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Boom & Bust: Weak Economy Hurts California, Wyoming Savors Tax Windfall; Tornadoes Touch Down in Arkansas; Employment Report

Aired May 2, 2008 - 14:00   ET


DON LEMON, CNN ANCHOR: All right. Breaking news, and the news is weather right now. Tornadoes, hail, hurricane-force winds, and late reports of six people killed in Arkansas.

MELISSA LONG, CNN ANCHOR: Now we're going to talk about the economy as well this hour. And after months of dismal economic news, you can blame -- well, I don't think you can blame us for asking, and perhaps you're asking the very same questions. Is this perhaps the light at the end of the tunnel? The

signs of hope are modest. They could be short-lived. But things that were going up are now going down today. Things that were going down are finally going up.

On the decline, the unemployment rate down one tenth of a percentage point from last month. And then the price of gasoline is down one-tenth of a penny from yesterday.

So, what's going up? Well, The Dow Industrial has been up, has been on the plus side after rising to 13,000. Above that mark again today, up 31, trading at 13,039, as we are coming up on just two hours before the closing bell.

President Bush says he is confident the economy will bounce back. In suburban St. Louis today, the president said the tax rebate checks that are going out right now will stimulate spending. Mr. Bush called on Congress to help lower gas prices by increasing supplies.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: World demand exceeded supply, and now you're paying for it. If Congress truly is interested in helping relieve the price of gasoline, they would do two things. They would recognize that we can drill for oil and gas in environmentally-friendly ways here in the United States where there are good reserves, and they would build refineries. They would encourage the construction of refineries.

Did you know that there hasn't been a new refinery built in America since 1976? No wonder there's constricted supplies.


LONG: President Bush was visiting a technology plant in Maryland Heights, Missouri.

Now, the term "love-hate relationship," it could have been invented for credit cards. If you think you deserve a break from the high rates and the high fees, well, the Fed is now agreeing. Regulators are considering new ways to fight what they call unfair and deceptive practices.

Some new rules under consideration would give you us more time to pay our monthly bills. They would also ban the practice of slapping on the higher rates on preexisting balances.

The Federal Reserve Board is expected to sign off on this plan this afternoon. The banking industry claims the changes would hurt consumers through higher prices and less available credit.

Now, high gas prices are giving American fits. The price of food is way up as well. Just how bad is it? A Massachusetts bakery is growing its own wheat and urging its customers to do the very same. Now, one of the bakers shared the recipe with CNN's "AMERICAN MORNING."


JONATHAN STEVENS, BAKER, HUNGRY GHOST BREAD: People are going home, they're taking a little bag of wheat berries, and they're running home and digging up their lawns. Everybody gets the same size bag and they know to dig up 100-square-foot plot.

And they simply -- they do the other kind of broadcasting. And they end up with -- we're all going to end up with wheat. And come early August, we're going to go around with just hand sides (ph) and cut it down. And we're going to measure what the yield was and we're going to test the wheat and see if it -- if it will work for bread.


LONG: Mr. Stevens is doing what he can. He says he had to do something. He knew he had to do something when the price of flour tripled.

LEMON: And the battle for North Carolina leads our Political Ticker today.

Hillary Clinton has a governor's endorsement. Now she's hoping Tar Heel voters feel the same on Tuesday.

Polls suggest Clinton has cut into Barack Obama's lead there. Clinton is all over the state today, including stops in Greensboro and Raleigh, site of the state party's Jefferson Jackson Dinner.

Guess who's also going to dinner there? Barack Obama also attending. He's campaigning in Indiana before he heads to North Carolina. Obama has an event in Charlotte before the stop in Raleigh.

John McCain has a town hall meeting in Denver. The presumptive Republican nominee has been pushing the idea of a federal gas tax holiday this summer. Clinton supports it. Obama, well, he is against it.

All the latest campaign news is available right at your fingertips. Just go to We also have analysis from the best political team on television. It's all there,

LONG: President Bush filled in the outlines today of another war-funding request. It was back in February, you may remember, he told Congress he'd want $70 billion to fight the wars in Iraq and Afghanistan through the end of his term in office.

Well, the breakdown came out today. The bulk? Forty-five billion dollars for combat operations, and then here's the really big number. Congressional analysts say the running cost of Iraq, Afghanistan, and the war on terror is nearing $900 billion -- $900 billion.

A drone goes down in Iraq and the military says the U.S. Air Force predator crashed today near Balad. The suspected cause? Mechanical failure.

Use of drones is up in Iraq. The unmanned aircraft can sniff out insurgents and strike with guided missiles. The predator costs -- as long as we're talking about money and the cost of war -- about $4 million.

LEMON: More than a month after its hotly-disputed elections, Zimbabwe finally announced the results today of President Robert Mugabe's attempt to hold onto power. The country's Election Commission said that opposition leader Morgan Tsvangirai got 48 percent of the vote to Mugabe's 43 percent.

Well, since no body got more than 50 percent, a runoff is called for. The opposition says the vote was rigged and a runoff is out of the question. It wants a power-sharing deal with Mugabe's party, minus Mugabe.

LONG: As you know, since we've been broadcasting today, we've been focusing on severe weather in so much of the heartland, focusing on nasty weather in Arkansas and in Texas, and now in Tulsa, Oklahoma. Showing you some new pictures of the destruction there.

Coming up, talking about more tornado warnings and the tornadoes that have touched down already today.

You're in the CNN NEWSROOM.


LONG: The reports have been disappointing. You have homebuilding down, jobs gone, gas prices up, as you know. Well, California's feeling the weight of a sagging economy, but it turns out that one state's pain is another's profits.

We have two reports now. First, with CNN's Chris Lawrence.


CHRIS LAWRENCE, CNN CORRESPONDENT (voice over): California once lured Americans to a land of opportunity, but the Golden State has lost some of its glow.


LAWRENCE: Betty Larkin is just one of more than 100,000 homeowners foreclosed on in the last few months alone.

LARKIN: People are saying something about a recession might come. To me, we are in one.

LAWRENCE: The mortgage collapse has eliminated 10 percent of California's construction jobs.

(on camera): We just saw the worst March for homebuilding here in California since the 1970s.

UNIDENTIFIED MALE: That is the primary story here. Housing prices down 25 percent, building activity essentially wiped out. That's slowing (ph) through the consumer confidence and taxes.

LAWRENCE (voice over): Lower property taxes have contributed to a projected $20 billion budget deficit, forcing the state to send pink slips to tens of thousands of teachers.

GINNY ZEPPA, TEACHER: It's really sad, because it's not like I will be able to find a job anywhere else either. California -- cuts are everywhere.

LAWRENCE: And the open road offers no escape, with gas prices soaring past every other state in the country.



ED LAVANDERA, CNN CORRESPONDENT (voice over): I'm Ed Lavandera in Cheyenne, Wyoming, where a state that's used to a yo-yo economy is enjoying an upswing.

JOE MEYER, WYOMING STATE TREASURER: Once every 19 years we get rich. The next 10 years we're broke.

LAVANDERA: The state is profiting from the taxes on high energy prices. Coal mining and natural gas are the state's economic backbone. Unemployment is below the national averages, and companies can't find enough workers.

MARION LOOMIS, WYOMING MINING ASSOCIATION: We have been going all over the country looking for qualified people to work in the mines. Mechanics, electricians, welders are in huge demand.

LAVANDERA: But to minimize the yo-yo effect, Wyoming now invests some energy tax revenue in stocks and fixed-income funds. The interest from that money now pays for about 25 percent of the state's budget.

(on camera): The Wyoming stay budget is $163 million ahead of where state officials expected it to be by this time of year. So while state lawmakers across the country are slashing budgets, here in Cheyenne they are writing checks.

(voice over): Schools are being built and remodeled. Highways are being upgraded. State treasurer Joe Meyer is smiling.

MEYER: Right now, it's kind of fun to be here. You can go hunting, fishing, too.

LAVANDERA: Just don't let these guys hear you say that.

Ed Lavandera, CNN, Cheyenne, Wyoming.


LONG: Now, the slumping economy may be affecting you in more ways than you even know. Check out's special report, "ISSUE #1." From protecting your money, to finding a job that's just perfect for you, there is a ton of information that could save you money and save you misery. Plus, you'll also find interactive tools and a whole lot more at -- Don.

LEMON: All right. Severe weather hitting a wide swath of the country. Want to get over now to CNN's Chad Myers in the severe weather center with the very latest.

We're hearing that Oklahoma is in this now.

CHAD MYERS, CNN METEOROLOGIST: I don't have that, Don.

LEMON: You don't?

MYERS: Nope.


MYERS: But I'm going to focus on Arkansas, and also the boot heel of Missouri.

We have three tornado warnings going on, which means either tornadoes have been sighted, or they are indicated by spin on Doppler Radar. Four miles north of Dixie, headed toward Cardwell.

Here's the radar picture right here. It's easy to see this one. I'm going to zoom right into the storm here. You'll be able to see it right on our map behind me or -- there you go. We're taking it full screen.

So, there is Paragould, there's Blytheville. Now I'll flatten it out and you'll get the tornado warning. The big pink square right there, if I keep going in, Cardwell, you are in the teeth of this storm for about the next, I'd say, five or so minutes. You need to be taking cover with that rotation right there. And just to the north and to the northeast of that we have another one. This is a brand new storm right over Tiptonville.

Tiptonville, this was probably just not even 30 seconds old, just off the printer. If your sirens aren't going off yet, you need to be taking cover.

Now, we've changed states. See, now that's Tennessee. Because we moved away.

There's the boot heel of Missouri there, and now into Tennessee. And then farther down to the south and southwest we're still seeing a tornado on the ground near Carlisle. This is the third time I've had to say Carlisle today and the word "tornado" involved. One to your west, one to your southwest, and now one right through your town, with reports of a gas station being hit near the interstate.

We'll have more as soon as we get it -- Don.

LEMON: All right, Chad. Thank you.

And what I was trying to say is that Tulsa from earlier, not anything going on right now.


LEMON: Yes. Correct.

MYERS: Sure.

LEMON: All right. Just want to make sure.

Hey, Chad, you may have some questions, so just stick by for a little bit, because we want to go now to Stacy Vaughn. She is from the Siloam Communications Department, the city of Siloam Springs. She's joining us now to talk about what she's seeing in her area.

Hi, Stacy. Thanks for joining us today.

What do you have for us?

STACY VAUGHN, SILOAM SPRINGS: I'm glad to be here.

Unfortunately, we have to report that we did have a fatality this morning as a result of a storm in Siloam Springs, Arkansas.

LEMON: A storm you said in -- repeat, please.

VAUGHN: Yes, a storm in Siloam Springs, Arkansas. We're not currently certain if it was straight-line winds or a tornado, but we did have a fatality, as well as another injury within the same home.

LEMON: OK. One fatality and one injury.

What are people telling you about the damage, especially in the area where the fatality and the injuries are? VAUGHN: Well, unfortunately, when the young girl was killed, a tree fell through her bedroom where she was sleeping. A 10-year-old boy was extricated from the same room and transported to the hospital, but he is in good condition.

We had various power lines down, as well as structural damage and tree damage, things of that nature.

LEMON: OK. And do you know how wide an area that this storm hit?

VAUGHN: It hit mostly the east side of our town. We don't have speculation on exactly what the path was or anything like that at this time.

LEMON: OK. What are you doing for these people who have damage to their homes? Are you housing them somewhere?

VAUGHN: The Red Cross is on site, and we are going to have investigators from the National Weather Service in town to investigate if it was a straight-line wind or tornadoes that caused the damage.

LEMON: OK. But so far, again, we just want to confirm here, one fatality, one injury, but several people taken to the hospital but appear to be OK?

VAUGHN: That is correct.


Stacy Vaughn from Siloam Springs, the communications department there.

We appreciate you joining us.

That is our breaking news here in the CNN NEWSROOM, severe weather hitting a big swath of the country. Tornadoes, tornado warnings, and we'll bring you all the updates right here in the CNN NEWSROOM.

Chad Myers of course on top of it back there in the weather center.

LONG: A busy young man today.

And while we're talking about the weather, we're also talking about issue #1, the economy. We've all been discussing the fact that a price -- a gallon of gas could hit four bucks, right? You've heard that warning. But what about paying for dollars for milk as well?

We'll talk more about that coming up.


LONG: Research shows issue # one, the U.S. economy. Today, we get the government's look at the job market. Employers cut positions for the fourth straight month. But -- but, the numbers aren't all that bad.

Stephanie Elam is now at the New York Stock Exchange, on the floor right there with an update, and helps us to understand the new report.

Hi, Stephanie.


That's right, 20,000 jobs were cut in April. And while you're sitting there thinking that sounds bad, analysts actually expected 75,000 to be cut. So obviously this was better than expected. And that was good news, at least this morning when the markets opened up.

The other thing that I should point out here is the unemployment rate, it actually improved slightly to 5 percent. That's better than 5.1 percent. That's where it was the month before.

Analysts say the report could indicate the economic downturn may not be as steep as originally feared. After all, job losses are shrinking, so that's one good thing there, compared to the previous months. But this month, there were strong gains in education.

We're looking at job growth in health care, government and business services, basically the service sector. Obviously anything related to housing, that was still a little rough there -- Melissa.

LONG: Well, good gains, as you pointed out, in the service sector. So a rare glimmer of hope, likely? This is not a rebound?

ELAM: No, I don't think anyone's cheering, going all out and thinking it's all over now. That's not the case here. The underlying weakness is still there.

As I was saying, the housing recession, any industries related to that, we're still having a rough time. That has not gone away at this point.

There are big job cuts in construction, manufacturing. Retail sector also getting hit as well.

And as far as wages are concerned, they rose at the slowest pace in nearly two years, and that's despite the fact that energy and food costs are significantly higher. So we are still paying more, but we're getting less money. So that's something obviously for us to keep our eyes on.

The other thing that I should say about this is that, you know, this report came out this morning. Markets were rallying, we were up over triple digits for the Dow. Not the case now at all.

That's because we have a $3 rise in oil prices today. That is weighing overall on the markets today.

A surprise, quarterly loss from Sun Microsystems. That socked off more than 20 percent at this time.

And as you can see, the Dow now down as well, off four points -- 13,007. So, barely above that 13,000 line right now. And the Nasdaq also on the downside.

So, again, you know, we still have like an hour and a half to go. Things could change. But right now we're dancing around the flat line.

But coming up -- how about this, in the next hour we're going to be talking about something that we've been waiting to hear. Gas prices have retreated ever so slightly. But we're going to tell you how much in the next hour -- Melissa.

LONG: Hey, ever so slightly? Every penny counts. Every tenth of a penny counts.

ELAM: It all matters. That's why we're telling you about it.

LONG: All right.

ELAM: I need to tell you something good every once in a while. You know?

LONG: Absolutely. Absolutely.

ELAM: I get tired of being the bearer of sad news.

LONG: And especially going into the weekend. We need some good news to take us through Monday.

ELAM: Exactly.

LONG: All right. Stephanie, thanks.

ELAM: Thanks.

LEMON: Arizona lawmakers trying to figure out a way to bring back some illegal immigrants.


UNIDENTIFIED MALE: Props (ph) have to be brought in. But I don't need anybody to wash my car, mow my lawn, or do I need to eat at a fast-food restaurant.


LEMON: That's right, I said bring back some illegal immigrants. They're rethinking their tough anti-immigration laws.


LONG: I think my mike's open now. Let me try one more time.

Coming up on the bottom of the hour, here's some of the stories we're working on for you in the CNN NEWSROOM on this Friday.

Severe storms rolling through middle America. Tornadoes threatening the residents of Arkansas, Texas and Missouri. At least six people were killed in Arkansas.

Minnesota legislative leaders agree to a $38 million payout for the victims of last summer's Minneapolis bridge collapse. Thirteen people died, 145 others were injured.

Yes, it may not be much, but it is a start, right? Gasoline prices fell a tenth of a penny overnight. The AAA Motor Club says the average price of a gallon of regular is now $3.62.


Back now to our breaking news, and the news is the weather.

Let's get right to Chad Myers. He's in the CNN severe weather center.

Chad, update us, please.

MYERS: Well, we don't know how bad it is, but we do now know that a tornado went right through downtown Carlisle, Arkansas. This has just been reported literally about four minutes ago. Just coming in.

It went across the interstate, across I-40, flipped over cars on I-40, and went right through the town of Carlisle. We talked about Carlisle. This is the third time I had tornado warnings for the town of Carlisle, and now we finally even know that it was hit.

I'm going to take you to this map here and I'm going to show you the other places that things are going on, too.

Tiptonville, now this is actually going to be in Tennessee. There's the map. There's Memphis on the bottom of the map.

Here's Tiptonville. You're right in the middle of this storm right now. No reports that it's on the ground, but the rotation is quite amazing.

A tornado reported on the ground here with this storm, six (ph) northwest of Monet (ph). This storm is still moving to the northeast at about 45 miles per hour. It did go right over the town of Cardwell.

Now farther to the south, this is the storm that did go over Carlisle with the damage. And so far, it looks like it's just north of Hazen, where the tornado was about 10 minutes ago. The entire area here all the way from now Tennessee and southwestern Kentucky, all the way down to Shreveport, under the gun for some big-time weather today.

We're going to keep you up to date as quickly as we can. I just want you to know, you're going to have to take cover for yourself at this point in time, because the tornadoes are coming so quickly. If you see a storm headed your way, whether the sirens are going off or not, get the kids and the dogs and the pets inside and stay there until the storm is gone -- Don.

LEMON: Chad, thank you for that.

LONG: John McCain's game plan tops our political ticker this hour. The presumptive Republican nominee is courting conservative Democrats and Independents, rather than relying on his party's base in order to get elected come November. A senior adviser tells the "Washington Times," the GOP core is more narrow than it was four years ago.

The Democratic candidates are raking in the cash for the Democratic National Committee. The DNC might want to think about a bake sale. Through March, the DNC raised $18 million to $36 million for the Republican National Committee. That's despite unprecedented fundraising by Barack Obama and Hillary Clinton.

And another concern for the DNC party, loyalty versus candidate loyalty. Clinton supporters saying they will not vote for Obama if he is the nominee. Obama supporters saying the same about Clinton. It's going on in Indiana and across the country. Some Democrats think this could spell trouble in November, especially if the nomination battle drags on.

LEMON: Cracking down on illegal migrant workers can pretty much rid a place of illegal migrant workers. If that doesn't strike you as a news flash, you're a step ahead of lawmakers in Arizona who are scrambling to bring back some of the illegal workers they drove out.

CNN's Randi Kaye explains.


RANDI KAYE, CNN CORRESPONDENT (voice-over): This is a steel plant in Phoenix. The owner, Sheridan Bailey needs workers. Even though he recently fired 12, they were all illegal immigrants. And with the tough new state law that could shut down businesses that knowingly hire illegals, Bailey wasn't taking any chances. It's causing losses across the board.

(on camera): How much money would you say you have lost in potential business as a result of the current law?

SHERIDAN BAILEY, IRONCO ENTERPRISES: $4 million or $5 million over a year's time is probably a reasonable figure.

KAYE (voice-over): It's a mess. Business owners say the immigration law backfired. Illegal workers once made up about 11 percent of Arizona's workforce. But with the crackdowns, thousands simply left. Two months ago, an economist predicted eight percent of Arizona's population would disappear and the state would lose tens of billions of dollars in economic output because of the new law. Hardest hit? Agriculture, tourism, hospitality, construction.

But unemployment is low here. It's below four percent. So, there aren't a lot of workers to fill jobs vacated by the immigrants who left. Bailey tried hiring veterans, ex-cons, even a lost boy from Africa. Nothing's worked.

We asked what will Arizona do now? Turns out lawmakers are now considering a plan to try to get the illegal immigrants back again. That's right, they're doing a 180, oops.

This state senator has a plan to get the workers back. It's sort of an end run on the original plan to get them out. It's a guest worker program. It would allow businesses to legally hire illegal Mexican workers.

MARSHA ARZBERGER, ARIZONA STATE SENATE: We want to see our companies be able to have increased productivity, increased profits so that Arizona's economy can go up. This influx of immigrant workers could make a big difference.

KAYE (on camera): Here's how a guest worker program would work in Arizona. First, a business would have to prove it was unsuccessful in hiring legal U.S. workers. Then, it would hire Mexican workers using the Mexican consulate. Every Mexican worker would get a background check, be photographed and finger printed before getting a guest worker card and coming here to Arizona.

RUSSELL PEARCE, ARIZONA STATE HOUSE: Every industry that wants cheap labor ...

(voice-over): Even this man, Russell Pierce, the state senator who pushed through the current tough immigration law is softening. In a stunning reversal, he now admits the state needs the immigrants back, but only for agricultural jobs.

PEARCE: Crops have to be brought in. But I don't need them here to wash my car, mow my lawn or do I need to eat at fast food restaurants.

KAYE: But Pearce is trying to have it both ways. He wants the labor but he doesn't want the laborers. So his plan ...

PEARCE: Doesn't lead to citizenship, doesn't lead to any permanent status, can't bring family with you, can't come here and have your babies, can't come here and be a burden on the taxpayer. Come here, work, earn your wages, pay your taxes and go home when it's done.

KAYE: So, while the whoops, we have no workers debate continues in Arizona, business owners keep an eye on the border, hoping the "Keep Out" sign is soon replaced by "Help Wanted."

Randi Kaye, CNN, Phoenix, Arizona.


LEMON: Of course, all the latest campaign news is right at your fingertips. Just go to We also have the analysis from the best political team on television. It's all there,

LONG: Now, when people talk about the high price per gallon these days, they might not actually be talking about gasoline. The price of milk has been soaring, too.

CNN's senior business correspondent Allan Chernoff looks behind the prices.


ALLAN CHERNOFF, CNN SR. CORRESPONDENT (voice-over): To make sense of milk prices in the dairy case, it's best to start here, in the barn at feeding time. As farmer Rich Byma dispenses a diet rich in corn and soybeans, it's like watching his 300 cows eat dollar bills. Feed has never been so expensive.

RICHARD BYMA, FARMER: We watch every pound of feed that we give to the cows.

CHERNOFF (on camera): The cost of feed has doubled in the past year. So Rich has his cows on a strict diet, but the less he feeds them, the less milk they produce.

(voice-over): Many other farmers are doing the same, says the U.S. Agriculture Department. The less milk farmers produce, the higher milk prices are likely to go.

BYMA: I think we need to be concerned as Americans that food prices are going to get really expensive. There may be some people that don't have enough food.

CHERNOFF: Milk already is expensive. The average price for a gallon of whole milk last year soared nearly a dollar. Consumers responded by cutting back, leaving the price of milk to ease a bit in recent months. But now that the cost of fuel has hit a new record, it's more expensive than ever to operate farm machinery and transport milk, 7,500 pounds a day from Byma's cows.

BYMA: I have sympathy for the consumer, but they have to understand if we're going to keep the next generation in business to take over these dairy farms, they need to be profitable.

CHERNOFF: Meaning milk prices may soon be climbing near $4 a gallon.


CHERNOFF: In fact, whole milk already is above $4 a gallon in some metropolitan areas, including Miami, Minneapolis and the New York area -- Melissa.

LONG: OK, that's not good news to hear. So, what can we all do about this? Is there anything we can do?

CHERNOFF: Well, not that much. But if the family does drink whole milk, they can move down to 2 percent. That is a little bit cheaper. In fact, according to the latest Department of Agriculture survey, five cents a gallon cheaper. It varies usually between a dime and a nickel cheaper.

LONG: Interesting, well, organic milk is so much more expensive to begin with, something like lactate always so much more to begin with, anyway. So, people might be stuck paying the prices.

You talked about the farmers and their plight. How slim are their margins right now?

CHERNOFF: They really are pretty thin right now. Just 60 cents is the profit margin for that farmer we just met for every 100 gallons that he actually is able to sell. And that is hundred weight, I should say, which comes out to about 11.5 gallons of milk. So, that really is a big change. Only a year ago, his profit margin was more than several dollars for that hundred weight. That's 100 pounds of milk.

So really, times have gotten a lot tougher for the farmers. Only last year, they were really enjoying those cash cows.

LONG: Big change in just a year, as you pointed out.

Senior correspondent Allan Chernoff, Allan, thank you.

Now, there are certainly plenty of freight to haul, but some truckers are parking their rigs. We're going to talk to one trucker and his wife to find out why coming up in our next hour.

LEMON: All right, we also have some more breaking news into the CNN NEWSROOM. And this is not the weather, this is actually really disturbing story coming out of Gilroy, California. Here's what we're being told. Take a listen, this is the truth. A mountain lion is on the loose in Gilroy, California, and they are looking in someone's backyard for this mountain lion.

And really, that's all we know of. We're working on getting more information here. But you see, obviously, some sort of law enforcement officer, someone on the scene there. It's at the top right of your screen. So apparently, they're combing someone's backyard because there's a mountain lion on the loose, and if you live in that area, this is obviously a very serious situation for you.

We're working on getting more information about this. And as soon as we do, we'll bring it to you in the CNN NEWSROOM. But we thank KABC for those pictures out of Gilroy, California.

Police say the D.C. Madam killed herself. Not everybody's surprised. We'll talk with the man who first told the world about Deborah Jeane Palfrey.


LEMON: OK. Back now to our developing news coming out of California. Now we're being told that it is Eagle Rock, California, nine miles outside of Los Angeles. There's a mountain lion on the loose.

Here's what you need to know about that mountain lion. They're telling us -- you see the window, people standing in the windows of their homes, obviously not going outside because they know exactly of what's going on. As they pan out here, we'll see exactly what they're doing.

But -- give you a bit of background. We're told that this is the second mountain lion attack. Apparently there was an attack there in week that killed five goats. It happened in -- the first one in Gilroy, California, at a ranch in a rural area on Bridle Path Drive. That's where that is.

Santa Clara County, which is where these attacks are taking place. The homes sit on five to ten acres of land and they can be worth several million dollars, we're told. And apparently, a lion also now lives there. The mountain lion killed five of this woman's youngest goats, three does, a buck, and a wether. The lion managed to consume a hind leg before it ran off.

Fish and Game told the person who lives there that the lion will probably come back. So now a lion has come back to Eagle Rock, California, where they're searching a backyard for it, because obviously it's dangerous. If it will eat animals, it will eat people as well. So I'm sure people are concerned for themselves and their children or what have you.

But again, mountain lion on the loose, Pictures courtesy of KABC. We'll bring you updates in the NEWSROOM.

LONG: Now, reaching out to voters but keeping a distance from reporters -- it is Bill Clinton on a whirlwind campaign swing for his wife.

Our Gary Tuchman is trying to keep up.


GARY TUCHMAN, CNN CORRESPONDENT: Bill Clinton, who some have seen as a loose canon and occasionally even a political liability as he has stumped for his wife, is now in a whirlwind campaign tour. And he's staying relatively low profile.

Within a 36-hour period, Clinton greeted throngs in the North Carolina city of Whiteville...

UNIDENTIFIED MALE: Forty-second president of the United States, William Jefferson Clinton ...

TUCHMAN: ... and the Indiana City of Whiting.

The man from Hope reminisced to the people of Hope Mills, North Carolina.

WILLIAM JEFFERSON CLINTON, FORMER PRESIDENT OF THE UNITED STATES: When I was president, we had lots of millionaires, but the bottom 20 percent of earners increased their earnings, in percentage terms, more than the top five percent.

TUCHMAN: He gushed about his wife in somebody's front yard in Lumberton, North Carolina.

W. CLINTON: I would be here for her if she asked if we had never been married.

TUCHMAN: And when he got to the North Carolina town of Billing (ph), Bill Clinton was nowhere near done.

W. CLINTON: This is my fourth stop today.

TUCHMAN (on-camera): Thirteen campaign stops in a day-and-a- half, in three states -- North Carolina, West Virginia and here in Indiana. Bill Clinton is the cheerleader in chief for Hillary Clinton.

W. CLINTON: And if somebody tells you can't win, it's because they know you can.

TUCHMAN (voice-over): Bill Clinton's aides feel comments he's made during this campaign about Barack Obama and race have been unfairly interpreted.

Campaign volunteers do their best to keep news cameras far away when he shakes plans, even tell police to kick us out of a public area.

UNIDENTIFIED MALE: I need you to move back.

TUCHMAN (on camera): But why? I don't understand.

UNIDENTIFIED MALE: Because you were told. Move back.

TUCHMAN (voice-over): In all his stops during this crucial time, Clinton seldom makes any references at all to Barack Obama. Although this implicit one was a zinger.

W. CLINTON: We're going to end this thing roaring. And what are they going to say if she wins the popular vote, I'm sorry, we're going to give it to the caucus states that are going Republican in November?

TUCHMAN: At times, it feels like he's running for a third term. After all, how many political spouses get handed the proverbial baby?

(on-camera): Would you rather see him as president of his wife as president?

UNIDENTIFIED MALE: I vote for a co-presidency between the two of them. The Billary Presidency. Hey!

TUCHMAN (voice-over): But right now, Bill Clinton seems to be staying on message and away from potential controversy and cracks himself up when talking about his daughter, Chelsea.

W. CLINTON: She was asked, do you think your mother would be a better president than your father? And she said, well, sure I do.

So I called her and I thought she'd say, dad, don't worry about it. It's election and she's on the ballot and you can't run anymore, what else can I say.

You know what she said? Dad, they asked me a direct question. I had to tell the truth.

TUCHMAN: The sometimes self-deprecating 42nd president doing what he can to make his wife the 44th.

Gary Tuchman, CNN, Michigan City, Indiana.


LEMON: Well, police say the D.C. Madam killed herself. Not everyone is surprised. We'll talk with the man who first told the world about Deborah Jeane Palfrey.


LONG: Here's something for you to consider. Is federal prison a fate worse than death? Deborah Jeane Palfrey apparently decided it was. The hanging death of the so-called D.C. Madam was a shock, but not a total surprise to people who had followed her checkered career and her legal ordeals.

Here's CNN's John Zarrella.


JOHN ZARRELLA, CNN CORRESPONDENT: The body of Deborah Jeane Palfrey was found by her mother in a small storage shed outside her mobile home.

Blanche Palfrey discovered her daughter, Deborah, had apparently hung herself using a nylon rope from a metal beam on the ceiling of the shed.

ZARRELLA: Police say several notes were found that made it clear the woman known as the D.C. Madam wanted to take her own life. Author Dan Moldea, who was working with her on a possible book, said he wasn't surprised.

He told "Time" magazine, "she wasn't going to jail. She told me that very clearly". She told me she would commit suicide."

Palfrey was to be sentenced next month for running a high-end prostitution service in Washington, something she continued to deny.

DEBORAH JEANE PALFREY, D.C. MADAM: No promises or claims directly or indirectly was ever made to a client that he should expect the associate to perform illegal acts for hire.

ZARRELLA: But authorities say she ran the business for 13 years, hiring polished, college-educated women, and coordinating it all from her home in California. She allegedly brought in millions of dollars, most of which she spent on her defense.

The 52-year-old Palfrey hinted at her current state of mind with a recent interview with CNN radio's Ninette Sosa.

D. PALFREY: I am looking at 55 years in a federal penitentiary. And at my age, that is virtually a life sentence.

ZARRELLA: John Zarrella, CNN, Tarpon Springs, Florida.


LEMON: All right. Interesting report from John.

But we want to learn more about this, take you deeper inside the story. We're joined now by William Bastone in New York. He is the editor of thesmoking, which broke the story of the D.C. Madam back in 2006.

Thank you for joining us today. And I'm sure you've gone through this before, but I want to know, how did you find out about this story? Was it a tipster, were you following it since she had been convicted before?

WILLIAM BASTONE, EDITOR, THESMOKINGGUN.COM: No, we had never heard of her. We had gotten our hands on an affidavit by an IRS agent that basically spelled out the IRS and postal service investigation of her and basically described her as this woman who operated this escort service in and around Washington. And we figured, well, it probably had to involve well-known individuals in the capital so ...

LEMON: Because it was in and around Washington, right?

BASTONE: Correct.

LEMON: And you just assumed that. OK.

She said 55 years in prison, she said that to CNN radio. And for someone who is my age, in her 50s, I think she was 52-years-old, she said that that was virtually a life sentence for her.

But many people in the legal profession believe that she would never have gotten that many years, maybe five at tops.

BASTONE: Correct.

LEMON: And talking about her frame of mind, you interviewed her. And during your interview, we have these quotes, she says, "I had thoughts of suicide. I also had Vietnam-like flashbacks."

Tell us about that and about that conversation with you had with her.

BASTONE: Yes, that was actually -- she actually said that -- the federal conviction for which she was going to be sentenced in late July was actually the second time she had been convicted of essentially operating as a pimp. Her first conviction came in the early '90s in California.

It was actually in pre-sentencing documents that she filed in superior court San Diego in which she made these assertions that she, at the time, was considering suicide as a viable option. She was distraught about being jammed up in California, so it was in the context of court filings that she actually said this.

LEMON: OK. Let me ask you. Since you've been doing this a lot, the most interesting part of the story that you can tell us about and something that maybe has not been reported yet.

BASTONE: Well, whenever you have these kind of high-profile escort services, the idea that there's a black book, the madam or the operator of this service has a black book that has all the names of the clients in it, and it has been reported in this instance. When in reality, she never had that.

The first time we spoke to her, she basically said she didn't even really know the names of the individuals who contracted out for services of her various prostitutes. And all she had, essentially, was many, many years of phone records. And that really was the only way that names surfaced. So the idea that she was holding back and she was going to drop the names of all these famous people really is not backed up by anything.

LEMON: All right. I'm up against a break here, but we've got lots of conspiracy theories abound here that it may have been much more sinister than a suicide, that someone may have come after her.

BASTONE: Well, listen -- I think that's insane.

If you're looking to off a person, there are easier ways to do it than to stage someone's hanging in a shed outside of her mother's house. It's pretty insane to think that.

LEMON: All right. William Bastone,

Thank you so much, sir. Have a great weekend.

BASTONE: Thanks, Don -- you too.

LONG: It is coming up on noon lunchtime in the Los Angeles area, and our affiliate KABC has its chopper hovering overhead in this neighborhood which is about nine miles outside of L.A. -- Eagle Rock is the community in Santa Clara County.

The reason they are there, they're searching for a mountain lion that's apparently on the loose today. It's a mountain lion that is hungry. It has killed five goats in this community in the last week now. It is a second mountain lion attack.

A woman, who happens to live there, was leaving the house this morning with her kids. She tells our affiliate, KGO in that area, and she saw this lion darting around and she ran back in for safety with her kids. Also, big safety issue because according to our affiliate, the nearest school, about ten miles away from this community. Our affiliate KABC keeping us posted as they search for this mountain lion. Again, possibly 150 pounds.

And, of course, we're also following the developing weather stories. Severe weather happening in Texas, and in Arkansas and in Tulsa, Oklahoma. These pictures from Oklahoma earlier in the day. We're going to talk to Chad Myers, who's been focusing his efforts today on the severe weather in that part of the country. That's coming up, right after the break.


LEMON: All right. Let's see what the web servers are clicking on at Checking the most popular videos there.

The house of horrors in Austria. We have a report on how the monster dad lived a double life for 24 years.

And get this crazy vehicle. It is a jet, maybe, I don't know, -- a motorcycle ...

LONG: Wow, that's neat.

LEMON: ...a car, well yes, yes and yes to everything. A handyman hot-rod fan built it, guess where, in his garage.

LONG: That's a neat vehicle.

LEMON: Yes, pretty neat.

And in Florida, this woman lost her job as a teacher because of her part-time job that is very unteacher like. Watch the report and decide for yourself if she was fairly treated.

These stories and plenty more all day long, they're free at

The next hour of the CNN NEWSROOM starts right now.