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Historic Church on Fire; Gas Hit a New High; New Debate in Presidential Race; China Marking Olympic Milestone

Aired April 30, 2008 - 10:00   ET

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

FREDRICKA WHITFIELD, CNN ANCHOR, NEWSROOM: Good morning again everyone. I'm Fredricka Whitfield in for Heidi Collins.
TONY HARRIS, CNN ANCHOR, NEWSROOM: And I'm Tony Harris. (INAUDIBLE) in the CNN NEWSROOM. Here's what's on the rundown. Are we or are we not in a recession? The economy is still growing but limping badly. Will Fed bankers rethink a rate cut today?

WHITFIELD: Yet another record at the pump this hour. New stats on oil inventories could impact the price you pay for gas.

HARRIS: The candidates' strategies to help you out at the gas pump. Will they work? We are focusing on issue number one today, Wednesday, April 30th. You are in the CNN NEWSROOM.

WHITFIELD: Off the top this morning (INAUDIBLE) concerns two major stories developing on issue number one, the economy, one, a decision on interest rates that could reach deep into your pocket. And a new development on the dreaded "R" word -- recession. CNN Senior business correspondent Ali Velshi with our money team is on the story from New York. Which one do you want to tackle first?

ALI VELSHI, CNN CORRESPONDENT: Let's talk about the "R" word. Part of that is because the GDP number came out this morning. Gross domestic product is defined as the total market value of all goods and services produced within a given country in a given period of time. So it's the largest measure we have of the economy. It came in at .6 of a percent for the first there months of the year. That's slow and that's kind of paltry, but the bottom line is that's exactly what it was at the end of 2007. So Fred, what it does is it bolsters the argument of people who say we are not in a recession.

Now just so you know, we just had that board up that showed what a recession is and what it isn't. It's not two consecutive quarters of negative growth. That's an old measure that has been thrown out. A recession is a significant decline in economic activity spread across the economy lasting more than a few months. And we do know, Fred, we've seen job losses. We have seen home price go down. We've seen the credit crisis continue. We've seen high gas prices and high food prices. So is that a recession or not? A little bit of not bad news, let's put it that way.

WHITFIELD: OK. And then the other thing, we are talking about interest rates possibly going down. For things that would encourage or stimulate the economy, if you wanted to buy a car, for instance. VELSHI: Yes. The Fed is meeting. They were meeting since yesterday and at 2:15 this afternoon Eastern time, they're going to come out with a decision on interest rates and they are widely expected to cut interest rates again for the seventh time by about a quarter of a percentage point. Now here is what happens. When you cut interest rates, as you said, it makes money easier to borrow. It makes money cheaper to borrow. Businesses tend to expand and hire people and those people have wages and they can pay taxes and then they get lower rates.

WHITFIELD: Except borrowing -- didn't that in part get us in trouble in the first place?

VELSHI: Well, that's a good point and if you have a loan that's tied to the prime rate, it goes down along with the Fed rate and those loans get cost less. So that is exactly the problem. We have to be careful when you create the ability to borrow more money and encourage people to spend. That gets you into credit problems. It also causes inflation and we know we've have inflation. So a real mixed pot going on today.

WHITFIELD: All right. Ali Velshi, thanks so much. Tony.

HARRIS: Politics and the price you pay at the pump. Democratic presidential candidates are at odds over a gas tax holiday. Dan Lothian is with the CNN election express in Indianapolis. Dan, good to see you again. What are the positions of the candidates on this?

DAN LOTIAN, CNN CORRESPONDENT: Well, let me first of all, take you back a little while, Tony, to Senator John McCain because he was the one who first came up with this proposal for a gas tax holiday, essentially as you were talking about earlier, 18.4 cent savings over the summer months, those key travel months. Senator Clinton, though is coming out with her plan which is somewhat similar. Although she says she has a way to pay for it by introducing legislation that would impose a -- what she is calling a windfall profits tax on oil companies. This is something that she has been talking about now for a number of days. She has been talking about it this morning in South Bend, Indiana and no doubt will continue talking about it at three other events that she has in Indiana here today and obviously the reason she is doing this, she says, is because so many people who are feeling pain at the pumps.

(BEGIN VIDEO CLIP)

SEN. HILLARY CLINTON (D) PRESIDENTIAL CANDIDATE: Another way to do that is to make the oil companies pay the Federal gas tax this summer. Now, some people say well, you know, that's not lot of money. It depends upon what do you for a living and how far you drive to work. If you are a trucker, it is a lot of money. If you are a farmer, it is a lot of money many. If you commute 60, 70 miles, it is a lot of money. And my opponent doesn't believe in any kind of gas tax holiday. And Senator McCain is for a gas tax holiday but he won't pay for it. That's not acceptable.

(END VIDEO CLIP) LOTHIAN: Senator Barack Obama says that the reason that he is against that gas tax holiday is because he doesn't believe that it will offer any real relief.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D) PRESIDENTIAL CANDIDATE: That will save 5 percent on your gas bill for three months which has been calculated to the average person will be about $28. So this is John McCain's scheme, his gimmick, $28 over three months, otherwise, known as $9 a month. All right. And this is his answer to the energy problems. And Senator Clinton, you know, she must have been reading the polls because she says me, too, I'm going to do that, too.

(END VIDEO CLIP)

LOTHIAN: Senator Obama says where Americans can really see some relief is in the plan he has been proposing for quite some time and that's a middle-class tax cut which he says could provide up to $5,000 for families each year. He also said that there needs to be more focus on coming up with some alternative fuels because he believes that if we can sort of bring down the consumption, people aren't consuming as much fuel, then the prices obviously would drop as well Tony. So obviously, this gas prices, the economy, jobs, all of those things are being talked about by the Democrats in Indiana.

HARRIS: Absolutely. There he is. Dan Lothian for us this morning, Dan, thanks. Gas pains. How do you spell relief? Two of the candidates want to suspend the Federal gas tax, as you just heard Dan mention. Would it help? An expert weighs in ahead in the CNN NEWSROOM.

WHITFIELD: Political prescription, Republican John McCain tells his health care plan in Pennsylvania later on today. McCain wants tax credits to help individuals and families buy health insurance. Individuals would get a $2,500 credit. Families would get $5,000. Critics say that would barely put a dent in the cost of health insurance and they say the plan could undermine employee-based insurance programs. The McCain campaign says it would not.

HARRIS: A couple of developing stories we are covering for you this morning. A huge fire guts a church in the strawberry mansion section of Philadelphia. The Prince of Peace Baptist Church went up in flames this morning in dramatic fashion. Local reports say the church was built in 1905 and at one time served as a public school. Power lines also caught on fire. Transformers exploded, nearby streets were shut down for a time. No word yet on what sparked the blaze.

Another spectacular blaze we are following in Hollywood. It is an unoccupied restaurant at Hollywood and Vine, that's near Capital records, that landmark building there. Forty-foot flames shot through the roof, smoke and it can be seen for miles we understand.

Also in the headlines, classes canceled today. A shooting at Florida Atlantic University in Boca Raton leaves students tense. Police say a gunman opened fire during a party at the university village apartments. Authorities are looking for this man in the overnight shooting. A new campus PA system immediately alerted students to stay indoors.

(BEGIN VIDEO CLIP)

FRANK BROGAN, PRES., FLORIDA ATLANTIC UNIVERSITY: Within moments after it was determined that there was a shooting on campus, the siren sounded. I heard it in my own home and the public address system was activated.

(END VIDEO CLIP)

HARRIS: The college also issued a university-wide e-mail and posted messages on its homepage.

WHITFIELD: A not so subtle message to Iran. Two U.S. aircraft carriers now in the Gulf region. Let's go to Pentagon correspondent Barbara Starr. Is it particularly kind of a show of intimidation?

BARBARA STARR, CNN CORRESPONDENT: Well Fredricka, perhaps here at the Pentagon they are looking at it a little bit more as saber rattling sort of, maybe. You know. They put another carrier into the Gulf because they were going to switch out carriers. But what happened was that Defense Secretary Robert Gates traveling in Mexico yesterday while this switchover was going on and everybody knew that they were really going to come down to one carrier very, very quickly, Secretary Gates said that it wasn't an escalation of force against Iran but that he said it could be seen as a reminder to Iran.

So some words from the secretary once again a bit of messaging, if you will, to the Iranians that there is the possibility of an American show of force in the Persian Gulf. This, of course, coming after the chairman of the joint chiefs recently said that there were, of course, military options to be used against Iran. And even Mr. Gates saying that Iran was hell-pent to get a nuclear weapon. So what we are seeing here is a lot of rhetoric, a lot of messaging, a lot of saber rattling, but underneath all of it what's really going on most senior commanders say there is no appetite for any U.S. military action against Iran. Nonetheless, they continue to watch that nuclear program very carefully and they are prepared if ordered. It is not something they want to have to do, however. Fred?

WHITFIELD: All right. Barbara Starr, thank you.

HARRIS: Out west, pouring more manpower on those wildfires. Planes and additional crews are being brought in to battle the fire south of Grand Canyon National Park. It has already consumed an estimated 2,000 acres. Officials think the fire was man-made.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: It was an abandoned or unattended campfire that started it. Some folks being interviewed currently in relation to that.

(END VIDEO CLIP)

HARRIS: No structures damaged. The fire has not been contained just yet. South of Reno, crews are still battling a brush fire. Half of the 1,200 acre blaze is contained, we understand. At one point yesterday, the fire briefly shut down a highway, threatened some homes and forced schools to evacuate. Officials hope to get fire fighting planes Fred in that area today. They believe this fire was sparked by downed power lines. Jacqui Jeras is in the severe weather center for us. And Jacqui, I know you are going to talk about the western wildfires in a moment. But we ask folks all the time to send in some I-reports and boy, the cache this morning has produced a beauty.

(WEATHER REPORT)

WHITFIELD: Dealing with the unimaginable abuse. A daughter and her children forced to live underground now getting a new start. .

(COMMERCIAL BREAK)

WHITFIELD: You're in the CNN NEWSROOM. I'm Fredricka Whitfield. Migrant workers headed for the U.S. given a helping hand in Mexico, safe haven from bandits and corrupt police.

(COMMERCIAL BREAK)

HARRIS: A troubling figure on vacation. Here is some new video just in to CNN showing Josef Fritzl in Thailand. Fritzl is the Austrian man who confessed to imprisoning his daughter for 24 years. Take a look at these pictures. It is unknown when exactly this video was shot. But it could provide some insight into the disturbing incest case. That's disturbing. The 73-year-old Fritzl is in custody in Austria. He hasn't been charged yet but he could face up to 15 years in prison for rape. His attorney says he may not be mentally fit to stand trial. Meanwhile, the daughter and five of her children have been reunited. The sixth child, a 19-year-old girl, is hospitalized in a coma. Authorities are considering giving them all new identities to help them cope with the trauma.

Nobody noticed. How is that possible? A father locks his daughter away. It is the second such revelation in two years. Austrians want answers. CNN's Alessio Vinci has the story.

(BEGIN VIDEOTAPE)

ALESSIO VINCI, CNN CORRESPONDENT (voice-over): A candlelight vigil in the center of Anstetten, residents here coming together to reflect on the horrific events shaking the small town in western Austria, looking for answers. How could Josef Fritzl do the things police say he confessed to, hold his own daughter captive for more two decades, sexually abuse her, fathered seven children with her daughter and not be caught or noticed by anyone? Not his wife, not his neighbors, not his friends. And not the social workers who regularly visited the house after he legally adopted three of the children he conceived.

UNIDENTIFIED FEMALE (THROUGH TRANSLATOR): The natives really missed something. They failed to be here and they know they missed something and the investigation would have been different.

VINCI: It is why Austria's interior minister is appealing for help.

GUENTHER PLATTER, AUSTRIAN INTERIOR MINISTER (THROUGH TRANSLATOR): We call on all of the society to participate, not to look away. We need partners and our partners are the population. Any suspicion, any interesting element they might have they must give police clues so that the police have something to go on.

VINCI: Many Austrians want to know if the country's social workers asked enough questions about Fritzl's claim that his runaway daughter abandon three different children on her (INAUDIBLE) doorstep. Would you believe it as interior minister, would you believe a story like this if you had to make a decision of whether or not, for example, assign three children to a grandfather?

PLATTER: If you look at a crime after it has happened and you say well, perhaps things should have happened in another way, but now that the crime is known and the person who committed it has given information to the police, of course in hindsight it is easy to say what could have been done. But when have you no information, it was not possible to take the appropriate measures.

VINCI: That does not wash with one newspaper columnist here who points to the case of Natasha (INAUDIBLE), a 10-year-old school girl kidnapped and kept in a cellar for eight long years before escaping in 2006.

ANNALIESE ROHRER, COLUMNIST, KURIER NEWSPAPER: Natasha (INAUDIBLE) really didn't change things at all. And (INAUDIBLE) we know that the police could have done more but it didn't change much. I hope -- you know, this is gruesome enough to -- so we send a message so to speak. But I'm not sure.

VINCI: The residents of Anstetten struggle with what happened here and they want the world to know that people here are not all monsters. Alessio Vinci, CNN, Anstetten, Austria.

(END VIDEOTAPE)

WHITFIELD: And of interest to us all, will the Fed cut rates again today? The decision could affect more than the cost of borrowed money, a closer look in the NEWSROOM.

(COMMERCIAL BREAK)

HARRIS: We want to take you to Annapolis, Maryland right now, just south of Baltimore and I guess south and east of Washington, DC. Is that correct? Annapolis, Maryland right now, rescue crews are working to free a worker, we understand is trapped on a construction crane. This is above a shopping center. If you know the area, this is Reva Road in the Annapolis area. The horizontal crane structure appears to have snapped. As you can see here, I'm trying to describe it best I can here from the information that we have. Horizontal crane structure appears to have snapped as you can see here and I'm trying to describe it as best I can here, from the information that we have. A horizontal crane structure appears to have been snapped at the point where the worker is located. And as you go in a little closer here, maybe you will see there are two rescue workers in hard hats who are visible there with the worker. So this is a rescue effort that's on the way right now. We will keep an eye on that situation and bring you an update as we get additional information.

Let's switch the scene here and take you to New York Stock Exchange right now for a look at the Dow, just about an hour into the trading day. As you can see, the Dow is up 47 points, at last check, the Nasdaq, plus seven. We are following the markets all day with Susan Lisovicz right here in the CNN NEWSROOM.

WHITFIELD: Federal Reserve will decide today whether to continue cutting interest rates. Personal finance editor Gerri Willis is here with what it means to your wallet. You are going to help translate this message for you. How are you?

GERRI WILLIS, CNN CORRESPONDENT: I'm good Fred, good to see you. We will start with the forecast. Most investors believe the Fed will lower rates by another quarter percentage point, but they may do nothing at all. If they do cut, it would bring the Fed funds rate to 2 percent and the Fed which has been cutting rates since last September to really forceful in January and March. This would be the seventh rate cut if the Fed cuts today. Many economists think that after this cut, the Fed will take a break for the rest of the year unless there is some kind of big economic disaster. Its hoped that the Fed's rate cut plus the stimulus package, plus the tax breaks for business will strengthen the economy.

WHITFIELD: All right. What does it mean exactly for you, me, the consumers, when it comes down to us helping to stimulate the economy, meaning we have more money to spend, getting greater into debt?

WILLIS: Fred, bottom line, I don't think it is a really big deal today. Look, in theory, the interest rates on your variable rate credit card should come down a little bit. Not much changed to mortgage rates. Even if the credit cards do come down, it will be more than a few dollars each and every month. There is a lot of turmoil in the credit industry; interest rates will remain the same, perhaps even higher. Rates on 30-year fixed rate mortgages continue to be low at 6 percent. The bright spot here will be for home equity lines of credit which move in lock step with the Fed cut.

WHITFIELD: OK, so for those who have adjustable rate mortgages, what do they need to know about this?

WILLIS: You know Fred, there are lots of different interest rates out there. We talk about a lot of that. There's the prime rate, the Fed funds rate. Guess what. Almost half of the adjustable rate mortgages are tied to an index known as LIBOR. That stands for the London interbank offered rate. It is not even set in this country. It is set in London. The recent rise in the index will likely increase payments for thousands of owners and I spoke to Greg McBride about this. He's from bankrate.com. He had this to say about LIBOR. (BEGIN VIDEO CLIP)

GREG McBRIDE, BANKRATE.COM: Even though the Federal Reserve has been cutting interest rates drastically, LIBOR marches to the beat of its own drummer. We haven't seen the same sort of performance out of the LIBOR. In recent weeks, the index has actually increased even though interest rates in general have been on the decline. If you are somebody with an adjustable rate mortgage whose payments are pegged to LIBOR, every little movement is something that could impact your household's bottom line.

(END VIDEO CLIP)

WHITFIELD: OK, this isn't good news, folks, folks out there with adjustable rate mortgages pegged to what they call LIBOR. To find out what you might be on the hook for once your mortgage adjusts, you have to look at something called your adjustable rate rider. I have one right here. Here you will find information on what index your mortgage is tied to. This one is just a little section called interest rates and monthly payments. Your new rate will be the sum of the margin plus the current index value. Take note of any caps too on how much your rate can go up. That's what you are looking for, that adjustable rate rider and then you have to compare and contrast. You need to shop around.

WILLIS: You do. If you are in the market today for an adjustable rate mortgage, a lot of people are, consider finding a lender who will peg your mortgage on the one-year Treasury index because Treasuries are doing well. They are getting lots of investors who want to park their money. They are worried about the economy. Since lenders are wary about what's happening, they push into these investments and the rates, the rate is about a percentage off from LIBOR, so it is a better deal for you. Of course, if you have any questions, send them to us at toptips@cnn.com. We love hearing from you.

WHITFIELD: All right. Good deal. Thanks so much, Gerri. We love seeing you and hearing from you.

WILLIS: Thank you.

HARRIS: And still to come, alert highway workers to the rescue, a toddler wandering in interstate traffic, can you imagine, the story in the NEWSROOM.

(COMMERCIAL BREAK)

FREDRICKA WHITFIELD, CNN ANCHOR: Hello again. You're in the CNN NEWSROOM. I'm Fredricka Whitfield.

TONY HARRIS, CNN ANCHOR: Hey, Fred.

WHITFIELD: Hello.

HARRIS: Good morning, everyone. Just past the half-hour. Welcome back. I'm Tony Harris. In the headlines this morning, a historic church on fire in the Strawberry Mansion section of Philadelphia. The Prince of Peace Baptist Church went up in flames this morning.

Local reports say the church was built in 1905 and at one time served as a public school. The scene today, boy, power lines on fire, transformers blowing up and a nearby street shut down. No word yet on what sparked the blaze. Look at the pictures. Boy, another spectacular fire. We've been following in Hollywood.

It's in a commercial building at Hollywood and Vine. 40-foot flames have shut through the roof there. Crews are trying to keep the fire spreading to adjacent buildings. No reports of injuries in either fire. Good news there.

WHITFIELD: Pain at the pump. Another record. AAA says gas has hit a new high. Almost $3.62 a gallon today. That's fueling new debate in the presidential race. Hillary Clinton and John McCain want to suspend the Federal Gas Tax for the summer. Barack Obama calls it a gimmick.

(BEGIN VIDEO CLIP)

SEN. HILLARY CLINTON (D-NY), PRESIDENTIAL CANDIDATE: I would immediately lower gas prices by temporarily suspending the gas tax for consumers and businesses. And we will -- we will pay for it by imposing a windfall profits tax on the big oil companies. They sure can afford it.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: Well, let me tell you something. This isn't an idea designed to get you through the summer. It's an idea designed to get them through an election.

(END VIDEO CLIP)

WHITFIELD: All right. So the big question would a so-called holiday from federal gas taxes help or hurt you? Here to walk us through it, Jerry Taylor, a senior fellow the CATO Institute.

Good to see you, Jerry.

JERRY TAYLOR, SENIOR FELLOW, CATO INSTITUTE: Good morning.

WHITFIELD: All right. So just to underscore, McCain and Clinton are on the same wave length saying let's go forward with a tax cut holiday for the summer. Obama calls it a gimmick. So can you break it down for me exactly what does this mean in terms of savings?

If this 18.4 cents a gallon which represents the federal tax. I did a little math based on a 16-gallon a tank. So we're talking about a $2.82 break on a fill up. And if you fill up once a week, you know, over a three-month period we are talking about really only $33.54 or so as a real savings.

So why do we want to do this?

TAYLOR: Well, that probably isn't going to happen. The likely market response to a tax holiday is to keep the prices exactly where they were before the tax holiday and just to take in the extra revenue.

The reason that is let's assume for instance that all the service station owners tried to cut gasoline prices to reflect a cut in the federal gasoline taxes, which is about 18 cents a gallon.

Well, if you believe that the supply of gasoline is relatively fixed over the summer, I suspect that's true, then reducing price is going to increase demand but there's no more gasoline to put into the market. That increase demand is going to put the price right back up to where it was before the prices were cut in first place.

Now this whole exercise will probably not even occur. Service station owners will keep the prices where they are. They'll keep the additional revenue. The net effect will be to transfer revenue from the federal treasury to the oil and gas companies.

Now, I worked at CATO institute. I have no particular problem with that but I'm relatively surprised that Hillary Clinton is saying (INAUDIBLE) sort of transferal of money.

WHITFIELD: Well, she is saying, you know, it's time to look at -- or placing blame. And she said it's the oil companies who are in part responsible for the reason why we are paying more at the pump.

TAYLOR: If she wants to blame somebody, she can go down the hall and blame Ben Bernanke. Because the main reason you are seeing this big surge in price is because market actors are afraid that the Fed has given up the ghost on inflation and they're parking their money in commodity futures, the hedge against inflation and the hedge against risk and equity markets.

You're seeing a boom in commodity prices across the board whether we are talking about copper, oil, coal, gasoline. It doesn't matter. Commodity prices are going crazy largely as a response to the fed policy. It's not the big oil companies.

If it were, then you'd expect to see low oil prices in other parts of the world where the big oil companies aren't and you don't. You see generalized increase in global crude oil prices because the big oil companies are priced takers, they're not price setters. That's OPEC's job.

WHITFIELD: OK. So now if we were to go forward with this gas tax holiday, we also understand that it means about $3 billion in federal moneys that are not collected. And if that's the case, money that would ordinarily go to some highway trust fund. Explain all that. What does that mean?

TAYLOR: Well, the federal gasoline taxes are user free. Motorists are paying this tax and the revenues are extensively used to help build roads and to maintain roads. But in reality, it also goes to building bike paths and to subsidize local mass transit and that sort of thing.

WHITFIELD: So we're not putting money into that fund to help improve our roads or to help fund some of these bike paths. And are we doing a great detriment to our country by having a gas tax holiday?

TAYLOR: Well, not necessarily. I think you can make a pretty strong case that there shouldn't be a Federal Gasoline Tax nor should there be federal road construction and maintenance programs. These are state and local responsibilities. Send it all down there. But to the extent to which we're trying to pay for this, Hillary Clinton would like --

WHITFIELD: Interstates. I mean, states are not going to --

TAYLOR: Believe it or not, before interstates, we had state highways, we're perfectly serviceable. The idea of the states will let interstate systems go is really silly. I mean, the real effect of the federal highway program is to get Bob Byrd elected every year in West Virginia.

Because what the Appropriations Committee does is they use this revenue, and they pave the heck out of states where there are politically influential politicians, but states for politician are on the Appropriations Committee continue to sit in congestion, continue to have road problems but they don't get remedied. So I don't think that's a very good argument.

But I want to get to the -- well, Hillary Clinton proposes to do is to make up for this lost revenue with a windfall profits tax. Well, the problem with that idea is that we had one in 1980. From 1980 to 1986, the Congressional Research Service, however, finds that that windfall profits tax reduced the domestic oil production by three percent to six percent, because --

WHITFIELD: And Clinton and John McCain are really on the same page. And just to underscore that again, one Democrat and a Republican here are seeing it eye to eye.

TAYLOR: Well, they both agree on a federal tax holiday which I think Barack Obama has the better argument on that. But they disagree about the windfall profits tax. Hillary Clinton wants to impose one to help pay for the lost revenue. John McCain would just let the lost revenue go apparently.

But the thing is the windfall profits tax -- and that impact will be to increase oil prices and thus increase gasoline prices.

WHITFIELD: Gary Taylor, we really appreciate very comprehensive view of this. I mean, really understand where some of this money is going. Why are we paying so much at the pump? Senior fellow at the CATO Institute, thanks so much, Jerry.

HARRIS: Boy, let's take up a couple of these points with Ali Velshi. Supply and demand. It's the foundation of all business and that includes what you're paying for gas and oil.

New numbers on oil inventories are just in. There he is.

Ali Velshi. Hey, you heard our guest from the CATO Institute just a moment ago. Don't blame big oil for high gas prices. Ben Bernanke and the guys there, the Federal Reserve. All these rate cuts have led to inflation and investor dollars are going to all kinds of commodities including oil.

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: That's exactly right. I mean, I think for the first $80 you get a barrel, you can blame the oil companies. But after that, it became about oil trading, not being about people who are buying and selling oil to use it and make it into gasoline or distill it. It actually became about trading.

It was a better trade than the stock market or the real estate market, because the Fed kept pushing it rates down and keep pushing the dollar down. So I think he is dead on. And this gas tax holiday is a bright, shiny object meant to distract people from the reality of it. It's going to save you, what, $25, $30 a year. That's not the answer.

One of the answers, though, might be that oil prices are actually down this morning, quite substantially. Tony, I don't know the last time you and I talked where oil was under $115 a barrel.

HARRIS: That's been a while. Yes, it's been a while.

VELSHI: Look at the deal we are getting. We got a report from the government just in, the Weekly Oil Inventory Report. Let me tell you a little bit about what they said.

The stockpile of oil has increased in the United States a little bit. Our imports have increased as well, which as you know, with the low dollars it's always tough. Gasoline use, get this is four-tenth of a percent higher than it was a year ago.

We have seen people pull off of gasoline. Not sure what that's about. And jet fuel use is 4.2 percent lower than it was a year ago. Now obviously, that means there are fewer planes flying. They are actually cutting down and those prices are affecting people.

But at $114, we've seen oil going down this week. We've seen the dollar going up a little bit this week. Getting stronger against other currencies. Let's see what happen this afternoon when the Fed makes the decision at 2:15. If it cuts rates, we might see the dollar go down further and then all of those things that we buy become more expensive.

HARRIS: I can't believe all of the new information and data that I'm following because of you, Ali. GDP, jobs report, PPI's, oil inventories now.

VELSHI: Now don't just be nice to me. If you don't understand these things or you think our viewers don't understand them, let me know, because I want them to get this, too.

HARRIS: You said it. All right, Ali, appreciate it. Thank you, sir.

VELSHI: All right, buddy. HARRIS: And keep watching CNN. Our money team led by that guy there has you covered whether it's jobs, debt, housing or savings. Join us for a special report. It is called "Issue #1," the economy, all this week, noon Eastern, only on CNN.

WHITFIELD: And sad news to report now. Just moments ago we told you about a crane accident there in Annapolis. A construction worker was trapped about 200 feet above ground when something went wrong with the crane he was working on.

Well, now we understand according to the Associated Press that that worker has died. As a result of this accident taking place. This crane was doing some work there at a shopping center. The Annapolis Town Center construction site, right there in Riva Road there in Annapolis.

And rescue workers were trying to free this construction worker there. 200 feet above ground. Those efforts were futile because now we understand, sadly, that construction worker has died. More information as we get it.

Tony?

HARRIS: Still trying to rebuild after Hurricane Katrina. Many New Orleans residents thought a grant was a godsend. Think again. Here's CNN's Randi Kaye.

(BEGIN VIDEOTAPE)

RANDI KAYE, CNN CORRESPONDENT (voice-over): There is a game of give and take in Louisiana. A game New Orleans resident John Montague has no interest in playing.

JOHN MONTAGUE, NEW ORLEANS RESIDENT: I'm angry, very angry.

KAYE: Montague is angry because he and his wife spent nearly $100,000 repairing their home after Hurricane Katrina. $20,000 of that was a grant from Louisiana's federally funded program known as Road Home. But now this. A $13,000 bill from the state. Montague's letter says --

MONTAGUE: We overestimated the damages to your house and you owe us $13,000.

KAYE: What did you think when you saw the letter?

MONTAGUE: I went ballistic.

KAYE: Do you have $13,000 to pay back? Twice here.

MONTAGUE: No. We've spent at least twice already.

KAYE: Why do they want the money back? Turns out the contractor hired by the state to dole out the cash, ICF International, overestimated some damages and gave residents too much money. Now it wants as much as $175 million back. As many as 5,000 residents could have to pay up. Some on the hook for as much as $150,000.

(on camera): Keeping them honest, we tried to ask ICF how this happened and why they are asking homeowners to repay money most have already spent. A company spokeswoman told us this is the state's program and it would not be appropriate for ICF to give us an interview.

(voice-over): She was quick to point out, though, the program has an extremely low error rate and very few homeowners will be affected. Homeowners advocate Melanie Ehrlich disagrees and says anyone who got a grant could get hit with a massive bill. She says she knows of more than 300 residents who have already been billed.

MELANIE EHRLICH, CITIZENS ROAD HOME ACTION COMMITTEE: It's so cruel to ask for money back for people who have gone through an agonizing grant application process because of ICF's incompetency and because the state didn't exercise enough oversight.

KAYE: But this isn't just a cut and dried case of incompetence and injustice. It is like just about everything related to Katrina's aftermath complicated. Everyone who got a road home grant signed a contract agreeing to repay money if overpayments weren't later discovered. This is Montague's contract.

MONTAGUE: They made mistakes and make mistakes all along. You know, why should people suffer?

KAYE: Montague says he was denied access to the state's damage report so he couldn't have known the state's inspector included a claim for six sky lights he does not even have. Or for 22 windows that weren't even damaged. So the adjustors of these windows had to be replaced?

MONTAGUE: These windows had to be replaced.

KAYE: Even though they were well above where the water was?

MONTAGUE: Yes.

KAYE: The state plans to fine ICF and hire an auditor to review all the cases. Still John Montague expects to find a lien on his house or a collector at his front door.

MONTAGUE: I don't have the money to give back. I spent the money, you know, improving the house, fixing the house up.

KAYE: So the game of give and take continues with no end in sight. Randi Kaye, CNN, New Orleans.

(END VIDEOTAPE)

WHITFIELD: Overcrowded and overwhelmed. Dr. Sanjay Gupta checks up on New Orleans hospitals, almost three years after Hurricane Katrina. That is still to come here in the NEWSROOM.

(COMMERCIAL BREAK) HARRIS: Making waves. Another U.S. carrier arrives in the Persian Gulf region. A signal to Iran. That's ahead in the CNN NEWSROOM.

WHITFIELD: The economy managed anemic growth in the first quarter of this year. Susan Lisovicz is on the floor of the New York Stock Exchange with details. Hello, Susan. Bad news and you are still smiling.

HARRIS: Don't you love that about her?

WHITFIELD: Yes.

SUSAN LISOVICZ, CNN CORRESPONDENT: Well, you know, I'm smiling because there was growth. It was anemic. 0.6 percent is not a lot for the world's biggest economy. But there were some folks that were bracing themselves for an outright contraction.

The debate of course will still continue as to whether the economy has actually fallen into a recession. But the GDP, first quarter GDP, is important because it is the broadest measure of everything that happened economically in first three months of the year. It matched what happened in the last three months of the year.

There's lots of little details in it. One of them that's very interesting is consumer spending which is so important to the U.S. economy. It's the weakest since the second quarter of 2001. And guess what? In that quarter, the U.S. economy was in a recession. Also some of the growing inventories accounted for some of the growth. But nonetheless, there was growth. 0.6 percent.

Fred?

WHITFIELD: OK. So now we're looking ahead this afternoon, you know, some breaks may be on interest. What can we really expect, I mean, beyond that?

LISOVICZ: Well, it's timely, isn't it? Policymakers have one giant report, one last report to look at before making the decision in about three hours or so from now.

The fact is the economy hasn't really changed much at all. It is still and has slowed down dramatically. The widespread belief here on Wall Street is that the Fed will cut again. And cutting is something that the Fed has done quite aggressively by three full percentage points since September.

And, you know, most analysts say, Fred, that it takes six months or longer for each rate cut to finally trickle through the economy. So think about it. What it started doing in September is just starting to take effect, if you hold to that notion.

So the real buzz here is not so much what the Fed is going to do. The expectation is another point cut. Bringing the Fed funds rate to two percent is what the Fed will say and whether it will hold steady indicating that it's done for a little while, because of concerns about inflation, which brings us to oil. Oil prices are down. We are seeing by more than a dollar today.

Ali was talking a few minutes ago about that inventory report. We did see a jump in crude supplies. But also, the speculation that the Fed will signal that it is done has also been bolstering the dollar and bringing oil price downs.

Want to mention one quick stock. GM, its shares are up eight percent. GM lost $3 billion in the first three months of the year. But guess what? That was better than expected. A lot of its sales driven from overseas. More than half of its sales now at GM come from overseas. And that has been a savior for a lot of companies reporting their earnings.

Right now, the Dow is up 75 points. The NASDAQ is up 13 points. And oil continuing. It just came down $3 yesterday.

Fred and Tony, back to you.

WHITFIELD: And there she is on an up note.

HARRIS: How about that? It is the core of who she is.

LISOVICZ: I'm looking at the glass half full.

HARRIS: There you go.

WHITFIELD: That's the way to proceed. All right, Susan, thank you.

LISOVICZ: You're welcome.

HARRIS: Let's talk about China for a bit. Marking an Olympic milestone. 100 days until the 2008 Beijing Games. What do we have? Countdown going here. People gather to countdown the final seconds to the century mark on the Olympic clock.

Thousands took part in a run near Olympic venues. The air was thick with pollution. That's a big concern particularly for the athletes. Can you imagine?

And Chinese forces staged an anti-terror drill. Police trained on ceasing a hijacked bus and repelling down the building.

WHITFIELD: Well, there could be new evidence in that polygamist abuse case. Another child born.

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HARRIS: You know, one of the teens taken from that polygamist ranch in Texas just gave birth to a baby boy. Both mom and baby will stay in foster care at least until early June. And there is another custody hearing then.

Texas Child Services say the teen mom is under 18. But a spokesman for the polygamist group says that's not true. More than 460 children were taken from the ranch earlier this month because of abuse allegations. Texas authorities say more than half of the teen girls already have children or are pregnant.

Some alert highway workers in Ohio are heroes today. They are being credited with saving this toddler spotted in traffic on Interstate 90 in Cleveland. Police say the 3-year-old boy was being cared for by a cousin at the time. The boy lives near the highway and was outside looking for a dog. The child has since been reunited with his uncle.

Take a look at some of the most clicked on videos at cnn.com. In Wisconsin, the drowning death of a college student may be tied to others across the country. The common link, smiley face graffiti.

A central portion of the old Hermann Bridge over the Missouri River was blown up on Tuesday. It's being taken out in stages. Pretty dramatic stuff here. No longer needed after a new bridge was built.

And one discount grocery store selling slightly expired food at low, low prices. The result, business is up. Now, for more of your favorite video go to cnn.com/mostpopular. And of course, don't forget, you can take us with you anywhere on your iPod with the CNN daily podcast. See some of the stories that will have you talking. The CNN NEWSROOM podcast available 24/7 for you right on your iPod.

Shooting on a college campus so school on lockdown.

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