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American Morning
Hurricane Ike Hammers Cuba and Threatens the U.S.; Palin to Appear on Her First Interview on ABC News; Obama Lead Shrinks, Will Meet with Bill Clinton; U.S. Seizes Fannie Mae and Freddie Mac; Fair Tax Plan Eliminates All Income Taxes
Aired September 08, 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: State of emergency, 15,000 tourists leave the Florida Keys. New Orleans on the lookout again.
(BEGIN VIDEO CLIP)
GOV. BOBBY JINDAL (R), LOUISIANA: Now is not too early.
(END VIDEO CLIP)
CHETRY: As Hurricane Ike leaves dozens dead and hundreds helpless.
And read their lips.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: I'll keep taxes low and cut them where I can. My opponent will raise them.
(END VIDEO CLIP)
CHETRY: Talking taxes. McCain versus Obama.
(BEGIN VIDEO CLIP)
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: And I wouldn't leave 100 million out like John McCain does.
(END VIDEO CLIP)
CHETRY: How much you could pay under each president on this AMERICAN MORNING.
And welcome. Glad you're with us on this Monday, September 8th. I'm Kiran Chetry. And I'm pleased to have with me this morning Alina Cho, in for John Roberts.
ALINA CHO, CNN ANCHOR: All girls all the time. You know, John Roberts, two weeks on the road working around the clock. That will do it to you. He's feeling a little under the weather. But, John, we hope you feel better soon.
CHETRY: Yes. You know what happens is when you finally slow down that it just hits you. CHO: Oh, yes, you keep going on adrenaline. You know, the DNC, the RNC. Boom. Now, he's sick. Poor thing.
CHETRY: All right. But meanwhile, we begin with breaking news and it's dangerous and deadly hurricane that's now ripping through Cuba. We're talking about Ike.
Overnight, Hurricane Ike hit the island as a strong Category three storm but it since weakened to a strong Category two with winds of 105 miles per hour now. Ike is forecast to swing by the Florida Keys before moving into the gulf where it could strengthen once again once it gets into the warm open waters.
We're live in Cuba. We'll also have the latest on the storm's track with Rob Marciano checking on that for us in just a moment.
Also, some new developments this morning for your money. Markets overseas soaring on news that the U.S. Federal government has now seized control of troubled mortgage giants Fannie Mae and Freddie Mac. Japan's Nikkei up nearly 3.5 percent on the news. Just ahead, Ali Velshi takes a look at how the government takeover could impact you either as a homeowner or, of course, as a taxpayer.
Also, just eight weeks to go until Election Day and John McCain closing the gap on Barack Obama, at least up to the latest polling shows. A new CNN poll of polls shows just a point now separating the presidential hopefuls. These polls were taken -- there were polls taken just before the Republican National Convention. They showed McCain down by as much as six points.
Back to our breaking news this morning and a dangerous storm with a deadly track record now taking aim at the Gulf Coast. After killing nearly, or at least 73 people in Haiti, Hurricane Ike now a dangerous Category two storm slamming into Cuba overnight. Its storm bands packing winds of 103 miles per hour, and they're closing in now on Cuba's capital, Havana.
Just to the east, Ike pounded the Turks and Caicos, ripping apart homes, shredding trees, and turning a vacation destination into a disaster area. And this morning, a human exodus along the Florida Keys which today could feel the storm's force.
CNN's Morgan Neill live in Havana for us where the storm is headed right now. We also have Rob Marciano live in the hurricane headquarters. But first, let's check in with Morgan on what it feels like to be there now.
Hi, Morgan.
MORGAN NEILL, CNN CORRESPONDENT: Hi, Kiran. Well, here in Havana, the winds have started to pick up a bit. I noticed on our way in, very early here, of course, but the ocean does seem to be picking up some, and we expect to see some risk of storm surge here at Havana's seawall as this storm goes closer. At latest report, it was near Las Tunas. That's a central province that already, we've seen some very dramatic images from this hurricane. Late Sunday afternoon, we saw when Ike made its way ashore in the eastern most city of Baracoa. We saw such power behind the storm surge. There were waves crashing into the seawall there in Baracoa that made their way over the top of five-story buildings. Also, massive flooding there that went at least some 10 blocks inland.
We heard reports of 80 houses destroyed in Baracoa alone. Power lines down, trees snapped off. In all, around the island in the central and eastern most provinces, authorities say they have evacuated -- get this -- more than 600,000 people. Also, hundreds of tourists that had taken their vacations here, obviously, at the wrong time of year. So, a lot of preparations that went into this as we speak.
This storm is making its way across the center of the island. We don't expect to see the end of it until sometime Tuesday. That means a lot of time to do a great deal of damage here, Kiran.
CHO: And, Morgan, pardon the pun, but this seems to be the calm before the storm, if you will. And stand by for just a minute. We want to bring in Rob Marciano for a look at what you're experiencing right now on the ground and what you can expect later this morning.
Rob, tell Morgan about what he's going to feel in the coming hours, particularly since this storm has just downgraded to a Cat two within the past hour, but still a strong storm.
ROB MARCIANO, AMS METEOROLOGIST: Well, I think Morgan pretty much told the story right there, as far as, it's not going to be over for him really until tomorrow. If not, if anything really, the story is not going to begin for Havana and Morgan until tomorrow night and into tomorrow morning.
This thing is still 375 miles to the east of Havana right here. Don't be fooled by this. We're starting to pick up the rain bands. This is from the Key West, Miami radars here. Cuba, they don't really let us into that type of information, but here it is on the satellite picture.
You really see exactly how strong this storm is. This huge eye going across Turks and Caicos. They made landfall north of Guantanamo last night. Now, the center of it is near Camaguey and heading towards Havana, which is still 370 miles away, moving west at about 15. So you trapolate (ph) that, that's pretty much 24 hours before this thing gets to Havana and the center is forecast pretty much a track right over it. So it will be a slow deterioration of conditions for the folks who live in Havana and for Morgan, and he'll be seeing this play by play as it unfolds here during the day today and tonight as well.
One hundred five mile-an-hour winds, it's probably going to weaken a little bit more because it's supposed to go right across the island and we do have some mountains especially on the east side. So this is going to ring out a lot of moisture. This will knock down the intensity just a little bit. If it wobbles north or south and gets over the water, then it will keep its intensity. But it's likely to keep its hurricane status while it's over the island itself. And there you see it as a Category one scooting right over Havana around this time tomorrow morning.
And then it reemerges in the Gulf of Mexico. Water still warm here even after being churned from Gustav. And by day four and five, we get it towards the end of the week. Anywhere from New Orleans back through Corpus Christi, Texas, is in the cone here, and this will obviously be adjusted from time to time.
But the number three there indicates a major hurricane expected to be at least in the central northern gulf by the time the end of this week rolls around. So it's going to be a long week certainly for folks watching this along the Gulf Coast, Alina, and along 24 hours for Morgan Neill and the folks who live in central and western Cuba for sure.
CHO: Yes. Bracing and expecting the worst. I see the latest here, Galveston and Lake Charles perhaps in that cone of uncertainty with the storm heading possibly on Saturday.
Rob, thank you. We'll check back with you later -- Kiran.
CHETRY: The "Most Politics in the Morning" now. And as we told you at the top of the show, there's a new CNN poll of polls out today. And it shows that the race for president is nearly deadlocked.
Barack Obama's lead over John McCain has now shrunk to just one percentage point. It's 44 percent to 43 percent. Saturday's poll of polls showed Obama with a three-point lead. Thirteen percent of the voters remain undecided.
And it is too early to tell if the new numbers are a bounce from the Republican National Convention. But some experts are saying it shows Sarah Palin, the vice presidential nominee for the GOP, is energizing the party. In just over a week, she's become a breakout star. And as Mary Snow shows us, the McCain campaign is ready to let Palin break away and face the media by herself.
MARY SNOW, CNN CORRESPONDENT: Kiran and Alina, Senator John McCain and Governor Sarah Palin spent the weekend campaigning together in two battleground states, Colorado and New Mexico. And while they took their message on the road together, that plan changes this week.
(BEGIN VIDEOTAPE)
SNOW (voice-over): In Colorado, and then in New Mexico, one thing seemed clear. The number two name on the Republican ticket was the one wowing the crowds. Citing momentum, the McCain campaign extended Governor Sarah Palin's stay on the campaign trail with John McCain, but she will break off on her own later this for a sit down with ABC News, her first national interview since being tapped as McCain's running mate.
GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: Senator McCain has called the two of us a team of mavericks.
SNOW: Word of the interview comes as her Democratic counterpart, Senator Joe Biden, publicly called for Palin to take questions from the media and let voters judge her answers. And in an interview with ABC, Barack Obama said McCain's choice of Palin contradicts his pledge to bring change to Washington.
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: He chose somebody who may be even more aligned with George Bush or Dick Cheney or the politics we've seen over the last eight years than John McCain himself is.
SNOW: But McCain makes his case for change by saying his record sets him apart. And he told CBS' "Face the Nation" that he understands the challenge of making that case following eight years of a Republican administration.
(BEGIN VIDEO CLIP, CBS NEWS "FACE THE NATION")
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: But I have to make a strong case that we're going to bring about that change and it's the right kind of change. And I know we're going to be talking about my running mate but I think I got the right kind of running mate who has that record also.
(END VIDEO CLIP)
(END VIDEOTAPE)
SNOW: And while the campaigns battle for the banner of change, the plan is for McCain and Palin to make that case together through Wednesday. Then, Governor Palin will return home to Alaska before her son is deployed to Iraq and she'll sit down for her ABC interview in her home state -- Alina and Kiran.
CHO: Mary Snow for us.
And Barack Obama is responding to comments Sarah Palin made about his time as a community organizer. You may remember that remark from her acceptance speech last week. Palin was talking about her own experience when she said, "I guess a small-town mayor is sort of like a community organizer except that you have actual responsibilities."
Well, speaking with ABC's "This Week Sunday," Obama said that criticism puzzled him.
(BEGIN VIDEO CLIP, ABC'S "THIS WEEK SUNDAY")
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: That's what I did between the ages of 24 and 27 before I went to law school. I would think that's what we want all our young people to do. I would think that that's an area where Democrats and Republicans would agree. And so, it's curious to me that they would mock that when I, at least, think that that's exactly what young people should be doing.
(END VIDEOTAPE) CHO: Meantime, Senator Obama and former President Bill Clinton will meet together this Thursday, September 11. President Clinton issued the invite after learning that Obama would be in New York. The pair will have a private lunch after Obama visits ground zero for a joint appearance with Senator John McCain.
And in another sign of party unity, Clinton says he will campaign for Obama. But so far, no events are on the schedule.
CHETRY: Emergency rescue.
(BEGIN VIDEO CLIP)
HENRY PAULSON, TREASURY SECRETARY: It is necessary to take action.
(END VIDEO CLIP)
CHETRY: Ali Velshi looks at what the government takeover of two mortgage giants means to you. You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
CHO: 13 minutes after the hour, we are tracking some breaking news for you.
Hurricane Ike on the move through Cuba right now, seen here in an image from space. You can really see how big the storm is. And right now, the storm is packing winds of 105 miles per hour. That's a Category two. It's expected to strengthen once it enters the warm waters of the Gulf of Mexico. The latest hurricane center track map shows the greatest chances for landfall would be near the Texas/Louisiana border on Saturday.
CHETRY: Well, this morning, the federal government is temporarily running two of the largest and most pivotal players in the mortgage industry. Yesterday, it seized control of Fannie Mae and Freddie Mac which have been dangerously weakened as home prices plunged and foreclosures rise.
CNN's Ali Velshi joins us now to break it down, talk a little bit about how it affects not only homeowners but taxpayers as well.
ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Yes. It's major news that will affect the price of homes, the price of mortgages and what you may pay in taxes. It started with an announcement from Treasury Secretary Henry Paulson.
(BEGIN VIDEOATAPE)
HENRY PAULSON, TREASURY SECRETARY: We have determined that it is necessary to take action. Our economy and our markets will not recover until the bulk of this housing correction is behind us. Fannie Mae and Freddie Mac are critical to turning the corner on housing. VELSHI (voice-over): And with that, the U.S. government takes control of sister companies Fannie Mae and Freddie Mac, two massive public corporations at the heart of the U.S. mortgage system. Together, Fannie and Freddie own or guarantee more than half of the U.S. mortgage markets. That's more than $5 trillion in loans.
Here's how they work. Banks loan money to homebuyers. The banks then sell those mortgages to Fannie Mae or Freddie Mac. Banks then use the money from those sales to make new loans. Fannie and Freddie, meanwhile, bundle those loans up, attach a payment guarantee to them, and resell them as bonds.
DEAN BAKER, CENTER FOR ECONOMIC POLICY RESEARCH: Now, they might issue the mortgage on Monday and sell it in the secondary market to Fannie and Freddie on Tuesday. And then, you know, Fannie and Freddie is putting in together in a mortgage back securities selling it a week, two weeks later. So they're incredibly important institutions even though, you know, for most of us, we've never seen them.
VELSHI: The system provided a continuous supply of relatively low interest cash, allowing banks to keep making affordable loans to homebuyers. But as home prices dropped, mortgage defaults soared making it harder for Fannie and Freddie to raise money.
BAKER: The interest rate on -- that Fannie and Freddie had to pay began to rise and, of course, that gets passed on in higher mortgage rates to, you know, anyone who goes to buy a home.
VELSHI: So in an emergency move in July, Treasury Secretary Henry Paulson said the government stands ready to provide direct financial support to Fannie and Freddie if needed. He said he hoped it wouldn't be needed.
PAULSON: If you've got a squirt gun in your pocket, you may have to take it out. If you've got a bazooka and people know you've got it, you may not have to take it out.
VELSHI: But without an explicit guarantee from the U.S. government, the stock of both companies continue to drop and major investors including the central banks of Russia and China started selling Fannie and Freddie bonds fast. That made it harder and more expensive for Fannie and Freddie to raise money.
(END VIDEOTAPE)
VELSHI: Well, now, with the almost explicit guarantee that the government will back Fannie and Freddie, Fannie and Freddie should be able to raise money again. That should reduce the 30-year mortgage rate by up to a third, say some experts, that could come within the next few weeks. The bigger deal is that it probably saved interest rates from going higher. Obviously if interest rates are lower, it makes houses more affordable to buy and that could help out the housing market. But there's a big tax burden here. Some say it could be $30 billion. It could be all the way up to $200 billion.
CHETRY: It seems everybody agrees it's not a good idea but they had no other choice.
VELSHI: That's pretty much it. It had to be done. You can't let Freddie and Fannie fail. In the next hours, by the way, I'm going to breaking down specifically the impact that it could have on you if you're a home buyer, if you're looking for a mortgage, and what it could do about taxes. We're talking taxes today.
CHO: Yes. And as you point out, if the government gets involved, ultimately --
VELSHI: We're paying for it.
CHO: Yes.
VELSHI: That's right, and you are.
CHO: Ali, thanks.
VELSHI: OK.
CHO: Tax fight.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: We're taxing wealth instead of wages.
(END VIDEO CLIP)
CHO: Is it really that simple? Experts debate the fair tax.
(BEGIN VIDEO CLIP)
JAY BOOKMAN, SYNDICATED COLUMNIST: If you tax something, you get less.
(END VIDEO CLIP)
CHO: You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
CHO: Welcome back. 20 minutes after the hour. "The "League of First Time Voters" will have a big impact this November.
CNN's Rick Sanchez has been looking at this important group in his ongoing series, and this morning addresses the so-called fair tax plan which will eliminate all federal taxes and replace them with one national sales tax. But is the plan feasible?
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: The current system is broken and can't be fixed. We have a GAO study that says that in 32 years, the entire federal revenue stream will be insufficient to pay the interest on the debt unless we have more growth in the economy. We may not have the perfect system. We may not even have the best system, but it's a better system than we had.
UNIDENTIFIED MALE: The problem with the fair tax is that the rate would need to be far too high in order to do what they want to do.
RICK SANCHEZ, CNN CORRESPONDENT: Well, hold on. They're saying they can do this at 23 percent and that at 23 percent it would pretty much equate whatever it is that the government is getting now.
ALLEN BUCKLEY (L), SENATE CANDIDATE: The joint committee on taxation, an arm of Congress, say H.R. 2525, which is the predecessor of H.R. 22, are virtually identical. OK. They said in the first five years, the revenue neutral rate was 59.5 percent, which means if something cost $1 without any tax, it would cost $1.60 with tax.
NEAL BOORTZ, SYNDICATED TALK RADIO HOST: The income tax is quoted as an inclusive tax. The income tax is quoted as an inclusive tax.
UNIDENTIFIED MALE: It's inclusive of what you spend, inclusive of what you're --
BOORTZ: If you're in a 33 percent tax bracket and you earn $100, you pay $33 income tax. It's inclusive. What the opponents of a fair tax do in order to boost the rate and make it appear to be less palatable is they'll continue to quote the income tax, which we have on an inclusive basis, and then quote the fair tax on an exclusive basis.
UNIDENTIFIED MALE: To compare it.
BOORTZ: To compare it. That's comparing apples to oranges.
UNIDENTIFIED MALE: We're doing something that's never been done in the history of taxation in America. We're taxing wealth instead of wages.
SANCHEZ: That's an important point.
JAY BOOKMAN, SYNDICATED COLUMNIST: It's not a tax on wealth. It's a tax on consumption.
UNIDENTIFIED MALE: It's a tax on accumulated wealth when it's spent.
BOOKMAN: When it is spent.
UNIDENTIFIED MALE: Ultimately, money is spent.
BOOKMAN: If you want less of something, you tax it. It costs more. If you tax something you get less of it. If you tax consumption you're going to get less of it. It is standard economic theory -- standard conservative economic theory.
(END VIDEOTAPE) CHETRY: State of emergency -- Floridians flee as deadly Ike tears through the Caribbean. The latest on the storm's track. You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
CHETRY: Well, this Thursday, Senator Barack Obama will meet with former President Bill Clinton in a sign of unity after a divisive campaign season. The two will share a private lunch in New York. So, could it mean a growing importance for Senator Hillary Clinton in the final weeks before the election as well?
Joining us now, "Washington Post" reporter and CNN contributor Dana Milbank. Good to see you this morning.
DANA MILBANK, CNN CONTRIBUTOR: Good morning.
CHETRY: So apparently, Bill Clinton reached out to Barack Obama and said let's do lunch. Why does Barack Obama need the Clintons right now?
MILBANK: Well, he needs them more than ever because of the Sarah Palin choice. And he's got a real enthusiasm gap now on his side because all of a sudden everybody has exploded with enthusiasm about Sarah Palin.
So, he needs to get Hillary out there particularly on the trail. He needs to have some peace with Bill Clinton, who probably should be bringing a food taster just in case.
CHETRY: On either side, right? But the interesting thing is apparently insiders said that Hillary Clinton has made it clear she's not going to go on the trail and trash Sarah Palin. There's also been a lot of talk about whether Hillary voters, even a small portion of them would decide to vote for Sarah Palin. What do you think about this?
MILBANK: Maybe a small portion would. There's a lot of talk about the Hillary voters. What really happened here is not the Hillary voters at all, it's the religious conservatives who have suddenly gone on board with McCain holding their nose. All of sudden, they're saying, hey, wait a second, maybe this is our guy after all.
Now, Hillary is not going to reach out and help Obama with those voters to begin with. It may help a little bit at the margin with women, but it definitely increases the challenge for Obama now.
CHETRY: I want to ask you about this new poll of polls out. It shows a virtual dead heat with Barack Obama at 44 percent and John McCain at 43 percent. It was taken during the RNC convention. So, you know, you talk about the convention bounces and they were so close together, it's hard to exactly tell. But should the Obama campaign be concerned?
MILBANK: Well, on the one hand, they should be concerned because if you look at 80 percent of the people think the country is on the wrong track, Democrats, in general, tend to be eight to 10 points ahead of Republicans. So that the fact that Obama isn't doing as well as all that is cause for concern.
Now, you know, the polls looking at where we are after the convention, we're more or less where we were before the convention in terms of basically a dead heat if you look at things overall. So I think this is an excellent argument these past two weeks for abolishing the conventions and we can all sit back right here in New York.
CHETRY: Do you think it's just sort of the media class here in Washington and New York that's making much of the fact that Sarah Palin has not done an interview yet with somebody. And she's set now to talk to Charlie Gibson and that he's going out to Alaska to do that. But a lot is being made of the fact that she hasn't really been out there and subjected herself to questioning.
MILBANK: Right. And there's a suspicion that like, well, she won't be able to do long division or name the capital of Pakistan or something like that. I think what we saw from the 2000 race is this notion of pop quizzes that George W. Bush was exposed to don't really work, and almost certainly she will hold her own.
But there is certainly a suspicion among the media, the media elites the Republicans have been going after that she's not quite up to the task and that this will somehow unravel when she's in public view. I suspect that she'll be able to hold her own.
CHETRY: And how does it work with the candidates? Because Joe Biden after he was selected as the VP nomination didn't go out on the Sunday circuit that week. Is that the norm?
MILBANK: Right. Because Joe Biden, of course, probably was on it for the previous 49 weeks. He loves to be out there on the Sunday circuit. I think Palin needs a lot of time. She didn't know she was going to be the vice presidential nominee. She needs a lot of coaching, and it's not a reflection of her abilities to the fact that suddenly she is, you know, right in the spotlight.
CHETRY: All right. Well, we'll be waiting for that for sure.
Dana Milbank, great to see you. Thanks for being with us.
MILBANK: Good to see you, thanks.
CHO: Just about 30 minutes past the hour. Here's an update on our top stories this morning.
Hurricane Ike downgraded to a Category two storm just this hour, but it is still battering Cuba and expected to hit Havana later this morning. The storm has already been blamed for at least 73 deaths in Haiti. It has also damaged more than 80 percent of the homes on Grand Turk Island. That's in the Turks and Caicos. Ike is expected to hit the Gulf Coast later this week.
Liver disease on the rise in obese teenagers. According to recent medical studies, some have needed liver transplants and researchers say if the trend continues, even more will need a new liver when they hit their 30s or 40s.
Pediatricians are being warned to be more vigilant. The American Liver Foundation estimates that two to five percent of American children over the age of 5 have the condition.
And jury selection begins today in the armed robbery and kidnapping trial of O.J. Simpson. He and five others are accused of breaking into a Las Vegas hotel room last September to take back memorabilia Simpson claims was stolen from him.
Four of those men negotiated plea deals. They are expected to testify against Simpson. And if convicted, he could face a life sentence.
Back to our breaking news this morning.
Havana bracing for a serious blow by Hurricane Ike. The storm slammed into the island east coast overnight and is right now battering the island with 105 miles per hour winds.
Heavy rains flooding homes in Haiti as well. At least 73 people killed there.
In just a moment, we're going to take you live to Key West, Florida, where mandatory evacuations have been ordered.
But for now, we want to go to Rob Marciano in the CNN Hurricane Headquarters.
So, Rob, the storm is going to lash Cuba later today. The U.S. is next. When is it going to hit and how strong is it going to be?
MARCIANO: Well, it has decreased a little bit in intensity, Alina, because it has made landfall in Cuba. Look at this, distinct eye through the Turks and Caicos, just slamming those islands.
And now it's in central Cuba right over Camaguey. It will be riding the coast -- actually riding right over the center of the island, most likely, maybe the southern coast over the next 24 hours.
And they get into Havana and you see serious storms and battering waves in some of the mountains in the central and the eastern part of the island are going to wring out a lot of moisture.
So flash flooding and mudslides are potential with this thing. Still about 375 miles from Havana. So it's not going to be until tomorrow morning before it gets over that city and then remerges into the Gulf of Mexico where the waters are still warm even after being churned from Gustav.
Expected to remain a category 1 storm while it's over the -- over the island. Getting into the Gulf of Mexico it will throw out some waves and some beach erosion and some storm surge to the Keys for sure. So evacuating some of those areas certainly warranted, and then potentially a cat 3, a major hurricane, into the north central Gulf of Mexico by the time we get to the end of this week.
This track, this time certainly can change as can the intensity. But anybody from New Orleans, even the Florida Panhandle to the Mexican-Texas border should be on the lookout as Hurricane Ike gets into the Gulf.
Alina, back up to you.
CHO: All right, Rob, thanks. Kiran?
MARCIANO: You got it.
CHETRY: Well, as the storm churns just south of Florida, many along the Keys are taking no chances. They've been told to board up and get out.
CNN's Susan Candiotti is live in Key West, Florida with more on what it's like there.
Hi, Susan.
SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT: Hi, Kiran. Good morning to you.
Certainly folks here in the Florida Keys are waking up to better news because a hurricane watch has been lifted, but that tropical storm warning is still in effect.
We're one -- we're at one of million marinas here in the Florida Keys. And as you can see, the boats are tied down, airports are closed, schools and businesses are shut down, and patients have been evacuated from hospitals.
But, of course, they're still expecting a storm surge, and so in the words of Tom Petty, people are saying, "the waiting is in the hardest part."
(BEGIN VIDEOTAPE)
CANDIOTTI (voice over): For free-roaming roosters, it's just another day in downtown Key West. But residents are boarding up and telling Ike to take a hike.
This shopkeeper is protecting his business but not yet ready to leave.
UNIDENTIFIED RESIDENT: I have no reason other than I really don't have any other place to go.
CANDIOTTI: 15,000 tourists peeled out of town Saturday as ordered. The last flights took off Sunday.
UNIDENTIFIED RESIDENT: They're saying you have to leave and nobody is going to put you up, and they're, like, what are you going to do?
CANDIOTTI: For now, the Grusons (ph) are staying. They've been through several storms in 14 years yet only evacuated once.
UNIDENTIFIED RESIDENT: I know people think Key West is hearty time and ha, ha, ha, but people are looking at this storm and if it veers at all north or anything, people are going to be leaving.
CANDIOTTI: Authorities admit most who live in the so-called Conch Republic are not taking the evacuation order seriously. Sunday meant one more day at the beach, getting around town, sweeping the streets, taking in the action, and enjoying the calm before the storm in a typically Key West way.
MAYOR MORGAN MCPHERSON, KEY WEST, FLORIDA: Conchs have a tendency to be hard shelled. And thus, they have -- you know, whether you're born down here or live down here, they get that hard shell attitude and you just have to be prepared.
CANDIOTTI: Preparations that, for some, included prayer.
After the boarding up and sandbags, it's time to wait.
(END VIDEOTAPE)
CANDIOTTI: So evacuation orders for residents are still in effect. They're set to expire at noon.
This morning, officials will be getting together to decide whether they're going to suspend those evacuation orders, but remember, they're still going to be hit hard by tropical storm conditions here, so flooding is expected.
Kiran, back to you.
CHETRY: All right, Susan Candiotti for us in Key West this morning. Thank you.
You know, this isn't the first time Florida is reeling from the force of Mother Nature. More for you now in an "AM Extra."
And look at the numbers, 96 major hurricanes, category 3 or stronger, have hit the U.S. since the 1850s, 37 of them made landfall in Florida. Louisiana also got hit 21 times, and that includes Gustav. Texas hit 19 times.
CHO: There's an $800,000 difference between John McCain's and Barack Obama's plan for some taxpayers. Find out who's plan is better for you. Part one of our series, "ISSUE #1," McCain versus Obama.
(BEGIN VIDEOTAPE)
CHO (voice over): Palin's former parish.
GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: It was so cool growing up in this church and getting saved here. CHO: Jessica Yellin on the church that talks about Alaska's role in the end of the world.
UNIDENTIFIED MALE: God has a destiny for the state of Alaska.
CHO: You're watching the most news in the morning.
(END VIDEOTAPE)
ANNOUNCER: "Weather Update" brought to you by...
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CHETRY: Well, you know, "ISSUE #1" is the economy. It will be front and center on the minds of voters this election and we want to help you make an informed choice when you cast your ballot.
So all this week, we're turning to Ali Velshi for a look at where the candidates stand on big pocketbook issue, and we're kicking things off with taxes, Ali -- the candidates' plans and the impact they could have depending on where you fall in the spectrum.
ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Yes, and this is probably one of the biggest ones. In the end it will probably be a big one for people to make their decision on.
Fundamentally, it's not as hot as some of the other topics but taxes, health care, things like that, really matters. So we want to start with taxes and break things down for you.
The Tax Policy Center is a group that has broken down the tax plans of the candidates and what they've done is they've taken not just their announced tax plans but other programs that they've got and they sort of mixed it all up and divided it by income level.
And that's what I want to share with you. We've talked about the differences between how the candidates would handle tax plans, and a lot of it comes down to the Bush tax cuts of 2001 and 2003.
John McCain says he would keep all of them in place for everybody. Barack Obama says he would keep them in place for low and middle income earners, but eliminate them for high-income earners, and you'll see that on the way these taxes break down.
Let's take a look at what happens. If you are at the lower end of the income scale, your earning between $38,000 and $66,000, your tax bill under John McCain will go down -- this is your federal tax bill -- by about $325. Under Barack Obama over $1,000.
If you're earning between $66,000 and $112,000 your tax bill under McCain will go down just under $1,000 but under Obama, it will go down about $1200. So in both of those areas, your taxes under Obama goes down more.
When you top a $112,000, that's where it starts to change. Your tax bill under John McCain goes down $2,500, just over $2,000 for Barack Obama. And if you are one of our many viewers earning more than $2.9 million a year, there's the difference.
Your tax bill under McCain goes down by almost $300,000. Under Obama it goes up by more than half a million. More than three quarters of $1 million difference in your tax -- your federal tax liability if you earn more than $2.9 million a year.
There are other policies you may want to think about but that's what's clear.
CHO: I mean, until you get to $2.9 million, I mean, they're not all that dissimilar.
VELSHI: No, once you get -- actually when you're talking about $250,000, it starts to -- it starts to spread, but, yes, in that area, under $250,000. And again, these things change and who really knows how this is going to work. And the reality is all of these -- both of these candidates, their full plans are not sufficient to not get us into more debt so they may have to change anyway.
CHETRY: And are they subject to Congress as well?
VELSHI: And they're subject to Congress which means...
CHETRY: So these are their pie in the sky what they want to do.
VELSHI: Given the projections right now and the fact that there's a Democratic Congress, there are some people who say the Barack Obama plan is more likely to be the one you actually see if he becomes president, whereas if John McCain becomes president he may not have a Congress behind him that's going to support those tax changes.
But, again, those are what the differences are.
We'll keep on bringing you this information to you because it's one of those issues that's you're going to help -- that's going to help you make a decision...
CHO: Oh sure.
VELSHI: ... on voting.
CHO: We all care about taxes.
VELSHI: Yes.
CHO: Ali, thanks.
VELSHI: OK.
CHO: All right. In our efforts to bring you the complete picture of the candidates on the presidential campaign trail, we're taking a longer look at John McCain and Barack Obama in their own words.
Here, first, is John McCain speaking in Albuquerque, New Mexico this weekend. (BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: I've fought corruptions and it didn't matter where the culprits were Democrats and it didn't matter whether they were Republicans.
I fought big spenders. I've fought those big spenders every step of the way and it spread corruption, my friends, a little straight talk. That's why we have former members of Congress now residing in federal prison.
And I want to tell you -- I want to tell you the first -- the first earmark pork barrel laden bill that comes across my desk I'll veto it and I'll make them famous and you'll know their names. You'll know the names of every one of them.
Our troops will come home with honor and victory not in defeat, as would have happened if Senator Obama had had his way.
(CHEERS AND APPLAUSE)
MCCAIN: These are tough times in the world, my friend. And Afghanistan we're fighting a tough struggle against the Taliban. The government in Pakistan is very unpredictable.
There's one thing that Osama bin Laden and General Petraeus agree on, and that is that Iraq is a central battleground in the war against radical Islamic extremism, and we are winning and we will win.
(CHEERS AND APPLAUSE)
MCCAIN: I got to tell you, I thank God for every single day for General David Petraeus and the brave men and women who are serving under his command. I thank God for them.
(CHEERS AND APPLAUSE)
MCCAIN: They're the best and they're the bravest and the most -- and the most professional we've ever had.
(END VIDEOTAPE)
CHO: We'll hear more from John McCain today when he campaigns in Missouri and Ohio, and we'll hear from Barack Obama in his own words coming up in a couple of minutes.
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CHO (voice over): Battle of the running mates.
SEN. JOE BIDEN (D), VICE PRESIDENTIAL CANDIDATE: It was deafening.
CHO: As Biden gets drowned out, will Clinton come in to save the day?
SEN. HILLARY CLINTON (D), NEW YORK: No McCain, no Palin.
CHO: Jim Acosta on the Palin problem.
You're watching the most news in the morning.
(END VIDEOTAPE)
ANNOUNCER: "Minding Your Business" brought to you by...
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(BEGIN VIDEO CLIP)
MCCAIN: The response, the response to her has been overwhelming. It's been incredible. She's ignited America.
(CHEERS AND APPLAUSE)
MCCAIN: And I'm so proud to have her with me.
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CHETRY: Senator John McCain praising his running mate Sarah Palin who has wowed the Republican Party faithful and captured headlines for the past week.
Well, now her Democratic counterpart, Joe Biden, is trying to stay in the limelight and stay on message.
CNN's Jim Acosta is here now with more on this one.
You know, talking about how Sarah Palin really, sort of, reenergized John McCain out there on the trail and Joe Biden certainly taking a back seat.
JIM ACOSTA, CNN CORRESPONDENT: And here we have this problem with Sarah Palin fever catching, a lot of Democrats may be wondering, what about Joe?
(BEGIN VIDEOTAPE)
ACOSTA (voice over): She may be a political newcomer but Sarah Palin is already elbowing Joe Biden out of the vice presidential spotlight, drawing big crowds for John McCain and solely gracing the covers of magazines across the country.
Biden does have Palin beat on one score, the Sunday talk shows, making his 42nd appearance on "Meet the Press, " the sometimes tough talking Biden tempered his criticism of the Alaskan governor.
BIDEN: Eventually she's going to have to answer questions and not be sequestered. Eventually she's going to have to answer questions about her record.
ACOSTA: Steering clear of a dogfight with a self-described pit bull in lipstick, Biden is instead tearing into John McCain, here, unloading on the Republican convention.
BIDEN: It was deafening on jobs, on health care, on environment, on all the things that matter to the people in the neighborhoods I grew up in. Deafening.
CLINTON: No way, no how, no McCain, no Palin.
ACOSTA: Still, it's not Biden, but Hillary Clinton who's seen by some Democrats as Obama's best bet to counter Palin-mania. She campaigns for Obama in Florida this week.
CLINTON: Senator Obama and Senator Biden offer the new ideas and positive change agenda that America needs and deserves after eight years of failed Republican leadership.
Senator McCain and Governor Palin did not.
ACOSTA: As for Biden, who's making the case as Senator Clinton once did that he's a kid from Scranton, Pennsylvania, not just a creature of Washington. Part of Palin's appeal lies in those well known small town roots.
BILL SCHNEIDER, CNN SENIOR POLITICAL ANALYST: You know they've got a celebrity on the Democratic ticket. His name is Barack Obama. They didn't need a celebrity running mate. John McCain did.
(END VIDEOTAPE)
ACOSTA: And the old political adage is that people don't vote for the bottom of the ticket.
Still Biden versus Palin at this year's vice presidential debate will undoubtedly go down as one of the hottest political events of the year.
Who would have thought?
CHETRY: I'm looking forward to it.
ACOSTA: Yes.
CHETRY: Yes, exactly.
Jim, great to see you, thanks.
ACOSTA: Good to see you.
(BEGIN VIDEOTAPE)
CHO (voice over): Obama's new running mate.
MICHELLE OBAMA, SENATOR BARACK OBAMA'S WIFE: We talk about this dog every day.
CHO: A contest to find the next first pet. Jeanne Moos runs down the results. JEANNE MOOS, CNN CORRESPONDENT: You can't walk around the White House with turkey in your ears.
CHO: You're watching the most news in the morning.
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CHO: Welcome back. About eight minutes before the top of the hour.
And with all of the focus on the candidates in November 4th, you may not know there was actually another vote just taken.
CNN's Jeanne Moos takes a look at who won that election for first pooch.
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MOOS (voice over): Ah, group hug. All that's missing is a family dog, a dog the Obamas have promised their daughters win or lose the election.
M. OBAMA: We talk about this dog every day.
MOOS: Well talk about this. The American Kennel Club held its own election.
What kind of dog should the Obamas get?
Since one of the kids has allergies, the AKC selected five hypoallergenic dogs, ranging from the Bichon Frise to the Chinese Crested. Some 42,000 votes later, we have a winner.
UNIDENTIFIED FEMALE: Poodle cinched the nomination.
MOOS: Just barely beating out the Wheaten Terrier.
(On camera): Just imagine, White House dinners. You can't walk around the White House with turkey in your ears.
(Voice over): The only thing is the girls seem to be partial to beagles.
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: This is one of the ones that they've been looking at.
MOOS: Anyway, if Obama wins, can you imagine a poodle sitting around the White House getting a pedicure?
UNIDENTIFIED FEMALE: For only $19.99.
MOOS: Jeanne Moos, CNN, New York.
(END VIDEOTAPE) (BEGIN VIDEOTAPE)
CHETRY: (voice over): Hurricane coming.
UNIDENTIFIED MALE: If it veers at all north or anything, people are going to be leaving.
CHETRY: The Gulf Coast getting ready as Ike gets compared to Katrina.
And the faith of Sarah Palin.
PALIN: It was so cool growing up in this church and getting saved here.
CHETRY: Jessica Yellin on the church that talks about Alaska's role in the end of the world.
UNIDENTIFIED MALE: God has a destiny for the state of Alaska.
CHETRY: You're watching the most politics in the morning.
(END VIDEOTAPE)
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CHETRY: Welcome back to the most news in the morning now. A look at your political ticker.
Bill Clinton and Barack Obama are getting together for lunch in New York Thursday. Clinton extended the invitation when he heard Obama would be in town for the appearance on the 7th anniversary of the September 11th attacks.
Vice-presidential nominee Sarah Palin agrees to her first national television interview since being named to the ticket. Charlie Gibson of ABC News will talk with Palin in Alaska on Thursday and Friday. She'll be back on the campaign trail early this week but back home for a ceremony on September 11th that marks her son's army unit deployment to Iraq.
Senator Ted Kennedy won't be heading back to Washington this week when Congress ends its August recess. He is currently undergoing radiation and chemotherapy in his fight against brain cancer. He plans to return to the Senate in January.
And for more up-to-the-minute political news just head to CNN.com/ticker.
Alina?
CHO: Kiran, with fewer than two months to go before the election, we want to bring you the candidates in their own words.
So here's Joe Biden first followed by John McCain.
(BEGIN VIDEO CLIP)
BIDEN: I don't want to personalize this election. Like I said, I heard Sarah Palin and John McCain talk about change.
Tell me one single thing they're going to do on the economy, foreign policy, taxes, that is going to be change? Name me one.
This is such malarkey. 90 percent of the time John votes with the president. A same tax cut, he jumps on his tax cut proposals which are disastrous. He jumps on his foreign policy which has been a complete and utter failure. He jumps on the whole idea that he has about how to deal with health care which is to tax.
John wants to tax health care benefits for people who get their health care from their employers?
Tell me where the change is, my goodness. He may change on how he deals with a lobbyist, but the idea on the economy, health care, education, same outfit, same deal, no change.
MCCAIN: He got the respect of many of the critics, and I understand that criticism. It's a part of the business. But I also would like to say that she has not only excited our base, as been pointed out.
She's excited Americans all over this country. We've been campaigning together, the electricity has been incredible. And I'd like to say it's all because of a charisma injection on the part of John -- Mr. John McCain. But it's not.
They're excited about this reformer, this lifetime member of the NRA, the person who is a point guard. She has -- I mean -- and I'm sure that Governor Palin has failings. And I'm sure she's made mistakes because she's had a long career from city council to mayor to governor, but the fact is she's kind of what Americans have been looking for.
And again, in all due respect to any critic, I think being mayor is a very important job nowadays, especially the way America is hurting. There's people who are mayors right now who are saying, hey, there's an abandoned house over on this street. The people have left it. What are we going to do?
You know? How are we going to provide people with the goods and services they need with declining budgets?
So all I can say is I think that her experience and her background not only qualifies her but brings to Washington a kind of an energy in a fresh wind that may be is necessary in our nation's capital.
(END VIDEOTAPE)
CHO: And stick around, coming up in our next hour, we're going to hear from John McCain about his plans to fight corruption in Washington. We'll also hear from Barack Obama about who he thinks will bring change to Washington.
