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John McCain Speaks on the Economy; CEOs Outline Delta-Northwest Merger; Crash in Congo Claims Numerous Lives; Pope Heads to U.S. for First Ever Visit

Aired April 15, 2008 - 10:00   ET

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

BETTY NGUYEN, CNN ANCHOR: Well, good morning, everybody. I'm Betty Nguyen.
TONY HARRIS, CNN ANCHOR: And I'm Tony Harris. Stay informed all day in the CNN NEWSROOM.

Here is what's on the rundown. It is ISSUE #1, the economy: John McCain turns into Mr. Fix It. Live coverage minutes away.

NGUYEN: Delta and Northwest, a marriage of necessity brought on by soaring fuel prices. The CEOs outline the merger. That's live this hour.

HARRIS: CNN inside the polygamist compound in Texas. Mothers, their children in state custody. Angry today, Tuesday, April 15. You are in the CNN NEWSROOM.

NGUYEN: Let's take you live to Pittsburgh, Pennsylvania, where Senator John McCain is talking about issue No. 1, that being the economy.

(JOINED IN PROGRES)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: And we in Washington are not just passive spectators. We have a responsibility to act -- and if I am elected president I intend to act quickly and decisively. We need reforms that promote growth and opportunity. We need rules that assure fairness and punish wrongdoing in the market. We need tax policies that respect the wage-earners and job creators who make this economy run, and help them to succeed in a global economy. In all of this, it will not be enough to simply dust off the economic policies of four, eight, or twenty-eight years ago. We have our own work to do. We have our own challenges to meet.

Millions of working men and women in Pennsylvania, Ohio, Michigan and beyond can tell you how urgent is the work before us. One man put it this way to a reporter not long ago, in reply to a question about the job he had just lost. He said, "I told my wife that I'll always keep a roof over her head. Now, I worry about keeping that promise." In the monthly reports of our Labor Department, nearly 250,000 Americans like this man were let go recently and suddenly from jobs they thought were safe.

A woman in the town of Trainer, in Delaware County, also captured the feeling of many when she described what it's like to work and save for years, and, at the age of 47, still struggle for the basics of life. The family has had medical problems, and as she puts it: "Trust me, no one wants to be in our shoes. And lots of people are just a sick husband away from where we are." For citizens like these -- doing their best to keep promises and meet obligations, there is no comfort knowing their problems are common and their worries are shared.

Meanwhile, the people we expect to be most sober and level-headed in their economic decisions -- bankers and other home lenders -- forgot some of the basic standards of their own profession. Hard- working homeowners are learning for the first time about the endlessly complicated borrowing, bundling, and betting that has been going on in our capital markets. Americans worry about a system that allows four million bad loans to affect 51 million good ones. They wonder how assets can so quickly become liabilities, and why the high-risk schemes of a few were permitted to inflict such grievous harm on our entire financial system.

Americans are also right to be offended when the extravagant salaries and severance deals of CEO's -- in some cases, the very same CEO's who helped to bring on these market troubles -- bear no relation to the success of the company or the wishes of shareholders. Something is seriously wrong when the American people are left to bear the consequences of reckless corporate conduct, while Mr. Cayne of Bear Stearns, Mr. Mozilo of Countrywide, and others are packed off with another forty- or fifty million for the road.

I leave it for others to speculate on the technical definition of a recession. It's all a little beside the point, if it's your plant that's closing and your job that's gone... when you are facing foreclosure, or back in debt after years of hard effort, or hardly able to buy food, gas, or heating for your home. In the end, the truest measure of prosperity in America is the success and financial security of those who earn wages and meet payrolls in this country. Many are waiting for their first homes, their first big break, their first shot at financial security. And helping them will be my first priority in setting the economic policies of this nation.

In so many ways, even now, the workers and entrepreneurs of America are taken for granted by their government, while the lobbyists and special pleaders are seldom turned away. By the tens of billions of dollars, our tax money is routinely squandered by the Congress on less than useless pork-barrel projects -- projects having nothing to do with the purposes of government, and everything to do with the preservation of power.

In the same way, many in Congress think Americans are under- taxed. They speak as if letting you keep your own earnings were an act of charity, and now they have decided you've had enough. By allowing many of the current low tax rates to expire, they would impose -- overnight -- the single largest tax increase since the Second World War. Among supporters of a tax increase are Senators Obama and Clinton. Both promise big "change." And a trillion dollars in new taxes over the next decade would certainly fit that description. Of course, they would like you to think that only the very wealthy will pay more in taxes, but the reality is quite different. Under my opponents' various tax plans, Americans of every background would see their taxes rise -- seniors, parents, small business owners, and just about everyone who has even a modest investment in the market. All these tax increases are the fine print under the slogan of "hope": They're going to raise your taxes by thousands of dollars per year -- and they have the audacity to hope you don't mind.

They and others argue that the tax increase is necessary in part to finance Social Security and Medicare. Unfortunately, this claim only serves to remind us of Congress' consistent failure to repair both of these programs even under the best of circumstances. For years, Congress has been buying time, and leaving the great challenge of entitlement reform for others to deal with. And now the two contenders in the other party have even proposed enormous new federal commitments before the old commitments have been kept -- trusting that others, somewhere down the road, will handle the financing and make all the numbers come out right.

But there will come a day when the road dead-ends, and the old excuses seem even more hollow. And it won't be the politicians who bear the consequences. It will be American workers and their children who are left with worthless promises and trillion-dollar debts. We cannot let that happen. And you have my pledge: As president I will work with every member of Congress -- Republican, Democrat, and Independent -- who shares my commitment to reforming and protecting Medicare and Social Security.

In so many ways, we need to make a clean break from the worst excesses of both political parties. For Republicans, it starts with reclaiming our good name as the party of spending restraint. Somewhere along the way, too many Republicans in Congress became indistinguishable from the big-spending Democrats they used to oppose. The only power of government that could stop them was the power of veto, and it was rarely used.

If that authority is entrusted to me, I will use the veto as needed, and as the Founders intended. I will veto every bill with earmarks, until the Congress stops sending bills with earmarks. I will seek a constitutionally valid line-item veto to end the practice once and for all. I will lead across-the-board reforms in the federal tax code, removing myriad corporate tax loopholes that are costly, unfair, and inconsistent with a free-market economy.

As president, I will also order a prompt and thorough review of the budgets of every federal program, department, and agency. While that top to bottom review is underway, we will institute a one-year pause in discretionary spending increases with the necessary exemption of military spending and veterans benefits. "Discretionary spending" is a term people throw around a lot in Washington, while actual discretion is seldom exercised. Instead, every program comes with a built-in assumption that it should go on forever, and its budget increase forever. My administration will change that way of thinking.

I'll hold the agencies of the federal government accountable for the money they spend. I'll make sure the public helps me, and I'll provide federal agencies with the best executive leadership that can be found in America. We're going to make every aspect of government purchases and performance transparent. Information on every step of contracts and grants will be posted on the Internet in plain and simple English. We're going to post an agency's performance evaluation as well. We're going to demand accountability. We will make sure that federal spending serves the common interests, that failed programs are not rewarded, and that discretionary spending is going where it belongs -- to essential priorities like job training, the security of our citizens, and the care of our veterans.

In my administration there will be no more subsidies for special pleaders -- no more corporate welfare -- no more throwing around billions of dollars of the people's money on pet projects, while the people themselves are struggling to afford their homes, groceries, and gas. We are going to get our priorities straight in Washington -- a clean break from years of squandered wealth and wasted chances.

I have a clear record of not asking for earmarks for my state. For their part, Senators Obama and Clinton have championed a long list of pork-barrel projects for their states -- like that all-important Woodstock museum that Senator Clinton expected Americans to pay for at the cost of a million dollars. That kind of careless spending of tax dollars is not change, my friends: It is business as usual in Washington, and it's all a part of the same wasteful and corrupting system that we need to end.

The goal of reform, however, is not merely to check waste and keep a tidy budget process -- although these are important enough in themselves. The great goal is to get the American economy running at full strength again, creating the opportunities Americans expect and the jobs Americans need. And one very direct way to achieve that is by taking the savings from earmark, program review, and other budget reforms -- on the order of 100 billion dollars annually -- and use those savings to lower the business income tax for every employer that pays it.

So I will send to Congress a proposal to cut the taxes these employers pay, from a rate of 35 to 25 percent. As it is, we have the second-highest tax on business in the industrialized world. High tax rates are driving many businesses and jobs overseas -- and, of course, our foreign competitors wouldn't mind if we kept it that way. But if I am elected president, we're going to get rid of that drag on growth and job creation, and help American workers compete with any company in the world.

I will also send to the Congress a middle-class tax cut -- a complete phase-out of the Alternative Minimum Tax to save more than 25 million middle-class families more than 2,000 dollars every year.

Our tax laws and those who enforce them should treat all citizens with respect, whether they are married or single. But mothers and fathers bear special responsibilities, and the tax code must recognize this. Inflation has eroded the value of the exemption for dependents. I will send to Congress a reform to increase the exemption -- with the goal of doubling it from 3,500 dollars to 7,000 dollars for every dependent, in every family in America.

The tax laws of America should also promote and reward innovation, because innovation creates jobs. Tax laws should not smother the ingenuity of our people with needless regulations and disincentives. So I will propose and sign into law a reform agenda to permit the first-year expensing of new equipment and technology, to ban Internet taxes, permanently, to ban new cell phone taxes, and to make the tax credit for R&D permanent, so that we never lose our competitive edge.

It is not enough, however, to make little fixes here and there in the tax code. What we need is a simpler, a flatter, and a fair tax code. As president, I will propose an alternative tax system. When this reform is enacted, all who wish to file under the current system could still do so. And everyone else could choose a vastly less complicated system with two tax rates and a generous standard deduction. Americans do not resent paying their rightful share of taxes -- what they do resent is being subjected to thousands of pages of needless and often irrational rules and demands from the IRS. We know from experience that no serious reform of the current tax code will come out of Congress, so now it is time to turn the decision over to the people. We are going to create a new and simpler tax system -- and give the American people a choice.

Better tax policy is just one part of a pro-growth agenda that includes smarter regulation and a leaner, more focused government. Among the many benefits to America, these reforms will help to create jobs, improve the investment climate, attract global investors, and strengthen the dollar.

Americans also worry about stagnant wages, which are caused in part by the rising cost of health care. Each year employers pay more and more for insurance, leaving less and less to pay their employees. As president, I will propose and relentlessly advocate changes that will bring down health care costs, make health care more affordable and accessible, help individuals and families buy their health insurance with generous tax credits, and enable you to keep your insurance when you change jobs.

Many retired Americans face the terrible reality of deciding whether to buy food, pay rent or buy their prescriptions. And their government should help them. But when we added the prescription drug benefit to Medicare, a new and costly entitlement, we included many people who are more than capable of purchasing their own medicine without assistance from taxpayers who struggle to purchase their own. People like Bill Gates and Warren Buffet don't need their prescriptions underwritten by taxpayers. Those who can afford to buy their own prescription drugs should be expected to do so. This reform alone will save billions of dollars that could be returned to taxpayers or put to better use.

There's never been a problem Americans couldn't solve. We are the world's leaders, and leaders don't fear change, pine for the past and dread the future. We make the future better than the past. That is why I object when Senators Obama and Clinton and others preach the false virtues of economic isolationism. Senator Obama recently suggested that Americans are protectionist because they are bitter about being left behind in the global economy.

Well, what's his excuse for embracing the false promises of protectionism? Opening new markets for American goods and services is indispensable to our future prosperity. We can compete with anyone. Senators Obama and Clinton think we should hide behind walls, bury our heads and industries in the sand, and hope we have enough left to live on while the world passes us by. But that is not good policy and it is not good leadership. And the short-sightedness of these policies can be seen today in Congress' refusal to vote on the Colombian Free Trade Agreement.

When new trading partners can sell in our market, and American companies can sell in theirs, the gains are great and they are lasting. The strength of the American economy offers a better life to every society we trade with, and the good comes back to us in many ways -- in better jobs, higher wages, and lower prices. Free trade can also give once troubled and impoverished nations a stake in the world economy, and in their relations with America. In the case of Colombia, a friend and crucial democratic ally, its stability and economic vitality are more critical now, as others in the region seek to turn Latin America away from democracy and away from our country. Trade serves all of these national interests, and the interests of the American economy as well -- and I call on the Congress once again to put this vital agreement to an up or down vote.

I know that open markets don't automatically translate into a higher quality of life for every single American. Change is hard, and while most of us gain, some industries, companies and workers are left to struggle with very difficult choices. And government should help workers get the education and training they need -- for the new jobs that will be created by new businesses in this new century.

Right now we have more than a half-dozen different programs that are supposed to help displaced workers, and for those who are not working at all. We have an unemployment insurance program straight out of the 1950s. It was designed to assist workers through a few tough months during an economic downturn until their old jobs came back. That program has no relevance to the world we live in today.

If I'm elected president, I'll work with Congress and the states to make job training and unemployment insurance what they should be -- a swift path from a job that's not coming back to a job that won't go away. We will build a new system, using the unemployment-insurance taxes to build for each worker a buffer account against a sudden loss of income -- so that in times of need they're not just told to fill out forms and take a number. And we will draw on the great strengths of America's community colleges, applying the funds from federal training accounts to give displaced workers of every age a fresh start with new skills and new opportunities.

These reforms must wait on the next election, but to help our workers and our economy we must also act in the here and now. And we must start with the subprime mortgage crisis, with the hundreds of thousands of citizens who played by the rules, yet now fear losing their houses. Under the HOME plan I have proposed, our government will offer these Americans direct and immediate help that can make all the difference: If you can't make your payments, and you're in danger of foreclosure, you will be able to go to any Post Office and pick up a form for a new HOME loan. In place of your flawed mortgage loan, you'll be eligible for a new, 30-year fixed-rate loan backed by the United States government. Citizens will keep their homes, lenders will cut their losses, and everyone will move on -- following the sounder practices that should have been observed in the first place.

It's important as well to remember that the foolish risk-taking of lenders, investment banks, and others that led to these troubles don't reflect our free market as it should be working. In a free market, there must be transparency, accountability, and personal and corporate responsibility. The housing crisis came about because these standards collapsed -- and, as president, I intend to restore them.

The grave problems in the housing market have been viral, spreading out to affect the credit and buying power of Americans even as the price of oil and gas is rising as never before. There are larger problems underlying the price of oil, all of which I will address in my energy plan, but in the short term there are crucial measures we can take.

I propose that the federal government suspend all taxes on gasoline now paid by the American people -- from Memorial Day to Labor Day of this year. The effect will be an immediate economic stimulus -- taking a few dollars off the price of a tank of gas every time a family, a farmer, or trucker stops to fill up. Over the same period, our government should suspend the purchase of oil for the Strategic Petroleum Reserve, which has also contributed to the rising price of oil. This measure, combined with the summer-long "gas-tax holiday," will bring a timely reduction in the price of gasoline. And because the cost of gas affects the price of food, packaging, and just about everything else, these immediate steps will help to spread relief across the American economy.

By summer's end, moreover, millions of college students will be counting on their student loans to come through -- and we need to make sure that happens. These young Americans, including perhaps some of you at CMU, are among the many citizens whose ability to obtain a loan might be seriously hurt by faraway problems not of their own making. So, today, I propose that the Department of Education work with the governors to make sure that each state's guarantee agency has the means and manpower to meet its obligation as a lender-of-last-resort for student loans. In the years ahead, these young Americans will be needed to sustain America's primacy in the global marketplace. And they should not be denied an education because the recklessness of others has made credit too hard to obtain.

These are just some of the reforms I intend to fight for and differences I will debate with whoever my Democratic opponent is. In the weeks and months ahead, I will detail my plans to reform health care in America, to make our schools more accountable to parents and taxpayers, to keep America's edge in technology, to use the power of free markets to grow our economy, to escape our dependence on foreign oil, and to guard against climate change and to be better stewards of the earth. All of these challenges, and more, will face the next president, and I will not leave them for some unluckier generation of leaders to deal with. We are going to restore the confidence of the American people in the future of this great and blessed country.

I do not seek the presidency on the presumption that I am blessed with such personal greatness that history has anointed me to save my country in its hour of need. I seek the presidency with the humility of a man who cannot forget that my country saved me. I am running to serve America, and to champion the ideas I believe will help us do what every American generation has done: to make in our time, and from our challenges, a safer, stronger, more prosperous country and a better world.

As I have always done, I will make my case to every American who will listen. I will not confine myself to the comfort of speaking only to those who agree with me. I will make my case to all the people. I will listen to those who disagree. I will try to persuade them. I will debate. And I will learn from them. But I will fight every moment of every day for what I believe is right for this country, and I will not yield.

Thank you.

NGUYEN: You have been listening to Senator John McCain talk about the economy, his ideas for the economy and a number of things that he's gone through, including an alternative income tax system, reform for medical care and prescription drugs benefits, also doubling the amount of exemptions taxpayers receive for dependents.

Let's really get some feedback on all this. Let's go to New York and CNN's Ali Velshi who joins us live.

And you know it is tax day, Ali. So let's start with that. Number one, he wants to reform the tax system. Talk to us about that.

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Well first of all, it's interesting because Mike Huckabee got a lot of support for the idea of a fair simple tax. What John McCain is saying he will leave the tax system in place for everybody that wants to fill out lots of forms and have deductions. He'll have a second alternative tax system in place for people who want a very simple form, sort of a flat rate. Kind of interesting that he is adding a tax system into the mix.

The other thing is it is tax day. More than five million Americans are subject to the alternative minimum tax now which makes you pay generally speaking a higher tax than under the simple system. He is going to phase out the alternative minimum tax. He wants to do that. That has been part of his campaign.

He also wants to cut business taxes from 35 percent to 25 percent. Small businesses in particular are the biggest employers or the biggest - the greatest growth in employment in America comes from small businesses. So he wants to encourage that.

And for people who have new ideas, he wants to sort of kick start that, Betty, by saying that in your first year of business, there will be tax write-offs on a lot of the investments that you will make in machinery and plant and equipment. So it's again a little more business friendly of a speech. Not as detailed as one might like.

One of the interesting details that I think will catch people's attention is the gas break in holiday. He wants to suspend federal taxes on gasoline from Memorial Day to Labor Day. That would be 18 cents a gallon for gasoline, 24 cents a gallon for diesel. Couple issues with that. One is gas has gone up so much that the federal taxes are not largely the issue here. There are other underlying problems. The second one is that he wants to do that in 2008. The election is at the end of 2008.

NGUYEN: Right. How is that going to happen? But he's trying to do this, too, ban Internet taxes -- also ban cell phone taxes.

VELSHI: That has been a big part of his campaign for some time actually and it's strange. It has small appeal, a niche appeal, but he feels those are areas of growth and communication and he is right on that. He wants to -- he says if you don't ban taxes on that there will be service charges and little bits of taxes that will just show up. That's actually going to be appealing.

It does not tend to be his demographic that that would appeal to. So he's got a lot of - you know we were hoping after the speech you would have a much better feel for who John McCain is on the economy. We are not entirely there.

He also wants this new mortgage situation where you can just go to the post office and fill out application if you are in trouble with your mortgage. He is getting closer to specifics. Let's put it that way.

NGUYEN: Yes, that's true. We are learning a little bit, another deal with the economy especially on this tax day. He wants to double the amount of exemptions for taxpayers who receive that for dependents. So some people may be very interested in that.

VELSHI: And he, by the way, says this Medicare system which costs us a lot of money, some people have called this new Medicare part D the most flawed government policy ever because of the remarkable cost associated. He is saying to people like Bill Gates and Warren Buffet should just not be subject to that. We have to take people that can afford to buy their prescriptions out of a subsidized government prescription plan. He's touched on a lot of issues, lacking a little bit of focus but he's touched on a lot of places. Hopefully we will see more coming out of this in the days ahead.

NGUYEN: Yes, he may have perked some interest if nothing else.

VELSHI: Yes, absolutely.

NGUYEN: OK. Thank you, Ali Velshi joining us live from New York.

HARRIS: Delta and Northwest, what will the merger mean for you, the passenger?

(BEGIN VIDEO CLIP) UNIDENTIFIED MALE: It might be good for the passengers.

UNIDENTIFIED FEMALE: I think it would be bad.

(END VIDEO CLIP)

HARRIS: Is a bigger airline a better airline? Official announcement happening any minute now. See it live right here in the CNN NEWSROOM.

(COMMERCIAL BREAK)

HARRIS: One big airline. The Delta Northwest merger news conference getting under way right now. The CEO is talking about the deal to roll Delta and Northwest into one mega-airline making it the nation's largest carrier.

Ali Velshi, a very busy man today. He's with us again from New York.

Ali, I want to know to what extent the price on that barrel behind you there had something to do with this merger. For the talks, which were off and now on again announcing the deal.

VESLHI: Right. Well, it has a lot do with it actually. I have this here because oil is within striking distance of $114 a barrel. Oil is the fuel -- fuel is the biggest cost for most airlines. They can't do anything about it. Even if Delta and Northwest merge, that does not bring the cost of fuel down. But by merging, they can cut other costs, mainly administrative costs and just try to make a little bit more profit out of it.

This will be the world's biggest airline. They're announcing the details of it now. They sort of put those details all out there. They'll be the world's biggest airline and it will be based in Atlanta where Delta is based. The new airline will be called Delta. That's why I'm calling it the new Delta. Serving 390 cities, 67 countries, with more than 800 aircraft, and 75,000 employees.

Now Delta and Northwest will be detailing in a moment that they plan to keep all seven of their U.S. hubs in place. There was some discussion about - there's not a lot of overlap but there's some discussion about Memphis and Atlanta being pretty close together. Memphis is a Northwest hub. Atlanta is Delta headquarters. But right now they're saying for now at least Memphis stays open.

Tokyo and Amsterdam are the international hubs. Amsterdam is a Northwest hub with its partnership with KLM. Tokyo is a Delta hub. They're both Sky Team Alliance members. That will make that integration easier.

But Tony, it is not a done deal. The Department of Justice, Department of Transportation and the shareholders of both teams have got to approve this and the Northwest pilots are not on side with this deal. The Delta pilots have agreed to support it in exchange for stock of the company. Northwest pilots have no such deal and that can get complicated.

HARRIS: OK. So this is -- this is a merger announcement. And as you mentioned, we have a long ways to go on this.

VELSHI: Six to eight months so no changes. Anybody who holds tickets, they don't have to worry about it. The Frequent Flier miles will be joined if the system comes together.

Memories of the U.S. Air and America West merger, that was not entirely successful on a systems front for several months. Checking in was a problem. Your air fares are probably not going to go down but your airfares have gone up largely because of oil prices in the last year. From January to now the average airfare is $100 more just because of oil prices.

HARRIS: Hey, are you close to the Dow? Are we up?

VELSHI: Yes, I was just looking at it a second ago. We are up in fact. So much going on in the market today.

HARRIS: There it is.

VELSHI: Twenty-two points higher. Yes, market is weighing good, bad.

HARRIS: Everything. All right, Ali. Appreciate it. Thank you.

If you would like to watch the news conference, let's just throw this information up for you and push you to CNN.com if you would like to see the press conference live right now.

NGUYEN: In the meantime though, wholesale inflation surges in March. Record oil and gas prices mean everything costs you more. It is issue No. 1.

(COMMERCIAL BREAK)

HARRIS: And new details coming in about a deadly plane crash in the Democratic Republic of Congo. Latest word is 83 passengers and crew members killed. But you know what? Let me sort of revise that. Because we have even more recent information that suggests 79 were onboard the plane and that there were now six survivors. Six known survivors. That would bring that number onboard who may have perished to 73.

We are going to continue to follow this. So at least at this point six known survivors of that plane crash. The D.C.-9 had just taken off from the city of Goma when it went down. It crashed into a neighborhood near the runway.

NGUYEN: And while we continue to follow that, let's talk about this. With oil prices soaring, the airlines are getting pinched. Four have filed for bankruptcy in recent weeks. That's why Delta Northwest executives are so happy to be merging right now.

Susan Lisovicz is at the New York Stock Exchange with Wall Street's reaction.

Susan, the announcement is being made that they have come to an agreement.

SUSAN LISOVICZ, CNN CORRESPONDENT: That's right. I mean it is no surprise. It has certainly taken a while to get it done. It is not officially done just yet. But it is a nearly $18 billion merger which would create the world's biggest airline. This just a year after both carriers emerged from bankruptcy proceedings and they are still losing money. You're looking at live pictures of the press conference as it takes place.

The new airline will be called Delta and have 75,000 employees. Officials say no layoffs or hub closings at least for now but today is a good reminder of why the two sides wanted to get this deal done. To cut costs. Oil prices along with unionized labor, the biggest expenses for any airline. Right now, trading above $113 a barrel.

Oil prices up 18 percent already this year. The dollar is falling. More credit problems. That's the latest from Wachovia Bank. I should say a consequence from that. Airlines have been raising prices to combat soaring oil prices. They will still need to cut costs. That's why consolidation is coming into the picture, Betty.

NGUYEN: Yes and Delta and Northwest, coming to this agreement but at the same time, it's not a done deal just yet. Don't the pilots and the regulators get some say?

LISOVICZ: That's right. And, you know, this was one of the reasons why this deal didn't get done a couple of months ago when we thought it was so close to happening. Delta pilots have approved. Northwest pilots have not. The Department of Justice will examine the competitive effects and how the combination will affect consumers.

Delta shares, by the way, which had been rallying yesterday, are right now down 10 percent. Northwest shares are down about half of that, about five percent.

Overall, we are seeing little bit of a rally. Despite the fact that we had a terrible wholesale report out an hour before the opening bell. Why? Because of rising fuel prices and food. We were expecting something in the single digits or I should say a fraction. The estimate point two percent, triple that. Wholesale prices over the past year, up nearly seven percent.

Perhaps the rallies come because better-than-expected earnings reports from Johnson & Johnson. That's a Dow 30 stock, by the way. The Dow right now is up 37 points or about a third of a percent. The NASDAQ is up just fractionally.

Betty, back to you.

NGUYEN: All right. Susan, thank you so much.

LISOVICZ: You're welcome. HARRIS: Pope Benedict is on his way, heading to the United States for his first visit as pope. He is casting a very different shadow than his predecessor.

(COMMERCIAL BREAK)

HARRIS: Time to take a look at some of the most clicked on videos at CNN.com.

A shoot-out in a liquor store in Milwaukee goes unnoticed by a customer. Take a look at this. You can see the picture in the bright green jacket. He's not even phase fazed. Gunshots going on here.

Hundreds of FLDS members got together at a rare meeting in Arizona. This comes after hundreds of children were taken away from a ranch in Texas.

And remember the 80s fad the Rubik's cube? Well, 40 Rubik's cube masters set out to prove that they were the fastest at a competition in Denver.

For more of your favorite video, go to CNN.com/mostpopular. And of course don't forget, you can take us with you anywhere, the CNN daily podcast. Just go to CNN.com and click on podcast.

NGUYEN: Pope Benedict is on his way to the U.S. right now. He left Rome aboard his plane the Shepherd One just a couple of hours ago. This trip expected to be different from those by his predecessor, John Paul II.

CNN's Mary Snow has more.

(BEGIN VIDEOTAPE)

MARY SNOW, CNN CORRESPONDENT: Pope Benedict XVI addressing crowds in Rome Sunday, getting an enthusiastic sendoff as he gets ready to introduce himself to American Catholics. Three years after succeeding Pope John Paul II, Benedict remains somewhat a mystery.

JOHN ALLEN, CNN SENIOR VATICAN ANALYST: I think most American Catholics may not know a lot about him. He is not the sexy media icon that John Paul II was. What they've seen by and large they've liked.

SNOW: Of American Catholics polled by the Pew Research Center, 74 percent give Pope Benedict a favorable rating. But the survey points out that he's not as highly regarded as his predecessor. For one, their personalities are different. John Paul was known for his charisma. Benedict is known as an intellectual, an introvert.

CARDINAL FRANCIS GEORGE, ARCHDIOCESE OF CHICAGO: He doesn't quite get the same kind of energy from crowds that John Paul II got. John Paul II was extroverted. He got energy talking to people. The present Holy Father loses energy and he has to rest in between all these encounters.

SNOW: The energy factor is partly due to age. Pope Benedict turns 81 this week. When John Paul became pope, he was only 58 and was able to keep a much more rigorous schedule traveling around the globe.

The two men, though, had strong ties. Benedict then Cardinal Joseph Ratzinger of Germany, was John Paul's chief theological adviser. He was a key figure behind the crackdown on moral teachings of homosexuality and women's ordination.

ALLEN: From the outside he was seen as an arch conservative, sort of Darth Vaderesque figure. So some people interpret it, the election as pope as a sharp to the right, Reagan revolution in the Catholic Church.

SNOW: But on the inside, says Vatican analyst John Allen, cardinals view Benedict as a man that's extremely open.

Victims of sex abuse by priests are hoping Pope Benedict will listen to them. There are deep scars following the widespread sex abuse scandal of the church that came to the forefront in 2002. One group is calling on the pope to meet with sex abuse victims and to transform the church. Another group is calling on the U.N. to investigate the Vatican's role.

Mary Snow, CNN, New York.

(END VIDEOTAPE)

NGUYEN: You can follow Pope Benedict's six-day visit on CNN.com. Tomorrow morning, we will take you live to the White House for the pope's historic visit there. You can see it right here in the CNN NEWSROOM.

And this note too, this weekend T.J. Holmes and I will anchor live from New York for the pope's visit on Sunday. We'll be live from Yankee Stadium mass. Don't miss it.

HARRIS: You are going up?

NGUYEN: I'm going up. I'm going to visit the pope.

HARRIS: That's terrific.

NGUYEN: If he allows us in.

HARRIS: If he knows you like I know you.

NGUYEN: We are good. Tony.

HARRIS: Still to come in the NEWSROOM, this is no child's play. One minute you are shooting the breeze, part of the next, there is a knife in your head. What's up with that?

(COMMERCIAL BREAK)

NGUYEN: We're going to start with this because wait until you see the story. He is doing better now. That's what you need to know. But what a scare for a Washington State boy. He had a knife, a butter knife, stuck in his head. Tyler Hemmert says he and a friend were sitting on a park bench when another boy became angry and threw a knife at them.

Tyler says he felt something like a bee sting. A little more be that, Tyler. It turned out to be a butter knife lodged between his scalp and his skull.

(BEGIN VIDEO CLIP)

TYLER HEMMERT, KNIFE STUCK IN HEAD: I could see the handle of the butter knife sticking out. So that's when I freaked out. They took a cat scan to make sure it was not my skull and found out it wasn't so they numbed it and cut it open and ripped the knife out.

(END VIDEO CLIP)

NGUYEN: That's one of the craziest things I have ever seen.

HARRIS: That's pretty crazy.

NGUYEN: Look at that. A butter knife in his head.

HARRIS: How hard do you have to throw a butter knife to get it to stick?

NGUYEN: He must have thrown it either at a close distance or pretty hard. Tyler says he got five stitches from it and he and his dad say they haven't heard from the fifth grader they say threw the knife. Authorities are trying to determine whether to file charges. The good thing is, Tyler is OK.

HARRIS: Seems a little wobbly though. But he's OK?

NGUYEN: He's got a good story now.

HARRIS: This is -- hard to understand it (ph).

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