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ISSUE NUMBER ONE
Tropical Storm Fay is Back Over Open Waters; Talking Politics at Work; Running Mate Announcements Highly Anticipated
Aired August 20, 2008 - 12:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
GERRI WILLIS, CO-HOST: You're listening to Senator Barack Obama, speaking live in Martinsville, Virginia.
This is ISSUE #1. Let's listen in to the senator.
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SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: ... are you feeling more insecure with your job, you can't get rising wages or rising incomes, and the cost of everything from gas to food to health care to trying to send your children to college keep on skyrocketing? And so what people were doing was, for a while home prices were going up, Mark (ph). So you used home equity as a way to make ends meet, make the bills match up with the income coming in. But then, because of a lack of oversight on Wall Street, because nobody was minding the store when it came to some of these predatory loans that were coming down, suddenly the housing market collapsed.
Home foreclosure rates higher than at any time since the Great Depression. So that no longer became an option.
And then people took out credit cards and you tried to piece a little bit of stuff together with that, except those teaser rates of zero interest suddenly shoot up to 28, 29 percent. And we've got record bankruptcies.
And so what's happened now is that not only is it harder to save and is it harder to retire, not only are jobs more insecure and people have lost their pensions, as well as their savings, but most importantly, people aren't sure whether that essential part of the American dream, the idea that if we work hard and we sacrifice, the next generation's going to be a little bit better off than we were, people aren't sure whether that still holds true. People feel like the American dream is slipping away. Now, that's what's at stake in this election.
We can't keep on going in the same direction that we've been going in. We have to fundamentally change how America does business. And if you doubt that, let me just ask you a question.
How many of you are better off now than you were when George Bush first took office? Go ahead and raise your hands. How many are worse off than you were since George Bush took office?
That describes the reality of our politics over the last eight years. And that's the reason I'm running for president of the United States of America, because I want to make sure that the next generation here in Martinsville, here in Henry County, here in Virginia, here in the United States of America, has the jobs and the opportunity of the future. That's what we're fighting for. That's what we're fighting for.
And we've got a very real choice in this election. We've got a choice between the senatorial candidates here in Virginia and their vision of the future, and we've got a choice when it comes to the presidential candidates.
Now, John McCain's economic advisers -- this just kind of gives you a sense of how they're thinking -- one of his top economic advisers a while back, he called you whiners. He said we're a nation of whiners, we're just going through a mental recession. He said if people would just basically stop complaining and get their minds right, then everything would be OK.
Well, I guess he hasn't talked to a laid-off worker who is 53 years old and has gone back to school, got retraining, and is still having trouble finding a job that pays even two-thirds of what he was making at the old plant. There's nothing mental about that.
And I don't see people whining, by the way. The American people don't whine. People work hard, and they don't complain. They'll put up with a lot.
What they want is just a chance. They want a fair shot.
People in America, they love to work. They take pride in work. They don't want it to be easy. They know it's going to be hard. They just want a fair shot. That's what we've got to fight for.
Now, what that means though is that we've got to recognize that we can't do things the same way we've been doing them over the last eight years. John McCain has provided honorable service to our country, but when it comes to his economic policies, he is promising and proposing the same things we've been doing for the last eight years. And I'll just give you an example.
His tax policies -- John McCain wants to continue the policies in which companies that ship overseas are still getting tax breaks from the United States government. You've got companies like ExxonMobil that have made record profits, that have been able to park $56 billion worth of profits offshore, not pay taxes on them, and not create jobs here in the United States of America.
Now, I don't know about you, but it strikes me that Mark (ph) is absolutely right. We live in a global economy, we can't always stop companies from moving, but we sure as heck don't have to give them incentives to move, we don't have to give them tax breaks to move. We should give companies tax breaks that are investing right here in Martinsville and right here in Henry County. That makes sense to me.
(APPLAUSE) John McCain does wants to -- he doesn't want to provide some additional tax breaks. But you know what? They're going to corporations, $300 billion worth, to folks who don't need them and weren't even asking for tax breaks. And what I want to do, instead, is to provide tax breaks to working families who are struggling to make the budget.
So I want to say to every family, each of you get $1,000 per family per year to offset rising costs of fuel, rising costs of food, lower your tax burden. I want to provide tax relief to homeowners who don't have big mansions and so they're not itemizing on their tax returns. But you deserve a deduction on your mortgage interest rate just like the big -- the folks who own the big homes do.
I want to say to senior citizens, if you're making $50,000 a year or less, you don't have to pay taxes on your Social Security, because you're already having a tough time making ends meet. Having a tax code that is fair and that is helping middle class families, that's part of the choice that we have at stake in this election. We need a policy to create jobs here in America. So not only do we need to change our tax incentives, but we've also got to invest.
WILLIS: All right. You've been listening to Senator Barack Obama talking about the foreclosure crisis, the mortgage meltdown, the situation consumers are in.
He says Americans want a fair shot, they are not whiners, he says. He's in favor of tax breaks. He outlined the tax breaks he wants for the American family, including $1,000 per family, per year, to offset what he calls rising prices.
So that's Barack Obama, campaigning on the road in Martinsville, Virginia -- Chris.
CHRISTINE ROMANS, CO-HOST: Gerri, we're also standing by for Senator John McCain, live in Las Cruces, New Mexico. We'll bring that to you as soon as it begins.
In the meantime, the big buzz is about who the running mates will be for Obama and McCain.
Let's go to our Ed Henry in Washington.
Ed, let's talk McCain. What are we expecting to hear about his choice for VP?
ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Well, good afternoon, Christine.
He has the advantage, John McCain does, of going second, essentially, because his convention is after Barack Obama's. So with this wide expectation that Barack Obama will make his announcement on a VP somewhere in the next couple of days, John McCain at this point is expected to announce his VP pick essentially at the end of the Democratic Convention, probably next Friday, right after Barack Obama's acceptance speech. Just in the last few minutes we've gotten some new information, in fact, about the speaking lineup, who will be at the podium at the Republican Convention. That might give us maybe some clues as to who might still be on the short list, who might not be.
For example, the lineup shows, as is expected, that the unnamed VP nominee at the Republican Convention will speak Wednesday night. Well, the lineup now says that on Monday night, Joe Lieberman, the Independent Democrat, will be speaking at the Republican Convention. That's obviously going to get a lot of Democrats exercised and upset. He was the Democratic vice presidential nominee back in 2000, a long time ago, obviously, and he's going to be in between Vice President Cheney on Monday night and Governor Arnold Schwarzenegger.
So the entire ideological spectrum of the Republican Party, perhaps, as well as Independents, covered in that time. It gives John McCain a chance to show -- try to restore that maverick image he's been talking about by having an Independent Democrat. But it also raises the question, does Joe Lieberman not become the VP nominee then if he's speaking Monday? Republican officials stress this is a work in progress, people could be moved around if they end up becoming the VP nominee, however.
Tuesday night, Tom Ridge, the moderate Republican, he's getting a lot of buzz about a potential VP pick. CNN learning that over the last couple of days, top McCain officials have been working the phones, reaching out to conservative leaders across the country about Tom Ridge, and since he supports abortion rights, a lot of conservatives telling the McCain camp that they would not be happy and that that could really split the party if Tom Ridge is picked. He, right now, is slated to speak on Tuesday.
On Wednesday, Mitt Romney, another potential VP pick. He's slated to speak on Wednesday, as is Bobby Jindal, the governor of Louisiana.
Again, just because they're speaking on Wednesday, in different slots than when the VP is expected to speak on Wednesday night, doesn't mean they're not going to be it. It just might give us a little hint about the schedule. And things could be moved around if they end up getting selected. Thursday night, Florida Governor Charlie Crist is going to speak before John McCain himself speaks and accepts the nomination.
One interesting little tidbit is that one name right now who is not on this lineup list is the Minnesota governor. He's going to be the host, essentially, of this convention, Tim Pawlenty. He's still on the McCain short list.
At this moment, he's not listed on the program. That leads, obviously, to some people to suggest, well, maybe he's going to be added at a VP nominee. But again, he could be slid in any number of days as the host of this convention.
See it as a work in progress, basically. But the focus right now is really Pawlenty, Romney, Ridge, Lieberman. A lot of conservatives upset at the prospects of Ridge and Lieberman, however, and that's why conservatives expect -- doesn't mean they're going to get it, but they expect that this is coming down to Romney and Pawlenty -- Christine.
ROMANS: What we know for sure is that the momentum really starts building from here on out.
ROMANS: Ed Henry in Washington.
WILLIS: Well, turning now to the Obama camp, we could hear as soon as today who he'll choose.
CNN's deputy political director, Paul Steinhauser, he's standing by in Denver.
Paul, OK, if you were a betting man, where would your money go right now?
PAUL STEINHAUSER, CNN DEPUTY POLITICAL DIRECTOR: Yes, I guess if I was a betting man, there's a lot of names out there. But there are three that come up more than anybody else. And those three are Senator Joe Biden of Delaware, Senator Evan Bayh of Indiana, and Governor Tim Kaine of Virginia. Those are the three that come up the most.
Now, today, Barack Obama, as you just saw, he's in Virginia, he's in Virginia again tomorrow. And, in fact, tomorrow, he will be campaigning with Tim Kaine. So that'll get people buzzing. So it could happen tomorrow, it could happen Friday, Saturday. Remember, five days from today, the convention starts right here in Denver, so the assumption is he's going to name his running mate before then, Gerri.
There's other names, as well. You've got Hillary Clinton; you've got Governor Kathleen Sebelius of Kansas; Governor Bill Richardson of New Mexico; Senator Chris Dodd of Connecticut; Senator Reed of Rhode Island. So there's a lot of names out there, but the three we talked about off the top, those are the ones more people are talking about.
One other note. This race between Barack Obama and John McCain is getting even closer. Take a look at our latest CNN Poll of Polls, where we average all the national polls, and it's now one point, Barack Obama ahead of John McCain by one point, 45 to 44, with 11 percent still undecided. Remember, while this is important, national polls are important, the race for the White House is a battle for electoral votes in the states, and it's really the states that matter the most.
WILLIS: Well, Paul Steinhauser, thank you for that.
ROMANS: All right. Where in the world is Fay? And where is she headed next? We're on top of the tropical storm in CNN hurricane headquarters. Plus, why the roads and the airports might be a bit quieter this Labor Day weekend.
And politics and the workplace don't always mix.
We're all over issue #1, right here on CNN.
ROMANS: All right. Let's take a closer look at all VP contenders and what they bring to the table for each candidate.
Mark Halperin is a senior political analyst with "TIME" magazine.
Oh, the guessing game continues, and it's an awful lot of fun. But we're running out of time here.
MARK HALPERIN, SR. POLITICAL ANALYST, "TIME": Right.
ROMANS: The momentum is building. We're going to find out sooner rather than later for the Democrats, at least.
Six names people have been talking about. There's a couple of names that they're kind of honing in on: Biden and Bayh. Do you think those are the two best choices -- or the most likely choices, I should say?
HALPERIN: If I were a wagering man, and I'm not, those would be the two I would most likely to put money down. They're both Washington veterans, they both have a lot of experience. Biden as a senator in Washington forever, and Bayh, as both a governor, where he had more hands-on economic work, of course, and also in the Senate.
ROMANS: The number one thing that people want to know when they go into the voting booth in terms of the VP is what?
HALPERIN: Is the person ready to be president? If you look at the history of successful picks, people who, right away, the press and then the public said, you know what? The presidential nominee did a good job because they didn't do something political, they chose someone ready to be president, it can bring political benefits, too, if they can talk about the economy. That's a plus.
But the reason why the list gets small in a hurry is because it's very hard to have that credential, to have that perception. Biden, I think, for most people who know them and the people who would meet them if they were picked, do clear that bar pretty easily.
ROMANS: Let's talk about economic credentials for Bayh in particular. He has a long record.
He was a two-term governor of his state, Indiana, a state that gores red. But he is a Democratic governor, he's been able to cross the aisle, cross the lines, and kind of work that way.
How does he -- what does he bring to the ticket in terms of the economy?
HALPERIN: Well, he was a pretty successful governor, as you said, governing in a very red state as a Democrat, as a fiscal conservative. He had a pretty good record both as governor and in Washington of supporting lower taxes, for the most part -- tax cuts for some, but responsible, fiscally responsible. Not a big spender by the standards of the Democratic Party.
So I think he's been a centrist, and he would add not just the sort of gravitas to the ticket a little bit because of his record, but also, I think people on Wall Street, people who care about the government not just doing out-of-control spending with a Democratic Congress and a Democratic president if they won, I think would take some reassurance from Bayh on the ticket.
ROMANS: Right. Is the strength from Biden foreign policy strength?
HALPERIN: Well, you know, not only. Of course, he's probably most known these days because he has been chairman of the Foreign Relations Committee. But he used to be chair of the Judiciary Committee...
HALPERIN: ... has a lot of experience in law enforcement.
On the economic side, he is a pretty fiery populist. As compared to Evan Bayh, I think Joe Biden, because of his relatively humble background -- Bayh's father was a senator, Joe Biden comes from a more humble background. I think he would be a pretty fiery populist.
ROMANS: But he's been accused of being too close to the credit card companies and the bankruptcy bill, because Delaware...
HALPERIN: Well, he is the center from the credit card companies from Delaware.
HALPERIN: No, there's no question that he's got in his record some parochial votes and positions. But overall, he has been kind of more of centrist -- not centrist, but mainstream Democrat, if you will. To the left of Evan Bayh on some economic issues, a little bit more populist, as I said.
ROMANS: Would the Obama advisers -- do you think they're pushing for some kind of a surprise?
HALPERIN: I think the third most likely thing at this point, it's a little bit of an instinct rather than reporting. The mystery person behind door number three, somebody who -- maybe who hasn't been talked as much about. But I think right now, again, Biden and Bayh, my sense is from talking to Democrats, are the two most likely.
ROMANS: Well, at this point, they're really building the momentum to the announcement and letting the announcement build momentum to the convention. You can see how it's sort of all laying out there.
Let's talk about McCain and his possibilities. You know, there's a lot of talk about whether this will be a pro-life or pro-choice candidate. How important is the abortion issue in who he picks?
HALPERIN: Well, it's hugely important, particularly for the delegates in St. Paul. If you look at surveys of past Republican conventions -- and I don't expect this one will be different -- a very high percentage, much higher that the population at large, of people who are delegates to that convention, are pro-life. And it's an important issue to them. I think John McCain is attracted to the notion of Joe Lieberman as his running mate, a bipartisan ticket.
ROMANS: And he's speaking at the convention.
HALPERIN: And he is speaking, we learned today, for sure. But I think in the end, both John McCain and his advisers will realize that that would destroy, potentially, the convention. It would be a big step, it would get a lot of publicity. But in the hall for those four days, it would dominate. It would be the only story.
I don't think John McCain can afford that. He's not far behind in this race, and some polls even have him ahead, but he can't afford to have a bad convention.
ROMANS: So McCain advisers calling around, probably, I'm sure, to the state party chiefs, getting their opinion, also using them as a sounding board, maybe talking a little bit about some of their ideas. What's happening right there?
HALPERIN: I think there are three potential things going on there. One is, John McCain needs to be satisfied that he can't pick Joe Lieberman, that it would be too politically controversial. I think his aides might be sending back that message to him based on those consultations.
Two, I think they want to send a signal to pro-choice Republicans and Independents that, we are considering pro-choice people, even if they're actually not in the end.
And then finally, what I think is really going on is they want to pick someone like a Mitt Romney, who's currently pro-life but has a mixed record in the past, was pro-choice. I think this way, if and when they pick Mitt Romney, they can say, you know what? We considered these other people, but we gave you a pro-life person, and that will make the pro-life people happy.
They're not that happy with John McCain. They've had skepticism about him despite his long voting record for pro-life. And they've got a lot of skepticism about Mitt Romney, but he's going to look great on the abortion issue for pro-life people after they pick him after all of these public consultations.
ROMANS: What about economics and trade? Because we know that John McCain famously said before that that is not his strong suit. Foreign policy is his strong suit, and he relies on his top advisers for that.
HALPERIN: You can't expect your running mate to help you overcome a big weakness like John McCain has on the economy. Now, he's been helped by the fact that Barack Obama still hasn't found his voice on the issue, as well.
I think one reason Mitt Romney seems like a strong pick, and in my mind, the most likely, still, is because he does have a pretty good record on the economy. He has a great private sector record at Bain Capital, one of the most successful venture capitalists in the modern history of this country...
HALPERIN: ... turning around the Olympics in Salt Lake City. So I think Mitt Romney, both in his record and his ability to talk about the creation of new jobs, competing with Asia. Rhetorically, I think he would be very strong on those issues compared to some of the other people who are talked about.
ROMANS: Let me ask you just one quick question, then, about -- let's see, we've got Rob Portman, who has a trade background, also on the list, Tim Pawlenty, Charlie Crist, Eric Cantor. Are these seen as outside chances?
HALPERIN: Well, I think that all of them have problems, but there's no perfect candidate. Tim Pawlenty is great for the Republican Party in the sense that he's talking about winning back working-class voters, Wal-Mart voters, Costco voters. That's key for someone who's trying to get John McCain more on point on the economy in these troubled times.
ROMANS: Mark Halperin, of "TIME," we'll leave it there.
We're going to go to a town hall meeting right now in New Mexico State University, where Senator John McCain is speaking. We're going to pick that up right now.
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MCCAIN: "... only I never knew a sailor drunk or sober with the imagination of Congress." And that's a pretty funny line. And I use it fairly often. I use it so often, I'm not making this up when I tell you I got an e-mail from a guy that said, "As a former drunken sailor, I resent being compared to members of Congress."
So I spoke up against the pork barrel spending, and it's going to stop. I spoke up against the administration for their mistakes in Iraq. And I fought for the surge that's going to bring our troops home with victory and honor, not in defeat, as Senator Obama wanted to happen.
(APPLAUSE) Now, I'd like to talk to you just for a couple of minutes about what you all know has been going on in a small little country far away from the United States of America, the country of Georgia.
Georgia was one of the first Christian nations. In the third century, the king of Georgia converted to Christianity. If you go to Georgia, it's a beautiful little country. There's churches that go back to the 4th and 5th century.
It was part of the Russian empire, then they became part of the Soviet Union. They broke free and had a terribly corrupt government. And there's a young man named Saakashvili who went to school in the United States of America. He went to George Washington University, and then he went to Columbia, which, by the way is where my daughter Meghan went to school.
So, Meghan, please -- thank you. And tell about the tuition costs there.
I'm very proud of her achievements. And anybody who knows of openings for art history majors, please let me know after.
I'm very proud that she was able to go to such a wonderful school and get a great education. But so did Misha Saakashvili. And he came back to Georgia, and there was a whole bunch of other people like him who wanted democracy and freedom.
They had a corrupt government headed by a guy named Shevardnadze, who you may remember from the days of the Cold War. And they had a peaceful revolution and they took over, and they were putting democracy and freedom and human rights, and they were prospering.
And guess who didn't like it? Vladimir Putin didn't like it.
So, you know, we'll read about it in the history books. But we'll go through it. And as we parse what happened -- and I'm sure that there was some provocation. But the fact is, Russian aggression was overwhelming, brutal, looting, murder, killing, and they still to this day, even though having signed a cease-fire agreement, are not leaving.
Why do we care? Of course we always care about any country in the world where democracy and freedom may be strangled in the cradle. But we also care because of what happens in the region.
The old Russian ambition predating the Soviet Union is to control that part of the world. It's not an accident that five presidents of five countries, Ukraine, Poland, Lithuania, Latvia, and Estonia, all came to Tbilisi when that country was under attack. And they did it because they know that their country is going to be under pressure from the Russians, as well. And Ukraine, especially.
And why else do we care? There's a pipeline that goes through that -- goes through Georgia which is literally, for all intents and purposes, the only oil pipeline that doesn't go through Russia. You will see the Russians use oil as a weapon.
When the Czechs agreed with us to put some missile defense radars in their country, the Russians cut back on their oil supplies. So it's also got to do with energy. It's got to do with energy, as well, and world markets.
And one thing I want to assure you of is that I will, as president of the United States, achieve energy independence. We cannot afford to send $700 billion a year overseas to countries who don't like us very much.
And so keep the brave Georgians in your thoughts and prayers.
And we have to take certain actions as to whether Russia should be in the World Trade Organization, whether they should be in the G-8 -- or now, I hope, G-7, and other actions that need to be taken. But this kind of provocation is not acceptable in the 21st century -- and activity.
And just let me remind you -- and I do not make any predictions. I hope that we can modify Russian behavior, but I would remind you that wars -- those of us that study history, wars and conflicts have started at other obscure places in the world. And we want to keep this one under control.
Yesterday, I was at an oil rig. Yesterday, I was at an oil rig offshore in Louisiana. It was quite an impressive technological marvel.
I think it's 10,000 barrels a day of oil come through that oil rig. And so my point is that they do it off the coast of Louisiana, they do it off the coast of Texas, and we need to drill offshore, and we need to do it now off our shores. And we can become energy independent.
Senator Obama says he wants energy independence, but he's opposed to drilling at home, he's opposed to nuclear power. My friends, we have to have nuclear power. Nuclear power has got to be part of any way of us being energy independent.
Why should it take the French five years to build nuclear power plants and us 10 or more? And by the way, the French now reprocess their nuclear fuel. We can do that. We can do that.
Eighty percent of the French electricity is generated by nuclear power. Now, we always want to be like the French. But the fact is -- and by the way, in case you missed it, we now have a pro-American president of France, which shows if you live long enough, anything can happen in the world. But the fact is we need nuclear power. But we need all of the above. We need wind, tide, solar. Where better a place for solar than New Mexico and Arizona? Wind, tide, solar, nuclear, natural gas, we need all of the above.
America sits on the largest reserves of coal in the world. We can develop clean coal technology and become independent. We cannot afford this. We cannot afford this.
And you know, a lot of times I hear that, you know, we can't do this. We can't reprocess, we can't store, we can't build nuclear power plants, we can't drill offshore, we can't do this. That's not America, that's not what America's all about.
We've met every challenge, and we can do it, and we will do it. And as president, we will do it.
ROMANS: Senator John McCain in New Mexico talking about the situation in Georgia. Also, Washington spending, and reiterating that we need to drill, he says, offshore to get more oil -- Gerri.
WILLIS: Well, we're tracking Tropical Storm Fay. The latest next from the CNN hurricane headquarters.
And windmills could actually be the future of New York City.
You're watching ISSUE #1 on CNN.
WILLIS: Welcome back to ISSUE #1.
Tropical Storm Fay back over open waters, gaining strength. Florida residents bracing for a possible third landfall as early as tomorrow.
CNN meteorologist Chad Myers live right now in our extreme weather center with more -- Chad.
CHAD MYERS, CNN METEOROLOGIST: Gerri, still just barely offshore. You've got to think of Cape Canaveral and that little point that's there. It's eight miles -- the center of circulation -- eight miles off that point. And so that is enough now to get it back over the warm water. And maybe you'll notice that the part that is over water is much more colorful, much more intense out here and the part that's on land, the west side, not doing very much because, obviously, that's where the dry air is.
Although the circulation is still there, we're getting heavy, heavy rainfall down from Palm Bay into Melbourne and then a little bit further to the north. Almost to Indialantic Beach Sea (ph). And Port St. Lucie under water. Almost 8,000 homes there damaged by the water and the flooding.
It is going to continue to be offshore for a few more hours. I don't know that number, how many. Is it 10, is it 12, is it 24? Twenty-four is a bad thing because it gains strength. Two to three to five is a good thing. That means it's back on shore, not gaining anymore strength and then scooting out of the way. We'll have to watch it this afternoon.
There are your latest coordinates if you're paying attention, 286, 80.6. All you need to know is, you can take a look at the cape, from where Cape Canaveral is, and it's only eight miles right off shore. So if the shuttle was sitting on the launch pad, the shuttle would be eight miles from where the center of circulation is.
It's not an eye anymore, Gerri, because it's not a hurricane. Never really was. Although yesterday the radar presentation over land really did look like an eye.
WILLIS: Right. And, you know, this storm gets around more than any storm I've ever seen, right? I mean, it's crazy.
MYERS: Yes. It really was. It went right over Puerto Rico, became a storm, got a name over the Dominican Republic, went over Haiti, then over Cuba, then over Key West, and then down here near Cape Romano, back out to sea again, making another landfall here. It could get into the Gulf of Mexico briefly and make another landfall out here. I don't expect that this little part right there would get any more intensity. But the number of landfalls could actually probably be breaking records now.
WILLIS: Amazing. Well, Chad, I'm sure you'll follow it for us. Thank you for that.
MYERS: You're welcome.
ROMANS: Energy prices likely to affect your holiday travel this Labor Day. CNNMoney.com's Poppy Harlow is here with your "Energy Fix."
You know, gas prices down, oil prices are down, but still they're a lot higher than they were last Labor Day.
POPPY HARLOW, CNNMONEY.COM: And that means airfares are not really down.
A million people, folks, actually, are expected to stay a lot closer to home this Labor Day. The Air Transportation Association thinks about 16 million Americans will fly on the U.S. (INAUDIBLE) over Labor Day. And that's a million fewer, though, than last year. A 6 percent drop there.
A lot of this, of course, does come down to energy prices. Oil prices have been falling recently, but still way higher than we saw a year ago. The airline industry says jet fuel, believe it or not, is the most costly transportation fuel, refined oil (ph). It's up 80 percent from a year ago. (INAUDIBLE) for the airlines there. Since the end of 2007, as a result, 12 U.S. carriers have either shut down completely or they filed for bankruptcy due to those soaring costs.
So oil at play here, Chris. ROMANS: But it's not just oil. It's not just energy costs.
HARLOW: Yes, it's not just oil costs. A lot of other things are weighing in here. As I mentioned at the beginning, tickets are a lot more expensive. Travelers trying to cope with all of that. Also, when you look to the convenience of flying for the customer. Many of these changes the airlines are making, they're not sitting well with the customer, higher airfare. Scheduling changes means people are flying less in some small towns. They are really being hurt by drastic schedule cuts. High gas prices also playing in here for the strapped consumer.
What they don't mention, but what is obviously playing in here as well, the fees for extra bags, even water on some flights. Those, too, may be encouraging some people to stay home.
The good news. If you are planning to fly, your plane should be less crowded. Maybe fewer delays. But who's to say. Let us know when you travel over Labor Day what happens. Is it smooth sailing? Log on to i-report.com/energyfix. Send us your pictures, your stories. We'll bring them to you here.
ROMANS: So we had the transportation expert say, you know what, you shouldn't fly from say Memorial Day to Labor Day anyway unless you have to for business.
ROMANS: Right. So, that's true. That's true. All right, Poppy Harlow.
Thanks, Poppy -- Gerri.
WILLIS: I think we should stop flying until they get rid of all those extra baggage fees.
ROMANS: There you go.
WILLIS: I'm putting my foot down right now.
ROMANS: That's right.
WILLIS: All right. There could be a silver lining in the housing crisis, really. We're going to fill you in on that ahead.
ALLAN CHERNOFF, CNN SR. CORRESPONDENT: This part of the Gulf of Mexico is called the dead zone. A region where life can't exist deep under sea. I'm Allan Chernoff and I'll tell you how the growth in corn production is adding to the problem, coming up on ISSUE #1.
ROMANS: Is there a silver lining in America's hobbled housing market? According to the National Association of Home Builders, lower prices are making more homes more affordable to average-working Americans. More than half, or 55 percent of homes, sold from April through June of this year were affordable to families earning the U.S. median income of $61,500, making home prices the most affordable since the second quarter of 2004 -- Gerri.
WILLIS: Well, some good news there, Christine.
Well, with five days until the first convention, you may be tempted to talk politics at the office. But should you. Here to help us navigate the politics of talking politics at work is Bruce Weinstein. He's the ethics columnist for "BusinessWeek."
Bruce, I love this topic. You know, I know friends who have broken up over politics. I know married couples who don't even talk about it because it's so contentious. What's wrong with talking about politics at work?
BRUCE WEINSTEIN, ETHICS COLUMNIST, "BUSINESSWEEK": The problem, Gerri, is that it's not in the company's interest, it's not in your clients' interest, and, you know what, it might not be in your interest. Let's say that you're up for a promotion or a raise and your boss has a very different point of view on a hot button political topic than you do. If you don't get the promotion or the raise, how can you be sure that it's not your politics that were behind the decision?
WILLIS: But, Bruce, what about chitchat around that water cooler? I mean, come on, that's not going to hurt you, is it?
WEINSTEIN: Well, politics is part of what I call the fearsome foursome -- sex, money, religion and politics. I mean if someone came up and said, "how's your sex life," you'd say, "none of your business." "Do you believe in God?" "None of your business." On the job, it's none of your business. "How much did you make last year?" "None of your business." And the same about your political point of view. It just doesn't belong at work.
WILLIS: All right. But here at CNN, it's an obsession. Politics is in the water. Everybody talks about it all the time. How do you avoid the conversation?
WEINSTEIN: Well, I mean, what if the conversation turned to religion? You know, you would say, we can talk about this maybe outside of work, but on the job it just doesn't belong here. You know, let's say we're talking about music and you like Madonna and I like Bruce Springsteen. I wouldn't say you're wrong, and you wouldn't say I'm wrong. But if you're on one side of the offshore drilling issue and I'm on other, you'll say, "you're an idiot, Bruce. You just don't have a different opinion."
WILLIS: I would never say that to you, Bruce.
WEINSTEIN: Well, a lot of people might. And that's the problem because they're so controversial, they can adversely affect our ability to do our job.
WILLIS: I guess there are ways to play if you are having this broad conversation in the office. You can handicap. What will the American people do? How is this going to end up? And not talk about your own personal politics.
WEINSTEIN: It's possible. But let's say when the Obama decision comes along for the VP pick and it is or is not Hillary Clinton, you know, some people are going to be up in arms and other people are going to say, yes. And then the argument starts and it can get in the way of doing your job, even at CNN.
WILLIS: All right. But how do I keep myself from being like a stick in the mud? If you're one of those people who's trying to protect your job, you're being super, super political in-house, you're not going to talk about sex, or religion, you're certainly not going to talk about politics, how do you keep from seeming like somebody who's just no fun?
WEINSTEIN: You say, "hey, did you know Madonna's coming back to Madison Square Garden?" Or, "did you see the great Bruce Springsteen concert in Jacksonville the other day. Fantastic." And then all of a sudden people get caught up in that. You just shift away. Ultimately, though, Gerri, this is a management issue. The good manager would just discourage this kind of discussion because it gets in the way of a your ability to do your work and to serve your clients, which is, let's face it, why you're there at work.
WILLIS: You know, the last time I heard a manager say no, it had just the opposite effect. You know, I mean, people do the opposite sometimes of what they're supposed to do.
WEINSTEIN: That's right.
WILLIS: So as a manager, how do you negotiate with those employees? How do you get them to go in the right direction and not chitchat all the time about politics and goodness knows what else?
WEINSTEIN: Well, maybe by showing them this segment and talking about why it's not in anyone's interest, including your own, to talk about politics at work. I think this is what brings it home. Because, at the end of the day, everyone wants to know, what's in it for me? And what's in it for you is protecting your job and protecting your salary and your future at the company.
WILLIS: OK. So there's a lot of risk, obviously. Give me three topics. We know what's forboden, what we can't talk about. Tell me what I can talk about.
WEINSTEIN: What you can talk about?
WILLIS: Around the water cooler.
WEINSTEIN: Music, movies, what was on TV last night.
WILLIS: That's so exciting.
WEINSTEIN: I mean, I know, but, hey, really, do you like the new season of "Mad Men"? Fantastic. Fantastic. And then it gets the discussion going.
WILLIS: Great suggestions.
Hey, Bruce, thanks so much for helping us out. Appreciate it.
WEINSTEIN: It's a pleasure, Gerri.
ROMANS: What was on TV last night here was politics.
Forget Chicago. Why New York City could be one day known as the new windy city.
And Midwest floods may be long over, but the effects are still being felt. We'll take you to an area known as the dead zone.
ISSUE #1 rolls on next.
WILLIS: Red hot idea or simply an idea full of hot air? That's what New Yorkers are asking themselves after Mayor Mike Bloomberg suggested transforming the city's skyline into a massive urban wind farm. Now to combat an over taxed power grid, the mayor wants to put wind turbines on top of skyscrapers, bridges and along the city's shoreline. He's come up with a no-cost for this ambitious plan, which will require approval a thicket of federal and state agencies.
However, Bloomberg said he would ask private companies how they could transform the city's skyline. Check out what it would look like. Here's a little picture we're going to show you. Pretty attractive. Already technology is on the drawing table, believe it or not, for turbines to be on top of buildings. They look a little like egg beaters and experts say their design could be incorporated to fit into the buildings.
New York has struggled in the past with an aging power grid that brought the boro of Queens to a stand still in 2006 for several days. As a result, Bloomberg has committed himself to making the city more energy efficient, taking his idea to no less an authority than T. Boone Pickens, who is said to have weighed in on the plan -- Christine.
ROMANS: This summer's historic flooding across the Midwest is now having devastating environmental and economic consequences hundreds of miles down the Mississippi River. The flood waters are expanding an area in the Gulf of Mexico where life simply cannot exist. It's called the dead zone. And that's where we find our Allan Chernoff.
CHERNOFF: Christine, Gerri, when Iowa was flooded earlier this year, fishermen along the coast of Louisiana knew that trouble was headed their way. They knew the flooding would expand the Gulf of Mexico's dead zone.
CHERNOFF, (voice-over): Louisiana fisherman Terry Pizani looks across the water with a sense of loss. What used to be the best fishing grounds in the Gulf of Mexico, he says, are barren.
TERRY PIZANI, FISHERMAN: You don't see nothing. You don't even see bait fish on the water. You don't see no bait fish or nothing. Nothing's there. I don't have no kind of testing material to test the water, but I know something's wrong.
CHERNOFF: This is the test. Thirty-five miles into the Gulf of Mexico, oceanographers sample water deep below.
This sensor measures the oxygen level in the water. The deeper it goes, the less oxygen it finds. And in this part of the Gulf of Mexico, there's virtually none at the bottom.
LORA PRIDE, LOUISIANA UNIVERSITIES MARINE CONSORTIUM: We're not finding enough oxygen to support life. Aquatic life.
CHERNOFF: The dead zone. A vast portion of the Gulf of Mexico's seabed that loses most of its oxygen. It forms every summer. But this year, it's especially large. Eight thousand square miles. Nearly as big as New Jersey. Scientists say the cause is hundreds of miles up the Mississippi.
Farmers across the Midwest use tons of nitrogen and phosphorous to fertilize corn, allowing them to satisfy growing demand from ethanol factories and developing countries. This summer's flooding caused much of the fertilizer to run off into rivers that flow into the Mississippi.
NANCY RABALAIS, EXEC. DIR., LOUISIANA UNIVERSITIES MARINE CONSORTIUM: The size of below auction (ph) zone has increased in proportion to these nutrients reaching the Gulf.
CHERNOFF: The fertilizer flowing into the Gulf triggers an overgrowth of microscopic algae.
PRIDE: These things will fall to the bottom. And as they decompose, they consume oxygen.
CHERNOFF: The lack of oxygen causes bottom dwellers, fish and shrimp, to swim away in search of oxygen. Clams, crabs, starfish and other slow-moving sea life suffocate. To find lots of shrimp, fishermen like Terry now have to travel far, to the edge of the dead zone, an expensive proposition with the cost of diesel fuel still high. So many boats are idle, others are staying away from their home port in Grandal (ph), Louisiana. A disaster for seafood processor Dean Blanchard who buys shrimp from fisherman.
DEAN BLANCHARD, SEAFOOD PROCESSOR: All my boats have to go somewhere else to try to make a living. It's a shame, you know. This is the prime shrimping ground in the country right here and it's shut it down. It just shut it down. It's unreal.
CHERNOFF: With demand for corn growing, experts say the dead zone is likely to expand in coming years. An environmental hazard that threatens Louisiana's seafood industry -- Christine, Gerri.
WILLIS: An amazing story.
Well, the crash test results are in. Find out if your SUV is near the bottom of the list.
And what it's going to take to turn around the housing market and up the value of your home. The money panel is standing by. We're all over issue #1 right here on CNN.
WILLIS: Welcome back to ISSUE #1.
On our radar today, SUVs overall getting smaller for greater fuel efficiency and improving when it comes to surviving an accident. Crash test results are in from the Insurance Institute for Highway Safety and four of the smaller sport utility vehicles earned top marks in front, side and rear crash tests. They are the 2009 Ford Escape, the 2009 Volkswagen Tiguan, the 2008 Mitsubishi Outlander, and the 2008 Nissan Rogue. All four models have side airbags and stability features to guard against rollovers. Now earning the lowest test score, the 2008 Jeep Wrangler -- Chris.
ROMANS: Great information.
So New York City's Michael Bloomberg has this crazy idea. Let's turn New York City into a wind farm and solve all of our energy problems. Crazy or genius? Thinking outside of the box in tough times? Who knows. Mike Santoli from Barron's, Ryan Mack with Optimum Capital Management, and from CNNMoney.com, Poppy Harlow is back with us.
Is it so crazy or do we have to start thinking big thoughts like this if we're going to really talk about energy independence?
HARLOW: Think back to the blackout. If you were trying to get home that day after work, I think you'd think it's a good idea.
ROMANS: Five years ago, that's right.
HARLOW: But a lot of people think this is going to change the New York City skyline. They're talking more about Queens, Brooklyn, Long Island and such. And we're a ways out. But, you know, it's an idea and that's the good thing.
ROMANS: Yes. And he's only got, what, 18 months, I think. So he would have to really push it through pretty quickly.
Ryan, are we doing enough good thinking outside of the box on these issues?
RYAN MACK, PRESIDENT, OPTIMUM CAPITAL MANAGEMENT: Well, I think, you know, you have to give Bloomberg credit. There's a lot of ideas that he's had, congestion taxing, that didn't pass before. But he's trying to think outside of the box and say that these are things that we have to do to put on the table. Renewable energy is a serious concern for the nation, especially for New York City. So I have to commend him on this project.
ROMANS: Mike, crazy or brilliant? At least it's got everybody talking about it.
MIKE SANTOLI, ASSOCIATE EDITOR, BARRON'S: I think it really represents exactly how things that were completely unthinkable a while back are now all of a sudden thinkable. The solution for higher oil prices -- it's high oil prices because it gets these solutions on the table.
ROMANS: Right. Exactly.
Home prices going down. I guess the solution for high home prices is everyone really getting killed on their mortgage because home prices are going down. We saw this report from the NAHB, the National Association of Home Builders, that affordability is improving. Fifty-five percent of homes are now affordable to the median income family. I would -- that's still 45 percent of homes are out of the reach of people, you know, working Americans. So an improvement, but more to go, you think, Ryan?
MACK: Well, what's 55 percent as opposed to 53.8 percent that was previous. So it's not a huge improvement. But we also have to look at mortgage prices. I think that the 30-year fixed rates, according to the -- versus the 10-year Treasury rates, was about a 1.4 percent spread, or a 1.6 percent spread. Now that over 20 years. But now it's about a 2.4 percent spread. So for a $250,000 home, it's about another 10 percent in terms of total average mortgage price that we have to look at. So individuals are still having problems in terms of reaching inside their pockets and paying off these mortgages.
ROMANS: Mike, talk to us a little bit about Fannie Mae and Freddie Mac and what's happening there. Because you guys had a great piece on the weekend, sort of pulling all of the pieces together. You know, what we've already known, which is that the housing market is in trouble. Fannie and Freddie are this kind of hybrid that can't be allowed to fail. But tell us what it means for taxpayers and consumers.
SANTOLI: Well, Fannie and Freddie together guarantee or own up to about almost half of all mortgages in the country. They're going bad at an accelerating rate. They need more capital. The government . . .
ROMANS: A lot more capital.
SANTOLI: The Treasury and Congress has effectively said, we will maintain their role as a buyer and guarantor of mortgages. But that doesn't mean they're still going to be companies with stocks trading on the stock exchange for a long period of time, as they have been for a while now. They need more capital. Treasury doesn't want to have to inject money into these firms. They probably are going to have to.
ROMANS: And that's our money? SANTOLI: It's our money, absolutely.
Now what they will try to do is inject the money, but keep the liabilities, keep all the debt off the government balance sheet because it would effectively double the national debt.
ROMANS: What does it mean for mortgage rates if you've got this trouble at Fannie and Freddie?
SANTOLI: Well, it's actually, as Ryan was mentioning, it's actually increased the cost of mortgages and reduced the availability because Fannie and Freddie can't go out and buy -- raise debt cheaply and buy more mortgages. But what it does mean is, if the government explicitly steps in, hopefully what that would do is increase availability and lower the cost of mortgages longer term.
ROMANS: So we'll pay for it either way is what you're telling me?
SANTOLI: That's right.
ROMANS: The American taxpayers pay for it either way.
MACK: I also think that Asia owns $3 trillion of Fannie Mae's debt. They also said that they're going to stop their repurchasing of debt. So the slowing of rollover of debt for Fannie Mae and Freddie Mac is definitely going to be a huge problem for this industry.
HARLOW: Also, if you look at the shares, what this could do to current shareholders that aren't the government, right? This could incredibly dilute the shares, if they're not traded anymore. This could really wipe out a lot of investors. And the cost it could be to us, about $25 billion to $100 billion to taxpayers, potentially. It's astounding.
ROMANS: So does Fannie -- do Fannie and Freddie come out in five years, 10 years looking like they look now or, I mean, are things fundamentally changing here?
SANTOLI: Oh, I think they're going to fundamentally change. I don't think they're going to have this kind of dual mandate where they have to create profits for private shareholders, as well as create this sort of, you know, federally endorsed role to buy and guarantee mortgages. I actually do think we're looking at probably recapitalizing them and basically restructuring how they operate. Maybe as more like nationalized entities.
ROMANS: Meanwhile, the banking sector is still -- every day we're watching the stocks of these companies. We're waiting to see, you know, how they're doing and how their own capital situations are. Do we think the worst is behind us for the banking sector, Mike?
SANTOLI: It's hard to say. Honestly, housing prices will drive -- the losses will drive the results of their balance sheets. And really it seems like we haven't quite seen the bottom. I do think we've seen more than half of the ultimate losses. So we're more than half way to some kind of resolution.
ROMANS: I don't know if that makes me feel better or that makes me feel like we're all going to be very, very busy.
SANTOLI: It's going to be a long slide (ph).
ROMANS: We're all going to be busy, right, Ryan?
MACK: There are small pockets of success. PNC came out with good earnings. Wells Fargo seams like it's doing reasonably well. But at the same time . . .
ROMANS: Ryan Mack, great. OK, Ryan Mack, we've got to leave it there. Mike Santoli, Poppy Harlow. Thanks, guys.
WILLIS: It's time now to get you caught up on the rest of the day's headlines.
"CNN NEWSROOM" with Kyra Phillips and Don Lemon starts right now.