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Auto Plants Shut Down Operations; Gay Groups Outraged Over Rick Warren Pick; Bernard Madoff Placed Under House Arrest; Caroline Kennedy Goes on Listening Tour; One-on-One with Condoleezza Rice; New York's Fat Tax; AIG Giving Thousands of "Retention Payments"

Aired December 18, 2008 - 06:00   ET


KIRAN CHETRY, CNN ANCHOR (voice-over): The $7 million house arrest. Investors get slapped in the face.

UNIDENTIFIED MALE: Closest analogy I think I can come up with is murder.

CHETRY: As the man accused of the biggest fraud in Wall Street history gets slapped with an ankle bracelet.

Plus, inauguration outrage. Pastor Rick Warren.

PASTOR RICK WARREN, SADDLEBACK CHURCH: I'm opposed to having a brother and sister be together, called that a marriage.

CHETRY: The man who supported Proposition 8.

WARREN: I'm opposed to an older guy marrying a child.

CHETRY: Invited to pray.

UNIDENTIFIED MALE: You think those are equivalent to gays getting married?

WARREN: Oh, I do.



CHETRY: Welcome. It's Thursday, December 18th. I'm Kiran Chetry.

JOHN ROBERTS, CNN ANCHOR: Good morning to you. I'm John Roberts. We have got a lot to tell you about this morning beginning with desperate measures by Chrysler and Ford.

Starting tomorrow, Chrysler will shut down all of its U.S. plants for at least -- at least, get that, a month. Ford also announcing it will close ten of its plants for an extra week in January. We've got more on this important story coming up in just a minute here on the "Most News in the Morning." Another side of bipartisanship in the president-elect's administration. This afternoon Barack Obama will name Republican Congressman Ray LaHood to be his secretary of transportation. Robert Gates who worked in the Bush administration stays on as secretary of defense. So that's two Republicans in the incoming cabinet.

The Las Vegas strip under three inches of snow this morning. Overnight the wintry weather caused delays at the airport and on roadways. This is the second winter storm in a week to hit the Desert City.

And sentencing day for the call girl booker linked to the alleged prostitution ring that took down former New York Governor Eliot Spitzer. Temeka Rachelle Lewis pleaded guilty to money laundering among other charges. Lewis could face up to 25 years in jail.

CHETRY: Well, breaking this morning. The pressure is on the White House now to stave off the collapse of the auto industry. Starting tomorrow, Chrysler will shut down all 30 of its plants for at least a month. Some 46,000 employees will be affected, but one analyst is warning workers that the plant may not reopen and to prepare for that.

Ford also taking desperate measures shuttering 10 of its assembly plants for an extra week in January. And General Motors now suspending construction on a plant in Michigan. Without a bailout, these sweeping decisions may just be the beginning of a nightmare for American workers.


UNIDENTIFIED MALE: And I'd rather go to work. I've been there 17 years. Like I said, I believe I missed one day for having a stroke. And my father work there 43 1/2 years and only missed five days.

UNIDENTIFIED MALE: It will be hard. It's going to be hard on everyone. My wife is back to college, but she will not continue that because we won't have the money to send her. So I don't know where we go from here.

UNIDENTIFIED FEMALE: I'm just worried for him. You know, for the family. We've got -- he's got -- I got a brother that's in college and, you know, he's going to IEU, so, you know, they're trying to take care of that. And it's just scary.


CHETRY: Well, Christine Romans joins us now with more on this. It is scary. I mean, there usually is a furlough around this time of year.


CHETRY: But now it's been extended at least for Chrysler for a month. But there's no guarantee that after a month they'll be able to operate again.

ROMANS: Usually when there's a furlough, you know, you don't have this kind of a situation. You don't have the companies saying because of the lack of consumer credit and a sharp decline in the number of cars people are buying, you don't have this kind of environment. These people are very, very nervous. And for Chrysler, this is 46,000 workers who are affected here right now.

I mean, you look at the number. It's all over the country where these will affect these plants. Some 30 plants in, you know, 20 some cities. And people will be paid during that time but they won't be paid their normal pay. It will be through a combination of, you know, state aid and also from the companies.

So from everywhere from Belvidere, Illinois to Toronto to Ohio and Missouri, Wisconsin, Michigan, Indiana, even in New Mexico. So across the board.

Also GM, I believe 30 percent of its manufacturing capacity. We already knew that. Ford extending by a week its seasonal furlough. There are a lot, a lot of people who are very concerned right now. And it's nothing less than DEFCON 5 in the auto industry right now. This is day by day, life or death for a lot of these autoworkers.

CHETRY: And so, the proposed bailout died in Congress and so what is the lifeline now? Is it just whether the treasury secretary or the current White House says we're going to give you money?

ROMANS: That's what they're waiting for. And this is what Dana Perino, the White House press secretary, says about, you know, where the White House stands on this. "We're aware of their financial situation and are considering possible policy options to provide assistance in an appropriate way."

Listen to this part, Kiran. "As we've said, a disorderly collapse of the auto industry should be avoided."

There are some who are noting that language and saying that's not a statement saying we are going to at all costs make sure that this industry survives. This is saying we're going to help prevent a disorderly collapse of this industry. So there are people who are nervous in Detroit and around the country about just when the White House is going to come out with some sort of policy help here.

Will it be from the $700 billion bailout? The White House has been very clear that they're looking at all kinds of options and they will not be rushed into some sort of a -- into some sort of a decision.

CHETRY: All right. We've seen that mistake before with some of the questions about AIG, et cetera.

ROMANS: Right.

CHETRY: All right. Christine, thanks.


ROBERTS: All right. It's four minutes after the hour. We're leaning a lot more about the high-profile people who are expected to be at Barack Obama's inauguration. The queen of soul, Aretha Franklin, will be there, Cellist Yo-Yo Ma, and Pastor Rick Warren?

A liberal groups and gay rights advocates are furious about that, criticizing Obama for choosing Warren to deliver the invocation after Warren has compared same-sex marriage to incest and child abuse.

CNN's Brianna Keilar is live for us in Chicago this morning. Brianna, what's the reasoning behind this choice of Rick Warren?

BRIANNA KEILAR, CNN CORRESPONDENT: Well, you know, we heard Obama espouse inclusivity and sort of post-partisan politics on the campaign trail. Obviously he's trying to do this symbolically but it is a tough road for him to do because you mentioned some of Rick Warren's views.

I should also mention that recently he actually compared abortion to the holocaust. But Rick Warren is a very influential evangelical figure. You probably know him as the best selling author of "The Purpose Driven Life." He is the pastor behind the Saddleback Church in Orange County, California, a mega church there. But this pick just has liberal groups so upset, groups like the Human Rights Campaign, People for the American Way, and even Andrew Sullivan, who is a conservative commentator but also a gay rights advocate.

He wrote yesterday in the Atlantic Web site, "Its shrewd politics, but if anyone is under any illusion that Obama is interested in advancing gay equality, they should probably sober up now."

Well, the Obama campaign really coming out against that criticism. Spokeswoman Linda Douglass saying the president-elect certainly disagrees with Warren on lesbian, gay, bisexual, transgender issues. But it has always been his goal to find common ground with people with whom you may disagree on some issues."

So, obviously, the Obama campaign trying to go for that inclusivity that he espoused on the campaign trail. But a serious pitfall here that he has to navigate, John, because a core Democratic constituency very, very upset with him over this.

ROBERTS: Just to be clear here, though, Brianna, he's giving the invocation at the inauguration. He's not joining the administration as a policymaker, right?

KEILAR: That's exactly right. And some might argue this is very symbolic. This is just being inclusive and bringing someone into the ceremony, that he's not going to be a religious adviser and maybe isn't a substantive sort of bringing in of Rick Warren.

ROBERTS: Brianna Keilar live for us this morning in Chicago with the latest on that. And we'll talk more about this with Hilary Rosen who's going to be joining us in a little while. She's outraged by this pick, Kiran. CHETRY: Also new this morning, government officials in Alaska are investigating racist jokes about President-elect Obama that have been circulating on state government e-mail accounts. One joke concludes that after the election all America has is "another black family living in government housing."

They say it appears the original e-mails came from outside of the state system, but they were forwarded by some state employees. Sarah Palin's spokesperson says the messages had "nothing to do with the governor's office."

An Islamic advocacy group is calling on the Justice Department to investigate a judge who had a Muslim woman arrested after she refused to take off her head scarf in an Atlanta courtroom. Lisa Valentine was sentenced to ten days for violating a court policy that prohibits people from wearing anything on their head. A judge released her six hours later.

This morning the man linked to the $50 billion scandal that cost thousands of investors their life savings continues to live life in his $7 million New York City apartment. Bernard Madoff placed under house arrest after the disgraced Wall Street giant couldn't make bail. Here's CNN's Joe Johns.


JOE JOHNS, CNN SENIOR CORRESPONDENT (voice-over): Bernard Madoff made a brief appearance but it was dramatic as he arrived home to a crush of cameras and pushing and shoving. He's now under house arrest as a condition of bail.

The drama at the Securities and Exchange Commission was behind closed doors. An investigation underway to find out if anyone supposed to be watching the Wall Street cookie jar could have allowed Madoff to help himself.

CHRIS COX, SEC CHAIRMAN: The reason for the investigation is to answer any questions on this score. But I want to emphasize that there is no evidence that anyone is aware of at this point that any personnel did anything wrong.

JOHNS (on camera): One guy who used to work there saw his name drag through the mud, though. Eric Swanson, a former, SEC attorney looked at some of Madoff's trading practices five years ago. Swanson left the agency two years ago. And last year, he married one of Madoff's nieces.

Is that a smoking gun? The SEC says no. Swanson never worked on any of the serious stuff involving Madoff.

(voice-over): One person familiar with Swanson's side of the story told CNN he hasn't done anything wrong. What people are trying to do is find scapegoats here and he is not the guy.

Still, it is pretty hard to fathom that one guy, even a Wall Street wizard like Madoff, could have pulled off a multibillion dollar fraud, unless he had help from someone. After all, insiders who took a hard look at Madoff years ago said his investment returns looked, well, surreal and that was only one of the many red flags.

FRANK CASEY, HEDGE FUND DEVELOPER: So lack of transparency, black box operation, no independent chief financial officer, no independent clearing operation verifying the trade tickets were actually real, and so consequently we had a situation here where most analysts would be raising red flags all over.

JOHNS: The SEC says it's going to move as quickly as possible to find out why it never caught Madoff. But now, the agency has members of Congress breathing down its neck and they plan an investigation of their own.

Joe Johns, CNN, Washington.


ROBERTS: I kind of have a sense that this is going to get really ugly.

CHETRY: Yes. About an hour and a half now, we're going to talk to Donald Trump. He has a lot of his friends who were affected by this. So we're going to talk to him about it. I guess they all met down at his Mar-A-Lago Estate to sort of talk about where you go from here.

ROBERTS: Yes. We talked with Mort Zuckerman from the Daily News and U.S. News & World Report the other day. And he's like where were the regulators in all of this? Who was watching, you know, the barn?

CHETRY: Exactly.

ROBERTS: Nobody apparently.

CHETRY: Well, here's a question for you. Are poinsettias really poisonous? Does sugar really make your kids hyper? Actually I can vouch yes for that one.

Well, we're looking at some classic holiday myths and separating fact from fiction for you.

ROBERTS: And Caroline Kennedy on the campaign trail for Hillary Clinton's Senate seat. How'd she do?

Plus, the pressure New York's governor is now facing to replace Clinton with a woman.

CHETRY: And just who did Condoleezza Rice vote for? She goes one on one with our Zain Verjee.



CONDOLEEZZA RICE, SECRETARY OF STATE: I'm going to continue to say that I'm --

VERJEE: We're dying to know.

RICE: I know you're dying to know.

VERJEE: Just spill the beans on us.

RICE: I know you're dying to know.


CHETRY: The secretary of state's candid interview with CNN.

It's 11 minutes now after the hour.


CHETRY: Well, Caroline Kennedy talking publicly about her desire to replace Hillary Clinton in the Senate. Right now, she's hop scotching across the state, stressing her credentials and taking questions while at the same time the state's governor, David Paterson is under some pressure to replace Clinton with another woman.

Jason Carroll is following the story for us. So if anything would work in Caroline Kennedy's favor that would be it as well.

JASON CARROLL, CNN CORRESPONDENT: Maybe. We'll see. You know, it is actually, though, up to Governor Paterson to choose Senator Clinton's replacement. And his office has been inundated with calls from lawmakers, special interest groups and just average people giving their opinion about who should fill Clinton's Senate seat. For now, the attention seems to be on Caroline Kennedy.


CARROLL: Caroline Kennedy making her interests official.

CAROLINE KENNEDY, SEEKING N.Y. SENATE SEAT: I've told Governor Paterson that I'd be honored to be considered for the position of United States senator. I wanted to come upstate.

CARROLL: Reporters in Syracuse wanted more. But when pressed, Kennedy offered no further insight into her qualifications.

UNIDENTIFIED MALE: Miss Kennedy, you're avoiding questions.

KENNEDY: I'm following the process laid out by the governor.

CARROLL: Next stop, Rochester. Kennedy finally talks experience.

KENNEDY: I have had a life long commitment to public service. I've written books on the constitution and the importance of individual participation.

CARROLL: Questions about Kennedy's qualifications still up for debate. Not in question among some women's groups, their desire to see Hillary Clinton's Senate seat filled by a woman.

UNIDENTIFIED FEMALE: Women are vastly underrepresented in positions of power in this country and we're trying to change that.

CARROLL: If not Kennedy, perhaps New York Congresswoman Carolyn Maloney, who says she's already met with New York's governor.

REP. CAROLYN MALONEY (D), NEW YORK: I've been honored that some of my constituents, many people have called me and I have been asked if I would accept it if it was given to me. As you know, this is a decision that is totally the governor's and I am sure he will use his best judgment.

CARROLL: Once Senator Clinton vacates her seat, 16 out of 100 senators will be women. New York Republican Congressman Peter King, who could ends up being Kennedy's opponent in 2010, says the ratio of men to women in the Senate should not matter.

REP. PETER KING (R), NEW YORK: We should get beyond gender politics and racial politics. And we should pick the best person for the job, the best qualified person. And I, quite frankly, don't think that Caroline Kennedy has shown the experience or the qualifications to be a United States senator.

DONNA BRAZILE, DEMOCRATIC STRATEGIST: As a woman, as a feminist, I am -- I think it's time to put another woman in that seat. I think Caroline Kennedy will bring a great deal to the table.


CARROLL: Senator Clinton has remained quiet about much of this, not endorsing anyone. Her senior adviser e-mailed me yesterday basically saying this is entirely Governor Paterson's decision and Senator Clinton respects the privacy of the process so she will not be commenting on it or any individual.

CHETRY: All right. Jason Carroll for us this morning. Thanks.

CARROLL: All right.


ROBERTS: Its seems that every other day there's another report of pink slips coming out and people taking longer to bounce back from that. So how do you survive a layoff in today's down economy? Our Gerri Willis with tips that you cannot afford to miss.

And it's aimed at stopping obesity, but is a proposed tax on soft drinks the answer, or just an excuse to get more of your money. We'll find out.

Seventeen and a half minutes after the hour.


ROBERTS: For the sights and sounds of the season, i-Reporter Bob Cronk set up a camera looking at his window in Portland, Oregon as car after car tried and failed to get up the icy hill and out of the neighborhood, edited it all together to the theme song from Benny Hill. That's what we love. Creativity in our i-Reports.

And Reynolds Wolf checking our weather for today. What's it looking like, Reynolds?

REYNOLDS WOLF, AMS METEOROLOGIST: Looks pretty good in parts of the country. It might be a little bit better than that than what you saw in parts of Oregon, but it may be getting a lot of worse in other places. We're going to tell you who's going to get the watch coming up in a few moments.

But first, let's show you some other i-Reports. These are fantastic.

We've got one that was sent in from Beth Vandyk (ph), Malibu snowfall. Take a look at this great shot. Looks just phenomenal up here in the high hills, snow continues to come down. That's going to be easing out as the storm system pulls a bit more to the east.

And another great offer that we have is from Christine Lalindor (ph). She sent in some video of snow falling in Apple Valley, California. There you go. Winter wonderland. It looks fantastic.

You know it's a great thing to see if you're able to sit back and relax, but just trying to get from point A to point B in that kind of snowfall and that kind of ice, that kind of mess can be just mind boggling and numbing for a lot of people.

Let's go back to the weather map. I want to show you a couple of things we're seeing this morning.

Right now to the central plains and back into portions of the Midwest is a combination of rain and sleet. Not much in terms of snowfall for the time being. But, John, that's really going to ramp up later on today. And across parts of the western Great Lakes, we could see, well, some snow beginning to pile up I'd say from Green Bay South, or to Milwaukee perhaps, even in Chicago.

Another big issue that we're going to have, though, is into portions of the Corn Belt back to the western Great Lakes. We have the possibility of dealing with some ice. Ice being a huge issue that we have in parts of the northeast. We had over a million homes knocked out with power. We could see that play out once again.

Also, over towards parts of the northeast, we have some watches in effect through Friday evening anywhere from six to 12 inches of snowfall. Looks like New York should be in fine shape going into the weekend but Boston could see up to a foot of snow by early into Saturday morning then a nor'easter secondary storm coming in for a late Sunday and into Monday.

So it looks like a very busy weather time to say the least, especially for much of New England.

Back to you, John.

ROBERTS: How much snow we're going to get over the weekend?

WOLF: Some locations could see up to a foot of snow. Right now, it does appear that New York is not going to see the most of it, John. But, as you know, this storm system pulls a little bit more to the east or west here just a few degrees. They can mean a tremendous difference for millions of people.

ROBERTS: Ay yay yay.

CHETRY: Take out your cross country skis.

WOLF: Well, there you go.

ROBERTS: I won't take out what I was going to take out. All right.

CHETRY: No, not your motorcycle.

ROBERTS: Reynolds, thanks very much for that.

WOLF: You bet guys. Wish I had better news.

CHETRY: Did you mean motorcycle?


CHETRY: OK. Bicycle?

ROBERTS: Skateboard, no.

CHETRY: All right.

Well, how about we're debunking some myths for you right now. Keep the kids away from the candy canes because sugar makes them hyper. How about keep the dog out of the poinsettias because they're dangerous. Or do you say poinsettia or poinsettia.

ROBERTS: Poinsettia.


CHETRY: Well, both of these are myths apparently. Doctors say they conducted 12 studies examining how children reacted to diets with varying levels of sugar and none in these studies found that kids on a high sugar diet behaved anymore hyper. To that I would say come over to my house after my child had two lollipops and she runs circles around the living room.

Also, poinsettia plants are not the kiss of death for your pets. Poison control experts say that common side effects of eating leaves are merely indigestion and upset stomach. They also said they tested this because apparently a bunch of kids ate poinsettias, which is also confusing. And finally, the morning after a late holiday party. There is no magic remedy for a hangover except maybe not drinking too much in the first place.

ROBERTS: There you go.

CHETRY: Do you believe that?

ROBERTS: Yes. The best cure for a hangover is prevention, I always say.



CHETRY: Or Alka-Seltzer.

ROBERTS: There are a lot of things that people have but, you know, the best thing is just everything in moderation. But I love watching your daughter run around the living room because she does it on the walls.

CHETRY: After two candy canes. Yes.

ROBERTS: It's like Carrie in the Matrix. Remember that?


ROBERTS: Twenty-five minutes after the hour.

Taxed for drinking Coke and Pepsi?


UNIDENTIFIED MALE: It's a sugar sweetened beverage tax.


ROBERTS: Paying extra for the sweet stuff. How a state getting creative with the new soda tax could cost you.

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


ROBERTS: Welcome back to the "Most Politics in the Morning." Evangelical Pastor Rick Warren known by millions for his book "The Purpose Driven Life" but he is also known for his culturally conservative views on gay marriage and abortion. So it's no surprise that many in the Democratic Party are outraged that he's giving the invocation at Barack Obama's inauguration.

Joining me now is Democratic analyst and CNN contributor Hilary Rosen.

Hilary, you're one of those people who's outraged by the pick of Warren to do this. Why?

HILARY ROSEN, POLITICAL DIR., "HUFFINGTON POST": I think, Inauguration Day is a day of celebration. It's a day of bringing the country together. It's -- when you have an invocation it's kind of a prayerful blessing with some moral authority talking about the direction of the country and, you know, conferring some authority on this president. And I think Rick Warren loses his moral authority when he, you know, is completely hypocritical about the way he deals with the issue of gays and lesbians and equality. And I just think the fact that you have to have this conversation about Rick Warren proves he's a bad choice.

ROBERTS: Well --

ROSEN: That's not what the day is for.

ROBERTS: Well, here's what Linda Douglass who's one of the spokespeople for the Obama transition said. She said, "The president-elect certainly disagrees with him, Warren, on issues being lesbian, gay, bisexual, transgender. But it has always been his goal to find common ground with people with whom you may disagree on some issues." I mean, obviously, this may be an attempt to reach out to social conservatives and Barack Obama is the president of all Americans not just liberal democratic Americans.

ROSEN: Sure.

ROBERTS: And just to play devil's advocate here, Hilary, he's giving the invocation. He's not making policy.

ROSEN: Well, you know, it's a huge platform. So Linda Douglass is a good friend of mine and I respect her a lot. But I think in this case, they're all just wrong.

They wouldn't say that if it were, about any other, you know constituent group, whether -- they wouldn't say it's just a difference of views if you call someone, you know, those lives that tend to incest or pedophilia. If you suggested that about African-Americans or Latinos or Jews or, you know, Catholics, you just wouldn't -- you wouldn't brush it away based on sort of just a different viewpoint. I just think that on this day in this moment, he could have found and should have found pastors and preachers that have a much more inclusive holistic message for the country.

ROBERTS: Hey, on the big wall along there with you, we're also seeing pictures of Caroline Kennedy who is starting to make the round here.


ROBERTS: She was in upstate New York feeling out the territory. She wants to become the next senator, the next junior senator from New York. Former Congressman Pat Schroeder, though, in a recent article in "Politico" said this about that seat, quote, "Senators should have to run for a vacant seat the way House members do. Names' still have an advantage in an election, but people would feel more comfortable knowing that both parties had a chance to weigh in, and the governor's party doesn't have the only say."

Is there a real sort of smack of nepotism to this whole thing? And is that the best thing for politics.

ROSEN: Well, you know, the processing in New York is that there's only one voter, and that's Governor Paterson. And, you know, I think Caroline Kennedy has to make her case to him. She got in a little late so there were other folks in that group who, I think, sort of developed the constituency and became other people's favorites. But, you know, she's clearly floated to the top. If this is not a done deal, it's starting to look more and more like, you know, Governor Paterson is kind of boxed in.

And by the way, it wouldn't be a bad choice. She's a classy woman. You know, deeply intelligent and compassionate. But from what I'm hearing from my sources, Governor Paterson still wants that group of a few folks to stay in this so that he has a choice to make.

ROBERTS: All right. Hilary Rosen, it's always great to see you. And so far, you've got the quote of the day with "they're all just wrong." Thanks for joining us this morning.

ROSEN: Sometimes they are.

ROBERTS: All right. We'll see you again soon.

KIRAN CHETRY, CNN ANCHOR: We're 31 minutes past the hour. At look at the top stories this morning. Justice in Rwanda. The master mind behind a 100 day killing spree back in 1994, convicted of genocide and war crimes today. An estimated 800,000 people were killed. The U.N. Genocide Tribunal also convicted two other men of the same crimes. All three sentenced to life in prison.

This week's jobless claims are about to be released. We're waiting to see if the number of people who filed for unemployment benefits for the first time is higher or lower than expected. We'll bring you those numbers as soon as we get them.

And Secretary of State Condoleezza Rice sits down with our own Zain Verjee. She says she won't miss Washington. She also criticized all the media coverage of the shoe attack of President Bush, when we asked her one very bold question as well. Zain joins us now.

What did you want to know from her? And what did she say to you this morning, Zain?

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Well, we talked to her for about 30 minutes. And she says, among her best moments in the Bush administration where things like when the Afghans were liberated from the Taliban, when Iraqis voted. And she also talked about her historic trip to Libya this year to meet Muammar Qaddafi. But what we also really wanted to know was who did she vote for in the election? Here's what she had to say.


VERJEE: Did you vote for Barack Obama?

CONDOLEEZZA RICE, U.S. SECRETARY OF STATE: I'm going to continue to say that I'm --

VERJEE: We're dying to know.

RICE: I know you're dying to know. I know you're dying to know. But the fact is that I didn't get involved in partisan politics. I think I've made clear that I thought that both Senator McCain -- John McCain and Barack Obama, the now president-elect, conducted themselves in a way that made the country proud. It's why people I think abroad were so focused on this election.

VERJEE: The worse breach of national security in the history of the United States came under your watch.

RICE: Absolutely.

VERJEE: Did you ever consider resigning?

RICE: I believe that this was -- this was a --


RICE: I do take responsibility, but this was a systemic failure. The United States of America had experienced terrorist attacks in 1993, in 1998, in our embassies abroad, in 2000 against the Cole and then finally in September of 2001. But the fact of the matter is that we have not thought of this. We, the administrations before us, had not thought of this as the kind of war against the terrorists that we were going have to wage.

VERJEE: Let me tell you what former Secretary of State Powell said just a few days ago on CNN. He said that he was disappointed, and I'm quoting, frankly, the National Security Council System didn't function in a way that I thought it should have functioned. We didn't always vet everything in front of the president. You were running the show.

RICE: Secretary Powell and I are very good friends and we remain so. Any principal whoever wished to say something to the president I facilitated it within hours. Not within days, within hours.

And the president sat with his national security team and everybody had an opportunity to speak their mind. And so if people didn't tell the president something, it wasn't because they didn't have the opportunity to do so.


VERJEE: I also asked Secretary Rice based on her experience, what does she think of the whole team of rivals idea for the future cabinet. Kiran, she says, differences of opinion are fine as long as the president knows how to sort through all of them and make a decision.

CHETRY: Very candid interview she gave you. Great job, Zain. Thanks so much.

ROBERTS: Well, soon a can of soda may cost you more than just calories. New York's governor is struggling to close a $15 billion budget deficit and he is proposing an obesity tax of about 15 percent to 18 percent on all non-diet drinks. Yet, at the same time, he also wants to tax New Yorkers for hitting the gym. Deborah Feyerick is following this one for us.

He's getting you on both ends here.


DEBORAH FEYERICK, CNN CORRESPONDENT: He's definitely getting you on both. The only thing you can do is drink diet soda and not eat. But anyway --

ROBERTS: And not go to the gym.

FEYERICK: Exactly. Well, New Yorkers are definitely going to be feeling the tax hikes in a measurable way. Almost everything is going up.


FEYERICK (voice-over): At the Cafe Suffe in Manhattan, the proposed 18 percent soda tax is falling flat. The store's owner convinced in today's tight economy where a 12-ounce can of soda can cost as much as $1.50 says no one will want to spend the extra quarter.

YOON CHOI, OWNER CAFE SUFFE: They will buy less soda. Because the people don't buy, what do I have to do?

FEYERICK: Coke, Pepsi, Mountain Dew, Sprite -- all sugary drinks, energy drinks and juices set to be hit with the new sales tax.

(on camera): Many people are calling this an obesity tax.

DR. RICHARD DAINES, NY STATE HEALTH COMMISSIONER: Not an obesity tax. It's a sugar sweet beverage tax. The whole goal is to keep people from becoming obese.

FEYERICK: The move by New York's Governor David Paterson comes as he tries to help close the state's $15.4 billion budget gap.

GOV. DAVID PATERSON (D) NEW YORK: It is also the largest budget deficit New York State has ever faced.

FEYERICK: But why single out soft drinks ask the beverage industry? Why not potato chips or fried food?

SUSAN NEELY, AMERICAN BEVERAGE ASSOCIATION: Trying to link this to obesity is just a facade for raising taxes and getting more money from people. You can't solve a complex problem like obesity by raising taxes on one product. FEYERICK: Susan Neely represents the major soft drink companies. 18 percent sales tax hike, it's a very regressive tax and you're not going to solve the obesity crisis by doing that.

But New York's health commissioner Dr. Richard Daines says even cutting out a single 120-calorie can of soda a week can make a big health difference especially in kids.

DAINES: In 30 weeks, 120-calories is a pound of weight gain. Five years, ten years, you've got ten pounds of extra weight on.


FEYERICK: Now the soda taxes, one of about 100 tax hikes proposed by the governor. Percent wise, it's one of the largest. Also targeted -- taxis, music downloads and movie tickets, so the future looks like staying home, turning on the radio, watching TV and maybe drinking some diet soda.

ROBERTS: Yes. You have to turn on the radio. You can't listen to your mp3 player because of all the extra taxes.

FEYERICK: Going to cost you.

ROBERTS: I can't believe they are taxing downloading music.

FEYERICK: Everything. They're so strap. They have to find anyway they can to find cash. And even the health clubs. They're thinking there as well. Children don't join health clubs, so let's do the sodas instead because that will have an impact.

ROBERTS: Going to hit everybody, right? Deb, thanks so much for that.

Well, you've been laid off. What to do next? Should you tap into your retirement to hold you over? Our Gerri Willis has got tips for you in her layoff survival guide.

Plus, if you're shopping at the cologne counter for your holiday gifts, one new scent is a real, shall we say, Whopper, literally. But do you want to pay to smell like a hamburger? It's 38 minutes after the hour.



UNIDENTIFIED MALE: I have eight different bosses right now.

UNIDENTIFIED MALE: I beg your pardon?



UNIDENTIFIED MALE: So that means that when I make a mistake, I have eight different people coming by to tell me about it. That's my only real motivation is not to be hassled than the fear of losing my job. But you know, Bob, that will only make someone work just hard enough not to get fired.


CHETRY: Classic scene from "Office Space." It's bad enough to be let go, but losing your job in the midst of an economic crisis means that it may take longer for you to find work again. So, what do you do? How do you figure it out?

Personal finance editor Gerri Willis is with us. She has a segment that she's been doing here, a special series "Layoff Survival Guide."

And today, you know, the writings on the wall, what do people do?

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Well, I got to tell you. You know that clip, it was funny but it's tragic for so many people, right? When you're laid off, the first thing you're going to do is look for money to pay those bills week to week while you're unemployed.

What's the first and probably biggest pot of cash you may think about? Well, it may be your 401(k). And in fact, you can take out money from your 401(k) if you're laid off under terms of what's called the hardship withdrawal. Devil's in the details, though. It can cost you a lot of money, with 10 percent penalty if you're under 59-1/2. Plus, you're going to pay taxes. At the end of the day, 40 percent of the money that you take out is going to go back to Uncle Sam.

I want to show you some of the details here. There's a web site called rolloversystems, where you can go, plug in how much money you have in your 401(k). Couple of details, it's on the right-hand of that screen right now. And it will tell you not only how much you'll pay in fees and taxes, but also how much money you would have when you retire, if you just let that money ride in the stock market or wherever you have it invested.

CHETRY: Oh, that's interesting. So, also if you're -- another thing about looking for a job is that you immediately start to say, OK, where can my skills be used somewhere else? Well, what if you're not sure if they match with what you're looking for?

WILLIS: Well, that's just the problem. A lot of people have skills that are not needed in this economy, right? You think about people who were building houses during the last few years. You think about mortgage brokers. Well, a lot of those people are retraining right now, doing different things. Some of those construction people are retrofitting green buildings. We've seen real estate brokers take on foreclosures. They're actually logging and maintaining foreclosures. So, everybody is trying to do something different.

One thing to think about here, if you really do want to retrain, a couple of good options here. Community colleges have some fast track programs that help people, who are already in the workforce, get through new programs quickly.

You might want to also study online. It's becoming more and more viable as an option. Do it at home. You don't have to worry about having transportation to school or moving for school. One great place to go,, the Council on Higher Education Accreditation. You'll find out which of these schools are on the up and up and which have a great reputation.

CHETRY: That's some great advice. Gerri, thanks so much. Gerri, by the way, is going to be blogging throughout the show, so you can send her some questions -- She'll be hopping online in just a moment. It's 44 minutes after the hour.

ROBERTS: Flame in a bottle.


JEANNE MOOS, CNN NATIONAL NEWS CORRESPONDENT (on camera): Would you want your man smelling like a burger?




ROBERTS: Jeanne Moos takes to the streets with Burger King's bizarre new cologne. Does the scent sizzle or fizzle? You're watching the "Most News in the Morning."



UNIDENTIFIED MALE: It's called Sex Panther by Odeon. It's illegal in nine countries. Yep, it's made with bits of real panther, so you know it's good. It's a formidable scent. Stings the nostrils -- in a good way.


UNIDENTIFIED MALE: Brian, I'm going to be honest with you, that smells like pure gasoline.


ROBERTS: Well, welcome back to the "Most News in the Morning." Ladies, if you're still looking for that perfect stocking stuffer for the guy in your life, it's hard to go wrong with cologne. But instead of something with a scent of sandalwood or a bit of hibiscus, how about a fragrance with a hint of heifer? Jeanne Moos explains.


MOOS (voice-over): We've all heard of...


MOOS: And maybe even...


MOOS: But now...

(on camera): This is flame. Flame. Flame from Burger King.


UNIDENTIFIED MALE: Come on, baby, give it a spray.

UNIDENTIFIED FEMALE: Flame with a scent of seduction, with a hint of flame-broiled meat.

UNIDENTIFIED MALE: I don't think smelling like a burger is too cool.

MOOS (voice-over): On the other hand, what other men's cologne cost $3.99, less than the price of a Whopper value meal, Burger King's Flame, sold at, where you also meet the Burger King King Creepoly (ph) beckoning you to his bear rug. But let's see if Flame passes the smell test.

(on camera): Will you smell Ian here?


(voice-over): We drenched CNN associate producer Ian Orefus (ph) in Flame.

(on camera): Smell Ian if you would.

(voice-over): The Flame got OK reviews. The hint of flame- broiled meat seemed loss on folks.

(on camera): Does Ian smell like this?


MOOS: Does he smell like this?


MOOS: Only a few people detected anything remotely resembling a charbroiled scent.

UNIDENTIFIED FEMALE: Oh my God, a little. That is sick. Almost like a gasoliney (ph) edge, which probably makes it smell like the charcoal broiled.

MOOS: A little gasoliney edge. That's always sexy.

UNIDENTIFIED FEMALE: That smell has less calories. MOOS (voice-over): Frankly, Flame seems to be a whopper of an advertising gimmick. McDonald's joked about the same concept in a Super Bowl ad featuring a distracted husband reaching for one of those dryer fresheners and popping in a McDonald's wrapper by mistake. The result -- but seriously, folks --

(on camera): Would you want your man to smell like a burger?



MOOS: He does?

(voice-over): Maybe the only one who wants to smell like a burger would be, say, the dog catcher. Some misunderstood Flame's purpose.

UNIDENTIFIED MALE: They spray this on the burgers?

(on camera): How do you expect to survive eating them. That wouldn't be Flame. That would be heart burn. Jeanne Moos, CNN, New York.


CHETRY: First, a massive bailout. Then, lavish retreats. Now another AIG stunner. Wait until you see how many employees are still being paid and you're footing the bill.

Plus, more victims in the $50 billion swindle. Donald Trump's friends defrauded, too. Pow-wow Trump's place. He's here to tell us what his angry cronies are planning. You're watching the "Most News in the Morning."



JAY LENO, HOST, "THE TONIGHT SHOW WITH JAY LENO": Federal prosecutors have decided to punish Bernard Madoff. You know, they're calling him the most hated man in New York for his &50 billion Ponzi scheme by placing him under house arrest. He's under house arrest in his $7 million Park Avenue apartment. Well, that should teach him a lesson.


CHETRY: Leno talking about New York's disgraced money manager. But there are many, many business headlines to make your blood boil including concerning insurance giant AIG. After taking billions in bailout money from Washington and promising not to give out bonuses, around 7,000 employees are apparently getting what's called retention payments. So what's the difference? And where is the oversight from Washington? Joining me now, Maryland Congressman Elijah Cummings.

Congressman, great to see you this morning.

REP. ELIJAH CUMMINGS (D), MARYLAND: It's good to be with you.

CHETRY: I know this has seemed -- "Bloomberg News" reporting that AIG is now offering these retention payments, as they're called, to thousands of employees. And you say that AIG CEO Ed Liddy told you that they would only be giving out 168 of these retention payments. So, what's going on here?

CUMMINGS: I don't know. And these are tough questions that Mr. Liddy apparently does not want to answer, because we've seen inconsistency after inconsistency.

He told us, at first, there would be no bonuses. Then, we found out that they have retention payments. He said that there would only be 168 of them. And then we find out that there are thousands. And so -- and then they said that they would not be going on these lavish junkets. And then we find out they are going on lavish junkets.

And so, Mr. Liddy was scheduled to meet with me today, but he wrote the media, he didn't write me, and told them that he had to postpone the meeting because he had to address other questions.

Let me tell you. The public now owns 80 percent of AIG. And they've got people getting bonuses from 160,000 to four million. Imagine that. Somebody who is making a million, they're going to get a $4 million bonus. The Congress asked AIG to do certain things and probably not enough, but the fact is that the American people and my constituents are asking these questions.

CHETRY: Congressman, I got to ask you this because critics of the bailout say that this is the exact thing that they're worried about, that Congress approved billions of dollars to these companies like AIG, that there really is nothing you can do once the money is given to them, even though we talked about demanding oversight. It's just really nearly impossible to happen. So, I mean, you voted for the bailout. Isn't this something that was bound to happen, I guess you could say?

CUMMINGS: Well, it's -- again, Secretary Paulson came in with a three-page plan. Congress did what it could to improve that plan. But the fact is that they said the sky was about to fall. So, we passed legislation to try to free up the banking institution, so they would loan money, and we wanted to get some foreclosure help for our constituents, and we wanted to help Wall Street.

But Main Street, which is suffering, has not been bailed out. And so, my constituents are saying, wait a minute, my tax dollars are being used to allow an AIG and its execs to go from place to place in lavish style, and then at the same time, not be accountable. Well, I'm asking the tough questions and I want AIG execs to know that I'm not going away, and the questions are not going away and I will not rest, I will not rest until we know the answer to these questions and there is accountability.

CHETRY: The bottom line, though, at the end of the day, is they got a government rescue package of about $152 billion. You believe, as many do, that they're going to come back and ask for more when the other 325 billion will be freed up in the new administration. Yet, we're going back and forth on this auto bailout. Have people just sort of -- I meant, is the public appetite for giving any more money to, quote, "help the sky from falling," is that -- are those days over with now?

CUMMINGS: I think the public has bailout fatigue. If there was one loan that we should have made, I think that it should have been to the auto industry. I mean, one out of every 10 jobs associated with the industry, and we asked them to jump over all kinds of hurdles and they weren't even able to get a $14 billion loan. And here AIG gets $150 billion investment, basically, and they basically acting like who cares. I mean...

CHETRY: Well, AIG is defending itself. Their senior VP of communications basically said that "these thousands referred to in the Bloomberg story are in lower levels of management in companies we're selling," and they go on to say, "it's crucial to keep these people in their positions while we sell these companies so that we can get the maximum value in a sale, value that will flow to the government."

So they're arguing that this is really just necessary to keep their business going.

CUMMINGS: Well, I can tell them that people are looking at us right now like 74,000 Citi Group employees and the other folks on Wall Street. I'm sure they're saying, wait a minute, if you got to pay somebody, who is already making a million dollars, $4 million bonus and giving out thousands of bonuses and you can't keep people. Don't worry about them. Let them go. And we'll take those jobs. There are jobs being lost every single day on Wall Street and my constituents are losing their jobs and their homes and these folks go off and refuse to answer certain questions. There's something wrong with that picture. And we can do better. We can do better.

CHETRY: All right. Elijah Cummings, congressman out of Maryland, great to talk to you this morning. Thanks.

CUMMINGS: Thank you.