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AMERICAN MORNING

Delta and Northwest Airlines Put Finishing Touches on Deal to Create World's Largest Airline; Price of Oil Now Crossing $113 a Barrel; Tax Season Wrapping Up

Aired April 15, 2008 - 08:00   ET

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


MITT ROMNEY, FORMER PRESIDENTIAL CANDIDATE: It's interesting in Washington, you pass a bill to create a program and it stays there for decades. There's never any evaluation of how well this working. And Senator McCain is saying enough of that. The people come before government.
We're going to let the people keep their money particularly the tough time like this where gas prices are high, when there are recessionary burdens that people are feeling.

Let's let our individuals have their taxes simplified and made lower. And let's have government finally pulled back. And of course, that's a very different approach that either Barack Obama or Hillary Clinton would take. Their view is always expand government.

KIRAN CHETRY, CNN ANCHOR: Well, you are bringing both of them up. They are criticizing John McCain's economic experience and also his plan to deal with the housing crisis over the weekend.

In fact, let's listen to what Senator Obama said this weekend.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: John McCain, it took him three tries to finally figure out that the home foreclosure crisis was a problem and to come up with a plan for it and he is saying I'm out of touch.

(END VIDEO CLIP)

CHETRY: We are waking up to the news this morning of home foreclosures up yet again for the month. What is his plan to help people who are suffering now?

ROMNEY: Well, you know, I'm a little embarrassed by those words from Barack Obama. That is -- he knows better than that. Senator McCain has laid out, if you will, two approaches or two parts of the issue.

One is for people who have been speculating, investors on Wall Street have been buying mortgage products. He is saying look, government does not have a role in bailing those folks out.

CHETRY: And he still feels that way? ROMNEY: He still feels that way about the speculators, the investors in products. But homeowners -- individual homeowners who may lose their home, homeowners who would be able to meet the terms of the original mortgage they agreed to. Those people he is going to work to help to make sure they keep their home and we don't have those homes dumped in the marketplace. So Barack Obama understands that.

There are two parts of the program. But government John McCain believes should not be bailing out investors, Wall Street folks, people who are speculators -- that is not the job of the taxpayer to take care of those folks, but it is something we want to do to care for those people who didn't know what they are getting into, but who can meet the original obligation they signed up for.

CHETRY: Now, you have been campaigning very hard for Senator McCain. You're actually travelling alone in Lancaster, Pennsylvania this week as well. What is the status, if you can tell us about a possible number two spot for you on this ticket?

ROMNEY: Oh, I don't think we're talking about that the VP sweepstakes these days. I'm working real hard to get Senator McCain elected. He's got a number of people that he can choose from. This is a time when we are all coming together to raise money, to get his message out across the country, to get him elected and that's what I'm doing.

CHETRY: Are you also have some good economic credentials and could possibly help him in a time like this, is it something that you guys have talked about?

ROMNEY: No. We really haven't spoken in that regard. But I can tell you that for a person who spent over 25 years in Washington, D.C., working that economic policies from the days of Reagan and throughout the current time, Senator McCain is very well aware of the spending programs in Washington, which ones need to be cut back, which ones need to be grown.

He understands also how to relieve the pressure on the American taxpayer. This is an individual who -- well if you take Hillary Clinton and Barack Obama experience and multiply it by ten, you still haven't caught up with Senator McCain when it comes to experience on the economy.

CHETRY: And you're out helping him push that message and we're glad that you had a chance to join us this morning as well. Mitt Romney, former presidential candidate and former Massachusetts governor. Thanks for being with us.

ROMNEY: Thank you. Good to be with you.

JOHN ROBERTS, CNN ANCHOR: Three minutes after the hour now. Delta and Northwest Airlines have put the finishing touches on a deal to create the world's largest airline. But what does it mean for you? Well, you see higher fares, fewer seats.

Well, joining me now to talk more about this, Delta CEO Richard Anderson and Northwest Airline CEO, Doug Steenland. We'd also like to welcome in our viewers from around the world who are joining on CNN International.

Gentleman, good morning. Thanks for being with us. Sorry for the delay. We hoped to get you on about 40 minutes ago, but had some technical problems. I know what it's like when the pilot comes on (INAUDIBLE) and has to tell all those passengers why they are stuck on the runway.

Mr. Anderson, let's start with you. What does this going to mean for the flying public? Some analysts believe that on certain routes at least, this could mean fewer flights and higher fares?

RICHARD ANDERSON, CEO, DELTA AIRLINES: Well, you know, this really is an end-to-end combination. There's very little overlap between Delta and Northwest. And what this does create for the United States and for the consumers in the United States is the very first global airline. Because we will have network throughout Asia, the Middle East, Africa, and India.

Over 400 cities, 67 countries, and many, many more choices for consumers because the combination will create between Delta and Northwest over 6,000 new city pairs. So very positive and we will be positive for consumers both in the United States and around the world.

ROBERTS: Doug Steenland, Northwest Pilots Union is complaining that they were cut out of this deal, and it's a much better deal for Delta employees than it is for them. Was there a strategy of divide and conquer here. Get the Delta pilots online and then deal with the Northwest pilots later?

DOUG STEENLAND, CEO, NORTHWEST AIRLINES: Not at all. We collectively tried working with our pilot groups to really do something revolutionary, which was to reach all of the contractual agreements that need to be reached in a merger like this before announcement.

Everybody tried, used their best efforts. We didn't get there. But we're going to continue to try to work really hard to get to that agreement before the merger is consummated. And if we are successful in doing that, it will really be revolutionary. No airline transaction will have succeeded in doing that.

ROBERTS: Now, Mr. Anderson, the pilots union for Northwest is suggesting that this merger is built on unstable ground. It's not likely that they could derail it, but could they be an impediment to the success if they don't get what they are looking for?

ANDERSON: No, because what this is really about is what's in the best interest of the 80,000 employees. The millions of customers we serve, and the 400 cities and communities that we serve around the world.

This is very positive for all of them, because the long-term best interest of the employees of both of these airlines is for these airlines to be healthy. And that is the truest job security in the airline industry. And combination of these two carriers makes for the strongest airline in the United States. And that's in their best interest.

ROBERTS: Mr. Steenland, if the figures I saw were correct, at the end of 2007, these two companies together had about 89,000 employees. You are looking at a target employee base of about 75,000. What do you do to get from 89 down to 75?

STEENLAND: Well, I think the 89 number doesn't equate to the 75 because it includes a couple non-mainline divisions. So, really today, we're starting at about 77,000 employees. And we both have some programs in place that will get that number down to 75.

So there will not be any significant -- there will be no layoffs as a result of this transaction for frontline employees. And we think it's clearly a positive story for employees in general going forward.

ROBERTS: No question there are some people will lose their jobs, how do you trim 2,000 people?

STEENLAND: Those deal with programs that were announced prior to the merger being announced, and obviously, when the price of fuel goes from, you know, $65 a barrel to over $112 a barrel, and other costs go up, some belt-tightening needs to take place.

ROBERTS: Mr. Anderson, you are going to get a lot of congressional and state scrutiny of comments that we've heard in the wake of the announcement of this merger are correct.

Senator Amy Klobuchar, from Minnesota said, quote, "I will hold their feet to the fire to live up to their commitments and show that any merger is in fact in the best interested of Main Street and not just Wall Street."

James Oberstar who is the chairman of the House Transportation Committee doesn't like merger of airlines as a rule. Tim *, the governor of Minnesota is promising to look deeply into this.

What are you going to tell members of Congress and politicians on the state level about this?

ANDERSON: We have to have a strong bible airline business in this country. Since 2001, there have been $30 billion in losses and 150,000 jobs lost. And what this is about is giving two airlines the opportunity to be strong and to be able to grow and provide viable careers to their employees.

And we welcome that challenge because this is the best answer to the challenges that the industry has faced. And we should be focusing on what it takes to allow the United States to have an airline industry and an airline, the largest airline, be able to compete against foreign flag carriers that have open skies rights into this country and are allowed to put together their combinations to compete on U.S. soil.

ROBERTS: And Mr. Steenland, one last question to you, if I could, is this the beginning of more consolidation in the industry? There have been suggestions that perhaps United Airlines and Continental Airlines would like to take a look at their own deal like this.

STEENLAND: We have no insight into that. We just worked hard to make sure that we did what was right.

ROBERTS: But is it the only way to survive in this economic climate?

Well, you know, airlines have faced many, many challenges in the past. And today's really big challenge is fuel. And by merging like Northwest and Delta are, we are creating benefits on the revenue side and on the cost side that neither airline could do on their own.

And those benefits which are in excess of a billion dollars will clearly help offset fuel price increases and other challenges down the road to create a more stable environment.

ROBERTS: Certainly, would be good to see at least some airlines making money. Richard Anderson, the CEO of Delta and Doug Steenland, the CEO of Northwest. Thanks for being with us this morning. Again, we apologize for the delay. But now that you are on your way to your destination, we hope that you will enjoy the flight. Appreciate it.

UNIDENTIFIED MALE: Thank you.

UNIDENTIFIED MALE: Thank you.

ROBERTS: Take care.

Kiran?

CHETRY: You know, we were just talking about the high price of oil. And we have some breaking news once again. The price of oil now crossing $113 a barrel. This news just coming in the past couple of minutes here. Ali Velshi is going to weigh in next.

CHETRY: Ali Velshi is going to weigh in next.

Also, ever wonder how the IRS decides whether or not you're the one they're going to audit? We have the red flags that could get you in trouble. If you're one of those last-minute filers, maybe you should listen up. We'll be right back.

(COMMERCIAL BREAK)

CHETRY: Following breaking news this morning, and another oil price record. You shouldn't touch anything on that barrel by the way.

VELSHI: When we touch the barrel, this is what happens. The oil prices end up going a little nuts. We've never seen these numbers before. Look at that, $113.30. Don't get scared. I'm going to take the 97 off, so you don't think it's 100.

CHETRY: All right. And in the meantime, let me ask why. What's going on this morning that causing the ---

VELSHI: Well, what's going on isn't any different than any other day. Really, it's -- we use too much oil. Oil prices have been going up for various reasons. I mean, none of them are fundamental. As John and I have mentioned many times before, it's -- the price of oil based on fundamentals should be much lower than it is now, if it were just supply and demand. But it's not.

It's a bunch of speculators who are in the oil market. Part of it is a lower U.S. dollar. Part of it is little supply. Glitches all over the world. But we use almost as much oil on a daily basis as we produce. And that's why we've got this kind of prices.

Now, how does it affect you? It affects you because we use, as you just mentioned with the CEOs of Delta and Northwest, we use a lot of oil for everything we use. Now, U.S. drivers consume 10 percent of all the oil that's produced in the world on a daily basis just to drive. That's truck drivers and car drivers.

Trucks use diesel, farm equipment uses diesel. That also increases because of this and so does fuel prices. Gasoline prices $3.38 a gallon right now according to AAA. And that is a record as well for gasoline prices. So again, you'll all know this when you get out and fill up your cars. But this is over $1 increase just overnight.

ROBERTS: So, how much trouble are we in as a result of this, economically?

VELSHI: This? There's never been -- I mean, I think in the last ten recessions there hasn't been one that's not been preceded by an oil spike. Now we've got an oil spike and we have a housing problem. This is a bit of a perfect storm. The only leg that's still standing, it's not standing by much, is the jobs.

ROBERTS: We were saying oil costs us $100. What you do to a screw with a screwdriver.

VELSHI: Except that you have often pointed out, you're correct in this, that as the oil prices cross $100 and gasoline prices get to $3.33, .43, .50, we do actually see pull-backs. We see pull-backs on the number of people who drive trucks.

CHETRY: Aren't we seeing more viable options for trying to conserve?

VELSHI: Yes, sure. When it's this --

CHETRY: Hybrids are becoming more commonplace. I mean --

VELSHI: I just spoke to the CEO of SASOL, the old South African Oil Company. They make gasoline out of coal. If oil's not $50 a barrel or higher, doesn't make it worth doing that. But at $112, $113, why not? There can be oil out of this computer --

ROBERTS: You got to hope that Brazilians tap that new reserve that they found right quick, Ali?

VELSHI: 33 billion barrels maybe, yes.

ROBERTS: Thanks.

The economy, issue number one on the minds of voters. Join Ali, Gerri Willis and the CNN money team for "ISSUE #1" all this week at noon Eastern, right here on CNN. And online as well at cnn.com.

CHETRY: Well, it's another chilly day across the East Coast. The good news is Jacqui Jeras is tracking a big warm-up for us. You know, we're talking about when is it going to feel like spring. In some places it's too hot, spring's over, and for us we're still waiting.

JACQUI JERAS, CNN METEOROLOGIST: Absolutely. The record hit has been across parts of the west. It's moving in to the Midwest for today. Where is that headed? We'll tell you about some temperature changes on the way. That's coming on AMERICAN MORNING.

(COMMERCIAL BREAK)

(WEATHER REPORT)

CHETRY: Meantime, we could be dealing with some winds as it all evens out. All right, Jacqui, thank so much.

Well, you know, tax season's wrapping up, of course, today at midnight. You've got to wrap it up or file an extension.

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Hurry up. Hurry up.

CHETRY: Do you need to worry about being audited by the IRS? You know, for a lot of people, Gerri, this is, you know, their nightmare. They worry about this. But is there anything you can do or you can avoid not to get audited?

WILLIS: Well, let's talk a little bit first about how you get audited. What happens to you. Because I don't think people realize anybody can report you, your stockbroker, your insurance agent, your banker, you name it. Even a neighbor or an enemy can decide, hey, you know, something is not right here, I'm calling the revenuers.

OK, let's talk a little bit about --

(CROSSTALK)

WILLIS: No, no, no, no, no, no. OK. The IRS, of course, can do it as well if they find something that's unusual in your tax filings. Maybe you're making $10,000 and have you a huge mortgage deduction. Things just don't line up exactly right.

Other red flags, huge charitable donations, of course, always a red flag. If you make less than some people in your profession, let's say you're a brain surgeon and you're making $5,000 a year. Hmmm, something's not adding up. Or if you fail to report 1099 forms. Those are the forms where you report investment income. And if you're wealthy, you're more likely to face an audit. 9.25 percent of wealthy folks get audited. About 1.4 million folks were audited overall last year. That's not a lot of taxpayers, but I know a lot of people worry about it.

CHETRY: What do you do if you find out that you are going to be audited?

WILLIS: Well, here's what happens. Probably most likely, it's a civil audit. That means you made some kind of stupid mistake. Maybe on your taxes. Happens all the time. You get a letter in the mail from the IRS. They'll tell you what the problem was and now ask for specific information. This will give you a real clue as to what they are after, what they're looking for.

If you give them the right information, you kind of fess up, chances are that you can get out of this by paying a fine and paying your back-taxes. Now, there's also criminal audit that you need to know about. That is scary stuff.

You know, a federal agent shows up at your door. The sanctions are pretty scary stuff. Be sure to get a lawyer. Don't talk to the IRS. And always, always, always if you get an e-mail from the IRS, don't answer it. They don't send out e-mails. The IRS does not send out e-mails. So, if you see something in your inbox, in your e-mail and it's an e-mail from the IRS, it's bogus.

CHETRY: Double trouble. So, you're possibly being audited and now you have a new computer virus to boot.

WILLIS: Exactly.

ROBERTS: Or somebody is trying to steal all your money.

WILLIS: Yes, yes, absolutely. So, you want to be careful about that.

CHETRY: All right, Gerri, thanks for the tips.

WILLIS: My pleasure.

CHETRY: And once again, "ISSUE #1" everyday at noon. We'll be watching. Thank you.

ROBERTS: While we had the depressing sight of Ali's oil barrel and we've been telling you all morning about John McCain's proposal to give us a summertime break at the gas pump. He's calling for the 18 cents a gallon federal gas tax and 24 cent diesel tax to be suspended between Memorial Day and Labor Day.

That brings us to this morning's "Quick Vote" question. McCain's gas tax holiday. Do you think it's a good idea? Well, guess what? Right now, 60 percent of you say, yes, it's a great idea. 40 percent say, no, we want to keep paying that tax. Cast your vote at cnn.com/am. We'll have a final check of the votes at the end of this hour. And we're getting some good e-mails in as well. We'll share some of those with you, coming up in about 25 minutes' time. If you want to, drop us a line, cnn.com/am.

CHETRY: All right. We're going to read some of those, coming in a little bit.

Meanwhile, we have some new video just in right now. It's the Pope leaving Rome. There you see him. He's on his way to the United States. And when the Pope arrives, security will be unprecedented. We're going to show you how they plan to keep the Pope safe but still accessible to the thousands and thousands who want to come out and meet the Holy Father. We're following all of this on AMERICAN MORNING. Still ahead.

ROBERTS: Coming up on AMERICAN MORNING, a Wild West showdown.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: They're violating the law, and when you violate the law you go to jail. Now we're going to send out our posy. We're going to arrest more of them.

(END VIDEO CLIP)

ROBERTS: A tough-talking sheriff rounds up illegal immigrants and tells others to stay out of his way. Meet the mayor who's fed up and fighting back.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: He's arresting legal residents for no other reason than being brown-skinned.

(END VIDEO CLIP)

ROBERTS: A sheriff and a mayor face off ahead on AMERICAN MORNING.

(COMMERCIAL BREAK)

ROBERTS: The mayor of Phoenix is calling on the Justice Department to investigate a famous local sheriff for potential civil rights violations related to a crackdown in Hispanic areas. Mayor Phil Gordon says Maricopa County Sheriff Joes Arpaio was targeting Latinos and arresting them for mostly minor offenses. The sheriff says that he is only enforcing the law on the books and not targeting a specific group.

Sheriff Arpaio is standing by and will join us in a moment. But joining us first from Phoenix is Mayor Phil Gordon.

Mayor Gordon, good to see you. You've sent a letter to the Michael Mukasey, the Attorney General, asking the FBI to investigate. What is it in your mind that the sheriff was doing that's wrong? MAYOR PHIL GORDON, PHOENIX: Well, first and foremost, he's focusing public safety resources at an area where we need to go after violent criminals, the illegal immigrants that are creating violent crimes, smuggling, et cetera.

Rather, what he's doing is announcing to the world that he's going into Hispanic neighborhoods and setting up sweeps under the name of crime suppression. And then what he's doing is sweeping in anyone with brown skin, making 20, 30 stops, arresting everyone and then bringing them to jail and determining whether they're legal or not.

And that's sweeping in American citizens of Hispanic origin, legal residents and terrifying the community, plus endangering undercover police officers and federal agents that are conducting undercover operations in those areas since there's no warning and no coordination.

ROBERTS: In your letter to the Attorney General, you charge Arpaio has been engaging in quote, "Discriminatory, harassment, improper stops, searches and arrests." He claims that all of his stops and arrests are legitimate. Fewer than half of the people that he arrested have been illegals. Is he crossing a line there or is he just doing police work that needs to be done?

GORDON: Absolutely, he's crossing the line. And it's not about enforcement of illegal immigration. In fact, we wish the federal government would do what they are charged for, which is secure the border and get a workable immigration policy. But this is about under the name of crime suppression, going after violent criminals, arresting individuals that are riding a bike without a light, crossing a street in the middle of the block.

I submit with 30,000 felony warrants sitting on his desk including a vast majority of illegal immigrants that have created and committed drug smuggling, murders, burglaries, torturing, that's where his resources should be. Taking 200 deputies off the street in helicopters and horse patrols to basically target Hispanic individuals. They're terrifying children, crying, parents that are afraid their children are going to get arrested for no other reason than being brown-skinned. That is wrong.

ROBERTS: Federal immigration officials so far say that they don't have any problem with what Sheriff Arpaio was doing. And Sheriff Arpaio has said this about you, Mr. Mayor. He says quote, "The Mayor is disconnected from the people he represents. Doesn't get the point. Now he's going to Washington to confuse the issue and try to get the public against me."

If not what the Sheriff Arpaio was doing, how would you deal with the problem of illegal immigration there in your city?

GORDON: Number one, this is about civil rights. Number two is Phoenix police have arrested ten times more illegal immigrants for violent crimes and turned over 2,000 which is five times more individuals in just one year versus three years of what Sheriff Arpaio has done. So, the city, the other local jurisdictions, the state jurisdiction of police and the federal agents have all worked together to go after the violent smugglers, the criminals, the ones that are coming into our community, and disrupting the safety of everyone.

Number two is, with respect to Sheriff Arpaio and what he's saying is being done, is not correct. Number one, he had the new special agent look at one operation and said, that's in compliance. What's been going on is for several months and ICE does not look at and does not focus nor has the jurisdiction on civil rights violations and putting the police officers' safety at risk.

That's what we're talking about. It's police officer safety and civil rights violations, not whether immigration laws should be enforced.

ROBERTS: Mayor Phil Gordon of Phoenix, thanks for being with us this morning. Appreciate you're up early for us.

GORDON: Thank you.

ROBERTS: And now, also joining us from Phoenix is Sheriff Joe Arpaio.

Sheriff, welcome. Thanks very much for being with us. Sir, you heard what the mayor says. He says you're engaging in racial profiling, potential violation of civil rights, and you're not going after the real criminals. What do you say?

SHERIFF JOE ARPAIO, MARICOPA COUNTY, ARIZONA: Well, that's garbage. We locked up 900 smugglers and co-conspirators under state law which he refuses to enforce. I can go on and on. My people have been trained by ICE 160 on these suppression operations. And we do clear a lot of warrants, drugs, domestic violence.

He is disconnected. He is pro-illegal immigration along with a small group of his activists, who continue to call me a Nazi, Hitler and everything else. When the people from Washington, it wasn't the agent in charge, it was top officials came here, they like what we were doing.

When it was in the headlines, the same day he wrote to the Justice Department on the most juvenile type of complaints I've ever seen. And I'm a former federal top law enforcement official. He's trying to inflame the community, going after the sheriff.

And you know, I got news for him. I will continue to come back into Phoenix. I will support, I will enforce the illegal immigration laws, crime suppression, and he can say whatever he wants with the garbage that he is throwing out, trying to deflect. He lost the public relations war. Now, he's trying to get the Justice Department involved, making it look like I'm under federal investigation. So, I got news for this mayor, I will continue to enforce the law. I took an oath of office. When he says violent criminals, he forgets to say a guy jaywalking killed his police officer on a minor crime. I can go on and on and refute everything this guy is saying. JOHN ROBERTS, CNN ANCHOR: All right. Sheriff, let me jump in here for a second, if I could because it is not only Mayor Gordon who is complaining. Listen to this exchange between yourself and Mayor Rebecca Jimenez from nearby Guadalupe.

(BEGIN VIDEO CLIP)

ARPAIO: You said you don't want us back here tomorrow, is that what you said?

MAYOR REBECCA JIMENEZ, GUADALUPE: Yes.

ARPAIO: We will be back here tomorrow, full force.

JIMENEZ: I figured you would.

ARPAIO: One more thing, if you don't like the way I operate, you go get your own police department.

(END VIDEO CLIP)

ROBERTS: So, there's the mayor of a town saying we don't want you to come back. You are saying we are going to come back. Mayor Gordon and other officials from Guadalupe complain you are a bully engaging in election year publicity stunts. What do you say?

ARPAIO: First of all, we do the contract. We are the law enforcement in Guadalupe. We've had three incidents of illegals assaulting citizens, serious crimes. I do the enforcement there. She hasn't even paid her bill. She owes me $300,000. If she doesn't like the way we operate, go somewhere else and get a police department.

ROBERTS: You've got 160deputies trained to enforce immigration laws but you have what you call a posse of another 300,000 you can draw upon, about 500 of whom carry weapons. Can you tell us who these people are, why they are involved in immigration enforcement?

ARPAIO: We have 3,000, we use the posse to go after dead-beat parents and hookers. Now, they are helping our deputies to express crime and in the process that we come across any illegal aliens, we arrest them, we don't let them go like the Phoenix police. They do because of the mayor's policies. We arrest them pursuant to our duties. I don't see what the big problem is.

ROBERTS: One more question if I could, Sheriff, because we are running out of time here. The mayor said you arrest only brown- skinned people, only people who look Hispanic, is that true? Do you ever arrest whites?

ARPAIO: Of course, we arrested 150 out of our last operations. 72 were illegal. Of course we do. He knows, he is just throwing hype out there to get people to go against me. It is not going to work.

ROBERTS: Sheriff Joe Arpaio, good to see you this morning, sir, thank you for being with us.

ARPAIO: Thank you.

ROBERTS: We will keep following the story. Appreciate it.

Kiran?

KIRAN CHETRY, CNN ANCHOR: We're also tracking breaking news right now with inflation numbers. New numbers just out. Ali Velshi joins us with that.

Hey, Ali.

ALI VELSHI, CNN CORRESPONDENT: Kiran, I wish I had something good for you. The problem is this is it. Oil has gone up to $113.66 since we last talked. Oil is part of the problem here. Wholesale inflation numbers have just came out, almost triple the rate that was expected. The number may not make sense to most people. It's 1.1 percent is the number. When you compare that year over year that is an increase. Are you sitting down for this? 6.9 percent. That is wholesale inflation, the price that producers of things pay. But obviously the issue is that gets passed on. When we talk about fuel surcharges and things like that, that's people who are passing on increased costs to you the consumer. We will get retail inflation in two days. This is always an indicator of the way things are going.

Wholesale inflation up year over year 6.9 percent, that's the annual rate of inflation. That is a remarkable number. If you want to know how remarkable it is, look at your paycheck, see if anybody has got a 6.9 percent raise in the last year. We've got oil prices up. We've got gas prices at record highs, not a great day for anybody who has to spend money in America.

CHETRY: Certainly isn't. Did you mention futures yet on the Dow as well?

VELSHI: Yeah, they are moving around because it is been a very, very confusing morning on several levels. They are trying to digest the whole Delta Northwest deal and all the other things and John McCain's announcement. Right now futures are kind of flat but it's been moving around. I wouldn't worry about it for the next half hour or so.

CHETRY: Let's worry about the fact that it's tax day as well.

VELSHI: It's tax day as well. That's right. Almost forgot that.

CHETRY: All right. Ali, thank you.

Turning to politics now, Senator John McCain is in Pittsburgh this morning to deliver his plan to help the ailing economy. McCain will suggest that the federal government suspend the 18 cents a gallon federal tax on gas and the 24 cent a gallon tax on diesel fuel for the summer from Memorial Day until Labor Day.

Earlier we spoke with former Republican presidential candidate and former governor of Massachusetts Mitt Romney about McCain's economic plan.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), FMR. PRESIDENTIAL CANDIDATE: Senator McCain is going to propose a new outlook in Washington that frankly will turn Washington on its head. It will say instead of growing government year after year after year and taking whatever tax revenue from the people we have to be able to do that, he's going to say enough, we're going to stop growing the federal government, we are going to put a freeze on discretionary spending and we are also going to give people back more of their money.

(END VIDEO CLIP)

CHETRY: You can catch Senator McCain's speech on the economy 10:00 a.m. Eastern Time right here on CNN.com.

Senator Barack Obama making the economy issue number one in his attempt to win the Pennsylvania primary. He came out swinging against Senator McCain after McCain suggested that Obama was out of touch with middle class voters.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: John McCain, it took him three tries to finally figure out that the home foreclosure crisis was a problem and to come up with a plan for it and he's saying I'm out of touch?

(END VIDEO CLIP)

CHETRY: Barack Obama says he would welcome a debate concerning which political party is out of step with voters' concerns.

Well some controversial comments making waves again. This is from the founder of Black Entertainment Television, BET, Robert Johnson, pictured there, is suggesting that Barack Obama probably wouldn't be leading -- be a leading presidential contender if he were white. He said, "What I believe Geraldine Ferraro meant is that if you take a freshman senator from Illinois called 'Jerry Smith' and he says I'm going to run for president, would be start off with 90 percent of the black vote? And the answer is probably not." His comments and remarks echo comments made by Clinton supporter Geraldine Ferraro last month which forced her to quit the Clinton campaign. Robert Johnson is a long time friend of the Clintons.

Senator Hillary Clinton speaking of releasing a new ad this morning, she is attacking Barack Obama for calling small town voters bitter. While speaking in Pittsburgh, Clinton was booed when she tried to bring up Obama's remarks.

(BEGIN VIDEO CLIP)

SEN. HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE: I know that many of you like me were disappointed by recent remarks that he made and I think it's important you know that we give people the chance to really compare and contrast us.

(END VIDEO CLIP)

CHETRY: Clinton says she thinks it's to give people the chance to really compare and contrast Obama at herself.

ROBERTS: Looks like she maybe took a left turn there when she heard the boos.

Still ahead, new video of Pope Benedict before he got on his plane to make the first visit to the United States as pope. During the flight he spoke of the clergy sex abuse scandal in the United States. We will tell you what he said coming up.

(COMMERCIAL BREAK)

CHETRY: This just in to CNN. Pope Benedict XVI talking directly about the clergy sex abuse scandal that has rocked the Catholic Church here in America. Moments ago the pontiff told reporters on this flight to the U.S. the clergy sex scandal causes him "great suffering." Pope Benedict is expected to arrive at Andrews Air Force Base at 4:00 p.m. Eastern Time. Teams of security personnel will be working together to keep him safe.

Our homeland security correspondent Jeanne Meserve joins us from Washington with a look at the behind the scenes security situation unprecedented as they prepare for the pontiff's visit and try to make sure he's safe.

Hi, Jeanne.

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: Hi, Kiran. Administration officials say there are no specific threats revolving around the pope's visit, but he was mentioned in a recent audio tape from Osama Bin Laden and he is visiting two high threat cities, Washington and New York. So every precaution is being taken.

(BEGIN VIDEOTAPE)

MESERVE: This is the pope, not Benedict XVI, but the man who plays him in security rehearsals for this week's visit. The Secret Service has been preparing for these four days for five months, enlisting 27 state, local and federal agencies to help out.

JEFF IRVINE, U.S. SECRET SERVICE: Every security aspect that you've ever been exposed to will be deployed. Quite frankly, quite a few that you've never seen deployed.

MESREVE: One of three pope-mobiles has been shipped in to move the pope around Washington. The Virgin Mary will watch over him and heavy bulletproof glass will surround him. Because you can see him and because the car sticks out, some standard security tactics can not be used.

RENEE TRIPLETT, U.S. SECRET SERVICE: Clearly that will make this a little more challenging than when we can play different shell games or moving the vehicles around and moving the protectee around.

MESERVE: The guest list for the pope's meeting with religious leaders was modified for security reasons. Ezek representatives not be there because they wanted to wear their ceremonial daggers. The stadium where Pope Benedict XVI will celebrate mass in front of 46,000 people poses the biggest challenge. Larry Cunningham knows. He handled security for John Paul II's visit to the U.S.

LARRY CUNNINGHAM, FMR. SECRET SERVICE AGENT: The sheer numbers and the size of the building, it's difficult to control.

MESERVE: A mile and a half of the nearby river will be shut, patrolled by coast guard boats with machine guns.

If anybody poses a threat they are in trouble?

LT. LYNDA LECRONE, U.S. COAST GUARD: We can use force.

MESERVE: Air traffic restrictions will be tightened and local roads and bridges will be closed to traffic.

(END VIDEOTAPE)

MESERVE: There will be, in fact, be many road closures as the pope moves around Washington affecting virtually everybody who lives and works here. So, although some people are very enthusiastic about the pope's visit, some people are dreading its potential impact.

Kiran, back to you.

CHETRY: Jeanne Meserve in Washington, thank you.

ROBERTS: It's 43 minutes after the hour. Jacqui Jeras is tracking a fire danger right now. Hey Jacqui.

JACQUI JERAS, AMS METEOROLOGIST: John, the winds really strong from the southwest into the Midwest. Find out how that impacts your travel. We will talk about the crazy temperatures up next on AMERICAN MORNING.

(COMMERCIAL BREAK)

(WEATHER REPORT)

ROBERTS: Yesterday, we were talking about the earthquakes off the coast of Oregon. Now the big one scientists say are coming. They are 99 percent certain that an earthquake will rock the state of California by 2037. It's part of the first ever nationwide forecast. They say they odds are slightly higher that it will hit southern California rather than northern California. A lot of people say a big earthquake in California the next 30 years, that is a safe bet.

CHETRY: Sounds like a no brainer but where, when, how hard it will be, how to predict it, that is the hard stuff.

"CNN NEWSROOM" is minutes away. Tony Harris takes a look at what's ahead.

TONY HARRIS, CNN ANCHOR: A lot of news. Good morning, Kiran. Good morning, everyone.

The Delta Northwest merger in the "NEWSROOM" rundown for you. The combined company would be the world's largest airline. Will it mean cheaper tickets for you and me? What about more leg room?

Record fuel costs pumping up inflation for March. New numbers out. We cover issue number one.

CNN gets rare access to the polygamous compound Texas. We talk to angry mothers.

The pope on his way a preview of his trip. Back to you, Kiran.

CHETRY: Millions of Americans can not afford health care. Dr. Sanjay Gupta has some ideas to help pay for it. Hey Sanjay.

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Good morning, Kiran. A lot of people don't have insurance at all. A lot of people are underinsured as well. I'll tell what you is going on here and what strategies are to get yourself out of the mess. That's coming straight ahead on AMERICAN MORNING.

(COMMERCIAL BREAK)

CHETRY: The economy issue number one for Americans. One of the biggest concerns is the rising cost of health care and how to pay for it. Nearly 100 million Americans are either underinsured or uninsured.

We are paging Dr. Gupta, CNN's chief medical correspondent, with more on this right now. Some solutions perhaps to try to help people figure out a way to pay for it?

GUPTA: If you look at what's happening here, it really has to do with how much health care premiums have gone up as compared to the average worker salary going up. You mentioned about 100 million. About 50 million are uninsured. 50 million underinsured as well.

Insurance premiums rose 78 percent between 2001 and 2007. And workers' salaries rose just 19 percent. So right there you can see the problem. As a general rule, experts say you should spent about 10 percent of overall income on health care. More than 50 million people spend more than 10 percent on health care. That is also part of the problem. You know, when you sort of think about how to deal with this, part of it is looking at your insurance plans overall, which is something no one likes to do.

Look for a couple specific things. For example, you can use network doctors instead of your own doctor, that could save you a lot of money. Also choose less benefits, what I mean by that, if you are no longer going to have children, you don't need to spend for the benefit of child care, immunizations, things like that, we would be remiss if not mentioning it's important to talk about prevention. Getting healthy will cut down your costs as well. Those are general tips.

CHETRY: You want to make sure you have adequate coverage. What are some of those can't miss things you that have to make sure you are covered for?

GUPTA: Well one of the things, most of us do not spend time in a hospital when we are young. We are going to visit the doctor and get referred to specialists. Sometimes co-payment for general practice may be $20. If you go to a specialist it goes up a lot $60.

Generic versus brand name drugs, this is important. Let say you are someone who has a medical problem or you're a cancer survivor, you probably don't want to have them give you generic drugs without being able to get the brand name drugs under the insurance plan. That is another suggestion.

Also look at what the cap on the benefit is. We did a documentary about this as you know, Kiran, let's say your cap is $500,000, may seem like a lot. But as we found out, even a relatively simple or immediate medical problem it can go up to 500, a million dollars quickly. You have to be careful on those caps. You may end up paying extra for that but it may be worth it.

CHETRY: You have a window, this is per year or lifetime, whatever it is, you've got to watch for that as well.

GUPTA: Or per family. It will say $2 million but for the whole family together, they divvy it up by the number of family members.

CHETRY: Good advice. Thanks Sanjay.

ROBERTS: A quick look at what CNN "NEWSROOM" is working on for the top of the hour.

HARRIS: See these stories in the CNN "NEWSROOM."

John McCain rolls out his economic plan this morning, live coverage.

Delta and Northwest agree to merge. Any perks for flyers?

CNN gets rare access to the polygamous compound in Texas.

Attacks around Iraq today kill dozens of people.

Pope Benedict arrives in Washington, live coverage.

And how did a butter knife end up here. "NEWSROOM" minutes away at the top of the hour on CNN.

(COMMERCIAL BREAK)

ROBERTS: Four minutes till the top of the hour. Time for the most news in the morning. Presidential candidates firing shots and drinking them too.

CHETRY: Jeanne Moos looks for the sweet spot in Barack Obama's bitter comment.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT: Shots and shooting.

OBAMA: She's packing a six-shooter.

MOOS: The latest tune the candidates are dancing toe on the road to the white house. Remember weeks ago when Hillary said to Barack --

CLINTON: Shame on you, Barack Obama.

MOOS: Well now --

OBAMA: She knows better, shame on her.

MOOS: Will the bigger elitist please stand up? Is it the candidates who declared income of $109 million since she and Bill left the white house or the one that said that small town Americans cling to guns or religion because they are bitter? Those comments --

CLINTON: They seem elitist and out of touch.

OBAMA: Who do you think is out of touch?

UNIDENTIFIED MALE: Hillary.

MOOS: Obama suggests it is Hillary who has been clinging to guns likee she's talking like she's Annie Oakley.

OBAMA: About Annie Oakley as in "Annie get your gun?"

Hillary Clinton is out there, you know, like she's out in a duck blind every Sunday.

MOOS: Talking about how her dad --

CLINTON: Taught me how to shoot when I was a little girl.

OBAMA: She knows better.

CLINTON: I shot and I shot a ban of ducks.

MOOS: Obama knocked her for trying to play Annie and knocked her for knocking down a few.

OBAMA: Come around with TV crews in tow and throw down a shot and a beer.

MOOS: Not that Senator Obama would stoop to such a thing. In a restaurant in Indiana, the locals played got ya with Hillary. The bartender asked Hillary if she wanted a shot with her beer, peer pressure was on.

CLINTON: They did what? MOOS: That would be a Crown Royal whiskey Hillary is about to clink and drink. Photos of the shot around the world resulted in a call for captions on the show of a conservative blog. Captions like Hillary Clinton encounters more shots than she did in Bosnia.

As for Obama's alleged elitism, what critics consider to be Senator Obama's nose in the air attitude has already been immortalized on merchandise. He took a pro Obama image that says hope and turned it into snob. In the meantime, Obama has developed a dismissive laugh that he uses when he talks about Hillary. Having a good time yet candidates? Funky good time.

Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

ROBERTS: Look toward to that every morning on AMERICAN MORNING. Final check of the "Quick Vote" question. We asked you, McCain's gas tax holiday, is it a good idea? 58 percent of you said yes, I think it's a good idea. 42 percent said no which is a little bit closer than I thought it would have been. We also asked for your e-mails all morning. Here's a couple of nay sayers.

Robyn from Florida writes, "If we had a tax free gas holiday over the summer, that's three months of no 18 percent gas tax. Where is that money going to come from? The national debt is huge. How much further would the debt go?"

CHETRY: All right. Well Mike in Pittsburgh wrote, "Gas taxes are one of the few equitable taxes we have. You use the roads, you pay for the use. Look at the poor condition of the infrastructure as it is. Take the money away it gets worse. Yes prices are high, drive less, take public transportation, walk, et cetera."

And so to everyone who wrote in, thank you.

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