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AMERICAN MORNING

What's Obama's Next Move After Break-Up with Reverend Wright; Federal Reserve Decision Today on Rate Cut; Sabre-rattling Between U.S and Iran: Pentagon Sends Second Carrier to the Gulf

Aired April 30, 2008 - 07:00   ET

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


JOHN DICKERSON, CNN POLITICAL ANALYST: At around 29 or 40. People are worried about their jobs, you know, their health care, the fact that we're engaged in two wars. So it's a problem for Barack Obama, but it's something that we get to exercise about to a great degree. But it's probably not something that people are waking up this morning who aren't involved in the Obama campaign and are terribly worried about.
KYRA PHILLIPS, CNN ANCHOR: So you disagree with the critics that say, uhh, this is much bigger than people realize?

DICKERSON: Well, it's a problem with certain voters who are still concerned about Barack Obama. They don't know what kind of person he is. And so, this is one of the things that informs their views about him. And, you know, if he were picking what they would think about, it wouldn't be the incendiary comments of his former pastor, but to the extent that Obama's campaign is not based just around his relationship with his pastor and he has other things to offer, then it's not a huge damaging blow. It's not a great thing to have happen, but it's not close to hurting or ending his candidacy.

PHILLIPS: All right. John Dickerson, appreciate it this morning. That brings us to our "Quick Vote" this morning. Here is the question.

Has the Reverend Wright controversy hurt Barack Obama's chance at getting the Democratic nomination for president? Right now, 55 percent say yes, 45 percent say no. Cast your vote at CNN.com/am. We'll continue to tally your votes throughout the morning.

And, of course, we want your e-mails on this as well. Go to CNN.com/am and follow the link that says "contact us." We'll be reading your e-mails just a little later next hour.

JOHN ROBERTS, CNN ANCHOR: It is now one minute after the hour. It could impact everything from paying off your house to the extreme prices at the pump. We are waiting for the Federal Reserve's decision this morning on whether it will cut the key interest rate again today. A steady diet of rate cuts in September has not been able to cure the economy or the mortgage meltdown. Some analysts say that they may have even contributed to rising oil prices as the dollar loses power with all those rate cuts.

And breaking this morning, gas prices hit another record, up 16 times in 16 days. Now, look at this. Ouch. $3.62 a gallon for regular according to AAA. That is a 33 cent a gallon jump in just a month. And what felt like a rip-off a year ago is a relative bargain today, $2.97.

It is a blame game when it comes to the economy. President Bush says Congress has not done enough to ease the economic slowdown. He called on lawmakers yesterday to pass bills that he has repeatedly sent them like expanding oil exploration to reduce energy costs and other legislation that would drop food prices and reform mortgage lending. But Democrats say it's the president's fault.

(BEGIN VIDEO CLIP)

SEN. CHARLES SCHUMER (D), NEW YORK: Now, the president says he's open to ideas. He says he's concerned with high gas prices and high food prices and student and home loan problems. But the truth is the president has closed his eyes and put his hands over his ears as these crises have grown.

(END VIDEO CLIP)

ROBERTS: House Speaker Nancy Pelosi called on the president to drop his veto threat on their bill which gives tax breaks in exchange for renewable energy.

PHILLIPS: Plans for a so-called gas tax holiday for the summer driving season is generating plenty of heat on the campaign trail. Hillary Clinton and John McCain are for it. Barack Obama though calls it a political gimmick that would save drivers "half a tank of gas." Clinton says it will spell relief though for millions of Americans.

(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 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)

PHILLIPS: Both candidates want a windfall profits tax on big oil companies, and that cost could ultimately be passed on to consumers.

Record oil prices are adding up to record profits for oil companies. We're going to talk with the president of Shell Oil later this hour and ask him whether oil companies could help struggling consumers.

Republican John McCain is making his health care pitch in Pennsylvania today. He is proposing a tax credit that people can use to buy health insurance. Families get $5,000, individuals get $2,500. His campaign estimates that the cost of the plan at $3.6 trillion over 10 years to be paid for by eliminating tax breaks for employer-based health plan. Now, McCain thinks that the government mandated health insurance plans offered by Barack Obama and Hillary Clinton simply won't work.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: We will replace the inefficiency, irrationality and uncontrolled costs of the current system with the inefficiency, irrationality, and uncontrolled costs of a government monopoly. Watch your diet, watch your diet. Walk 30 or so minutes every day. Take a few other simple precautions, and you won't have to worry about these afflictions.

(END VIDEO CLIP)

PHILLIPS: Critics say McCain's plan won't help senior citizens and people in poor health who have trouble getting insurance right now.

ROBERTS: Sabre-rattling between the U.S. and Iran this morning. The U.S. now has two aircraft carriers patrolling the waters of the Persian Gulf. On Tuesday, the USS Abraham Lincoln arrived in the region to replace the Harry S. Truman. Defense Secretary Robert Gates said the move is not an escalation but should serve as a "reminder to Tehran."

Barbara Starr is monitoring this developing story and joins me now from the Pentagon. Barbara, a few months ago I recall reports that Iran was cooperating on reducing the flow of weapons to these militant groups in Iraq. Now there are accusations by the U.S. that it's stepping up that cross border traffic and as well aiding the Taliban in Afghanistan. What's going on?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, John, there is a lot of rhetoric about Iran these days all over Washington. We are waiting and expecting to see some sort of press conference from the Iraqis later this week about the types of Iranian weapons they found during that recent fighting in Basra. Iranian weapons, they are going to say were made earlier this year showing, they say, clear evidence that Iran has not stopped that flow of weapons into Iraq.

As far as Iranian weapons into Afghanistan, that now has been going on for some time with very little notice in the public arena. And all of this really continues to mount as we see those two aircraft carriers in the gulf.

Now, they are expected to go down to one carrier in the next several days, but in the meantime, as Secretary Gates says, it is a reminder to Tehran, a reminder of U.S. military muscle power. Will the U.S. use it, or is this just sabre-rattling?

By all accounts, there are no current plans for any type of U.S. strike inside Iran, but there's plenty of rhetoric about the possibility of doing that. It was just a few days ago the chairman of the Joint Chiefs of Staff said that there were military options if ordered. Secretary Gates himself said Iran, in his words, is hell bent, his words, on getting a nuclear weapon, something the U.S. will not tolerate.

So the tension, the rhetoric is mounting. Sabre-rattling, sending the message, but what is Iran hearing and what is going to happen next, the question -- John.

ROBERTS: Barbara Starr for us at the Pentagon this morning. Barbara, thanks.

PHILLIPS: A teenager removed from that polygamist compound in Texas gave birth to a baby boy. Child Welfare officials say that she's doing well and is younger than 18, by the way. Spokesperson for the church insists the new mom is 18 and is in a monogamous marriage to a 22-year-old. The teen also has a 16-month-old child. You can do the math on that one. Four hundred sixty-three children in state custody after a raid earlier this month.

Now the army is inspecting all of its barracks around the world. This happened after the father of a soldier showed us video of filthy bathrooms and other deplorable conditions at Fort Bragg, North Carolina. Edward Frawley told us he just wanted a congressman or a congress person to put pressure on the army and get things cleaned up. He got more than that.

We're going to ask what's being done now as we talk live with Army Vice Chief of Staff, General Richard Cody. That's coming in just a few minutes at 7:25 Eastern time.

ROBERTS: And the Fed is expected to cut key interest rates again today. Ahead, why it could be the last rate cut for a while.

And three presidential candidates, three plans to improve your health care. We're paging Dr. Gupta to break each one down for us. That's ahead on AMERICAN MORNING.

(COMMERCIAL BREAK)

PHILLIPS: Well, the Fed's decision -- sorry. Do you know what I'm doing?

ROBERTS: No, what are you doing?

PHILLIPS: Well, I'm actually looking at my upcoming discussion about Barack Obama.

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: You can talk about that if you like.

PHILLIPS: And Reverend Wright, and I apologize for that, Ali Velshi.

VELSHI: No.

PHILLIPS: We're also talking about the GDP, minding our business, gas prices, everything else -- VELSHI: Clearly, Kyra is already bored with the discussion so I'll try and keep the rest of you interested.

PHILLIPS: Keep it interesting, please.

VELSHI: Yes, all right.

I'm going to pick it up. This is huge. This is going to be the seventh Fed rate cut in a row. You've got to pay attention to this. This is major. All right.

The Fed is expected to cut rates by about a quarter of a percentage point, and how does that affect you? Well, let me tell you. It makes money cheaper to borrow.

Typically for businesses, first of all, it makes businesses say, well, you know, it's a little easier to get that loan, a little cheaper. Maybe I'm going to expand, build that plant, hire more people. Those people, by the way, then get salaries and pay taxes and that makes the government better off.

Also reduces the prime rate which means your loans that are tied to prime become a little lower. It's meant to encourage people to spend. And if you spend more, you know, good for the economy. The prime rate is going to go down so that should help you, you know, really help you get a bit of a discount on some of your loans. But fundamentally the problem as the prime rate drops, it increases demand, and that demand makes things cost less, but it also lowers the dollar.

Now, we've seen the dollar strengthen a little bit this week. And as a result of the dollar getting stronger, we've seen oil drop a little bit. But the problem with increase in demand is it increases demand for the things you buy. Not just oil and gas, but food, you know, grains, eggs, milk, chicken, things like that, and inflation is a problem, which is why the Fed might cut rates but might say that they're done cutting rates.

That's why that is so interesting. Fed rate cut today, 2:15 p.m. Eastern time.

ROBERTS: I am held with rapt attention.

VELSHI: There you go.

ROBERTS: Except with you.

(CROSSTALK)

PHILLIPS: You know what else is building strength? It's dolphin teeth. Did you read that article this morning?

VELSHI: Dolphin teeth.

PHILLIPS: Oh, yes. Go to the Solomon Islands.

VELSHI: Yes.

PHILLIPS: That's their currency. Dolphin teeth. They're bringing the old culture back. It's like gold in the Solomon Islands.

VELSHI: And is the dollar strong against dolphin teeth because I've still have not booked my summer vacation?

PHILLIPS: It's about 26 cents to the --

VELSHI: Per dolphin's tooth.

ROBERTS: And if Ron Paul runs as an independent, Ron is bringing gold back. Here comes the gold stand.

(CROSSTALK)

VELSHI: There you go.

ROBERTS: All right. Extreme fire danger in the hot, dry southwest today. Rob Marciano tracking extreme weather for us today. Good morning, Rob.

ROB MARCIANO, AMS METEOROLOGIST: Good morning, gold, beaver pelts, let's bring it all back. Let's get it rolling.

(LAUGHTER)

We start you off. Look at the fires across parts of the southwest. These pictures out of Nevada yesterday. Very dramatic stuff. Can you imagine being on the fire lines there? These guys are brave lads and lassies. Complete weather coming up when AMERICAN MORNING comes right back.

(COMMERCIAL BREAK)

MARCIANO: Look at these flames coming out of just outside of Reno, Nevada, yesterday. Three hundred firefighters battling a fast-moving blaze, 1,200 acres burned. Yesterday we had winds gusting to 70 miles an hour. You can imagine just how difficult that fire fight was.

Today winds gusting 25, 30 at the moment, but they shouldn't be quite as bad. Dramatic stuff coming out of Nevada from yesterday, and fire is going to be an issue today elsewhere. Good morning everybody. I'm Rob Marciano. Welcome back to AMERICAN MORNING.

Extreme not just critical, but extreme fire danger. That's the next step up according to the SPC. Check out where it's going to be across parts of eastern Arizona where we have a fire that's burning near the Grand Canyon and in through most of New Mexico. Winds could gust up to 60 miles an hour. We've got relative humidity though with 48 percent, and it's been pretty dry there. So that's not the best of scenarios.

I want to show you this map. Let's go to Google Earth. Check out, the river flooding continues across parts of Mississippi. We take you into Davenport, Iowa. That is the Modern Woodmen Park there where we've had some flooding issues. There's Rock Island. That's where one of the latest river gauges are.

And where that park is we've got some issues. Check out the flooding there, 19.22 feet. Above 19 feet is where you see major flooding, and it's not expected to fall below that or below 18 feet, I should say, until Saturday.

Check out this video out of Davenport, the Quad cities. The Quad City River Band, it's their stadium that you saw in Google Earth. Modern Woodmen Park surrounded by the Mississippi. Sandbags holding the water out but keeping players and their fans out as well. They've had to play elsewhere because of that. Ironically enough, they have been watering the outfield.

I doubt that water is coming from the Mississippi, but that would be a wise use of the floodwaters there for sure. Kyra and John, back up to you.

PHILLIPS: Thanks. Appreciate it, Rob.

Well, the army at full attention after a soldier's dad exposes nasty conditions at Fort Bragg. We're going to talk to the army's number two in charge about what's being done right now to fix it.

ROBERTS: And cost versus coverage. How the candidates' health care proposals affect your pocketbook. We're paging Dr. Gupta for the details. Hey, Sanjay.

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Hey, John. We're talking about tax breaks, national insurance plan, high-risk pools. It's one of the most important decisions you're going to make this election. I'll break it down for you coming up on AMERICAN MORNING. Stay with us.

(COMMERCIAL BREAK)

ROBERTS: It's 19 minutes after the hour. The candidates for president are spending more time talking about how to get health care to more Americans without having costs go through the roof. Presumptive Republican nominee John McCain laid out the details of his $3.6 trillion health care plan yesterday.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: Right now, even those access to health care often have no assurance that it is appropriate care. Too much of the system is built on getting paid just for providing services regardless, regardless of whether those services are necessary or produce quality care and outcomes. American families should only pay for getting the right care.

(END VIDEO CLIP)

ROBERTS: Our chief medical correspondent Dr. Sanjay Gupta is looking into the plans. Sanjay, break it down for us this morning. How is Senator McCain's plan different from the other ones, from Barack Obama and Senator Hillary Clinton?

GUPTA: I think the biggest thing is actually taking what are tax incentives and shifting them from the employer to the individual. Think of it like that.

The way the system sort of exists now is that a lot of employers provide health care. They get a tax benefit so they benefit to some extent. The employee benefits because they get health insurance. He wants to shift some of that tax break to the employee directly, so they can choose their own health care plan.

They can have a lot of insurance companies from which to choose and that promotes a lot of competition. He thinks that will eventually drive down costs and put some of the decision power, if you will, back in the hands of individuals.

Now, obviously there are differences here between the various health care plans. Senator Obama's camp released a statement specifically about McCain's health plan shortly after it was released. And he says basically that he's recycling the same failed policies that didn't work when George Bush first proposed them and won't work now.

Part of the concern is will people actually go out and buy health insurance if they have these tax benefits. Senator Clinton says, look, two things are going to be problematic with this. One is that it may exclude some of elderly Americans, and it may exclude people with pre-existing conditions. So those are some of the differences, but that's essentially what McCain is trying to do here -- John.

ROBERTS: So what should voters at home who are trying to figure out whose health care plan works best for them keep in mind when trying to figure it out that calculus?

GUPTA: Well, you know, there's not a lot of differences frankly between Senator Clinton and Senator Obama's plan. We've talked a lot about this, you and I. One of the big differences is that they say Senator Clinton's plan requires people to buy health insurance if they can afford it. Senator Obama's plan requires it for children mainly.

But, you know, if you had to sort of create some bullet points overall for the different health care plans, take a look at this. For example, Senator Clinton's plan says it's going to mean affordable premiums. What she means specifically by that is it can never exceed a certain percentage of overall family income.

Obama's, you know, sort of as national insurance program. Let me emphasize this is not socialized medicine. This is not governmental sort of medicine, but it's a national insurance plan. And then, of course, we mentioned with McCain's plan specifically, he's going to talk about insurance for high-risk individuals. So if you do have some sort of pre-existing condition he may offer even more incentive for people to go out and buy insurance.

But again, he's very much leaving it in the realm of the free market, encouraging competition among insurance companies and getting away from employer-based coverage, John.

ROBERTS: It's a complex issue, difficult to understand. One we need to talk a lot about.

GUPTA: We'll keep doing it.

ROBERTS: Sanjay Gupta, all right. Good stuff. Sanjay Gupta for us this morning. Sanjay, thanks. The doc will be back a little bit later on today as well.

PHILLIPS: The big news in politics today, Barack Obama publicly denounces his former pastor over comments the Reverend Jeremiah Wright made Monday at the National Press Club.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: I am outraged by the comments that were made and saddened over the spectacle that we saw yesterday.

(END VIDEO CLIP)

PHILLIPS: And now, many people in the black community say that Wright is hurting Obama's campaign. That brings us to this morning's "Quick Vote" question. Has the Reverend Wright controversy hurt Barack Obama's chance at getting the Democratic nomination for president?

Right now, 50 percent of you say yes, 50 percent say no. Split right down the middle. Cast your vote at CNN.com/am. We're going to continue to tally your votes throughout the morning.

And, of course, we want your e-mails. Go to CNN.com/am and follow the link that says "contact us." We'll be reading your e-mails a little later this hour.

ROBERTS: A father's outrage turns the U.S. army on its ear. We're going to talk to the number two man in charge of the army after terrible living conditions were exposed at Fort Bragg, and what the army is doing about it. That's coming right up.

And she's accused of stealing celebrity records and selling them to a media outlet. We'll tell you the price a former hospital worker may have to pay for her snooping. Ahead on AMERICAN MORNING.

(COMMERCIAL BREAK)

PHILLIPS: The army admits of letting American soldiers down, and now it's inspecting barracks around the world. They're responding to the dismal conditions at Fort Bragg, North Carolina, exposed in the posting on YouTube by a soldier's father.

(BEGIN VIDEO CLIP)

VOICE OF EDWARD FRAWLEY, SOLDIER'S FATHER: The second floor toilets have overflowed, and there is over three inches of water on the floor. I don't need to tell you what the brown water around the floor drain is.

(END VIDEO CLIP)

PHILLIPS: Ed Frawley took these pictures three weeks ago after his son's unit returned from Afghanistan. Turning now to talk about this, General Richard Cody, vice chief of staff of the U.S. Army.

Sir, it's great to see you this morning.

GEN. RICHARD CODY, ARMY VICE CHIEF OF STAFF: Good morning, Kyra.

PHILLIPS: Well, I had a chance obviously to interview the father yesterday, and I just want you to take a listen to one thing that he told me.

(BEGIN VIDEO CLIP)

EDWARD FRAWLEY, FATHER OF FORT BRAGG SOLDIER: I had been in those barracks three times in the last four years, and I saw the condition and chose to ignore it. But two weeks ago, I couldn't. And when I went back the morning after he arrived, I took these pictures that are in this video and I knew I couldn't walk away from it. Somebody had to do something.

(END VIDEO CLIP)

PHILLIPS: And, sir, I know you saw the video right away on YouTube. And you made a call to Ed Frawley immediately. What did you tell him?

CODY: Well, first off, Kyra, I talked to him about the fact that I wanted him to know that the senior army leadership was not mad at him for what he did. He's a father. He has a son that served extremely well in Afghanistan as well as all the other great 82nd Airborne troopers, and I knew he was proud of his son and proud of his son's soldiers (ph). And I wanted him to know that, one, we weren't mad.

We understand that we've got old barracks, and I wanted to assure him that one, this was a breakdown and the entire senior leadership of the army was going to fix this. We have been challenged, and he understood that and then we just talked father to father. I think I spent about 30 minutes talking with Mr. Frawley, and we talked about our sons serving in Afghanistan and other things that fathers would talk about.

PHILLIPS: Well, sir, how did it even get to this point? And why did it take a father's YouTube video to get the attention of the army?

CODY: Well, first off, we've got -- it should not be that way, and I told Mr. Frawley that. I said, you know, we've got commanders in place. We've got systems in place to take care of these old Korean War barracks until these new barracks get built out. And that broke down, and it broke down in this building.

We've had other situations where we've had barracks with their old plumbing break down, and we've had to go and fix them. For the last six years, we've been repairing these barracks in keeping what I call triage on them so that they're safe, clean, and livable, but they're certainly not the barracks we want these great soldiers to live in. And that's why we're spending almost $66 billion since 2005 all the way to 2013 to repair and put up brand new barracks that are worthy of these great soldiers that are serving and defending this country.

PHILLIPS: And I know that immediately when you saw this, you called for investigations across the country and even overseas over the weekend. Did you find -- what else has come forward besides what we saw from Ed Frawley's video? Anything else that has shocked you even more? And when will we start to see a difference, I mean, right there at Fort Bragg?

CODY: Well, first off, I'm getting finally all the reports in and I'll have a meeting today with the installation management commander and his people that went out and inspected. You can imagine we're a very large army, so we're talking thousands of buildings that were inspected over the weekend by sergeant majors and by the commanders.

Short anecdote is the Korean War era barracks require much more maintenance. We have the money to continue to keep them painted, take care of their plumbing, and keep the living conditions, put new furniture in. But really the answer is what I'm getting back is we've got to get our new barracks built and built fast.

PHILLIPS: And, sir, you mentioned that you talked to Frawley about the fact that you're a father. You have two sons that have been on a number of deployments. I believe you still have a son that is overseas.

Your wife Vicki (ph) very active within the military. I think if she knew that your boys were coming back to conditions like this, she would be appalled. I am assuming you feel the same way.

CODY: I don't have words that I can say on TV of how mad I was that these young soldiers coming back after a 15-month tour -- I was over in Afghanistan with these soldiers not two months ago and saw the great work and the great ambassadors of America they are and living in terribly tough conditions over there in the mountains of Afghanistan, and to have these great heroes come back to that condition is uncalled for. The army leadership is not going to let this stand and we're going to take care of it. We are being challenged, but we have the right people in the right places to fix these failures.

KYRA PHILLIPS, CNN ANCHOR: Well, it was heartbreaking to see what happened at Walter Reed and it hits home I think for every American and the troopers' families to see what we saw at Ft. Bragg, but, sir, I know that you have stepped up to the plate and we're going to follow those investigations and follow up with you.

Well, thank you, Kyra. Again, I want to tell the soldiers at Ft. Bragg, North Carolina, our secretary of the army is en route today to come down and talk to the troops and that's the level of attention. But across the army, we have a moral commitment to take care of our soldiers, and we're going to do that.

PHILLIPS: General Richard Cody, vice chief of staff for the army. Appreciate your time.

CODY: Thank you, Kyra.

JOHN ROBERTS, CNN, ANCHOR: Good commitments from the general though this morning.

PHILLIPS: And he's a man of his words. I'll tell you that.

ROBERTS: Definitely, yes.

We're watching the Federal Reserve today. Another rate cut could come this afternoon and it could have a big impact on oil with the value of the dollar and the price of oil going in entirely different directions. Some experts are saying that it might be best for your money if the Central Bank decides to stand pat for the first time since September.

And breaking news this morning. Gas prices, guess what? Hit another record. For the 16th day in a row, now $3.62 a gallon for regular according to AAA. That is a 33 cent jump in just a month. A year ago we were still under 3 bucks a gallon. Doesn't that look like a bargain? $2.97 is what the price of gas was.

Six days to go now before the crucial primaries in North Carolina and Indiana. And Barack Obama is denouncing his former pastor, the Reverence Jeremiah Wright. The Illinois senator now trying to control the bleeding and heal the wounds of his presidential campaign because of Wright's controversial comments. CNN's Dan Lothian joins me now from Indianapolis. Dan, we got this informal poll going this morning. Split about 50/50 as to whether the Reverend Wright controversy is beginning to hurt Barack Obama. What are folks there on the ground in Indiana saying about it?

DAN LOTHIAN, CNN CORRESPONDENT: I guess, you know, we'll really find out next week after the voters have cast their votes as to how this impacted the campaign. That will ultimately be the true test. But this is a controversy, John, that Senator Barack Obama really had hoped to put behind him. You know in Pennsylvania, he had that race speech when this controversy first erupted and then Jeremiah Wright, Reverend Jeremiah Wright went on this media tour over the last few days. Initially, Senator Obama really had sort of a low-key response but then he decided to come out with a lot more force and essentially separate himself from his controversial former pastor.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: I want to make absolutely clear that I do not subscribe to the views that he expressed. I believe they are wrong. I think they are destructive, and to the extent that he continues to speak out, I do not expect those views to be attributed to me.

(END VIDEO CLIP) LOTHIAN: Senator Obama will be having four campaign events here in Indiana today, and he really hopes to sort of put again this Jeremiah Wright controversy behind him and focus on the issues, issues that he believes are important to the people here and certainly he believes that they care most about and not this controversy. John.

ROBERTS: So he's all caught up in this Reverend Wright controversy. What about Hillary Clinton? Is she staying on track, staying on message?

LOTHIAN: She really is staying on message. In fact, when her campaign was asked to comment on his strong statements yesterday against his pastor, former pastor, they declined. They had no comment whatsoever. She really has chosen to really focus on the issues, talking about the issues that are important to voters here, in particular the economy and talking about gas prices. You know, she's been sort of touting this gas tax break that would take place over the summer months essentially doing away with this federal gas tax. She plans -- would want to introduce legislation that she believes will really be a big relief for voters here and certainly voters across the country because gas prices are so high, and she said she would pay for it by imposing a windfall profit tax on the oil companies.

Again really focusing on the issues such as gas prices and as she says, jobs, jobs, jobs. Economy is the big issue here not only for Senator Clinton on the campaign trail, but also Senator Barack Obama. Again, he hopes to turn the focus back to that today. John.

ROBERTS: Gas tax holiday and tax on windfall profits, something we will put to the U.S. president of Shell Oil this morning. Dan Lothian for us in Indianapolis. Dan, thanks.

PHILLIPS: Republican John McCain taking his health care message to Pennsylvania today. McCain says that health care costs can be driven down by competition. He proposes moving away from employer- based insurance plans and offering a tax credit so that people can choose their own coverage. Critics say that wouldn't help seniors and people with existing conditions who have trouble getting coverage now. McCain says the Democrats' universal health care plans wouldn't work.

And a former employee at the UCLA Medical Center has been indicted for allegedly stealing celebrity medical records and selling them to the media. 49-year-old Lowanda Jackson is accused of selling the information for at least $4,600. She faces up to ten years in prison if convicted. No celebrities are named in the actual indictment but dozens are said to have had their records breeched at UCLA including Britney Spears, Farrah Fawcett and Maria Shriver.

ROBERTS: Coming up on 36 minutes after the hour. New this morning the Olympic torch is in Hong Kong this morning. New video overnight of the torch's arrival ceremony. Hours earlier Hong Kong deported three pro-Tibet demonstrators who were planning to protest the torch relay. At least four others have already been kicked out. The Hong Kong relay begins on Friday. It's now just 100 days until the opening of the games in Beijing. A secret royal visit to Afghanistan. Officials say Britons' Prince William flew into Kandahar this past weekend, meeting with troops, getting briefed on military operations. The 25-year-old prince is a second lieutenant or "leftenant" as they say there in the British Army. He received his pilots wings from the Royal Air Force earlier this month. Will's brother, Prince Harry, recently returned from his tour of duty in Afghanistan after his deployment was leaked to the media. We got princes all over the place, including our own Prince Ali.

PHILLIPS: Oh, no, he's the king.

ALI VELSHI, CNN, SENIOR BUSINESS CORRESPONDENT: Oh, stop. Go on. Busy day today in economics. We've got this Fed -- what is expected to be a rate cut later this afternoon. We also have in one hour have the first estimate of what the GDP, the gross domestic product, was in the first quarter of this year. I know that sounds like a lot of numbers, but this is going to spur a lot of discussion as to whether we are or are not in a recession. I'm going to tell you a little more about that as soon as we come back on AMERICAN MORNING. So stay with us.

(COMMERCIAL BREAK)

VELSHI: Good morning. Welcome back to AMERICAN MORNING. I'm Ali Velshi. Let me tell you a little bit about GDP because you're going to hear that word today. In about one hour, the estimate for the first quarter GDP is going to come out. That is gross domestic product. That is the broadest measure that we use of the economy. And it's the one we use to determine whether or not we're in a recession, going into a recession, out of a recession. How strong the economy is.

Here is what the description is of GDP. It's referred to as the total market value of goods and services produced within a given country in a given period of time. So we're going to get that number. And depending on whether it's high or low, things are going to happen. Things in particular are going to happen today because the Federal Reserve is meeting and it's going to announce their decision on interest rate cuts at 2:15 this afternoon. So, one assumes that if the GDP is really weak, they might change their decision. They might have a different decision to make. I want to just tell you about recession because we talk a lot about that. Many of you think we're already in one. The term recession or whether we're in one is determined by a group called the National Bureau of Economic Research. I don't know what they do in between recessions, but this is their job. They figure out recession.

ROBERTS: They wait for the next one.

VELSHI: They wait for the next one. And this is what they say a recession is. Just so you know this because you'll have heard different things. The NBER does not define recession in terms of two consecutive quarters of a decline in real GDP. That's what we typically think it is rather a recession is a significant decline in economic activity spread across the economy lasting more than a few months. So, we just want - I just want to do away with that wrong definition. A little water cooler talk for you, "normally visible in real GDP, real income, employment, industrial production and wholesale-retail sales."

ROBERTS: Do they define a number of months?

VELSHI: No, they don't define the number of months which is why when people say it's not officially a recession and our viewers and American voters say it is a recession, bottom line is it's not really clear to anybody what a recession is. If you feel like it's one, it's a good chance --

ROBERTS: Isn't that what Ronald Reagan said he wanted a one- armed economist --

VELSHI: Right because that's one hand and the other hand. If you just have one arm, there are no hands. There's only one. And it's just something to tell people at work. It's not two quarters.

ROBERTS: What time?

VELSHI: Fed is 2:15 Eastern.

ROBERTS: GDP numbers at?

VELSHI: 830. in a little less than an hour and I'll bring it up to you live.

ROBERTS: Looking forward to that. Ali, thanks.

Mississippi rising. Rob Marciano tracking the extreme weather. A new flood fears this morning.

Rob, a lot of problems in the Midwest.

ROB MARCIANO, CNN, METEOROLOGIST: Yes, we do. We got the Mississippi just doesn't want to go away. It's a big river and it's got some problems. We also have frosty conditions. Record lows yesterday and we're seeing some today. the complete forecast when AMERICAN MORNING comes right back.

(COMMERCIAL BREAK)

MARCIANO: Welcome back to AMERICAN MORNING. I'm Rob Marciano. Check out some of these numbers yesterday morning. It was a chilly start to your day, Chicago 31 also below freezing, in Springfield, Missouri, Columbia, Missouri, 32. Paducah, 33. And Houston, Texas also getting into the act with a record low yesterday of 46 degrees. We're seeing frost and freeze advisories from Michigan all the way down to North Georgia and the smoky mountains of Tennessee and western North Carolina. The temperatures right now 28 in the Grand Rapids and 33 degrees in Detroit. That's chilly. And 32 degrees in the windy city.

A little bit farther to the south, some of these are probably going to be records. Charlotte, Colombia, Charleston, Wilmington, those may very well turn out to be records. We'll check the books as we go through the rest of the morning. Rainfall amounts yesterday 3.71 inches in upper Maine. Millinocket, and Bangor, Maine, 3 inches. East Providence, Rhode Island 2.5, and Portland, Maine, 2.25 and Caribou, Maine, 1.48. Actually, pretty dry weather across a good chunk of the U.S. today. Although the Mississippi at the quad cities continues to be very swollen and major flood state here. Also we should mention getting reports out of Memphis, Tennessee, the airport there had a routine power shut down last night. When they went to fire it back up at 4:00 a.m., something failed. So, they got some delays there. Northwest I guess is -- that's one of their hubs. So, you may want to check if you're traveling on that carrier. John and Kyra, back up to you.

ROBERTS: You got to hate that. Rob, thanks very much.

MARCIANO: All right, guys.

ROBERTS: The big oil companies say they know you're feeling the pain of nearly $4 a gallon gas and they say their multibillion dollars profits are not to blame. So, who is? We're going to put that question to the president of Shell oil just ahead.

PHILLIPS: An incredibly emotional testimony. Lives affected forever by tainted heparin. We're "Paging Dr. Gupta" about the safety of drugs that we depend on every day. That's coming up next on this AMERICAN MORNING.

(COMMERCIAL BREAK)

PHILLIPS: Heartbreaking testimony on Capitol Hill over the recalled blood thinner heparin. Family members cried as they told a congressional committee how their loved ones died after receiving contaminated heparin made in China believed to have a dangerous cheaper additive. They're angry that the heparin made it to the U.S. when it wasn't safe.

(BEGIN VIDEO CLIP)

COLLEEN HUBLEY, LOST HUSBAND: I watched my husband and my best friend slip away before my eyes. As a nurse, I thought that I would be there to save my husband from any errors, but I guess I was naive. I never thought the life-saving medication we were relying on might be contaminated.

(END VIDEO CLIP)

PHILLIPS: That was Colleen Hubley of Toledo, Ohio. She herself a dialysis nurse, whose husband died last January from the tainted heparin. We're "Paging Dr. Gupta." Now, joining us live. Sanjay, do we know yet who is responsible for that contamination.

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: That testimony just so sad. You know, they haven't been able to pinpoint exactly, you known where this contamination took place although they have some ideas about that. And that sort of the root of this entire investigation. You know, heparin is a blood thinner. As you know, Kyra, it's a widely used one, about 12 million Americans use it. This particular product, this particular contaminated product, now that they've been tracing this medical investigation, it looks like it was found in 11 countries. There were adverse events in two of those countries, at least the United States and Germany that have reported. Thus far, 81 deaths.

One of the difficulties here, Kyra, is trying to make this exact link. People who are often taking this medication are already ill to some extent. So was it the illness that actually led to the death or was it the heparin itself? It looks like it was the heparin mainly because in higher doses you had more significant problems among these patients, and that's sort of where the FDA is focusing their investigation. We know that the plant in China that people are looking at had not been inspected.

We know that using sophisticated testing they have been able to link this contaminated heparin to China, and that's sort of where this investigation has led the FDA so far. At the heart of all this is a substance called chondroitin sulfate. The name is not that important but they've been able to pinpoint the exact ingredient that seems to have been so problematic. In contaminated doses, people had allergic reactions. They had blood pressure drops. They have problems with their heart, and as you just heard, Kyra, sometimes they had death as well.

PHILLIPS: Could be that the contamination, could that have been deliberate? As awful as that sounds it looks like, in fact, it very well could have been deliberate. In fact, the CEO of Baxter released a statement specifically about that saying we're alarmed that one of our products was used in what appears to be a deliberate scheme to adulterate a life-saving medication. And the FDA investigation as we've read it so far seems to support that theory. Now, if you sort of dissect it a little further, you will find it appears to have been a cost-saving measure. The contaminated product was cheaper, frankly, than the active ingredient that should have been used so as opposed to designed to cause injury or death, it was seemingly done to save money, Kyra.

PHILLIPS: Well, it's hard to watch that testimony. Sanjay Gupta, thanks.

GUPTA: Thank you.

ROBERTS: Nine minutes now to the top of the hour. The big news in politics today, Barack Obama publicly denouncing his former pastor over comments that the Reverend Jeremiah Wright made on Monday at the National Press Club. And now, many people in the black community say Wright is hurting Barack Obama's campaign. It's the question we're asking this morning in our "Quick Vote." Has the Reverend Wright controversy hurt Barack Obama's chance at getting the Democratic nomination for president.

Right now 44 percent of you say yes, 56 percent say no, which is 180 degree turnaround from the way it was earlier today. Cast your vote at cnn.com. We'll continue to tally your votes throughout the morning. We've also been asking for your e-mails on this today. Joe from Roseville, Michigan writes, "as troubling as the Reverend Wright issue has been for the Obama campaign, this last episode may actually have strengthened Obama. He is now been able to show a different persona, less structured than his comments from Philadelphia, showing more sadness, concern, even anger and hopefully strength."

PHILLIPS: And this one coming from Judy in Cedarfall, Iowa, "I think Obama should step down. He can't tell us that he didn't let the stuff his pastor said rub off on in him in the past 20 years and he is just now denouncing this racist pastor."

ROBERTS: And Patty from Cortland, New York says "I think it's too early to determine if Reverend Wright will have a major impact on Senator Obama. The Indiana and North Carolina primaries will determine how many people are really paying attention. Too many people are worried about paying for gas, mortgages, and food."

We're going to read more of your e-mails coming up in our next hour of AMERICAN MORNING. So keep them coming.

(BEGIN VIDEOTAPE)

ROBERTS (voice-over): Money talks. The Fed could make another cut today.

The candidates promise relief.

SEN. HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE: I would immediately lower gas prices by temporarily suspending the gas tax.

ROBERTS: We ask big oil about it's billion dollar profit.

And game changing. Punching, kicking, speeding, shooting, and racking up hundreds of millions. Just what makes "Grand Theft Auto IV" roll?

(END VIDEOTAPE)

(COMMERCIAL BREAK)

ROBERTS: It's 55 minutes after the hour. Biofuels under fire this morning amid the growing global food crisis. A group of international food scientists say if countries stopped turning corn into ethanol, it would cut the price of corn by 20%. President Bush addressed the need for so-called green fuels in the Rose Garden.

(BEGIN VIDEO CLIP)

PRES. GEORGE W. BUSH, UNITED STATES OF AMERICA: It's in our national interests that we are -- our farmers grow energy as opposed to us purchasing energy from parts of the world that are unstable or may not like us.

(END VIDEO CLIP) ROBERTS: Scientists want the United States and other countries to use nonfood crops like switchgrass to produce biofuels saying "we need to feed the stomach before we feed the car."

Anybody who is feeding the car knows it costs you even more to fill up with gas. For the 16th straight day in a row, gas prices reaching a new record. Look at this, it's now $3.62 a gallon according to AAA. That's up from 3.29 a month ago. 65 cents higher than a year ago. And despite raking in record profits, big oil companies say they're not the ones to blame. John Hofmeister is the president of Shell Oil. Mr. Hofmeister, thanks for being with us.

JOHN HOFFMEISTER, PRESIDENT, SHELL OIL COMPANY: Nice to be here.

ROBERTS: Your first quarter profits came out yesterday up 25 percent to some $9 billion.

HOFMEISTER: Well, yes. On a current cost of supply basis, it's about $7.8 billion. You know --

ROBERTS: When you're talking that kind of money, that's almost a rounding error. What do you say to people who are in this enormous budget crunch just trying to keep their car full of gas so that they can get to work.

HOFMEISTER: Yes. Well, I say we need more gas to be produced in this country is what I say. I have been saying that for three years ever since I took this potion. If the U.S. set a goal to produce 2 to 3 million barrels more a day in this country, we would send a shock around the world that would immediately say to the speculators, hey, the U.S. is serious. The President said something yesterday about this. I didn't hear him, but I think that's good news. But we should set a specific target. The presidential candidates should be out there on the postings saying let's increase domestic production by 2 to 3 million barrels a day. That would be something that would put money back into this country, jobs back into this country, and it would bring more supply toward the Americans who need it.

ROBERTS: You say, Mr. Hofmeister, you didn't get a chance to hear the president. We happen to have him right here. Let's listen to what he said.

HOFMEISTER: OK.

(BEGIN VIDEO CLIP)

PRES. GEORGE W. BUSH, UNITED STATES OF AMERICA: One of the main reasons for high gas prices is the global oil production is not keeping up with growing demand. Department of energy estimates that Anwar could allow America to produce an additional million barrels of oil everyday.

(END VIDEO CLIP)

ROBERTS: So it's drilling, drilling, drilling is what the president is saying. Of course, environmentalists and critics are saying that's not the way to go about doing it. We need to focus on cutting consumption, renewable forms of energy and isn't it true that regardless of us tapping Anwar or whatever that globally we're starting to reach a peak in production and that within maybe a decade or two oil production will actually begin to decrease?

HOFMEISTER: Well, I think there is some argument with convenient, easy oil we will peak sometime in the next decade. I think Shell sees that coming, but in terms of total oil supply to the world, we're a long way from reaching peak oil because it doesn't take into account unconventional oil. I think the President brings up a good point in that we could, we have the available domestic supplies off the coast of Alaska as well as Anwar. Shell has won $2 billion worth of high bids for the (Chuck Cheese)ph -- that's a few years off before we could begin production. But let's remember that there's more than 100 billion barrels of untouched oil and gas in this country that is subject to a 30-year moratorium.

Now, there's only one body in this country that can set a 30- year moratorium and that's the U.S. government.

ROBERTS: You know, of course, what Senator Clinton is proposing. She, like John McCain, is proposing to repeal the gas tax for at least the summer, a little gas tax holiday here. The difference between the two planes is that Senator Clinton wants to slap you with a 50 percent profit on what she calls windfall taxes, you profit above a certain level, not a good idea?

HOFMEISTER: Well, look at our revenues and our income for the last quarter. If we made $7.8 million. We'll, no.

ROBERTS: I'm sorry.

HOFMEISTER: Well, no. I'm going - using a corollary. If we had made $7.8 million on a 114 million dollars of revenue. Nobody would call that excessive because that's 7.5 percent. We made $7.8 billion profit on 114 billion revenue. That's not even 7.5 percent. So, to me, that is not an excessive number when banks and pharmaceuticals and I.T. companies earn a whole lot more.

ROBERTS: Would it hurt you if she put in place this tax on the windfall profits?

HOFMEISTER: Well, sure, it would. It would slow down investments. I think taxing the oil companies is an idea that was tried in the '80s, it drove us to do more imports, which is the exact problem that we have today.

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