll create millions of new green jobs and invest in rebuilding our nation's infrastructure.
To extend opportunity, we'll invest in our schools and our teachers and make college affordable for every American.
And to ensure...
And to ensure that America stays on the cutting edge, we'll expand broadband access, expand funding for basic scientific research, and pass comprehensive immigration reform so that we continue to attract the best and the brightest to our shores.
I know that making these changes won't be easy. I will not pretend that this will come without costs, although I have presented ways we can achieve these changes in a fiscally responsible way.
I believe in PAYGO. If I start a new program I will pay for it. If I intend to cut taxes for the middle class, then we're going to close some of the tax loopholes for corporations and the wealthy that are not working for shared prosperity.
So we're going to have fiscal discipline.
I know that we'll have to overcome our doubts and divisions and the determined opposition of powerful special interests before we can truly advance opportunity and prosperity for all Americans.
But I would not be running for president if I did not think that this was a defining moment in our history.
If we fail to overcome our divisions and continue to let special interests set the agenda, then America will fall behind, short-term gains will continue to yield long-term costs, opportunity will slip away on Main Street, and prosperity will suffer here on Wall Street.
But if we unite this country around a common purpose, if we act on the responsibilities that we have to each other and to our country, then we can launch a new era of opportunity and prosperity.
I know we can do this because Americans have done this before. Time and again we've recognized that common stake that we have in each other's success. It's how people as different as Hamilton and Jefferson came together to launch the world's greatest experiment in democracy. That's why our economy hasn't just been the world's greatest wealth creator, it's bound America together, it's created jobs and it's made the dream of opportunity a reality for generations.
Now it falls to us. We have as our inheritance the greatest economy the world has ever known. We have the responsibility to continue the work that began on that spring day over two centuries ago right here in Manhattan, to renew our common purpose for a new century and to write the next chapter in the story of America's success.
We can do this, and we can begin this work today.
Thank you very much.
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