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AMERICAN MORNING

Pilots Allege U.S. Airways Pressured Them to Fly With Less Fuel; Interest Section to Open in Tehran; Oil Prices Down; Former Hostages' Story Go to Hollywood; Generation Y Says American Dream Dying; Tough Times at the Vatican; Crimes Against Hearing-Impaired On the Rise

Aired July 17, 2008 - 06:00   ET

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


KIRAN CHETRY, CNN ANCHOR: Skimping in the skies. Pilots say a major airline ignoring safety to save money.
Plus, hear no evil. Bluetooth thieves mistakenly take a deaf child's hearing aid.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I just thought he was never going to say mom.

(END VIDEO CLIP)

CHETRY: On this AMERICAN MORNING.

Good morning. Glad you're with us on this Thursday. It's July 17th.

JOHN ROBERTS, CNN ANCHOR: The good part of it is that it's Friday eve.

CHETRY: That's right.

ROBERTS: And it's always something to celebrate.

CHETRY: That's what we call it here.

ROBERTS: Some of the stories that we're following for you this morning, a lot of important news to tell you about.

The U.S. reportedly ready to send diplomats to Iran. For the first time in nearly 30 years, the British newspaper, "The Guardian," says the State Department is set to open a U.S. interest section in Tehran. It will allow the United States to reach out to Iranians without reestablishing formal diplomatic relations.

CNN's Christiane Amanpour is going to have more on the story. She'll be along in just a few minutes time.

A dramatic shift on how America is fighting the wars in Iraq and Afghanistan. The Pentagon revealing accelerated plans for pulling more troops from Iraq by this fall after significant improvements have been reported there. But at the same time, the Pentagon is hoping to send more troops to Afghanistan where there has been an increase in violence. Defense Secretary Robert Gates said he'd like to see more boots on the ground sooner rather than later.

The FBI is investigating IndyMac for possible mortgage fraud. The Feds are looking into whether the bank used false information to give home loans to risky borrowers. The investigation is targeting the bank and not individuals who worked for the company.

IndyMac was taken over by federal regulators last week. It is the second largest bank failure in U.S. history. The FBI now investigating 21 companies tied to the sub prime mortgage crisis.

CHETRY: Well, if you fly U.S. Airways you want to hear this next story.

A stunning accusation this morning against U.S. Airways. Pilots for the airline are claiming they're being pressured to fly with less fuel than they feel is safe in order to save money. They've actually filed a formal complaint with the FAA about it. CNN's Deborah Feyerick is following the story, and she joins us now with more details.

DEBORAH FEYERICK, CNN CORRESPONDENT: Well, certainly scary. U.S. Airways says that it will pay $2 billion more in fuel costs this year than it is last year. And some pilots are saying because of those costs they're being forced to fly with fuel levels that are way below their personal comfort level.

(BEGIN VIDEOTAPE)

FEYERICK (voice-over): The U.S. Airline Pilots Association took out a full page ad in "USA Today" accusing U.S. Airway's management of pressuring captains to reduce fuel levels in order to save money. Eight pilots filed complaints with the Federal Aviation Administration, as did the pilots union. They accused the airline of trying to infringe on the captain's authority by making them fly with less fuel than they're comfortable with. The Department of Transportation says fuel levels are always up to the pilot.

UNIDENTIFIED FEMALE: The pilot is the last authority that determines how much fuel that plane takes. And pilots have that discretion and are routinely given that discretion. So if a pilot doesn't feel that a plane has enough fuel in it for the trip that he or she is about to make, then they have the discretion of not flying that flight.

FEYERICK: Prior to filing the complaints, the eight pilots, all senior captains who normally fly international flights, were called in by U.S. Airways to do fuel conservation training. The union says the pilots were carrying 10 to 15 minutes worth of extra fuel and caused the training intimidation and harassment.

The U.S. Airways says the eight pilots were way above average in terms of the amount of fuel they had when the planes landed. A spokesman for the airline says it's a balance between having enough to travel safely, but also fly efficiently. In a statement released the U.S. Airways spokesman says, "We are absolutely not employing intimidation tactics to pressure pilots," and says "fuel amounts on average are more than twice the FAA minimum standards."

(END VIDEOTAPE)

FEYERICK: Now the eight captains fear their jobs are now in jeopardy. But U.S. Airways says the one-day training is not punishment and that the careers of these pilots are safe. The Federal Aviation Administration says it is looking into this matter -- Kiran.

CHETRY: You know, the other interesting thing is just how many pilots are making these allegations. A small amount when you look at how many there are.

FEYERICK: Absolutely. And you really have to keep that in mind. These are eight pilots out of about 5,000. One pilot who reached out to me said, in fact, he's never felt pressured to fly with less than enough fuel and says that this really is a contract.

CHETRY: Hopefully we can sort it out because it's a scary thought for sure. Thanks, Deb.

ROBERTS: 3 1/2 minutes after the hour. Back to our top story breaking this morning.

The British newspaper "The Guardian" reporting that the United States is set to open a diplomatic office in Tehran for the first time in nearly 30 years.

Joining us on the telephone now with more details on this, CNN's senior international correspondent Christiane Amanpour. She's in France for us today.

And Christiane, what do you know about this?

VOICE OF CHRISTIANE AMANPOUR, CNN SR. INTERNATIONAL CORRESPONDENT: Well, this news in "The Guardian" comes just ahead of a meeting planned in Geneva, as you know, which we talked about yesterday, between the Europeans and the Iranians on trying to undeadlock the nuclear negotiations. And the United States is sending as an observer and as a message to these talks the third most senior member of the State Department, William Burns, the undersecretary, just to observe and to send a message that the U.S. is behind this.

Now on this diplomatic mission, we have been reporting this now for the last several days and it has been aired before. The intention or the exploration of the U.S. State Department to try to open an interest section, which is not a full consulate and it is not a full embassy, but an interest section in Tehran. And as you know, for a long time many officials inside the United States and around the world have urged the U.S., this administration, to actually engage with Iran.

An interest section, if, indeed, it does get opened, is something that could, for instance, facilitate visa requests and the kind of travel requests that Iranians would have for travel to the United States. It would also station U.S. diplomats. And that is true.

It would be for the first time since the hostage crisis back in 1979. So that would be a big shift. It is something that the Iranian president, Mahmoud Ahmadinejad, has responded to just in the last couple of days on Iranian television saying that in principle Iran would welcome such an interest section in Tehran.

It is not clear any timetable or whether, in fact, this decision has been made fully by the United States, or whether it is actually going to go ahead. And it's also not clear what, if -- or if any, reciprocal measures the Iranians would request. Certainly it's known that the Iranians would like to have direct flights for their Iran Air from Tehran to the United States. Perhaps to New York. Again, these are issues that are not yet clear and it's not yet sure whether there's any reciprocal measures that the Iranians would ask for.

ROBERTS: Christiane Amanpour reporting for us this morning. Christiane, thanks.

We should point out just for clarity that as Christiane was alluding to a difference between an interest section and a full consulate or embassy, is the interest section serves many of the same functions but does not necessarily mean that there are official diplomatic relations. And typically, an interest section as we have seen in Cuba, is attached to another embassy. In the case of the intersection in Cuba, it's attached to the Swiss Embassy -- Kiran.

CHETRY: All right. Well, some other stories new this morning. Washington, D.C. residents can start applying for handgun permits as of today. That's now that that ban has officially been lifted.

The district council approved new firearms legislation this week. It follows the Supreme Court ruling last month that struck down the 32-year-old ban on handguns in the nation's capital. Residents can also register guns that they've had illegally under a six-month amnesty period.

For those who are hearing on Capitol Hill today on how some of the wealthiest people in America are reportedly able to dodge big tax bills by illegally hiding money overseas. Today's hearing comes after a six-month investigation uncovered thousands of Americans set up secret Swiss bank accounts and failed to report them to the IRS tucking an estimated $100 billion in taxes.

Also, a major new study finds that the low carb diet is more effective than two other popular options when it comes to losing weight. This was a study conducted over two years where researchers studied volunteers who are on either a low carb diet, a low fat diet, and the so-called Mediterranean diet that uses a lot of olive oil and nuts and limits red meat and dairy.

They found people on the low carb diet lost 12 pounds on average while those on the low fat diet only lost seven pounds. And surprisingly, the low carb diet also apparently had the best effect on cholesterol levels.

It is important to note though that in this study the low carb diet urged dieters to choose vegetarian options. It sets limits for carbohydrates but no limits for calories and fats. They encourage them to get a lot of their fat and protein from veggie sources they were talking about. Things like nuts, seeds and soy products -- John.

ROBERTS: And we should also point out that if you ran for a third hour of AMERICAN MORNING at 8:00 a.m. Eastern, Sanjay Gupta is going to tackle some aspects of diets including whether or not drinking water would actually help you lose weight. So try to be around for that.

Oil prices come down again, as the downed economy forces Americans to pull back on consumption. Can the downward trend last?

Summer blockbuster. From the jungles of Colombia to Hollywood and vine. Freed American hostages cashing in.

(BEGIN VIDEO CLIP)

TED JOHNSON, MANAGING EDITOR, DAILY VARIETY: This is a combination of a strong female character as well as an inventor of story.

(END VIDEO CLIP)

ROBERTS: You're watching the "Most News in the Morning."

(COMMERCIAL BREAK)

CHETRY: We're always trying to get some appropriate music to bring in our senior business correspondent Ali Velshi. And today, it's Bruce Springsteen. Because?

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Because it's going down, down, down. The price of oil. Two days in a row. Not really a trend but quite fascinating. Quite fascinating that I have something to bring you other than bad news.

The price of oil yesterday settling at a paltry, measly, bargain $134.60 a barrel. Down $4.14. That's about 10 bucks in two days. I mean, again, here's the fascination.

Down about 10 bucks in two days and it's still 135 bucks for a barrel of oil. But really has been coming down fairly dramatically.

Couple of things going on. One is, a couple of days ago, Ben Bernanke talking about the economy slowing down, and that sort of caused people to think we'd use less oil. The other thing is every week we get this inventory report about how much oil we've used, and it does show that we have a little more oil in the United States than we thought we did because people have stopped using it as the price of gas goes up.

Now that has had quite an effect on markets. Take a look at this. Best day in about three months for major markets.

The Dow was up 2 1/2 percent. The Nasdaq up three percent, and the S&P 500 up 2 1/2 percent. Take a look at the Dow over the last year just so you can have a sense of where you are when you're looking at your investments.

Still down quite a bit over the last little while. But kind of interesting the developments here. And by the way, it is Thursday, which means if you have things to say about banking or the markets or oil or anything, you can call in at 11:00 Eastern.

ROBERTS: It's not just about the gas.

VELSHI: It's not just about the gas. Since we're on radio, we are taking your calls and we'll try and answer them.

ROBERTS: You're just full of euphemisms today, you know.

VELSHI: Well --

ROBERTS: There's a couple of reasons why oil is going down. The economy is collapsing. That's why.

VELSHI: You could say all is well. Oil is down. The markets are up. OK, we got banking earnings, by the way, this morning and tomorrow. So this could have been a two-day wonder.

ROBERTS: All right. You also, you broke your promise. You said you're going to take the day off if the price of oil went down.

VELSHI: That's true.

ROBERTS: We're glad you're here, though.

VELSHI: Sympathy.

ROBERTS: Thanks, Ali. See you soon.

New study leveling serious charges against the tobacco industry today accusing of manipulating the contents of cigarettes to lower a new generation of smokers.

Plus, Rob Marciano is watching extreme weather for us this morning. He's in Atlanta. Hey, Rob.

ROB MARCIANO, AMS METEOROLOGIST: Good morning, John. Still watching this area of disturbed weather, now heading into the Caribbean where the waters are toasty. Will it develop into a tropical storm? The answer coming up when AMERICAN MORNING comes right back.

(COMMERCIAL BREAK)

ROBERTS: Welcome back to the "Most News in the Morning." A look now at some of the stories we're going to be tracking on the CNN news grid. Later on today, President Bush travels to California. He's going to be meeting up with Governor Arnold Schwarzenegger and tour some of the areas devastated by the recent wildfires. The president will then head to Napa Valley for a fundraiser.

At 10:00 Eastern -- let's bring that one on up here -- former Attorney General John Ashcroft is going to be in the hot seat on Capitol Hill. Lawmakers will quiz him about his role in approving and implementing aggressive interrogation techniques for detainees at Guantanamo Bay. You can see the hearing as it happens. Just head to CNN.com/live.

And at noon Eastern, up here on the grid, former Vice President Al Gore is going to give a speech about the country's energy needs, and Washington being billed as a new way to think about energy production and consumption. Beyond that, Gore's folks are being pretty tight lipped. Stay tuned to CNN and CNN.com/live for coverage of that event -- Kiran.

CHETRY: All right. It is 6:15 here on the East Coast. Our Rob Marciano down in Atlanta today, and I know he's tracking extreme weather because he doesn't have a blazer on this morning.

MARCIANO: That's right. Plus, you know --

CHETRY: It's harder to concentrate on the weather when you have a blazer.

MARCIANO: You know, it's just hot out. And you're going to feel some heat up there too over the next couple of days. Another part of the weather story is going to be building heat wave across the northeast.

But first off, this area of disturbed weather heading into the Caribbean where the waters are toasty there. Certainly enough for a tropical development. It's kind of close to South America so there may be some dry air kind of inhibiting things.

It sent a hurricane hunter aircraft into it yesterday. Found a broad area of low pressure but not quite enough circulation or winds to really name this thing or say we're headed to our next tropical depression of the season. So that's the good news with that which doesn't seem to want to go anywhere that I want it to go.

Needless to say -- if you get a space bar that would help matters rapidly. There's a little disturbance over Florida that's creating heavy rain across ports of northern Florida. But that has now skipped over towards the northeast part of Florida. So Carolina coastline may very well see some action.

This is -- I tell you what, John and Kiran. You know, Bertha just doesn't want to go away and quite frankly I'm tired of talking about her. So I'll toss it back to you.

Tropical storm now heading to the southeast. She's sticking around for the party way too long. Back to you guys in New York. CHETRY: Good thing. At least directional wise, at least the direction she's going is not going to cause a lot of problems, right?

MARCIANO: No.

CHETRY: She just kind of wants to sit there.

MARCIANO: Yes. She'll head up in the shipping lanes of the North Atlantic. Other than that, everybody should be OK.

ROBERTS: No problems except for fish.

MARCIANO: Bye, guys.

CHETRY: Thanks, Rob.

ROBERTS: John McCain confronts a political problem head-on and surprising new polling on what black and white Americans think of Barack Obama and the effect that his run is going to have on race in America. We'll find all that out.

Summer blockbuster. From the jungles of Colombia to Hollywood and vine. Freed American hostages cashing in.

(BEGIN VIDEO CLIP)

TED JOHNSON, MANAGING EDITOR, DAILY VARIETY: This is a combination of a strong female character as well as an inventor of stories.

(END VIDEO CLIP)

ROBERTS: You're watching the "Most News in the Morning."

(COMMERCIAL BREAK)

ROBERTS: This morning the American hostages' story of survival in the jungles of Colombia looks destined to be played out on the big screen. Right now, studios are scrambling for the rights to their story. Here's CNN's Kareen Wynter with that.

KAREEN WYNTER, ENTERTAINMENT CORRESPONDENT: Good morning, John and Kiran. If Hollywood has its way, this Colombian hostage rescue story could soon hit the big screen.

(BEGIN VIDEOTAPE)

WYNTER (voice-over): A daring real-life rescue played out on tape and in the news.

(BEGIN VIDEO CLIP)

JOHN ROBERTS, CNN ANCHOR: It was a stunning end to a hostage drama.

(END VIDEO CLIP) WYNTER: Three Americans, the former Colombian presidential candidate and 11 other hostages held by a rebel group in Colombia for years finally freed. Within hours, Hollywood wanted a piece of the drama.

TED JOHNSON, MANAGING EDITOR, DAILY VARIETY: There's actually several different deals that appear to be in the works for the Colombian hostage story, which tends to happen sometimes with major events that have this much intrigue.

WYNTER: Variety's Ted Johnson says it's the type of story that writes itself. Ingrid Betancourt, who was taken hostage in 2002, is reportedly in talks with a literary agency in France while Hollywood is pursuing the three Americans.

JOHNSON: Almost all the principals who are involved are in the process of securing agents or meeting with agents and coming up with their own deals.

WYNTER: Las Vegas-based businessman Phil Maloof, whose family owns the Sacramento Kings and Las Vegas Palms Hotel and Casino, is among many jockeying for the movie rights.

PHIL MALOOF, BUSINESS MOGUL: We're in talks with the Colombian officials right now and also with Ingrid. We've got an offer into her. And hopefully within the next couple weeks we'll know whether or not she goes with us.

WYNTER: Industry watchers say there's already some buzz around who would play the role of Betancourt.

JOHNSON: This is a combination of a strong female character as well as an inventor of story that has the potential to hit many different quadrants of the movie audience.

WYNTER: But securing the rights is only half the challenge. Industry watchers say bringing a production like this to the big screen could take years.

(END VIDEOTAPE)

WYNTER: The big question then is, will producers still be able to sell this story to a movie audience? John and Kiran?

ROBERTS: Kareen Wynter for us this morning from Los Angeles. Kareen, thanks.

The hostages, by the way, are far from the first to cash in on a harrowing story. Here's more in an "AM EXTRA."

Army Private Jessica Lynch sold her story being captured and then rescued in Iraq. She got $1 million and a book deal but split that with the author.

15-year-old Elizabeth Smart was found alive nine months after being abducted at knife point from her bedroom in Salt Lake City. That was back in 2002. She and her family cut a movie and book deal. The amount undisclosed.

And the so-called runaway bride, remember her? Jennifer Wilbanks? She captured national media attention when she disappeared from her Georgia home four days before her wedding. She and her former fiance made $500,000 for selling their story -- Kiran.

CHETRY: They didn't stay together, though. Alas, you have to marry someone else.

Well, the best is yet to come. Not. A new study asked generation y -- that's what the young people, the leaders of our future -- about what they thought their prospects were to make it big and live the American dream. Well, their answers may surprise you. We're going to talk with one of the study's authors.

ROBERTS: Passing the buck. Tough times at the Vatican.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Pope Benedict is a theologian. He's not a businessman.

(END VIDEO CLIP)

ROBERTS: Why the Holy See is seeing red. You're watching the "Most News in the Morning."

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JAY LENO, HOST, "THE TONIGHT SHOW WITH JAY LENO": According to "The Wall Street Journal," one good way to save money in this bad economy is to brew your own coffee instead of picking up a latte at Starbucks. And Starbucks said today a good way to save money is to cancel your subscription to "The Wall Street Journal."

(END VIDEO CLIP)

CHETRY: Jay Leno with his take on the troubled economy. And the young men and women who will become the leaders of tomorrow. They're known at generation y. Many of them seem to have a dim outlook on whether or not they can even achieve the American dream.

A new study just out this morning finds that nearly half of 18 to 29-year-olds believe that America's best days are behind us. The survey was conducted by The Rockefeller Foundation as well as "Time" magazine.

And joining us now, Dr. Judith Rodin, the president of The Rockefeller Foundation. And she's talking about this this morning. Thanks for being with us.

DR. JUDITH RODIN, PRES., THE ROCKEFELLER FOUNDATION: Oh, it's wonderful. Thank you. CHETRY: So you talked to people of all generations about their attitudes toward their future and economic stability. And we did find, at least you guys found in the study, the generation known as Generation Y, these 18 to 29-year-olds, seem to have a more pessimistic outlook on whether or not they're going to be able to have a secure economic future. Why?

RODIN: Right. This was a very large random sample so it was a poll conducted with over 2,000 people and it over sampled for African- Americans and Hispanics and younger people so that we were sure we got a lot of diversity. And we were shocked by the evidence that it was this youngest generation, 18 to 29, who felt 90 percent of them felt the social contract was broken. That they were very uncertain about the future of all the generations.

They felt regardless of what the economy was doing, it would take longer to fix. And they were very personally worried about their own future much more so than their parents.

CHETRY: Let's talk about a couple things you mentioned. The broken social contract. This notion that really defined the 20th century workforce where you could work at a place for a very long time. You give them your best years and you do your job, and in the end you have some sort of guarantee about health care, retirement and security when you're no longer working. That doesn't hold for the 21st century.

RODIN: No. Eighty-five percent of Americans understand that. In this poll, they said they believe the social contract is broken. They know globalization has changed the rules of the road, and what they're yearning for is a new social contract. They want new rules and they want new tools. And they're looking to a variety of sectors for help.

CHETRY: Were you able to sort of glean or tease out why the younger generation, this Generation Y that we're referring to, the 18 to 29-year-olds, seem to be more pessimistic about the future than all of the other age groups?

RODIN: One thing we looked at was whether this differed by whether they only had high school as opposed to college education and more. And the pessimism didn't differ. So it's not, as we in prior generations felt, the more education, I guess, the more optimistic I am about my future.

Here they're looking at other variables. And one piece of evidence is what their last year was like. We asked a variety of questions. Over the year have you cut back in entertainment or vacations?

Did you have difficult paying a bill? Did you have to borrow money from family and friends? Did you not have enough money to fill a prescription? And on every one of those questions, that generation was the worst.

CHETRY: Playing devil's advocate, are they expecting too much? Are they expecting to have it all too early? I mean, all of us remember leaving college having some debt, working jobs where we weren't making as much money as we had hoped.

This Salon.com article had an interesting take on it. They say, sure it's tough to live as a violinist well or as a grad student in New York today. But the same thing held 20 years ago and 40 years ago to improve their lot, 20 somethings have to do the same things their parents should be doing -- saving more, spending less and building skills that are marketable.

RODIN: Eighty percent of all Americans believe they ought to be self-reliant. What they want are the tools that help them to be that way. And this generation is no different.

They're not asking for handouts. They're not asking for an easy time just as their parents didn't. But they have a view, and I'm not sure it's an unrealistic view, that the future is more bleak for them.

CHETRY: And you guys are trying to change that. The Rockefeller Foundation pledging $70 million for this campaign for American Workers Initiative. What is that?

RODIN: Yes. It's extraordinary that two years ago when we were all still focused on the war and terrorism, we started to see some of these elements really occurring.

And so, we began this effort with funding not for profits, for profit, and government to all look at new policy, new kinds of rules that help people sort of weather these economic -- this isn't going to be the last crazy economic cycle. This is the 21st century. So what kind of savings tools, what kind of retirement tools, what kind of different health care tools for a more diverse work force.

CHETRY: Very interesting. Dr. Judith Rodin, president of The Rockefeller Foundation. Thanks for being with us.

RODIN: Thank you.

CHETRY: Well, do you think the American dream is dead or alive? We want to hear from you about it. Send us an iReport. Capture yourself on video, talking a little bit about this, and head to cnn.com/am. Follow the link and send us your thoughts. We love to hear from you.

John?

ROBERTS: It's 31 minutes after the hour. A day of mourning in Israel as two soldiers returned in a prisoner exchange with Hezbollah are laid to rest. Ehud Goldwasser and Eldad Regev received posthumous promotions. They were kidnapped by Hezbollah two years ago in a cross-border raid that led to the 34-day long war with Israel. The soldiers' remains were returned in exchange for five Lebanese prisoners.

Pilots under pressure. U.S. Airways pilots accusing the airline of pressuring them to use less fuel then they feel is safe in order to save money. Eight senior pilots and their union filed a formal complaint with the FAA. U.S. Airways says it will pay $2 billion more in fuel costs this year than last. But the airline denies pressuring anyone.

And the current energy crisis poses a greater threat to America than terrorism. That warning today from Republican Congressman John Peterson. He is helping lead a bipartisan group to come up with a compromise on domestic drilling and alternative energy sources. We're going to be talking with Congressman Peterson about all this coming up in less than an hour here on AMERICAN MORNING.

John McCain trying to win over black voters. Yesterday, he addressed the nation's oldest civil rights group but got a less than enthusiastic reception. At the same time, Barack Obama is confronting his own political challenges regarding race issues.

Here's CNN's senior political correspondent Candy Crowley.

CANDY CROWLEY, CNN SENIOR POLITICAL ANALYST: John and Kiran, you know that old ad to the more things change, the more they stay the same? Take that and apply it to this year's campaign.

(BEGIN VIDEOTAPE)

CROWLEY (voice-over): John McCain went before the NAACP and recognized the obvious, Barack Obama is making history.

SEN. JOHN MCCAIN (R), PRESUMPTIVE PRESIDENTIAL NOMINEE: Of course, I would prefer his success not to continue quite as long as he hopes. But it does make you and me proud to know the country I've loved and served all my life, still a work in progress and always improving.

CROWLEY: But in New York Times/CBS News Poll shows despite Obama's already historic run, Americans still see things in black and white. 59 percent of blacks describe race relations as generally bad in this country. Only 34 percent of whites say that.

What's more, only half of black respondents think an Obama presidency would change race relations.

RON WALTERS, DIR. AFRICAN AMERICAN LEADER CENTER: It lends us some credence to the fact that even if Barack Obama is now the nominee of the party or even if he wins the presidency, it's not going to have a profound effect upon race relations in the United States.

CROWLEY: The truth is blacks have voted Democrats for decades, no Democratic presidential nominee has won the white vote since the early '70s. These things take time.

WALTERS: You have to look at American culture and the fact that 400 years for these kind of racial attitudes to develop, racial behaviors to materialize. And you're certainly not going to wipe that out with just someone being elected to any office in the United States.

WALTERS: Making history does not change history.

(END VIDEOTAPE)

CROWLEY: Given the odds against him of winning the black vote, the NAACP may seem like a strange forum for John McCain, but it is a perfect one for a candidate who wants to be seen as a different kind of Republican and one who wants to show that he will reach across all kinds of barriers to get things done.

John and Kiran?

ROBERTS: Candy Crowley reporting for us from Washington. Candy, thanks so much.

CHETRY: And Alina Cho joins us now with some other stories new this morning.

Good to see you, Alina.

ALINA CHO, CNN CORRESPONDENT: Hey there, guys. Good morning to you. Good morning, everybody. And new this morning, more details are coming out about the Reverend Jesse Jackson's crude hot mike conversation.

FOX News now says he used the "N" word. It was reportedly on an unaired portion of the tape in which Jackson said Barack Obama was talking down to black people and that he wanted to cut off a certain part of the candidate's anatomy. Jackson did apologize for what he called his hurtful words.

The tobacco industry is firing back amid serious accusations that it's manipulating the levels of menthol in cigarettes with the goal of making them more appealing to young smokers. A new Harvard study found that cigarettes targeted towards young adults had low levels of menthol. Menthol, by the way, is not addictive but it can mask the irritation of smoking.

The study also found that cigarette makers boosted the minty additive to keep adults hooked. Cigarette maker, Lorillard, called the accusations, quote, "categorically false."

And the U.S. could be in the midst of a baby boom. The government reports more than 4.3 million births last year. That's up from 2006. And by the way, it's the highest number of babies born in one year since 1957. That was the height of the baby boom. But experts say in order for this to be considered a real boom, we'd have to see double digit increases. And so far, that's not the case.

Sort of the perfect storm.

CHETRY: When I had baby Christopher there were 44 newborns in the nursery at this one hospital.

ROBERTS: This put a fire cracker in the latest baby boom.

CHETRY: Yes. I mean, 44. They usually are 12. CHO: It's a lot. And they say it's to the sort of perfect storm, you know, with more immigrants having babies, women waiting till their 40s, and then, larger numbers in 20 and 30 year olds.

(CROSSTALK)

CHETRY: And some people in their early 20s is having babies. Yes, I can totally see the link.

CHO: Exactly.

CHETRY: All right, thanks.

Well, those cell phone wireless headsets are in hot demand. And the hearing disabled are now falling victim, because confused crooks are mistaking their hearing aides for Bluetooths.

ROBERTS: Passing the buck. Tough times at the Vatican.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Pope Benedict is a theologian. He's not a businessman.

(END VIDEO CLIP)

ROBERTS: Why the holy sea is seeing red. You're watching the "Most News in the Morning."

(COMMERCIAL BREAK)

ROBERTS: A little bit of blue money this morning as we look live across Rome toward the Vatican. What a beautiful picture that is. But unfortunately, what's going on inside isn't as beautiful as the picture. Because it seems everyone these days is feeling the effects of the struggling U.S. economy, even the Catholic Church.

CNN's Jennifer Eccleston shows us how the weak American dollar is hurting papal profits.

(BEGIN VIDEOTAPE)

JENNIFER ECCLESTON, CNN INTERNATIONAL CORRESPONDENT (voice-over): Even the capital of Catholicism is feeling the economic pinch. Last year's balance sheet for the holy sea in the red. Its administrative core lost about $14 million.

JOHN O'KANE, NON-PROFIT FUNDRAISER: The expenditures of the Vatican are enormous. They have schools, hospitals, churches in poor countries throughout the world for which they don't receive any revenue back.

ECCLESTON: Add in papal trips, its embassies overseas and a number of money losing Vatican agencies. But the Vatican did benefit from nearly $80 million in offerings worldwide. About a quarter of that came from American Catholics. The most from any one country. But Americans donated in dollars and the Vatican spends in Euros. And last year, the dollar lost 15 percent of its value to the Euro, so to maximize revenues --

UNIDENTIFIED MALE: The Church like any good financial manager, you know, says -- OK, well, we have this money. You know, we're going to have to spend it within the next year, but, you know, let's invest it.

ECCLESTON: In another of the Pope's budgets for the Vatican City State, its investments lost $12.5 million dollars in '07 compared to an $11 million profit the year before. Those investment returns have raised questions with some inside the Church.

UNIDENTIFIED MALE: Pope Benedict is a theologian. He's not a businessman. We don't expect him to figure out the Vatican investment portfolio. That's not his job. But we want to make sure that there are good people doing that. And we don't know it unless there's more transparency.

ECCLESTON: The Vatican has no legal obligation to disclose its investments. But in a statement to CNN, a Vatican spokesman said many Vatican investments have given good results. The losses from the negative effects of the exchange rates are linked to circumstances which are hardly foreseeable.

And such economic hardships for the Catholic Church and other denominations may not be over.

UNIDENTIFIED MALE: Churches need to look at their budgets and cut back. And then the folks that are giving the money, again, are likely going to continue to give even though it's going to be at a lesser amount.

(END VIDEOTAPE)

ECCLESTON: Even here at the Vatican, financial management isn't an act of faith. And when it comes to finances, even divinity has its limits. So, the Vatican, too, must weather the sloughing economy and perhaps even pray for the resurrection of the once almighty dollar.

John?

ROBERTS: Jennifer Eccleston this morning from Rome. Jennifer, thanks so much.

CHETRY: Well, a Bluetooth headset and a hearing aid. They're often hard to tell apart these days and it's making the crucial device that allows people to hear very attractive to thieves.

ROBERTS: Who killed the electric car?

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: They are fearful.

(END VIDEO CLIP)

ROBERTS: If you never saw the movie, Miles O'Brien brings you up to speed and goes for a ride in the car you can't buy. You're watching the "Most News in the Morning."

(COMMERCIAL BREAK)

CHETRY: Welcome back to the "Most News in the Morning." Crimes against the hearing impaired are on the rise. And the reason, crooks are mistaking some high-priced hearing aids for a hot-ticket item. Chris Lawrence has the story.

CHRIS LAWRENCE, CNN CORRESPONDENT: John, Kiran, it is hard to tell these apart. But one is a regular cell phone headset. The other, an expensive earpiece that helps the deaf to speak and understand words.

(BEGIN VIDEOTAPE)

UNIDENTIFIED CHILD: Three.

UNIDENTIFIED FEMALE: Three.

UNIDENTIFIED CHILD: Four.

UNIDENTIFIED FEMALE: Four.

UNIDENTIFIED CHILD: Five.

UNIDENTIFIED FEMALE: Five.

LAWRENCE (voice-over): Every time Jose Franco speaks, his mom hears a miracle.

UNIDENTIFIED CHILD: Whoa! Spiderman.

HILDA GIRON, JOSE'S MOTHER: I just thought he was never going to say mom.

LAWRENCE: But now she's worried again. Jose is deaf. It's only this earpiece working with a tiny receiver in his skull that allows him to process sound. But thieves think it's some kind of expensive Bluetooth, and keep trying to steal it.

The first time, they ripped it off at a grocery store. And right after he got it back, someone snatched it off his ear at McDonald's.

GIRON: (INAUDIBLE). I couldn't think.

LAWRENCE: Now, Jose has to use a backup. But if it gets stolen again? Too bad.

BARBARA HECHT, JOHN TRACY CLINIC: My understanding is that people can get a replacement every few years, but they really only get one.

LAWRENCE: Barbara Hecht runs a clinic that helps deaf children memorize sounds.

HECHT: What do you hear when you're making popcorn?

UNIDENTIFIED CHILD: Pop, pop, pop.

LAWRENCE: The cochlear implant converts sound into electrical signals. And without his earpiece, Jose can barely hear a jackhammer or a roaring chainsaw just a few feet away. His world would sound like this.

Jose was scared when they stole his earpiece. That and --

GIRON: Sad?

LAWRENCE: Sad?

JOSE FRANCO, USES COCHLEAR IMPLANT: Sad.

LAWRENCE (on camera): Jose, when you got your implant back in, were you happy?

JOSE FRANCO: Happy.

LAWRENCE: Teachers say some kids used to feel a little self- conscious about the earpiece.

HECHT: So, we were actually kind of thrilled that people are wearing these Bluetooth devices and headsets because our kids kind of fit in.

LAWRENCE: No one thought that meant becoming the targets of criminals, who can't tell a Bluetooth from this.

(END VIDEOTAPE)

LAWRENCE: One big difference? This Bluetooth costs about $100. The implant earpiece? $6,000.

John?

Kiran?

ROBERTS: You got to feel so sorry for that little boy. That's his real one connection to the outside world in terms of auditory responses.

CHETRY: You just got to wonder about people you're going to rip some device off a little kid's head.

ROBERTS: Unbelievable.

CHETRY: I know.

ROBERTS: He may not have much of chance of winning over African- American voters, but it didn't stop John McCain from trying yesterday. What he said at the NAACP convention two days after Barack Obama's appearance.

Perfect fit.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I'm not an alcoholic. I'm a drunk. Alcoholics go to meetings.

UNIDENTIFIED MALE: She got arrested for drunk driving.

JEANNE MOOS, CNN CORRESPONDENT: Did she really?

(END VIDEO CLIP)

ROBERTS: Jeanne Moos looks at mug shots where the perps are dressed to a tee. You're watching the "Most News in the Morning."

(COMMERCIAL BREAK)

CHETRY: Well, imagine getting nabbed by the police, then you get busted by the fashion police.

ROBERTS: Oh, yes. Just what is appropriate attire for your mug shot? CNN's Jeanne Moos looks at some interesting and arresting images.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): People who get busted like to hide their faces with their hair, with their hoods, with their shirts.

But you can't hide from a mug shot. And when this Michigan man was photographed in a "World's Greatest Dad" T-shirt after allegedly arranging underage sex, that got us thinking about perps suited to a tee.

For instance, the mug shot of the guy wearing "Trouble Finds Me" or "Out on Bail."

UNIDENTIFIED MALE: Not anymore.

MOOS (on camera): Out on bail.

UNIDENTIFIED MALE: That's what it could say on the back. Not anymore.

MOOS (voice-over): The folks at the smoking gun Web site specialize in legal documents and mug shots. Imagine getting arrested and then "If We Get Caught, It's All Your Fault" tee or "It Wasn't Me." And who needs a written confession when you're wearing one? "I Make Stuff Up." "Trust Me, I'm a Liar."

Nobody's perfect goes perfectly with a face that shrugs. "Every Great Idea I Have Gets me in Trouble." And the mother of all mug shot understatements, "I May Not Be Mr. Right." Andrew Goldberg is a mug shot connoisseur, sifting through --

UNIDENTIFIED MALE: Hundreds a day and thousands a week.

MOOS: Out of those thousands, one like, "I'm A Virgin But This is an Old T-Shirt," sticks out.

MADONNA: Like a Virgin, hey...

MOOS: Or the opposite -- "Support Your Local Hooker."

But some T-shirts are prophetic -- "I'm Not an Alcoholic. I'm A Drunk. Alcoholics go to Meeting."

UNIDENTIFIED MALE: She got arrested for drunk driving.

MOOS (on camera): Did she really?

UNIDENTIFIED MALE: Yes.

MOOS: "Things To Say To a Police Officer." Now, what are the chances of getting arrested with that on?

UNIDENTIFIED MALE: And the first thing is only going.

MOOS: Some of the T-shirts merit getting busted by the fashion police. "Overly Caucasian: Do Not Place on Dance Floor," "Motorcycles Helping Ugly People Have Sex Since 1903," "Warning: I Have PMS and a Handgun." Arrested people seem to like to insult others with their T- shirts.

UNIDENTIFIED MALE: He says "You're a Freakin' Idiot," but he's the one who's locked up. "98 Percent Naughty, Two Percent Angel."

MOOS: "The Party Has Arrived, All Right," "Trust Me, I Do This All The Time," "I Live in my Own Little World, But It's OK... They Know Me Here," "Stupidity is Not a Crime."

UNIDENTIFIED MALE: Right. And obviously, that's not what he got arrested for a stupidity.

MOOS: Nope. It was aggravated assault with a folding knife. Who needs to dress for success when you can dress for arrest? Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

CHETRY: Charge and ride.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: They are fearful of how disruptive plug inn cars will be.

(END VIDEO CLIP)

CHETRY: A man who drives one of the last electric cars tells us why they ended up on the scrap heap.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: It's incredibly frustrating.

(END VIDEO CLIP)

CHETRY: Plus, we'll talk to the congressman who says that gas prices is a bigger threat than terror. You're watching the "Most News in the Morning."

(COMMERCIAL BREAK)

CHETRY: This just in to CNN. Barack Obama bringing in big bucks this month. The campaign reporting Obama raised $52 million in June. What makes it even more interesting is that the average donation was just $68.

John?

ROBERTS: John McCain went before the NAACP's national convention in Cincinnati yesterday trying to win over traditionally Democratic African-American voters. His appearance came two days after Senator Barack Obama's. McCain's chances of winning African-American votes are incredibly steep.

But according to the NAACP chairman just because Obama is running for president doesn't mean that there's still isn't more work to be done on civil rights. And NAACP Chairman Julian Bond joins me now from Cincinnati.

Chairman Bond, it's good to see you this morning. Thanks for being with us.

JULIAN BOND, NAACP CHAIRMAN: Good to see you.

ROBERTS: I wanted to play a little bit of John McCain's speech yesterday. Obviously, the reception that he got was a little bit tepid compared to Senator Obama's. But let's hear a little bit of what he had to say.

(BEGIN VIDEO CLIP)

MCCAIN: I am a candidate for president who seeks your vote and hopes to earn it. But whether or not I win your support, I need your good will and your counsel. And should I succeed --

(APPLAUSE)

(END VIDEO CLIP)

ROBERTS: In terms of good will and support, we can look at a new CBS News/New York Times Poll that suggests that African-American voters would support Barack Obama 89 percent to 2 percent for John McCain. Does he, Chairman Bond, have any hope of attracting anything more than a handful of votes this November in the African-American community?

BOND: Surely, he does. You know, in most elections about 10 percent to 15 percent of African-Americans vote for the Republican candidate. So, at least that's his threshold. And if he tries hard, if he makes statements appealing to our interests, then he can do it.

ROBERTS: One of his main messages yesterday was about plans to give low income students in poorly performing schools vouchers so that they could go to private school. Is that an idea that's, you know, widely attractive in the African-American community?

BOND: No. It really isn't. We're very interested in reforming and perfecting public schools. Most of our children go to public schools. Many of us are disappointed with their performance. But vouchers seems to us to be taking money away from public schools, spending it on private schools.

We're in favor of charters and other alternative kinds of institutions. As long as they're required to obey the same laws that public schools are. Free of employment discrimination, open to every child, but not vouchers.

ROBERTS: As we said, there was quite a striking contrast between the reception for John McCain and the reception two days earlier for Senator Barack Obama who really brought the house down. You have called his candidacy a cause for pride and praise but you also add it does not, quote, "herald a post civil rights America anymore than his victory in November would mean that race is an issue has been vanquished in American."

How do you believe, if he becomes president, it would change race relations in this country and what work would there be yet to be done?

BOND: Well, I think two things would happen if Barack Obama became president. Remember, the NAACP is nonpartisan. We don't endorse any candidate or any political party. But I think it sends a signal to Americans that we've moved up to a certain level of tolerance and fairness.

The very fact that an African-American man is running for president, campaigning in cities where he couldn't stay in a hotel 40 years ago says something good about the United States.

ROBERTS: Right. So, what is there still left to do? And should Senator Barack Obama carry this pressure should he become president of being a civil rights leader just because he is an African-American candidate?

BOND: Well, we expect any president of the United States to be a champion of civil rights. And I hope that if Obama gets the nod, then he'll do that. I hope John McCain would do it as well.

But we don't elect presidents to be civil rights leaders. We elect them to be presidents. We have civil rights leaders abundant in America. Some people think we have too many of them. But we don't want to put that burden on his shoulders or Senator McCain's shoulders. We want whoever wins to be a president who cares about justice, fairness and equality, who enforces the civil rights laws, who ensures that racial discrimination goes away and any president who does that will be fine with us.

ROBERTS: Do you think does making history change history?

BOND: I'm sure it does. In fact, I know it does. You know, others -- black candidates have run for president before. Jesse Jackson, Al Sharpton, most prominently Shirley Chisholm, who really broke the mold. None of them succeeded. But each of them made it possible for the next one. And Obama is opening a realm of possibilities for people of color. And at least, if you're a Democrat, Republican, Independent, you've got to be proud of that.

ROBERTS: Julian Bond, chairman of the NAACP. Thanks for being with us this morning, sir. Good to see you.

BOND: Thank you.

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