Return to Transcripts main page
CNN Newsroom
Government to Bail Out Fannie Mae & Freddie Mac; Feds Take Over Failed Bank; Cyclone Recovery Slow in Secretive Myanmar; Bush Lifts Executive Ban on Offshore Drilling
Aired July 14, 2008 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, CNN ANCHOR: Satire shmatire (ph). The Obama campaign doesn't see the humor. What's behind the cartoon cover of this "New Yorker" magazine? We'll get both sides of the story.
(BEGIN VIDEO CLIP)
BETTY NGUYEN, CNN ANCHOR (voice-over): This is not what Myanmar wants reported some two months after the storm. The only way for us to capture these images was to sneak into the Irrawaddy Delta under cover of darkness.
(END VIDEO CLIP)
PHILLIPS: Mission to Myanmar. Betty Nguyen reveals the ravages caused by nature and complicated by a secretive regime. She'll join us live with her incredible journey.
Hello, everyone. I'm Kyra Phillips live in New York. Don Lemon is away, and you're live in the CNN NEWSROOM.
No matter where you deposit your paycheck, no matter where you take out your mortgage, you're asking some troubling questions today. Will Fannie Mae and Freddie Mac need your money to stay afloat? Does the IndyMac Bank bust a signal of a dangerous trend? Will the cost of fuel keep on rising? President Bush thinks it will. We're about to hear from him.
Investors -- investors, rather, are watching it all, and so are we. Let's just get right to it. The government ready to prop up two mortgage-lending giants, trying to shore up investor confidence. Our senior business correspondent, Ali Velshi, at the "ISSUE 1" desk, has been talking about it all morning, all afternoon.
Hey, Ali.
ALI VELSHI, CNN SR. BUSINESS CORRESPONDENT: And probably by now I can make sense of it, Kyra.
The -- the U.S. government is stepping in to help Fannie Mae and Freddie Mac. There were some perceived problem at those institutions that caused the stock price to drop precipitously over the last week.
Now Fannie Mae and Freddie Mac are in the business of buying loans primarily from banks that give people mortgages. And what they do is by buying those loans from those banks, those banks have more mortgages. They're freed up to issue more mortgages. They're sort of the grease of the wheels.
These -- Fannie Mae and Freddie Mac, then, resell these bundled mortgages to other investors as mortgage-backed securities. They get the money for that, and they start the process again. They give people loans.
So without Fannie and Freddie, you'd have a lot of loans that just weren't available, and they'd become more expensive. The Treasury Department now saying -- Henry Paulson coming in and saying that they are going to make more money available to Fannie and Freddie if they need it. They're going to increase their credit line. And the treasury wants authority from Congress to step in and actually buy stock of these two publicly traded companies if those stocks need shoring up.
Now, it's yet to see how that's all going to play out. But it's an assurance by the federal government that these two institutions will stay in business.
PHILLIPS: Well, will this make things better?
VELSHI: Well, we've had a lot of comment from a lot of people who watch this very closely to say it was necessary. There's a lot of panic out there in the market, particularly in the wake of the failure of IndyMac bank. There are a lot of people who feel that banks and large financial institutions can fail.
So there's something important about the government stepping in and saying, "We are taking action to ensure that major institutions like this won't fail." We have yet to see whether it will help, but it does seem like a step in the right direction, Kyra.
PHILLIPS: All right, Ali. Thanks so much.
And on Friday IndyMac bank went bust. Today it's open again under new management and a totally different name. It's now IndyMac Federal Bank. And customers are at the door.
Let's get straight to Pasadena, California, and CNN's Kara Finnstrom -- Kara.
KARA FINNSTROM, CNN CORRESPONDENT: Hi, Kyra.
Well, the crowds have actually continued to swell here throughout the morning. Want to give you a look around me. More than 300 people, we estimate, are in these lines. The line actually stretching around the bank and out of our view. We've been speaking with these folks all morning long. Many of them just have questions. They might have a checking account here. They want to know about whether the checks they've already written will clear.
Many of them, unfortunately, are over that $10,000 mark, which is the concern. So folks there who do have over $100,000 wanting answers about whether they've structured that money properly.
Here's one of the women that we spoke with earlier this morning. (BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: I heard her saying she's not too concerned. She is concerned. It's a lot of money for a person that's retired and, you know, trying to make ends meet, so -- and having -- she was an employee for Bank of America for 25 years. So it's not like she doesn't understand the banking system.
(END VIDEO CLIP)
FINNSTROM: Now Kyra, for folks who have less than $100,000, the FDIC trying to get out the message that, whether you come today, tomorrow, or next week, that money is secure. So folks don't have to rush down here and wait in these long lines.
You can see they've brought out chairs because people are going to be waiting here quite a while today. They're only letting in ten people at a time. And Kyra, those folks have lots of questions. We've only seen one group come out so far.
PHILLIPS: All right. We'll stay in touch. Kara Finnstrom, thanks so much.
And whether it's banks closing, changing names, or people losing jobs, we get the constant hits to our economy. We're getting word now about Midwest Airlines saying that it will reduce its workforce by 1,200 people, we're told. Apparently, it's removing its fleet of older 12 MD-80 jets from service.
It's about 40 percent of current staffing at Midwest and its Skyways subsidiary. Most jobs, we're told, will end by mid-September. Once again Midwest Airlines reducing its workforce by 1,200 people. Twelve hundred people out of jobs by mid September.
Much more "ISSUE #1" coverage ahead. President Bush on the hunt for oil. He makes a move. We're going to hear from him at the half hour. Plus, our Gerri Willis tells you how to keep your bank account from going bust. And a big name in personal finance, Suze Orman, weighs in.
The nation's two biggest minority groups are in the spotlight today in the race for the White House. A short time from now John McCain speaks to the National Council of La Raza convention in San Diego. That's one of the biggest Latino organizations in the country. And then this evening Barack Obama will speak to the NAACP's 99th annual convention in Cincinnati.
In our latest poll of polls, Obama leads McCain by just four points, 47 percent to 43 percent. Last week Obama led by eight points. The poll of polls is an average, by the way, of three different surveys.
Now, we've learned that Obama plans to meet next week with Palestinian leader Mahmoud Abbas. Palestinian official tells CNN that that meeting will take place next Wednesday in the West Bank. Obama is also expected to stop in Israel, but those details are still being worked out.
On the issue of Iraq, the Illinois Senator is praising Prime Minister Nuri al-Maliki's recent call for a timetable for U.S. troops to leave Iraq. An opinion piece in today's "New York Times" Obama writes, quote, "We should seize this moment to begin the phased redeployment of combat troops that I have long advocated."
(BEGIN VIDEO CLIP)
SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: What I am absolutely convinced of is that, to maintain permanent basis, to have ongoing combat forces, to have an open-ended commitment of the sort that John McCain and George Bush have advocated is a mistake. It is a strategic mistake.
(END VIDEO CLIP)
PHILLIPS: Well, Democrats have blasted McCain for suggesting that American troops could say in Iraq for 100 years.
Well, talk about a cover story. The Obama campaign isn't laughing at the cartoon on the cover of the current "New Yorker." It depicts Obama and his wife in the Oval Office, and the new apparent president is dressed in Muslim attire. Mrs. Obama sports an afro and a machine gun. An American flag is burning in the fireplace. A picture of Osama bin Laden hangs on the wall.
The magazine says, "Hey, it's satire," but the Obama spokesman, Bill Burton, says, quote, "'The New Yorker' may think that their cover is a satirical lampoon of the caricature Senator Obama's right-wing critics have tried to create. But most readers will see it as tasteless and offensive. And we agree."
A spokesperson for John McCain agrees, too. At the bottom of the hour, we're going to get both sides of this argument with conservative radio talk show host Shelley Wynter and Los Angeles City councilman and Obama supporter Bernard Parks.
Well, Jesse Ventura may be plotting a comeback. The former Minnesota governor and professional wrestler is expected to announce tonight on CNN's "LARRY KING LIVE" live whether he will run for the U.S. Senate as an independent. If he does he'll compete against Republican incumbent Norm Coleman and Democrat Al Franken. You can watch Ventura on "LARRY KING LIVE," 9:00 p.m. Eastern, only on CNN.
An Army nurse, Holley Wimunc, who was missing, is now confirmed dead, and two Camp Lejeune Marines are under arrest, including the victim's estranged husband, Marine Corporal John Patrick Wimunc. And Marine Lance Corporal Kyle Alden are due in court tomorrow to face arson charges. Those arise from a fire at the Wimunc's Fayetteville, North Carolina, apartment more than a week ago, around the time that Holley was reported missing.
Neither Marine has been charged with her death. His father actually said that authorities found his daughter's remains in a brush fire yesterday near Camp Lejeune. Weather is proving a mixed blessing for the fire crews in California. High humidity, calmer winds and rain helped with some wildfires around the states. But a couple places saw flooding and mudslides.
In one community dozens of homes were damaged by a slide as wide as three football fields. A county over, some firefighters were stranded when flash floods washed out the roads.
Now parts of Arizona also getting drenched. Traffic came to a standstill after flash floods swamped U.S. Route 60 in Tempe. More drivers were stuck for hours. And in Tucson, thousands of people were stuck in the dark when storms knocked out power poles. And it might not be over yet. More rain is in the forecast through midweek.
Now, as Bermuda feels the effects of Tropical Storm Bertha, we're also keeping our eye on another system coming down the pike.
Chad Myers, what you working on?
CHAD MYERS, CNN METEOROLOGIST: Could be Cristobal, probably by -- could be today, actually. It looks pretty impressive. But I would say certainly by the middle of the week it will have a name.
Tropical Storm Bertha still out in the Atlantic, but now look, almost centered right over Bermuda, feeling the effects on all sides of that island nation. Going to make kind of a wiggle path and then back out into the ocean the next couple of days. Right now, winds are 65 with a few gusts to 75, and it goes down to 60, 65, and then down to nothing, eventually, out in the middle of the Atlantic. That water is cold enough that it will kill it.
Now, here is the possible tropical formation. Here we go. Here's San Juan, Puerto Rico, and then on up through the north, there you go. That would be Florida way up there. And there's Bertha.
But now this is the area. Watch how this really intensifies in the past couple of hours. This is about a 12-hour satellite loop. It really did begin to spin right there. That's where we're watching for. We'll see if that actually does get a name. And it would be Cristobal if it was the next storm, the "C" storm, because we have already, obviously, had the "B" storm, which is Bertha.
More showers in the southwest. This is the typical monsoon. Isn't it just ironic, Kyra, that the firefighters needed rain, and some of the firefighters were cut off because the roads were washed out? They got so much rain. It's just -- it's one or the other. You can't seem to get a happy medium out there.
PHILLIPS: Trying to look for the -- we're all looking for balance, actually, aren't we?
MYERS: Exactly.
PHILLIPS: All right, Chad. We'll talk a lot more today. Thanks. Surging oil prices, they're a drain on all of us. Now President Bush is going to talk about one potential remedy. We'll have live coverage.
Also...
(BEGIN VIDEO CLIP)
NGUYEN: I'm Betty Nguyen. Coming up, what the Myanmar government doesn't want you to see two months after the deadly cyclone.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
PHILLIPS: NATO is calling the defense of a remote U.S. base in Afghanistan heroic fighting. Nine American soldiers were killed, 15 wounded in yesterday's battle near the Pakistan border. That's the highest number of U.S. soldiers killed in the Afghan war in three years.
The military says that insurgents overran an observation point just outside the outpost but failed to capture the base. An estimated 100 attackers were killed or wounded.
Now, the president of Sudan is facing charges of genocide. The chief prosecutor of the International Criminal Court in the Netherlands accuses President Omar Al-Bashir of masterminding a campaign of murder, rape, and deportation of African tribes in Darfur.
According to the U.N., government-backed militia have killed an estimated 300,000 people over the past five years and forced two and a half million from their homes.
Sudan's vice president rejects the court's jurisdiction. He says the charges are politically motivated.
Two months after a devastating cyclone hit Myanmar, the military government is still keeping foreign journalists out, hoping to hide the suffering, damage, and death from the rest of the world.
But CNN's Betty Nguyen found a way to get inside. Here is her exclusive report. But a quick warning: some of the pictures are pretty graphic and disturbing.
(BEGIN VIDEOTAPE)
NGUYEN (voice-over): The landscape is still littered with the remnants of lives swept away by Cyclone Nargis. This is not what Myanmar wants reported some two months after the storm.
The only way for us to capture these images was to sneak into the Irrawaddy Delta under the cover of darkness.
(on camera): It's really the only way to get down there and bypass the checkpoints.
(voice-over): I can't reveal how we made this journey, because it would jeopardize the safety of the locals who helped us, and once we arrived, it's easy to see why the junta government doesn't want us here.
Devastation is everywhere. This slab is all that's left of a monastery.
(on camera): The water was this high?
(voice-over): The village's only monk says the tidal surge was up to his neck, and he barely made it out alive, but many did not.
This farmer, forcing back tears, describing how he lost his wife and only daughter. He says if it weren't for his two surviving sons, he'd have no reason to live.
UNIDENTIFIED MALE (through translator): I have nothing: no food, no property, no companion.
NGUYEN: It's a place where the living still walk among the dead and the thick vegetation that lines the narrow canals, the cyclone's horror, is hard to ignore.
(on camera): This is what the Myanmar government doesn't want you to see. Bodies still rotting along the delta some two months after the cyclone hit. And you can still smell the stench of death.
(voice-over): Villagers say there were simply too many bodies to bury. They believe this was a child. No one knows for sure. In fact, most are trying their best to forget the painful past.
Perhaps that's why rice was planted in fields just a few feet away. These poor farming communities don't have time to linger over the loss, especially when cyclone survivors are still struggling to stay alive.
(END VIDEOTAPE)
PHILLIPS: Betty is now in Bangkok, Thailand. She joins us live.
Betty, tell us about the aid. Is it getting into these villages?
NGUYEN: Well, Kyra, we toured about half a dozen villages, and very little aid has reached the people suffering in those villages. Some had just received a few bags of rice, maybe some tarp, some roofing material. But that was about it. Not enough to really make a difference.
The situation may be different in larger cities along the delta. That's where aid groups have set up their camp, but the junta government is also in those cities. We couldn't make it to those cities without getting caught.
PHILLIPS: Just watching you and seeing that remarkable video and getting in through the night, tell me more about how difficult it was getting down to the delta.
NGUYEN: It was absolutely frustrating. The Myanmar government has made it nearly impossible for us to show cyclone devastation. So we pretty much had to go under cover of darkness, smuggling in like fugitives, trying to hide away and work as far as we could before we got caught. Because you just never knew who would be over...
PHILLIPS: As you can imagine, it's tough to get not only inside Myanmar but also to get a live signal from Bangkok, where our Betty Nguyen is. She was just telling us how difficult it is to get down into the delta. She's been doing some incredible reporting there for us in Myanmar. We'll continue to talk to her and run more of her pieces. Sorry that we lost the connection there.
Meanwhile, straight ahead: Super Bowl ads, red, white, and blue label. Budweiser is as American as they come, but not for long.
And a special group of athletes shows just how much of a winner they are.
(COMMERCIAL BREAK)
PHILLIPS: This Bud is for who? Anheuser-Busch is the latest American icon facing foreign ownership. The maker of Bud has agreed to a $52 billion takeover bid by Belgian brewer InBev, which says it will keep Anheuser-Busch's North American breweries open.
If shareholders and regulators OK the deal, it would create the world's largest brewer with the name Anheuser-Busch InBev. And beers such as Beck's, Stella, Rolling Rock, Budweiser, Bud Light, it's all under that banner.
Anheuser-Busch is going the way of quite a few so-called American icons. Take the Chrysler building, a stand out on the New York skyline. It was brought just this month -- or bought, rather, just this month by investors from Dubai. Well, New York's General Motors, building funds from Kuwait and Qatr helped finance its purchase.
And Anheuser-Busch isn't even alone in that beer category. Coors is now owned by Canada's Molson, Miller by South Africa's SAB.
Now, there's no shortage of news out in the financial sector today. First, the federal government sees a major bank, Indy-backed -- IndyMac, rather. And then it unveiled a lifeline for mortgage giants Fannie Mae and Freddie Mac.
Susan Lisovicz on the floor of the New York Stock Exchange has a look at how investors are reacting to all this.
Hey, Susan.
SUSAN LISOVICZ, CNN CORRESPONDENT: Hey, Kyra.
Well, we had a nice, big open. The Dow quickly rallied up 100 points in the first minute or so of trading. But it also quickly evaporated. Remember what the Federal Reserve and Treasury Department are trying to do is not only give Fannie and Freddie, you know, some emergency funding, should they need it. They're also trying to restore confidence in the financial markets.
And clearly, there is still some concern. One analyst tells CNN that, you know, confidence takes a while to restore. Another analyst says that, you know, aid is just -- this aid is just a Band-Aid approach. Also Bloomberg is reporting that famed investor Jim Rogers is calling this approach an unmitigated disaster.
Let's take a look at what's happening right now. The Dow Industrials, well, we're seeing a loss of 59 points right now. The NASDAQ, meanwhile, is down 28 points.
Shares of Freddie and Fannie, which were each up about 30 percent in the early going, Freddie is down 12 percent. Fannie is down 5 percent.
And just very quickly, IndyMac shares are no longer trading as a result of the seizure late Friday by the FDIC. It had a classic run on the bank on Friday. Kyra, you may remember this. It lost nearly half its value Friday, and its last trade was 14 cents.
PHILLIPS: Well, we've seen plenty of companies going bankrupt. You were talking about the airlines, auto suppliers, retailers. What makes these financial institutions so different?
LISOVICZ: Because they are the lifeline for the U.S. economy. It's all about credit. Credit for you and me as consumers for whatever it is, loans for college education, loans for your home, and if these two giants have problems as well as other institutions, credit is going to be that much tighter and it's going to make the housing crisis that much worse. And remember, the housing crisis is already called the worst since the Great Depression, Kyra.
PHILLIPS: Wow. All right. Susan Lisovicz. We'll be talking to you a lot more throughout the afternoon.
So how would you judge this cover? Does it make fun of Barack Obama's right-wing critics, or is it just bad taste all the way around? We're going to hear two very different sides.
(COMMERCIAL BREAK)
PHILLIPS: Live to the Rose Garden right now. The president of the United States getting ready to step up and lift the executive ban on offshore drilling. We'll explain a little bit more about what that is after he does it.
(JOINED IN PROGRESS)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: ... drives to work or takes a family vacation or runs a small business is feeling the squeeze of rising prices at the pump. With these pressures on prices, we must continue to implement good conservation policies. And we need to increase the supply of oil, especially here at home.
For years my administration has been calling on Congress to expand domestic oil production. Unfortunately, Democrats on Capitol Hill have rejected virtually every proposal. And now Americans are paying at the pump. When members of Congress were home over the Fourth of July recess, they heard a clear message from their constituents. We need to take action now.
One of the most steps we can take to expand American oil production is to increase access to offshore exploration on the Outer Continental Shelf or what's called the OCS. But Congress has restricted access to key parts of the OCS since the early 1980s. Experts believe that these restricted areas of the OCS could eventually produce nearly ten years' worth of America's current annual oil production.
And advances in technology have made it possible to conduct oil exploration in the OCS that is out of sight, protects coral reefs and habitats, and protects against oil spills.
Last month I asked Congress to lift this legislative ban and allow the exploration and development of offshore oil resources. I committed to lift an executive prohibition on this exploration if Congress did so, tailoring my executive action to match what Congress passed.
It's been almost a month since I urged Congress to act, and they've done nothing. They've not moved any legislation. And as the Democratically-controlled Congress has sat idle, gas prices have continued to increase. Failure to act is unacceptable. It's unacceptable to me, and it's unacceptable to the American people. So today I've issued a memorandum to lift the executive prohibition on oil exploration in the OCS.
With this action the executive branch's restrictions on this exploration have been cleared away. This means that the only thing standing between the American people and these vast oil resources is action from the U.S. Congress.
Now the ball is squarely in Congress' court. Democratic leaders can show that they have finally heard the frustrations of the American people, matching the action I have taken today, repealing the congressional ban and passing legislation to facilitate responsible offshore exploration. This legislation must allow states to have a say in what happens off their shores, provides a way for the federal government and states to share new leasing revenues and ensure the environment is protected. This legislation should also take other essential steps to expand domestic production.
Congress should clear the way for our nation to tap into the extraordinary potential of oil shale, which could provide Americans with domestic oil supplies that are equal to more than a century's worth of current oil imports. Congress should permit exploration in currently restricted areas of northern Alaska. Which could produce roughly the equivalent of two decades' of imported oil from Saudi Arabia. Congress should expand and enhance our domestic refining capacity so that America will no longer have to import millions of barrels of fully refined gasoline from abroad.
The time for action is now. This is a difficult period for millions of American families. Every extra dollar they have to spend because of high gas prices is one dollar less they can use to put food on the table or send a child to school. And they're rightly angered by Congress' failure to enact common sense solutions.
Today I have taken every step within my power to allow offshore exploration of the OCS. All that remains is for the Democratic leaders in Congress to allow a vote. The American people are watching the numbers climb higher and higher at the pump and they're waiting to see what the Congress will do.
Thank you.
PHILLIPS: The president of the United States there talking about lifting the executive ban on offshore drilling. But, as you heard, it's going to take two moves there. Congress has to join as well. Why? Because there's two prohibitions on offshore drilling. One was imposed by Congress, the other by an executive order that his father had implemented back in 1990.
He says he wants responsible offshore exploration, but that's when environmentalists come in and even a number of congressional Democrats and they've said, no, we want to protect beaches, coastal states, tourism and the economies there. So, it's a constant environmental and political fight. We'll continue to follow, of course, what Congress does as Bush does his side to lift the executive ban. We'll see what Congress decides to do.
Meanwhile, offshore drilling is a growing issue in the presidential race. Barack Obama wants to keep the current federal ban in place. John McCain wants to lift it, just like the president. And he -- let the states decide on their own. And as you're about to hear, both men have their reasoning behind their takes.
(BEGIN VIDEO CLIP)
OBAMA: If we started drilling today, the first drop of oil wouldn't come for another seven years. And even then it wouldn't have a lot of impact on prices because it would go to a world oil market, the Chinese and the Indians, they'd be buying that oil just like us. You would not see a significant savings. Everybody agrees with that.
Meanwhile, the oil companies currently have the rights already to drill 68 million acres of land in offshore areas that they haven't touched. So, the oil companies already have 68 million acres that they're not using effectively. And yet John McCain is talking about giving them more land to drill with no guarantee that that would actually produce lower gas prices.
I believe that before we give the oil companies any more land, it's time we tell them to start drilling on the land they already have or turn it over to somebody who will because we need that oil.
(END VIDEO CLIP)
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: If we will drill offshore, which Senator Obama is opposed to as he is opposed to every -- whether it be offshore drilling, whether it be nuclear power, whether it be any of the efforts we need to make. He's -- you're talking about Dr. Phil, he's Dr. No.
He's Dr. No on energy. He's against nuclear power. He's against storing of spent nuclear fuel. And he's against reprocessing. He's against offshore drilling. He's against offering a reward for the development of electric car. He's against everything we need to do in order to make this nation energy independent.
(END VIDEO CLIP)
PHILLIPS: Well, since exploring for oil could take years, experts say that offshore drilling probably wouldn't have an immediate impact on prices.
Well, a picture might be worth a thousand words, but the cover of the latest "New Yorker," could be worth a lot more. Take a look at this. It portrayed Democratic presidential candidate Barack Obama and his wife, as Muslim terrorists. Both the Obama and McCain campaigns call it tasteless and offensive. But the "New Yorker" says quotes, "Satire is part of what we do and it's meant to bring things out into the open, to hold up a mirror, to prejudice the hateful, and the absurd. And that's the spirits of this cover."
Joining me now from Atlanta, conservative radio talk-show host, Shelley Wynter. And in Los Angeles, city council member and Barack Obama supporter, Bernard Park Sr.
Gentleman, good to see you both.
Good afternoon, Kyra.
BERNARD PARKS SR., LOS ANGELES CITY COUNCIL MEMBER: Hello there. How are you doing?
PHILLIPS: Councilman -- good to see you both. I'm doing very well.
Councilman, you actually just called for a boycott of the magazine. Tell me why you are so outraged about this cover.
PARKS: I think it's outrageous that we have a cover that would depict racism, sexism, anti-religion, also anti-patriotism, and then on top of it, to try to draw a conclusion that Mr. Obama has some sympathy towards terrorism. And all of those are depicted in this magazine cover with no explanation and with the thought that these people tried to justify it, that maybe they'll read the story and get a different perspective, or that the everyday person understands satire.
I think it's something that's outrageous, well over the top, and is totally unnecessary, particularly in this time and this date.
PHILLIPS: Now Shelley, satire is supposed to be funny, it's supposed to be thought provoking, it's supposed to be clever.
Do you see this as over the top?
SHELLEY WYNTER, RADIO TALK SHOW HOST: Absolutely not. Kyra, this is interesting to me. The "New Yorker" is not a news magazine. The "New Yorker" -- and since 1925, it's been a high minded, journalistic, literary publication.
It -- nothing in their description calls it's a news magazine. So, if "Time" or "Newsweek" did something like this, I'd be right on the right with Mr. Parks. But, this is the "New Yorker." E.B. White has come out of here, John Cheever, countless authors have come out of this magazine. And so I think what they did, it absolutely shows what this cover -- this cover shows exactly what the article is about. I would say, if you're going to boycott --
PHILLIPS: Wait a minute. But there's my question. This cover doesn't demonstrate what the article is about. If you read the article, the article -- it talks about how he put together his campaign, how he picks his mentors. How he sort of rose to the position...
WYNTER: Isn't the, isn't the. Correct me if I'm wrong, isn't the article on the politics of fear? Isn't that what this is all about? Isn't that what the cover is supposed to depict, what the politics of fear is all about. If we're going to boycott the New Yorker then I say, I would just as well go down to Rainbow Push headquarters and boycott Rainbow Push for what Jesse Jackson said.
PHILLIPS: But Shelley, but Shelley. If I see this magazine cover, OK. I mean, this is pretty racial. I mean, let's look at it again.
You've got Michelle Obama in an afro. You know, you've got, you know, her husband, Barack Obama, in a turban. We're talking about racism and terrorism. I mean, these are -- and burning of the flag. These are the most sensitive issues in our country right now. If I see that, I'm going to think, oh, my god, is this who we want in the White House?
WYNTER: But do you really believe that? Do you really believe that if you see this article, this cover, excuse me, you're going to say to yourself, oh, this is Barack and Michelle.
I mean, no way. This is crazy to me. This is satire. It's just -- no one was this outraged when someone had a painted -- had a cartoon of Condoleezza Rice as a pregnant black woman who had -- delivering a monkey as a baby. No one said anything. I didn't see the likes of Mr. Parks wanting to boycott that magazine that ran that cartoon. So this is satire. And so anybody that looks at a drawing of a cartoon and wants to say this is what my presidential candidate is going to be like, it's already ridiculous. It shouldn't be voting.
PHILLIPS: Councilman, go ahead.
PARKS: I think you're missing the point in the fact that this magazine will be in newsstands across this country and internationally. No one is going to read the article to the fine point that you've just discussed it. It will leave the image and the impression of what the cover reflects, and for those who have those...
WYNTER: No way.
PARKS: ... racist tendencies, those that already have those sexist tendencies...
WYNTER: They not going to vote for Barack Obama anyway.
PARKS: What -- well, the issue is, what has Michelle Obama done?
PHILLIPS: Shelley, let him finish, let him finish.
PARKS: What is Michelle Obama done in her life that would allow you to depict her in fatigues, a bandoleer and a machine gun on a cover of a magazine? There is absolutely nothing. She's never quoted a word, stated a word, her persona in any way close to what's depicted on this magazine. So satire would not even have a place here.
WYNTER: Ask the people who are pushing that message about Michelle and Barack Obama. That's who they're talking about when they draw a satirical cartoon.
I mean, everybody -- I don't think there's anybody walking around today that will see a cartoon drawn like that on the cover of the "New Yorker" by the way, not "Time," not "Newsweek." The "New Yorker," which is a literary journal of commentary -- social commentary reporting and so forth. No one is going to walk by that and say, oh wow, I knew that about Barack Obama was true. Now that I see it on the "New Yorker."
PHILLIPS: All right. Let me bring, let me ask you guys...
WYNTER: If that happens, they weren't going to vote for him anyway.
PARKS: This magazine cover...
PHILLIPS: Gentleman, let me ask you a question.
PARKS: ... hits at the lowest level of people's thought processes.
PHILLIPS: Councilman, let me pose this. And councilman I'll start with you. I've known you for a long time. You've broken a lot of barriers as a black professional, being a police officer, the chief of the LAPD. Now, you're in the political arena.
Do you think in any way this cover sets us back? That it's more divisive than anything else and only proves that we're still racially insensitive?
PARKS: Well, I think what it does is that it forgets that the eye of the beholder is the one that sets the judgment. It's not those who did the printing, it's those who receive the message. And I think it does set us back because every now and then when you get something like this, you have to go back and look at the calendar and realize it's 2008, and we've just taken a major step back to where this wouldn't be acceptable decades ago.
The fact is, today you have more people that will speak out on it, but it wasn't acceptable in decades ago when people were going through many, many other issues that dealt with racism, sexism. So it's certainly not appropriate today.
PHILLIPS: Shelley, there's definitely a risk when you lampoon ignorance. That is for sure. Not everyone is going to get it. Can you give me the final thought?
WYNTER: I appreciate that.
I'm just saying if we're going to be politically correct on satire, then what is the definition of satire? If you're going to knock down what's -- something that's clearly satirical, then what choice -- where do we go from here? Now we have nothing out there. And I would say to Mr. Parks, if we're going to be set back, then we need to be as outraged at Jesse Jackson's comments last week because that set us back 150 years, back to the days of lynching. And because he said it, it doesn't take away from the fact that it set us back almost 150 years.
PARKS: Well, I don't think it's a benefit no matter who does the harm.
WYNTER: Fair enough.
PARKS: And I think no one...
(CROSSTALK)
PARKS: ... anyone supporting Jesse Jackson. And I think what we need to do is find out how many people out of ten, understand what satire is and look at it in the face of what it is. It's a picture that depicts what could be the first couple of the United States, in a very derogatory manner. And brings up all of the fears and anger which drives people to the worst conclusions they can come up with. I think that's totally inappropriate.
WYNTER: If nobody know what is satire is, they shouldn't be voting.
PHILLIPS: But Shelley -- but that's my final point. Is that when you lampoon ignorance, you know, not everybody is going to get it and it's risky. It's a definite risk.
WYNTER: That's what satire is. That's the definition of satire.
PHILLIPS: And we all appreciate it. Shelley Wynter, Councilman Bernard Parks. Gentlemen, great conversation.
PARKS: Thank you very much.
WYNTER: Thank you, Kyra.
PHILLIPS: Thanks, guys.
Well, are you on the list? The government's terrorist watch list has swelled to about 1 million names according to the American Civil Liberties Union. And the group is marking that milestone with some scathing criticism of national security policy. It's calling for better controls on the list like, tight criteria for adding names and more rights to challenge your inclusion.
(BEGIN VIDEO CLIP)
CAROLINE FREDRICKSON, DIR,. ACLU WASH. LEGISLATIVE OFFICE: The watch list. Now with over 1 million records or soon-to-be there, is so bloated as to be infective at best, likely useless and perhaps even harmful by creating its own security weaknesses. The list is unfair to travelers, unfair to law-abiding Americans and unfair to the security screeners who have to work in this ridiculous system.
(END VIDEO CLIP)
PHILLIPS: Well, just this month President Bush signed a bill that removes Nelson Mandela from the watch list. Mandela of course, is the former South African president and Nobel laureate.
Untouchable. More than just a word. A dangerous, virtually inhumane way of life for millions of people in India. But some have found a way out. Wait until you hear this woman's story.
And they've got medals and grit. But it's the grit that will capture your heart.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: I've done a lot of smiling and crying this week. They're happy tears.
(END VIDEO CLIP)
PHILLIPS: A celebration of life and courage at the Transplant Games.
(COMMERCIAL BREAK)
PHILLIPS: With the FDA still trying to find the cause of that massive salmonella scare, you might find it tough to find fresh jalapeno peppers. Imports from Mexico have slowed down, now that inspectors are tasting jalapeno and serrano peppers and cilantro. Peppers have become suspects in the salmonella outbreak that earlier was linked to tomatoes. And made more than 1,000 people in the U.S. sick. So, should Congress force insurance companies to raise insurance caps? Several patient advocacy groups want insurers to raise limits to keep pace with inflation. Congress is also considering legislation. Insurers defend the cap saying that most coverage offers a maximum of several millions dollars or is unlimited. And they add that government regulation could raise insurance rates.
Well, this is not your typical group of athletes. Before they came to compete in Pittsburgh this past weekend, they face an even bigger battle, surviving organ failure.
Shannon Perrine with CNN affiliate WTAE, reports on the transplant games. Where just by showing up, the athletes are already winners.
(BEGIN VIDEOTAPE)
SHANNON PERRINE, WTAE REPORTER (voice-over): Yes, Trine Engebretson is strong. She won a gold medal today and a silver yesterday. She gave that medal to the family of the girl who donated a liver so that Trina could live.
Hollywood star Larry Hagman, a liver transplant recipient himself, awards the medalists at the games today. With every medal, another story of success that comes from the generosity and selflessness of another family.
TRINE ENGEBRETSON, TRANSPLANT GAMES GOLD MEDALIST: I have done a lot of smiling and crying this week. They're happy tears, but a lot of tears.
PERRINE: Trine says, holding the games in Pittsburgh means a lot to her.
ENGEBRETSON: Pittsburgh is always near and dear to my heart because this is where I was transplanted and Dr. Starzell (ph) performed my surgery almost 25 years ago. So, I've always had a soft spot for Pittsburgh. But now that I got to meet my donor family, you know, my new family members here in Pittsburgh, it's a much deeper soft spot in my heart now. And I'll never forget this, ever.
PERRINE: The U.S. Transplant Games is a chance for transplant recipients to show how much they are thriving. It's also a chance to spread the word to others. Decide if you want to be an organ donor and make sure your family knows about that decision.
ENGEBRETSON: For people who still haven't made their wishes known about being an organ donor, just simply please talk to your families and let your wishes be known. So that God forbid that time ever comes, you can help you know, the 100,000 people who are still waiting.
(END VIDEOTAPE)
PHILLIPS: Well, the 14th annual Transplant Games is the largest gathering of transplant recipients in the world. Straight ahead, one of the filthiest, most degrading jobs in the world.
(BEGIN VIDEO CLIP)
SARA SIDNER, CNN CORRESPONDENT: This whole lane is covered with urine and feces. We're stepping in it, as is she. She doesn't wear anything. She has no gloves, she has no boots. She's wearing basic flip-flops here.
How an Indian untouchable escaped her living hell. The life of a real Cinderella.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
PHILLIPS: I'm still trying to get this. Why do these crazy people once a year, every year, in Spain do this? The annual running of the bulls in Pamplona. Five people, of course, were injured in today's final running, but no one was gored. Thank God. In all, 45 people were hurt during the eight day event. This tradition has been around for about 400 years, but gained worldwide fame after Ernest Hemingway wrote about it in the 1920s.
I don't think he ever ran with the bulls, by the way.
India's Untouchables, more than 160 million people born into a caste system that deems them impure, less than human. Despite being outlawed by India's constitution, the Untouchables must endure daily humiliations, threats, even violent death by upper-caste Hindus who want to keep them in their place. A tiny few have found a new life through a charity that helped one Untouchable woman live her wildest dream.
CNN Sara Sidner reports. And a quick warning, some of these pictures aren't exactly pleasant.
(BEGIN VIDEOTAPE)
SIDNER (voice-over): This is the life of what Indian society calls an "Untouchable" woman. By birth right, it is her job to manually clean away the feces and urine left behind in the toilets of her upper cast neighbors, and then carry it away on her head.
"For the past 20 years my life hasn't been a life," she says. "Like insects, the world opposes us so this is hardly a life."
(on camera): We have just arrived at one of the homes where Manju, who's 37-years-old, is going to go ahead and clean out the toilet. The smell is indescribable. This whole lane is covered with urine and feces. We're stepping in it, as is she. She doesn't wear anything, she has no gloves, she has no boots, she's wearing basic flip-flops here.
(voice-over): These women begin this dirty work as early as age seven. Usha Chaumar did and then spent 21 years of her life as doing it. She says, she was often treated like the excrement she cleaned up every morning.
(on camera): So, it would be unusual for someone to do this, just to touch you?
"No touching," she says. "Even if I was ashamed, I didn't have any other work but this. Since I was a child I've been doing this. I would have died doing this."
(voice-over): Instead, five years ago, she quit and lived to do something unimaginable in this Rajasthani town. She ended up in New York City, on a runway, no less. Modeling side by side with a professional. The U.N. invited Usha and others like her, to bring awareness to the world's sanitation problem.
Dr. Bindeshwar Pathak made it all possible. He runs Sulabh International, a multi-million dollar charity to change lives by literally changing toilets. His toilets don't require the dirty work.
DR. BINDESHWAR PATHAK, SULABH INTERNATIONAL FOUNDER: I saw the conditions and I though they were living like pigs. So, why not to give some alternative jobs to them.
SIDNER: His education centers give women training to do other jobs. Usha is one of the most dedicated pupils. For her hard work, she was crowned princess of sanitation workers at the U.N. It is a title that takes some getting used to. Especially after being treating like dirt for most of her life.
Sara Sidner, CNN, Rajasthan, India.
(END VIDEOTAPE)
PHILLIPS: OK. So we know she's a beauty, but graceful, not so much. For the second year in a row, Miss USA gets a dubious distinction at the Miss Universe pageant in front of a live audience and about a billion people on live television.
(COMMERCIAL BREAK)
PHILLIPS: You know what, though? She is still sexy.
Miss USA, Crystle Stewart, will never forget her appearance at the Miss Universe pageant, and neither will we. Remember the slip? Coming just after judges picked her for the top 10, by the way. Ms. Venezuela was once kidnapped in her homeland so she knows how to be graceful under pressure. She picked up the crown and the title.
And by the way, in case you're feeling a little sense of de ja vu, last year Miss Mississippi, Rachel Smith, had a little balance issue at the Miss Universe competition as well.
We're trying to keep our balance in the next hour on the CNN NEWSROOM.
