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AMERICAN MORNING

Stimulus Battle; Cabinet Nomination Hearings; Home Foreclosures Growing Still; Possilbe Salmonella in Kellogg Peanut Butter Crackers

Aired January 15, 2009 - 08:00   ET

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


KIRAN CHETRY, CNN ANCHOR: All right. Well, it's 57 minutes after the hour. A look at the top stories this morning. Israel defense minister says that shelling of the United Nations compound in Gaza was "a grave mistake." Israeli artillery hit the U.N. Relief Facility in Gaza City causing a massive inferno.
Three people were injured. U.N. Secretary-General Ban Ki-Moon expressing protest and outrage to Israeli officials in Jerusalem. He sort of discussed the Gaza ceasefire but foreign minister Tzipi Livni says that Israel cannot rest unless it removes Hamas as a threat.

(BEGIN VIDEO CLIP)

TZIPI LIVNI, ISRAELI FOREIGN MINISTER: These are difficult times, but Israel, a member state of the United Nations is doing what the state needs to do in order to defend its citizens and this is an effective, successful, military operation against terror.

(END VIDEO CLIP)

CHETRY: Well, today, the first real test of Barack Obama's political clout. In just a few hours, the Senate will vote on whether to tap into the last of the federal bailout money. Obama wants the $350 billion to expand lending to consumers and small businesses. We're live to Washington in a moment for more on the battle on both sides of the aisle over the bailout.

And grim doesn't begin to describe the latest news on home foreclosures. A year-end report from realty track showing foreclosures have jumped a record 81 percent last year and up 225 percent if you go back to 2006. That means 1 in every 54 homes was in some state of foreclosure last year.

Well, just five days now until Barack Obama is sworn in as president. And this morning, he is gearing up for his first major showdown with Congress. In just a few hours, a high stakes vote on whether to give the Obama innings access to billions of dollars in financial bailout money and heavy skepticism among Republicans and Democrats. Not only about the bailout, but also about Barack Obama's economic stimulus package. It's something that he defended to CBS' Katie Couric.

(BEGIN VIDEO CLIP)

OBAMA: This is a package that I think is going to make sense. I have every confidence that it's going to work, but it's going to take some time and we've got to do it with some speed. So my main message to Congress right now is, get it done.

(END VIDEO CLIP)

CHETRY: Our Suzanne Malveaux is live in our Washington bureau this morning. So he is talking to Katie Couric a little bit more about the importance of passing the stimulus package. Meanwhile, that big bailout, at least the second chunk of it also waits to be spent, if you will, and he's gearing up for a little bit of a back and forth as to whether or not the Congress is going to release this money.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: You know, Kiran, it's going to be fascinating to watch this vote, because the Senate leadership believes that he'll get that money. But it is really far from certain. There are moderate Democrats, those blue dog Democrats who are fiscally conservative who are not convinced. There are a lot of Republicans who are not convinced. They really want to see more transparency, more accountability here.

This is not something that is guaranteed. Barack Obama has put a lot of personal, political clout behind this. One of the things to watch for is what happens on the House side as well. Congressman Barney -- not Barney Frank, rather -- yes, Barney Frank, actually put forward a package, a bill that says, look, there's a certain amount of money that should be spent to make sure that homeowners stay in their homes, we want to see where the money goes, how to track these funds. If that is something that the house goes for, you may see some of those senate lawmakers say, ok, this is passing the test here. We get some sort of solid written commitment from this administration that they'll do a better job than the Bush administration. Perhaps we'll move forward on actually releasing those funds.

KIRAN CHETRY, CNN ANCHOR: Yeah, this is interesting. It's almost like trying to put the horse back in the barn after the door is closed. They did pass the huge bailout and they also talked when they passed it before about wanting to have oversight and wanting to have some sort of sense of where the money is going. Are they going to try to put more teeth in that this time at least?

MALVEAUX: Well, absolutely. Behind closed doors, Barack Obama, as well as his chief of staff, Rahm Emanuel and Larry Summers, his top economic guy, they are saying, look, ok, if you need some of this in writing, if you need something that is more substantive, perhaps we can play ball, that that is a possibility here. Because Barack Obama has been simply making the case using his rapport, that you know, trust me here, you know? You know me. Trust me. This is something that we're going to do, we're going to do it a lot better than the Republicans did. And lawmakers are not satisfied with that. They are saying, look, you know trust, but verify. We want this in writing and perhaps we even need to see legislation that's going to back this up. So that is all part of the process. That's what we're going to be watching today.

CHETRY: Suzanne, thank you.

ROBERTS: Suzanne mentioned no drama Obama is hitting a few speed bumps on his way to the White House. Some serious resistance to his economic plans and a treasury secretary nominee who didn't pay taxes. Here is what the incoming president is saying about that.

(BEGIN VIDEO CLIP)

BARACK OBAMA, (D) PRESIDENT-ELECT: I think he's embarrassed about it -- we knew about this before, before we nominated him. It was an innocent mistake, a common mistake that's made. I'm confident he will be confirmed and I'm confident he will do an outstanding job. (END OF VIDEO CLIP)

ROBERTS: Our senior political correspondent Candy Crowley is live in our Washington bureau. You think maybe confirmations past would have derailed the whole thing but a guy like Geithner, he's somebody who a lot of people have a lot of faith in. Might he be able to weather this storm?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Absolutely -- well, never say absolutely!

ROBERTS: It's Washington, after all!

CROWLEY: It is after all the U.S. Senate. Nonetheless, we can't see anything up on Capitol Hill which would tell us that, at this point, they are ready to turn him down. He's had Republican support, he's had Democratic support. Senator Schumer from New York said yesterday, as far as he can tell, the votes certainly are there. That doesn't mean that Mr. Geithner won't have a rough going over in the hearings and it certainly slowed down those hearings. The Obama camp really wanted their key economic players in place by the time he takes the oath of office. That might still happen with Geithner, but likely it will go past inauguration. So it's slowed him up.

But there is a huge well of respect for Timothy Geithner at this point. And some of the Republican complaints you are hearing about the fact the man who will oversee the IRS made a mistake and didn't pay taxes for four years is also Republican feeling that Geithner and, in general, the Obama economic team is too Wall Street and not enough Main Street, that their concern is the bottom line up in New York and throughout financial institutions and that is where their faith is. And not enough concerned about jobs being created on Main Street. So it's kind of a two-fer and this gives them an opening to complain about something that many Republicans have felt for a while.

ROBERTS: We'll have to wait to see what kind of an impact it has in the hearings. I think they are scheduled for, what, next Wednesday?

CROWLEY: Right. They could always do it sooner, as you know, but that's the current plan.

ROBERTS: As you said, after all, it is the U.S. senate.

CROWLEY: Right.

ROBERTS: The foreign relations committee is going to vote on Hillary Clinton's confirmation and the full senate expected to vote next week. Smooth sailing for her, do you expect? CROWLEY: Absolutely. I'm sure you saw a lot of those hearings. It was pretty -- she kind of batted down any kind of concern about her husband and conflict of interest. It was pretty much a love fest for one of their own, frankly, and she will sail through. It's really interesting that of the appointees that Barack Obama has made and the nominations, Hillary Clinton has had the most controversial past and she is now getting probably the least controversial confirmation. So maybe she thinks she is due, but, nonetheless, this is pretty much a done deal. And another thing that Obama wanted to have happen before his inauguration.

ROBERTS: As Dana Milbank pointed out in yesterday's "Washington Post." The typical role of advise and consent for the senate was more like applaud and congratulate. So probably smooth sailing.

CROWLEY: Good line.

ROBERTS: Candy, thanks. Good to see you this morning.

CROWLEY: Sure. Thank you.

CHETRY: In our political ticker this morning, Barack Obama's senate seat will finally be filled today. Roland Burris, that's right, Roland Burris will take the oath at 2:00 p.m. eastern. Democratic senators initially tried to keep Burris out because of the man who appointed him, embattled Illinois Governor Rod Blagojevich.

Senators Joe Biden, Hillary Clinton and Ken Salazar expected to say farewell on the senate floor today. Biden, of course our next vice president, senate foreign relations committee is expected to vote today on Clinton's nomination as secretary of state and hearings are also under way for Salazar to become interior secretary.

Here is a look at Barack Obama's official presidential portrait. The first time an official presidential portrait was taken with a digital camera.

The historic Blair House if finally ready for the Obama family. It's a traditional place where the president-elect stays before moving into the White House. The Obamas have been staying at the Hay-Adams hotel for the past couple of weeks because foreign dignitaries were staying at the Blair House.

And for the latest political news go to cnn.com/ticker.

(WEATHER REPORT)

CHETRY: Home foreclosures jumped to record highs. Ahead our own Gerri Willis with some essential advice on what you can do to keep your home if you're in danger of losing it. A lot of good tips for us coming up at nine minutes after the hour.

Uproar over a magazine cover. The superman pose that some are calling a sellout.

UNIDENTIFIED FEMALE: The problem with the cover is it's a man standing in a superman pose and, thank you, but the women of this country can stand up for themselves.

CHETRY: What's a man, even this man, doing on "ms."? You're watching the most news in the morning.

(COMMERCIAL BREAK)

ROBERTS: New pictures to bring you this morning, looking live at Gaza City. This is the United Nations relief and works compound. We had John (INAUDIBLE) who's the director of the relief agency in Gaza on a little while ago. Apparently what had happened was two or three Israeli artillery shells fell on that compound. According to John Ging, those shells were loaded with phosphorus, which is highly incendiary, it burns in the presence of air. The only way to put it out ---- you can't put it out with water, that actually makes the fire worse. The only way to put it out is to smother it. Because of all the fighting go on in the area, emergency crews can't et get to that compound.

A couple of people who were hurt in that attack, which the defense minister on the Israeli side quoted grave mistake. At this point, we don't know the extent of the damage. It was confined to buildings but John Ging was worried that it was going to spread to the warehouse where a lot of relief supplies, particularly medicines are being stored. A very grave situation unfolding in Gaza City. You can see just pillars of thick black smoke billowing out of the United Nations relief and works compound after it was hit by Israeli artillery shells, allegedly containing white phosphorous.

Foreclosures up 81 percent last year, a record high that is nearly a million families who have been thrown out of their homes. It looks like that things are not going to get any better in the coming months either. CNN's personal finance editor Gerri Willis with some tips on what you can do to save your house if you're facing foreclosure. Good morning Gerri.

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Good morning John, good to see you. Yeah, these numbers this morning just astonishing. Some 3.4 million people out of their homes this year. It could happen to you. The numbers are supposed to get worse next year. Let's talk about what you can do to avoid foreclosure and not to be one of these people that we described this morning in these numbers. First off, contact your lender. I know not every lender is negotiating right now with people who are in trouble with foreclosure but some of them are. It is an essential first step to get started. Some banks even are making it a special program to help people who are in foreclosure like Bank of America. So it's definitely the first stop that you want to make.

If this doesn't work, if you can't get any help out of your lender right now, there are programs out there the federal government has put together that can help you. You can even get a counselor in your neighborhood from the Department of Housing and Urban Development. Let me give you some of those phone numbers right now, 1-800-225-5342 is one place to go. That's the Department of Housing and Urban Development's phone number and they have counselors in your area. But there are other programs too, the home ownership preservation foundation can help as well, at 888-995-HOPE. Call, reach out, you got to reach out yourself, you can't wait for somebody to come to you.

Now, I want to tell you about something you may have encountered. Maybe you got a letter in your mailbox or maybe you've seen signs up in your neighborhood. Foreclosure specialists, they're attorneys, there's a cottage industry that's growing right now., really targeting people in foreclosure. You may not want to hire an attorney but you can take a page from their book, which is this. If there was anything done illegal with your loan, if they failed to tell you the kinds of things they needed to disclose about your loan, it's a great way to get the conversation started on getting a new loan from your lender so do that.

One other thing to keep in mind here, John. It takes at least a year typically, often longer, in New York state, its multiple years, to get a foreclosure rolling and get it going so you have time. Even if you have that default notice, you have months and months to get the new loan, a loan that will actually help you save your home.

ROBERTS: That's some good information Gerri, thanks.

WILLIS: My pleasure.

CHETRY: Barack Obama's latest magazine cover is causing quite a stir this morning. We're going to tell you why some women are saying that Obama posing as Superman on the cover of Ms. No less is a sellout.

And an open letter from the president-elect to his little girls. His thoughts on the historic inauguration and why he decided to run for the nation's highest office. It's 16 minutes after the hour.

(COMMERCIAL BREAK)

CHETRY: Snow is falling this morning as we get a beautiful shot of Columbus Circle this morning right outside of our "American Morning" studios. It's snowing outside. How about that?

This morning a popular women's magazine cover is featuring President- elect Barack Obama, it's raising a few eyebrows though. It's a shot that features Obama striking the iconic superman pose while revealing a shirt that reads, let me show it. I can show it better than I can describe it. This is what feminism looks like and CNN's Jason Carroll has been looking into this. This is "Ms." Magazine, right?

JASON CARROLL, CNN CORRESPONDENT: Right, surprising right, to some. This is what's causing a lot of the debate. Critics are very upset over this. Basically the critics are saying this is the wrong cover especially for a feminist magazine and they say it sends the wrong message to women. "Ms." Magazine says it's the right cover, saying it's the right time to showcase a man like Obama who identifies himself as a feminist.

(BEGIN VIDEOTAPE)

CARROLL (voice-over): He's graced the covers of just about every major magazine. "Time" "Newsweek" and "Ebony," "Rolling Stone," even "Tiger Beat." Some flattering, others controversial file this upcoming cover of "Ms." magazine in the latter category.

AMY SISKIND, THE NEW AGENDA: The problem with the cover is it's a man standing in a superman pose and, thank you, but the women of this country can stand up for themselves.

CARROLL: Feminists like Amy Siskind remember a feminist movement united under the cause of advancing women's rights. "Ms." magazine was a leading voice then. Its original cover featured a wonder woman for president. How Siskind wondered can they feature a superman declaring this is what a feminist looks like.

SISKIND: If they had put is this the face of feminism instead this is the face of feminism? It would have been a provocative cover but I think by proclaiming it, was a real mistake.

UNIDENTIFIED FEMALE: This is not a takeoff on that original cover. I think people have overreacted.

CARROLL: "Ms. "magazine knows its cover ignited a debate. The executive editor says it's not selling out by featuring Obama.

KATHERINE SPILLAR, EXECUTIVE EDITOR, MS. MAGAZINE: We've had a couple of people contact us. Why would we put a man on the cover? It's because, indeed, men, too, can be feminist.

CARROLL: Siskind agrees, men can be feminist. In fact, some are part of her organization called the new agenda. But she, like some political observers, say, so far, Obama just hasn't done enough to support women.

JULIE MENIN, DEMOCRATIC COMMENTATOR: There is still some concern from some women's groups about President-elect Obama, and specifically some of the concerns they have are there have not been that many women appointed to his cabinet.

CARROLL: While "Ms." says it has received a mostly positive response to the cover, Siskind got responses like this on her blog, quote, "Obama won because he was not a woman. So why does Ms. Have to rub it in our faces?" Another writes, "Another example of how truly silly the hero-worship of Obama has become."

SPILLAR: I think they should read the magazine. We explain why the illustration and why we wanted to really wake people up to the opportunity that now exists.

(END OF VIDEOTAPE)

CARROLL: And Amy Siskind says a better cover choice would have been possibly Senator Hillary Clinton or even Governor Sarah Palin. "Ms." Magazine says they had men on their cover before and overall subscriptions are up because of this issue. They also say they have orders for a commemorative sized poster and they say those orders are off the charts. But it is a debate. Even our executive producer who is a woman, got in my here during this whole taping, and Janelle said, you know, lighten up, what is the big deal?

CHETRY: To you?

CARROLL: She said it to me.

CHETRY: I have to laugh because --

CARROLL: She said it to Amy, a message to Amy.

CHETRY: Right, well we have seen Barack Obama --

CARROLL: Right. I didn't say anything.

CHETRY: We have seen him everywhere, right, even the young kids. You said that you were on the subway.

CARROLL: Yeah, I was on the subway and coming into work and this little girl sitting across from me was with her mother and she was pointing and she said, mommy, mommy, Obama, Obama. The whole train started laughing obviously.

CHETRY: (INAUDIBLE)

CARROLL: In this shot, maybe just a little bit alike?

CHETRY: Not bad. You're our superman, that's for sure. Thanks, Jason.

ROBERTS: I think Jason's pecks are a little bit bigger!

CHETRY: Sure.

CARROLL: That's true. Biceps, too!

ROBERTS: Look at the top five challenges facing Barack Obama, besides trying to measure up to Jason Carroll, we're up to number two. Our panel of experts joins us to talk about America's broken health care system that's just ahead.

And he's about to be the leader of the free will, but Barack Obama still has time for his two little girls. In an open letter see what he writes to Malia and Sasha about their new life in the White House and his dreams for them. 23 minutes after the hour.

(COMMERCIAL BREAK)

ROBERTS: To the world he is America's next president but to Malia and Sasha Obama, he's simply dad. Barack Obama has written an insightful letter to his girls about how their lives are about to change, among other things. Alina Cho joins us now with a closer look at all of this. I read it. It's a very inspirational --

CHO: It is.

ROBERTS: As a father of a daughter.

CHO: Yeah you know, people got teary-eyed about this. It's really heartfelt John as you know. Good morning. Good morning everybody. Just days before Barack Obama becomes the 44th president, "Parade" magazine has asked him to share his personal thoughts on everything. That is exactly what he has done. In a rare open letter to his daughters, Malia and Sasha, the president-elect writes, ""Dear Malia and Sasha, I know you both had a lot of fun these last two years on the campaign trail. But I also know that it hasn't always been easy for you and mom and that as excited as you both our about that new puppy, it doesn't make up for all the time we've been apart." Mr. Obama then says when he was a young man he thought life was "all about me" but then the two of you came into my world he writes, and I soon found that the greatest joy in my life was the joy I saw in yours." He goes on to say I realize that my own life wouldn't count for much unless I was able to ensure that you had every opportunity for happiness and fulfillment in yours. In the end girls, that's why I ran for President." And the letter concludes, "These are the things I want for you. To grow up in a world with no limits on your dreams and no achievements beyond your reach. I love you more than you can ever know. Love, Dad."

That's not any dad. We're talking about the president-elect, of course. Obama has talked a lot about his daughters in the media. Most recently to ABC this past Sunday. Take a listen to what he said.

(BEGIN VIDEO CLIP)

BARACK OBAMA (D) PRESIDENT-ELECT: I'm trying to figure out why it is that they don't seem to be fazed by anything. You know, folks think I'm cool, they are -- they are a lot cooler than I am.

(END OF VIDEO CLIP)

CHO: Yeah, he says that the transition to Sidwell Friends, the girls' school, has been very easy as well. We should mention that in the letter to his girls, Obama also says, quote, "With the great privilege of being a citizen of this nation comes great responsibility. And, john, that does sound a bit familiar, right?)

ROBERTS: It does. Absolutely.

CHO: With great power comes great responsibility. That's a Spiderman mantra.

ROBERTS: It looks like he's quoting off (INAUDIBLE) Spiderman. Can I show you a quick picture of my daughter? Can we get this?

CHO: She is gorgeous.

ROBERTS: Very inspirational. Camera two. Over here on two. We still got it there?

CHO: She is gorgeous. How old is she? Is she 16?

ROBERTS: She is 17.

CHO: She's 17 and you got her a blackberry for Christmas, right?

ROBERTS: No.

CHO: No you didn't? I thought you were going to get her one.

ROBERTS: No, I got it last year.

CHO: Man! Time flies! No wonder I thought she was 16!

ROBERTS: She got that for her birthday.

CHO: But hey, this letter, you know something for the historical record I mean it's incredibly, really rare and something for the family record. I mean imagine down the line, really something that these girls will cherish.

ROBERTS: Tells a lot what he says in that letter is an inspiration for all young women across the country, not just his own daughters.

CHO: And fathers, dads should get out there and write letters to their daughters.

ROBERTS: Absolutely. Or instant message back and forth. Whatever.

CHO: That, too. We're in a different age.

ROBERTS: Alina, thanks so much for that.

CHO: You bet.

CHETRY: John also bought his daughter a horse. Number one dad, right? The gift that keeps on giving.

ROBERTS: I actually have a picture of that, too!

CHO: We don't have enough time for that!

ROBERTS: I'll show it later.

CHETRY: We're coming up on half past the hour now a look at the top stories this morning.

In just a few hours, lawmakers will be taking up a vote on the rest of the massive bailout fund. Barack Obama has been on Capitol Hill to push for it but some lawmakers are arguing that the rescue plan has already been mismanaged. They want some assurances that the second half will be more successful or transparent. Obama is also defending his stimulus plan. He told CBS' Katie Couric failing to act is not an option.

(BEGIN VIDEO CLIP)

BARACK OBAMA, (D) PRESIDENT-ELECT: This is a package that I think is going to make sense. I have every confidence that it's going to work, but it's going to take some time and we have to do it with some speed, so my main message to congress right now is get it done.

(END OF VIDEO CLIP) CHETRY: And tonight, President Bush ill be giving his final nationally televised address as president live from the White House. It is the president's last scheduled public event before the inauguration of Barack Obama and you can see it live right here on CNN at 8:00 Eastern Time.

Kellogg warning today that - to consumers that some of its peanut butter crackers may contain Salmonella. Officials say the products affected are Austin and Keebler brand toasted peanut butter sandwich crackers. Peanut and jelly sandwich crackers and peanut butter chocolate sandwich crackers. Kellogg is taking them off store shelves. So, no reports of illnesses.

There's a new study about in vitro fertilization saying despite it's effectiveness the procedure cannot turn back the biological clock. The "Washington Post" reporting Harvard researchers found that while in vitro gave infertile women under age 35 about the same chance of having a baby as women typically that age, that it could not counteract the decline in fertility that occurs in women older than 40. More than 113,000 women in the U.S. have in vitro cycles each year in the United States.

Well, all this week we're looking at the top five challenges facing Barack Obama. And today is number two, health care. With skyrocketing costs and the economy steep in recession, what is the solution? Today, our panel of experts, former Senate majority leader and heart-lung transplant surgeon, Dr. Bill Frist. We also have Dr. Christina Johns at the Children's National Medical Center in Washington, and emergency room specialist and health editor for "U.S. News and World Report," Dr. Bernardine Healy. Thanks to all of you for being with us this morning.

DR. BERNARDINE HEALY, FMR. HEAD, AMERICAN RED CROSS: Thank you.

CHETRY: I want to start with you, Dr. Frist. You know as we talked about this huge animal that is the notion of universal healthcare, what are the first steps we need to take in figuring out what shape it will take and whether or not we could afford it.

DR. BILL FRIST, FMR. SENATE MAJORITY LEADER: Well I think most people agree today that all Americans, 100 percent of Americans should have affordable access to healthcare. We do have about 46 million people uninsured today. Some of them are not poor, about 10 million non-U.S. citizens, about 10 millions make three times the poverty level. What about 10 million already have the plan out there that just haven't signed up.

So I think the smart thing to do is what Congress is now doing is taking each segment of that population in seeing how in responsible way where you aren't going to have runaway cost, you can cover these people. We do, I believe, a country as rich as ours today do have a moral responsibility to have 100 percent coverage in this country.

CHETRY: And Dr. Healy, does that take the shape of some mandate? Mandating that if you could afford healthcare, you have to have it. HEALY: I think that's right. I think President Obama brought that up several times when he was on the campaign trail that people really have responsibility and, rather touchingly, he talked about responsibility in his letter to his daughters.

And if someone can afford health insurance, they absolutely should have it. If someone can't, you can't deprive them of access to health care. You provide it for them. But everyone should pay what they can afford to pay and that gets back to the issue of it has to be affordable. Right now for the average family, $13,000 a year for insurance, that's awfully high. We have to address that as well.

CHETRY: And Dr. Johns, I'm interested because you see a lot of this firsthand, where for emergency rooms, for some people that is their only way of getting any type of treatment.

DR. CHRISTINA JOHNS, CHILDREN'S NATIONAL MEDICAL CENTER: Absolutely right. It's heartbreaking and it's tough to - tough to swallow when you know that had they had insurance and better access to primary care, they could get quality care in a less expensive, more resource- efficient, smarter way that would be better for their wellness. They wouldn't wait to come to see me when it's almost too late. And we'd have better outcomes.

CHETRY: Dr. Frist. Go ahead.

FRIST: I think we - I think we do have to face the realities today. Right now, a family of four, health insurance policy costs about almost $13,000. You start multiplying numbers like that by 45 million people, the government simply doesn't have the money today. So I don't think people should expect the government - we don't have $120 billion and that $120 billion would grow every year at twice of inflation and we simply don't have that money in government programs today that already have about a 36 trillion unfunded liability. So we got a real challenge before us.

CHETRY: We also spend actually more than any other industrialized nation spends on healthcare. We're going to take a quick break and when we come back we're going to talk about whether computerizing the system, trying to do a larger dealings when it comes to generic drugs, figuring out ways to try to streamline the health care system. And also preventive care and just how important personal responsibility is as it factors in. We're going to take a quick break. We're going to be right back.

Also all this week, we are looking at the top challenges Barack Obama faces as president. So if you have a question you want to ask, go to cnn.com/am and send it to us. It's 35 minutes after the hour.

(COMMERCIAL BREAK)

JOHN ROBERTS, CNN ANCHOR: Just in to CNN. The newest jobless claims numbers. Christine Romans joins us now with more. And it's not looking good, is it, Christine?

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: No, John. It's 524,000 people lined up in the latest week for first time unemployment benefits. These are folks who lost their jobs and had to line up for those benefits. An increase of 54,000 from the week before. So you're running numbers here above 500,000 that are indicative of a pretty tough labor market.

And we know that this week there have been even more layoffs announced. Google laying off a hundred workers. Google analysts say has never laid off full-time workers before, so it shows you just how far-reaching this economic downturn is. Motorola laying off 4,000. The engine maker, Cummins 800, Neiman Marcus 375 workers. Cessna, the plane maker, 2,000 workers this week. So these latest jobless claims are for the last week and we know that this trend just continues. A lot of economists telling me, John, that they don't see anything to suggest that it's turning around here any time soon. It just continues to be a steady drum beat of layoffs, layoffs, and filing for unemployment.

ROBERTS: The numbers worse than expected. So we'll see what the impact in the market is. Christine, thanks.

CHETRY: And we're continuing our look now at America's broken health care system. The number two challenge facing Barack Obama White House. And we're back with our panel, Dr. Bill Frist, Dr. Christina Johns and Dr. Bernadine Healy.

And Dr. Healy, I want to start with you on this one. Obama says that digital medical records could save billions. More doctors are also turning to preventive care for their patient. When we talk about health care costs, why not computerized records? Why haven't we seen a bigger push towards that in hospital and in primary care offices around the country?

HEALY: Well, first of all, we must have computerized records. We must have the prescriptions that are on-line, accessible to patients. It is modern medicine but it has an expensive infrastructure behind it. We need to have systems that are interoperable. I mean, there are a lot of technical issues that just haven't been overcome. I think we have to be careful here though.

Peter Orszag who was the head of the CBO, the Congressional Budget Office, and now is going to be President-elect Obama's OMB head has done a lot on health finance. And he makes the point that both preventive health care though important and IT technology. You know, modernized technology in terms of records is important, what he doesn't is that immediately you're going to see any real effect on the cost of healthcare. That's a longer term investment.

CHETRY: Dr. Frist.

DR. BILL FRIST, FMR. SENATE MAJORITY LEADER: Well, there's no question that we are way behind, even the rest of the world in terms of electronic medical records and computerization. If we really want to hold down cost, I believe we need to have the markets work but the markets are not going to work until we have informed consumers. And write now, with the information and technology structure have, the lack of electronic medical records. But it gives us a great opportunity right now with the current and future government to address, to invest.

So we do have electronic medical records which will improve the quality of care, improve access and make consumer shopping a reality instead of just a theory.

CHETRY: And the other interesting thing that we talked about is preventive. I mean, we take a look right now at the leading causes of death in our country, heart disease, cancer, stroke, respiratory diseases, diabetes. A lot of this has to do with obesity and other ways that what we do contributes to our demise. And how much personal responsibility, Dr. Johns, do we need to take for our own health care, as we look toward things like universal health care for everyone?

JOHNS: You know this is a great point. Hey, you've only got one body so you got to treat it well and use it right. The government isn't going to fix everything. You have got to take ownership of your own lifestyle and make the right choices, trying to do the same for your children.

Making sure that you go and see your doctor. Eat healthy foods. We're not kidding about this stuff. It has long-term implications that are important. Not just for wellness, but has impact on us as a society in terms of cost and in terms of how we're going to do as a people.

CHETRY: Dr. Frist, why are we seeing this increase, I think it's by 15 percent the cost of prescription drugs in a five-year period. We're growing faster than any category of spending.

FRIST: Well, they are growing faster but I should also say as a doctor and as a surgeon, that there is nothing more important in our armamentaria today than prescription drugs. That if you're going to give somebody who has high blood pressure, one of the number one killers in this country, a prescription drug to bring down that blood pressure, it is prevented. It is absolutely cost-savings.

I do think the only thing that is going to slow the cost of drugs overall is a switch from prescription drugs to generic drugs. I encourage people to look and see what the cost of their drugs are and to do just that. But let's not forget that those drugs are very, very powerful today.

In the overall scheme of health care costs, prescription drugs are not the problem today. I think it is technology, it is the variation in health care, the lack of evidence-based medicine, high administrative cost in this country.

CHETRY: A lot of big challenges. Last word from Dr. Healy?

HEALY: Well, I think that President-elect Obama has a major, major issue on his plate. I really think the country is ready. I think he is the kind of cool leader who can bring this to the public and I think we all are ready. This is a country that is ready now to make a difference on health care.

FRIST: Kiran, I think we have a great opportunity now. Right now, America is waking up to the cost of healthcare. We have 45 million people uninsured and for the first time really the country says we have a responsibility to make that available and we have leadership in the legislative branch and in the executive branch. And Tom Daschle, with his experience in the legislative branch, now leading the health care initiative, I think we got a great opportunity to have responsible reform in health care today.

JOHNS: It's a problem of the American people, not just sick people.

CHETRY: You're right. It affects every single one of us. Each and everyone of us. So thanks you guys for your insight this morning. Dr. Bernardine Healy, Dr. Bill Frist and Dr. Christina Johns, thanks.

JOHNS: Thanks.

FRIST: Thank you.

ROBERTS: Well, still ahead, the Sundance Film Festival getting underway but where are all the stars, we'll tell you ahead on the most news in the morning. It's 43 and a half minutes after the hour.

(COMMERCIAL BREAK)

ROBERTS: The Sundance Film Festival is usually a star-studded affair but as our Ted Rowlands tell us, things are going to be a little bit different this year.

TED ROWLANDS, CNN CORRESPONDENT: John and Kiran, a lot of Sundance veterans are expecting possibly a little bit different festival this year. Partly because the inauguration is landing square in the middle of the 10-day event and the economy. Not sure how that will affect this week.

That said, 218 films are going to be shown here. They've pared that down from over 9,000 submissions and everybody wants to get into Sundance as the premiere event for independent film making. Some of the stars that have projects here -- Susan Sarandon, Jim Carrey. Chris Rock has a documentary. We're told that a lot of the A-listers are going to be here for a few days and then they're going to be moving on to Washington, D.C. to witness the inauguration and take part in that celebration.

The other part of Sundance, of course, is deal making, a lot of independent filmmakers hoping that their film will create that buzz and be picked up and sold so they can make some money and so people can see their work. A lot of industry folks are going to watch Sundance to see how much money really is on the table and how the economy affects that side of it.

Over the years, Sundance has produced a lot of break-through films. The first one that really went from independent status to the big screen in terms of big revenue was "Sex, Lies and Videotape." It's part of the 25-year anniversary. They're going to re-show it here. And Director Steven Sotherberg is going to be here as well. 25 years at Sundance, Robert Redford said in an interview this week, he can remember standing out in front of the Egyptian Theatre that first year, literally waving people in to come and watch an independent film. A lot has changed over the last 25 years. John, Kiran.

CHETRY: Ted Rowlands, for us. Thanks.

President Bush said he was a uniter, not a divider. So what about the next president? He is already tangling with the lawmakers. We're going to ask Fred Thompson whether the GOP will work with him.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JAY LENO, TV HOST: President Bush will give his farewell address to the nation. Or as the White House is calling it, a very special episode of "Are you smarter than a fifth grader?" Yes.

(END VIDEO CLIP)

ROBERTS: Welcome back to the most politics in the morning. Barack Obama said that we have never been a collection of red states and blue states, we have always been the United States. Well, the next president is already facing off with lawmakers on Capitol Hill and some of them in his own party. Will he be able to reach across the aisle?

Joining me to talk more about that in the studio is a former republican presidential candidate and new host of the "Fred Thompson Radio Show," coming in March. Former senator, good to see you.

FRED THOMPSON (R), FMR. PRESIDENTIAL CANDIDATE: Thank you. Good to be with you again.

ROBERTS: Nice to have you in the studio for a change.

THOMPSON: Yes, I think the last time we were in Iowa or somewhere.

ROBERTS: Well the last time I saw you was at the airport and I don't remember.

THOMPSON: We probably, neither one remember which one.

ROBERTS: But enough of catching up. Let me ask you a couple of questions here. A lot of republicans have been very complimentary of the incoming president thus far. What are your thoughts?

THOMPSON: Well, I think in terms of the way that he's handled himself, I think he's done very well. He's undergoing a honeymoon period right now.

ROBERTS: Seems to be quickly coming to a close.

THOMPSON: Well, you know, that is the nature of the presidency. And I'm sure he's aware of that. But what is really important, of course, is the policies. And if he continues on the same track that he was on during the campaign, if he is consistent with what his Senate record was, what his record was in Illinois, it's going to be a very liberal agenda. If that's the case, there's going to be conflict and back and forth and that is part of our system.

ROBERTS: In your speech at the republican national convention in St. Paul you called him the most liberal nominee ever to run for president. Since then he seems to have shown some centrist tendencies according to some people with his cabinet picks. He is trying to reach out across the aisle, to the republicans. Do you still feel the same way which is the most liberal nominee to ever run some.

THOMPSON: I think considering he might have appointed, I think some of the people in the national security area have been pretty good picks. Some of the people in the defense area have been pretty good picks. My guess is that he probably wants to get an experienced group of people in there to deal with the international affairs because they're so complicated and so dangerous and so important. And he's going to concentrate on domestic policy.

ROBERTS: Did you think he will be able to reach across the aisle? Do you think he is really interested in that? He went and had dinner the other night with a number of prominent conservative commentaries including George Will, Charles Krauthammer(ph), William Kristol. Or as some right wing blogs have suggested do you think that's just cover?

THOMPSON: Yes. Well, it's a part of the mating ritual, you know, that always goes on. This reaching across the aisle is greatly overblown. It doesn't amount to anything. Everybody comes in and wants to work with the other party and all that, and, you know, to a certain extent, that's true, but as soon as the rubber hits the road, as soon as a policy is set forth, as soon as a bill is introduced, then you get back to what you believe in. And this is not necessarily a bad thing at all. This is a part of our checks and balances and this is what we will see. But it's good here, in a few days, at least until he gets sworn in, for goodness sakes, that you know, we can make nice and be friends.

ROBERTS: One of the things you've been talking about on your website, fred08.com, is the economic stimulus package.

THOMPSON: Yes.

ROBERTS: You've been doing it somewhat tongue in cheek. Let's listen a bit of how you put it on your website.

(BEGIN VIDEO CLIP)

THOMPSON: Not too far in the future, we will have rampant inflation and it will take a wheelbarrow of money to buy a loaf of bread and the Chinese undoubtedly will see what is going on and quit lending us money and our economy will collapse but the bottom probably won't fall out for years.

(END VIDEO CLIP)

ROBERTS: And you said you had a perfect solution to unemployment. Give everybody unemployed who is unemployed shovels, half of them dig holes and the other half fill them in. But on a serious note, what are you thinking about the bailouts, the new stimulus plan?

THOMPSON: Well, yes, we're in unchartered territory here. We ought to have a little modesty about what we're doing. We've already shown that in Washington we really don't know what we're doing. I mean the plan changes. The dollar amounts change. You know, we appropriate $700 billion and then we discover, to our shock that you know no safeguards have been built in. We don't really know what's happened to the money and things of that nature.

So we ought to slow down and consider the long-term consequences of what we're doing. And we're doing some very important things that is going to change the face of this country and it's going to affect our kids and grandkids. That is what I was kind of humorously trying to do there with that video. There is no question that these additional trillions that we're, in effect, talking about, in addition to the Medicare and social security obligations that over 75 years, there's about another 40 trillion dollars that we don't have.

All of this is going to hurt us down the road. Rampant inflation. We are going to be printing money. Our foreign creditor is going to be looking at this and we're totally dependent on them now.

ROBERTS: Right.

THOMPSON: And we may be scrambling to do some very dramatic things short term that have never been proven to work in the past, incidentally, that will have very serious long-term ramifications. So instead of speeding up like the world is coming to an end tomorrow, let's recognize that we do have serious problems, but that we should not be rushed in to doing things without properly considering ramifications.

ROBERTS: Well, obviously, you're going to have a lot of material for your new talk show.

THOMPSON: Yes.

ROBERTS: This will be interesting.

THOMPSON: I can hardly wait.

ROBERTS: We've had Fred Thompson, film actor. We've had Fred Thompson on television. We've had Fred Thompson, senator. Fred Thompson, the attorney and Fred Thompson, the presidential candidate and now the Fred Thompson, the radio show host.

THOMPSON: I'll find a steady job if I keep at it, I'm sure of that. Seriously, it gives you an opportunity to have a forum that you can discuss things in a little more extended format.

ROBERTS: Well, looking forward to it.

THOMPSON: And that's what I've always want - hopefully with a little humor.

ROBERTS: All right. It's always great to see you. Thanks for dropping by.

THOMPSON: Thank you very much.

ROBERTS: And best of luck to you in your latest gig.

THOMPSON: Thank you very much.

ROBERTS: All right. It's 56 1/2 minutes after the hour.

(COMMERCIAL BREAK)

ANNOUNCER: This is CNN. Breaking news.

CHETRY: Breaking news right now. We want to show you some pictures out of Gaza City again. You see some smoke rising from either a part of or right behind a media building that houses world media outlet such as Reuters and Abu Dhabi covering the situation in Gaza City. These are live pictures right now, coming to us from Gaza City.

This, in addition to the situation that happened this morning. U.N. headquarters struck by Israeli artillery fire and many humanitarian organizations. There you see the pictures right now of the inferno that that shelling caused. The E.U. humanitarian aid commissioner speaking out today saying he is shocked and dismayed at the shelling.

They are calling for an independent investigation. They actually had to suspend some of the operations the United Nations did, after these Israeli shells hit the compound and, again, these were warehouses, in part, that were providing and housing some badly need aid that were going to people that were stuck in Gaza.

A lot of outrage also from the United Nations head Ban Ki-Moon. He was arriving in Israel to try to talk about some sort of ceasefire agreement. So again many calling for an investigation. Israel, for its part, weighing in saying that it was a grave mistake. We heard that from one of its leaders. Others saying they are still going to investigate exactly who was behind that shelling.

So, again, a tough situation right now in Gaza City as the military operations continue now for more than 2 1/2 weeks. Again, new pictures this morning of smoke rising from behind or right in the area of -

ROBERTS: Apparently the media building was also hit. Reuters News Agency was in that part of the building that was hit as well. So it looks like there's been a number of -- number of different strikes this morning.

That's going to wrap it up for us. Thanks so much for joining us on this AMERICAN MORNING. We will see you back here again bright and early tomorrow.

CHETRY: And right now here's "CNN NEWSROOM" with Heidi Collins.

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