Return to Transcripts main page
American Morning
Bad Financial Numbers from Time Warner; Obama's Corporate Crackdown; Shooting at U.S. Embassy in Greece; Stimulus and the Housing Crisis
Aired February 04, 2009 - 08:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JOHN ROBERTS, CNN ANCHOR: Breaking news this morning, bad financial numbers from CNN's parent company, Time Warner, reporting a $16 billion loss in the fourth quarter of 2008. Analysts had predicted that the media conglomerate would actually post a profit.
President Barack Obama has high hopes for the long-term health of the U.S. economy, but the president told CNN's Anderson Cooper the immediate outlook is bleak and it's keeping him up at night.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: I will tell you, in terms of what is alarming right now is how fast the economy's been deteriorating. I think even two or three months ago, most economists would not have predicted us being in as bad of a situation as we are in right now.
(END VIDEO CLIP)
ROBERTS: Mr. Obama expressed confidence about working with Congress on his economic package saying, quote, "We are closer to getting it right."
And Olympic gold medalist Michael Phelps could face criminal charges for his now-infamous bong hit. He was allegedly snapped smoking pot during a party at the University of South Carolina. The Richland County sheriff's office is now investigating and says it will file charges if Phelps did smoke marijuana on campus.
Breaking news now and a story that's going to have everyone talking today, President Obama readying for a showdown with executives of big business whose survival depends on taxpayer bailout. In just a few hours, he'll unveil a plan that would limit executives' annual pay to $500,000. A nice paycheck for most of us, but for bigwigs used to making millions of dollars a year, it's quite a hit.
Also any additional pay for senior executives would have to come in the form of restrictive stock, stocks that they can't cash in until banks pay back the taxpayers for the money that they owed them -- or money that they loaned them, rather, with interest.
The president hinted about the new limitations last night in an Oval Office sit-down with our own Anderson Cooper.
(BEGIN VIDEO CLIP) ANDERSON COOPER, CNN ANCHOR: On executive compensation, Paul Krugman suggested in "The Time" on Sunday that your tough talk may be just for show. What can you really do?
OBAMA: Well, I think -- you know, we will talk about it tomorrow, but we're going to be laying down some very clear conditions in terms of where...
COOPER: Do you support Claire McCaskill's idea of capping...
OBAMA: Well, I -- I -- again, I don't want to completely preempt my announcement tomorrow.
COOPER: You could here.
(LAUGHTER)
OBAMA: But the -- but I think there are ways -- there are mechanisms in place to make sure that institutions that are taking taxpayer money are not using that money for excessive executive compensation.
And I think that, when you see the announcement that we make, people will say, this is a reasonable approach. It's not a government takeover. Private enterprise will still be taking place. But people will be accountable and responsible. And that's what we have to restore in the financial system generally.
COOPER: It keeps a lot of Americans right now up at night.
OBAMA: Absolutely.
COOPER: Does it keep you up at night?
OBAMA: It keeps me up at night, and it gets me up...
COOPER: Literally?
OBAMA: Literally, because -- because we have got a range of different problems, and there is no silver bullet. We're just going to have to work our way through the problem.
So, number one, we have got to have a recovery package that puts people back to work and ensures that states that are dealing with rising unemployment can deal with unemployment insurance, can provide health care for people who have lost their jobs. So, that's one set of problems.
Then, you have got a banking system that has undergone close to a meltdown. And we have got to figure out, how do we intelligently get credit flowing again, so that small businesses and large businesses can hire people and keep their doors open and sell their products?
And, you know, part of the problem, unfortunately, is, is that the first round of TARP, I think, drew a lot of scorn. You know, we learned -- you know, we have now learned that, you know, people are still getting huge bonuses, despite the fact that they're getting taxpayer money, which I think infuriates the public. So, we also have to set in place some rules of the road. And, tomorrow, I'm going to be talking about executive compensation and changes we're going to be making there.
Even after we get that done, we still have to get a financial regulatory system in place that assures this crisis never happens again. And we have got to do this in the context of a world economy that is declining, because, in some ways, the Europeans are actually doing at least as badly as we are.
You have even seen China, which has been growing in leaps and bounds over the last two decades, starting to decline. So, trying to do all those things on parallel tracks, at a time when people are scared -- and legitimately so -- I think, is going to be a -- a big challenge.
I think we're up to the challenge. But it's going to take some time. And I think the American people recognize that.
(END VIDEO CLIP)
ROBERTS: Of course, the longer it takes, the more our jobs, our economy continues to bleed jobs. It's just incredible. He's got to get that out there and got to get it going fast.
KIRAN CHETRY, CNN ANCHOR: And so joining our conversation now is CNN's Suzanne Malveaux. She's live from the White House. Christine Romans is here with us in studio.
Suzanne, we saw you, boy, taking a brunt of a -- I guess the snow gusts, right? They're really kicking up around there. But, you know, today, Barack Obama is going to be talking about the executive compensation. The president really wanted a chance to be able to do this. Yesterday, he ended having to talk a lot about Tom Daschle. But moving forward how is he going to regain that confidence that Washington is on watch when it comes to Wall Street?
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Sure, Kiran. What you're going to hear the president talk about is essentially holding all these banks accountable, saying, look, more transparency and greater restrictions. They want to know if these banks, if these financial institutions are receiving federal fund. What kind of transportation are you getting? Are you flying on a corporate jet? What kind of parties are you having? Events, entertainment, all these kinds of things, office renovation. That is going to come up here.
The other thing obviously is this $500,000 cap for CEOs for their compensation. Now, this is only for those companies that are receiving what's called exceptional assistance from the federal government. And what does that mean? We've been asking to try to get a dollar figure. We don't have a dollar figure, but we have a sense the examples they're talking about AIG, as well as Citigroup, so that's, you know, $152 billion, $325 billion.
So this doesn't necessarily apply for most of those companies, those financial institutions that are receiving money. And the big problem here, obviously, Kiran, is they want those smaller companies to be involved in this program. And if there is too much government oversight, they're going to say forget it, we don't want to be a part of this, we'll just take our losses without the federal money.
ROBERTS: And, Suzanne, let's bring in our Christine Romans now. When we look at this idea of how wide-ranging the effects of the stimulus plan will be, you talked about diversity, some people say that it's unfocused and the length of time it's going to take to work its way through as well.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: It's interesting because the stimulus is something that the president wants to be going out there and talking and selling. And he said he's talking about, you know, fat cats on Wall Street and Tom Daschle and all these other things. All of it a big distraction from what really is what he's trying to sell here, and that is some sort of rescue of the American economy.
Suzanne made a very good point about AIG and Citi. These aren't your run-of-the-mill $25 billion or $45 billion recipients of loans and (INAUDIBLE) from the federal government.
(CROSSTALK)
ROMANS: Oh, no, there's backstops of hundreds of billions of dollars of potentially bad assets. We do want to talk about exceptional -- exceptional -- what's the word that they were using, John? Exceptional --
CHETRY: Compensation.
ROBERTS: Assistance.
ROMANS: Assistance. Exceptional assistance.
ROBERTS: Exceptional assistance. We don't know what that means. Is that $10 million, is it $20 billion or is it --
(CROSSTALK)
ROMANS: I think Suzanne was saying that it means things like AIG and Citi, which was really exceptional. I mean, I would say all of that assistance was exceptional quite frankly. But, you know, it's like being a college student. You know, you think you can do whatever you want and have your own rules. And your parents say, oh, no, I'm paying for college. You will do what I want. It's the same thing, the banks saying, look, we need to grow, we need to grow and create jobs, we need to be able to flying jets around the world because we're doing all of this great business.
Well, you know what, guys, we're paying for your tuition. So you will ride like everyone else, you know. So that's a -- it's just an incredible time, so the president definitely trying to sell the stimulus, and all of this stuff is one very big distraction.
CHETRY: And as you said he might also be trying to sell for the future another multibillion dollar bank bailout.
ROMANS: That's a lot of people are telling me that they think there's going to be more money that's got to go into the banking system. Another kind of very complicated rescue. He's got to convince the American people, guys, I've got it under control.
CHETRY: Christine, thanks so much. And thanks to Suzanne as well. We'll be continuing to follow this throughout the morning.
President Obama and Treasury Secretary Timothy Geithner will be making this announcement that we've been talking about on executive pay at 11:00 a.m. Eastern this morning. And you can watch it live on CNN and cnn.com.
ROBERTS: And this just in to CNN, a shooting outside the heavily guarded U.S. Embassy in Athens, Greece. It sounds like a rather bizarre incident. It involves a police officer -- a Greek police officer and a Brink security guard -- a Greek national who was hired for protection by the U.S. embassy there.
Apparently what happened was this 38-year-old police officer took his .32-caliber service revolver and fired two shots at the security guard. One of the shots hit the security guard in the neck. Initially, police thought that the discharge of the firearm might have been an accident. They are now walking that back, though, thinking that perhaps this police officer deliberately targeted this security guard. They have no idea what the reason for the shooting might have been. The security guard is in the hospital. He appears to be in stable condition at this point. We'll keep working this story for you.
But, again, a shooting outside the U.S. embassy in Athens, Greece. A Greek police officer shooting a Greek security guard -- a Brinks security guard who was contracted by the U.S. Embassy. He has a bullet wound in his neck at this moment.
As the economic stimulus package makes its way through the Senate, lawmakers see a chance to tackle the housing crisis. We'll tell you what they're thinking about. It's 10-1/2 minutes now after the hour.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
OBAMA: The only measure of my success as president, when people look back five years from now or nine years from now, is going to be did I get this economy fixed.
(END VIDEO CLIP)
CHETRY: President Obama wants quick passage of the stimulus bill to give the economy a much-needed boost. The bill is now working its way through the Senate, and growing as it does, approaching the $900 billion now. And some lawmakers are pushing for provisions to tackle the housing crisis head on. The proposals include cutting mortgage rates, tax rebates for first-time home buyers and a three-month moratorium on foreclosures.
Joining us now from Dallas to talk about it is Richard Bitner. He's an associate publisher of Housingwire.com, "Housing Wire" magazine. He also wrote "Confessions of a Subprime Lender."
You spent 15 years in the lending industry. Thanks for being with us this morning.
RICHARD BITNER, HOUSINGWIRE.COM: Good to see you. Thank you.
CHETRY: I just want to pick through some of these, so we can figure out how much, in your opinion and in the opinion of others who've been in the business, this will help potentially the major trouble that we're seeing in the housing sector. What about this lowering mortgage rates, 30-year fixed at 4 percent for certain qualified buyers. This could be retroactive as well as for people who buy future new homes. Do you think this will help?
BITNER: I think we're going to see really just a marginal pick- up with this stuff, and there's a couple of reasons why. Right now, a 30-year fixed rate mortgage is going for roughly 5 percent. You know, the difference on a $200 mortgage between 4 percent and 5 percent is about $119 in savings.
Now, I love to save $119 as much as the next guy, but, unfortunately, the $119 issue without lowering the rate is really not the problem that we're facing today. The problem that we're facing has to do with the ability to get borrowers qualified, the lack of credit that exists in the market. The average consumer who's sitting out there is not going to, I think, come off the fence to save $119...
CHETRY: OK. Let me ask you this.
BITNER: Yes?
CHETRY: I got you. But one of the other big problems, though, is there are people who are underwater right now. I mean, they may owe more money on their homes than their homes are worth.
BITNER: Right.
CHETRY: The other problem is people whose adjustable rate is ballooning. They could afford it -- original, the teaser rate, and they can't afford it now. So, if there's this across-the-board 4 percent for people who qualify, wouldn't that technically stem more foreclosures?
BITNER: Well, I mean it's a possibility. Again, obviously, the people who got the biggest problems are the ones who are underwater. So, that's not going to do them anything because you can't lend them any more -- we can't lend them more money than their properties are worth today.
Secondly, the other thing we got to keep in mind, when we started talking about people who are having problems with their adjustable rate mortgages, without getting into all of the minutiae, remember, an adjustable rate mortgage is tied to a particular -- the calculation is tied to a particular number that was established at the beginning of the loan, a margin, and a particular monetary index. Right now, all the monetary indices are very, very low because Congress has been keeping rates down. So, the interest rate adjustments are not as bad as most people are thinking.
CHETRY: There are people who say that when their teaser rates expire they found themselves unable to pay. We'll leave that for now because I want to get to the other thing -- about Republicans saying they want to increase this tax credit for home buyers to $15,000. Some are saying $7,500. Others were saying $15,000. Would that help juice the market?
BITNER: Well, I think there is some hope, but I think there's also some flaws in it. Number one -- and we saw this earlier when we were talking about this months ago with the Hope for Homeowners Program. A $7,500 credit simply limited to first-time home buyers, I don't think will probably get it done. I mean, if we're really going to do this, and again keeping in mind the whole point is to try to get people back into the housing market. I think we have to do it completely.
One of the things that Republicans have actually proposed is putting a limit, which is not uncommon, to say you can't make more than $150,000 in adjusted gross income as a couple in order to qualify for this credit. Well, the problem you've got to think as you pull back for a moment is going, where do we have the biggest problems with housing?
It's in the most expensive markets. It's California. It's Florida. It's Las Vegas. These are markets where, quite frankly, you need that kind of income and more to be able to qualify to purchase a home, even with the prices falling as much as they have.
CHETRY: Right.
BITNER: So, I think we're a little shortsighted. I mean, it's kind of like being half pregnant. If we're going to do this, we need to push all of it and give every American the opportunity to buy that.
CHETRY: I just want to ask you about this, because everybody acknowledges that the soaring default rates on subprime mortgage are really at the heart of the credit crisis. What did people like you, people who were doing the subprime lending, think would happen down the road?
BITNER: Well, and again, I think that's one of the reasons why I got out. You know, we were, to a certain degree, like many lenders, sort of operating under an assumption that the credit quality we were looking at in terms of what we were writing loans for, which Wall Street said was acceptable, would survive over time.
But there came a point, at least for me in '05 where we kind of did a reality check and said, you know, this is insane. We're writing riskier loans. You know, everyone's making less profit. We're not doing ourselves or the buyer any good. And so I think everybody came to that conclusion at some point. I think I feel blessed that I was a little earlier than most.
CHETRY: Yes, we're in tough time now because of a lot of it.
BITNER: Yes.
CHETRY: Richard Bitner, associate publisher of Housingwire.com, "Confessions of a Subprime Lender." Thanks.
BITNER: Thank you.
CHETRY: John?
ROBERTS: So, how much is a trillion dollars, really? It's more money than you could spend in 1,000 lifetimes. The government planning to do it in just two years. Numbers that will blow your mind as we try to put it all in perspective this morning.
And President Obama said he screwed up over the Tom Daschle episode. We'll talk with the Washington columnist who is stunned by the president's mea culpa. It's 18-1/2 minutes after the hour now.
(COMMERCIAL BREAK)
ROBERTS: Well, the search is on now for a second choice to be President Obama's Health secretary. The president making a blunt admission about Tom Daschle's failed nomination, telling CNN's Anderson Cooper that he screwed up.
(BEGIN VIDEO CLIP)
COOPER: You've let one of the most important domestic issues, which is health care, get caught up in what looks to many Americans like politics as usual.
OBAMA: Well, I think what happened was, was that Tom made an assessment that, having made a mistake on his taxes, that he took responsibility for, and indicated was a mistake, made the assessment that he was going to be too much of a distraction in trying to lead what is going to be a very heavy lift, trying to deliver health care.
And...
COOPER: Do you feel you messed up in letting it get this far?
OBAMA: Yes. I think I made a mistake. And I told Tom that I take responsibility for the appointees and...
COOPER: What was your mistake? Letting it get this far? Or you should have pulled it earlier?
OBAMA: Well, I think my mistake is not in selecting Tom originally, because I think nobody was better equipped to deal both with the substance and policy of health care -- he understands it as well as anybody -- but also the politics, which is going to be required to actually get it done. But I think that, look, ultimately, I campaigned on changing Washington and bottom-up politics. And I don't want to send a message to the American people that there are two sets of standards, one for powerful people, and one for ordinary folks who are working every day and paying their taxes.
COOPER: Do you feel you have lost some of that moral high ground which you set for yourself on day one with the ethics reform?
OBAMA: Well, I -- you know, I think this was a mistake. I think I screwed up. And, you know, I take responsibility for it. And we're going to make sure we fix it, so it doesn't happen again.
(END VIDEO CLIP)
ROBERTS: Having cabinet appointees, three of them now, with back-tax issues, has been a major distraction for President Obama as he pushes his economic stimulus plan. Taking the hit for Tom Daschle surprised many people in Washington, including Marie Cocco. She is a syndicated columnist for "The Washington Post" writers group. And she joins us now from Washington.
Maria, it's good to see you. Yesterday, I read your column which was titled "Daschle is Indefensible." You called the whole saga "The Audacity of Audacity." But were you surprised to see the president take the hit for the pick of Tom Daschle?
MARIE COCCO, WASHINGTON POST WRITERS GROUP: No, because he had all these interviews with the networks, prescheduled actually before this crisis really broke out in the open yesterday, and so he had no choice but to be asked about this when he had those big network interviews.
And I just want to say that, you know, George Bush famously did not admit to any mistakes. But every other president that I've covered, which goes back to Ronald Reagan, actually has admitted mistakes. That's the right thing to do. That's the way to start going forward and putting this behind you.
ROBERTS: Yes, I guess we should probably clarify that President Bush did admit to mistakes, but it wasn't until about year six of the presidency. By the way, his former media adviser, Mark McKinnon, had a pretty interesting take on this whole saga as well. He wrote in a column in the "Daily Beast," quote, "First you get the guy who is going to be in charge of business allegedly involved in funny business with a company that's done business in New Mexico. Then the guy who is in charge of taxes forgetting to pay his taxes. Then the woman in charge of scrubbing the federal budget apparently not scrubbing her own taxes. And now the guy who is supposed to drive health care is done because he didn't pay taxes for his driver."
So you got Bill Richardson, Tom Daschle, Geithner, Killefer and now -- I mean, what does that say about the vetting process? Was it all done too quickly?
COCCO: No. I don't think that's true at all. I think some of these issues are -- you know, we tend in the media, and I'm guilty of it sometimes myself to lump everyone together as the same circumstance. I don't think the problem was the vetting issue. For example, Tom Daschle knew about his tax problems or at least suspected them...
ROBERTS: Yes.
COCCO: ...in June, but apparently did not tell the transition team about this particular car issue. I think that President Obama's problem is quite different necessarily than these individual threats. And here's the problem -- he campaigned as a purist on this. He campaigned as if he was going to have a magical groom, sweeping Washington clean. And some of his most ardent and earliest supporters frankly believed that 100 percent. So, the problem comes if you say, you know, when Jesus cleans the money changers out of the temple, he did not then say, well, a few of you guys can come back in if I think you're the right person or that you're useful to me.
ROBERTS: Yes, he just cleaned them all out. So you also said in your column yesterday that he has just handed Rush Limbaugh and his ilk an incredible talking point here to beat him mercilessly over the head with. Do you think his mea culpa yesterday took away some of their ammunition?
COCCO: Well, I think it keeps the story from running on and on and on. I'm not saying that there won't be new stories. For example, we still have this issue of the person who has been nominated for the number two job at the Pentagon who is, in fact, a former defense industry lobbyist.
ROBERTS: Yes. William Lynn.
COCCO: Yes, and that is still not -- he is still not confirmed. So, the question now becomes, what's the next saga? My guess is, it is going to be William Ryan, because that is a very clear, explicit waiver that the White House has given to somebody who is, in fact, a former lobbyist for one of the major defense contractors in the country.
ROBERTS: Marie Cocco, it's good to see you this morning. Thanks for stopping by. Appreciate it.
COCCO: Thanks, John.
ROBERTS: OK. 26 minutes now after the hour.
CHETRY: Dissecting a trillion dollars.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: You started spending the day that Jesus was born and you spent $1 million every single day, you still wouldn't have spent $1 trillion.
(END VIDEO CLIP)
CHETRY: Everyone seems to be tossing around the number.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: A trillion.
UNIDENTIFIED MALE: A trillion.
UNIDENTIFIED MALE: Trillion.
UNIDENTIFIED MALE: $1 trillion.
(END VIDEO CLIP)
CHETRY: But can we afford it?
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Knock on wood. We'll see what happens.
(END VIDEO CLIP)
CHETRY: We do the math, ahead on the "Most News in the Morning."
(COMMERCIAL BREAK)
CHETRY: It's day 16 and a stimulus plan is under fire. Two appointees suddenly backing out. President Obama launching a major media blitz yesterday. The president sat down for a conversation with Anderson Cooper in the Oval Office and also defended his plan to rescue the economy.
(BEGIN VIDEO CLIP)
COOPER: On the stimulus plan for you, what is non-negotiable with -- with Republicans?
OBAMA: The unemployment insurance, health care for people who have lost their jobs, you know, providing some relief to the states on those fronts, and providing families relief, that's very important.
Infrastructure investments that lay the groundwork for long-term economic growth I think is critical. You know, so, for example, when we say we're going to weatherize two million homes, that's not just make-work. First of all, you can employ people weatherizing those homes. We are also then saving families, individual families, on their energy bills. But the third thing is, it's making this country less dependent on foreign oil.
So, the same is true for health I.T. The same is true when it comes to education. We want to train thousands of teachers in math and science, and invest in science and technology research. All those things will make us more competitive over the long term.
What I do think is negotiable is some programs that I think are good, good policy, but may not really stimulate the economy right now.
ANDERSON COOPER, CNN ANCHOR: How did they even get into the bill in the first place?
OBAMA: Well, Anderson...
COOPER: How did it get this far?
OBAMA: You know, there are 535 members of Congress who have their own opinions.
(LAUGHTER)
COOPER: Do you think some of the House Democrats went too far?
OBAMA: No, you know, I think that if you look at -- first of all, I think it's -- in fairness to the House Democrats, and this hasn't been talked about enough, if you tally up all the programs that have been criticized on "AC 360" or anywhere else, that amounts to less than 1 percent of the total package.
So they actually were remarkably disciplined considering the size of this package. We've -- they left out, at my request, all earmarks. So there aren't private PET projects. And, by the way, many of the critics of the current package can't say that about any of the budgets they passed over the previous six or eight years.
COOPER: But this is what American people are hearing about, whether rightly or wrongly, and, I mean, do the Republicans beat you on selling this? On selling the message?
OBAMA: Well...
COOPER: Did you lose the message?
OBAMA: Well, no, no, I don't think we've lost the message. That's why I'm here with you. Everybody's going to be watching me talk to you today. But I think that the American people understand something has to be done. They want to make sure that we're serious about it and that we're not using this to promote politics as usual.
And that's what I'm insisting on. You asked earlier do I lose sleep. Look, the only measure of my success as president, when people look back five years from now or nine years from now, is going to be, did I get this economy fixed? I have no interest in promoting a package that doesn't work, because I'm not going to be judged on whether or not I got a PET project here or there. I'm going to be judged on have we pulled ourselves out of recession.
I think that the members of Congress understand that as well. I don't question the sincerity of some Republican critics, who may think that they can do better on this. And I'm happy to negotiate with them. If they've got better ideas, I'm happy to do it.
What I won't do is, in some cases, some of the criticism has suggested that the better approach would be to do exactly what we did over the last eight years that got us into this problem in the first place. There's going to be some differences ideologically or in terms of, you know, recipes for how to fix the economy. And, you know, those differences we can live with.
COOPER: You still think...
OBAMA: But I still think we can arrive at a package that works for the...
COOPER: Within five years or nine years, which one are you hoping for?
(LAUGHTER)
COOPER: Based on what you've seen so far?
OBAMA: You know, listen, you want to be president when times are tough because, you know, I -- didn't do all this just to occupy this fancy office. I did -- I came here to change things.
(END VIDEO CLIP)
KIRAN CHETRY, CNN ANCHOR: All right, hearing from the president there. His stimulus plan is now pushing $1 trillion. And so we wanted to find out exactly how big is $1 trillion. We've been throwing these numbers out there and, you know, it's going over many people's head. $1 trillion is really hard to grasp.
Christine Romans is "Minding Your Business." She joins us with a little more perspective. In fact, we were -- the three of us, we were sitting here writing down all the zeros that go into it, and how a thousand millions is a billion, a thousand billions is a trillion. I mean it's -- whoa.
CHRISTINE ROMANS, CNN CORRESPONDENT: I had no way to calculate it. My producer and I, we had these calculators and we're trying to figure out the best way to sort of explain how big this is. We had to go find an expert mathematician to try to bring it down to earth because it's so complicated.
JOHN ROBERTS, CNN ANCHOR: You know how big is $1 trillion?
ROMANS: It's big. How big?
ROBERTS: Ten times smaller than the national debt.
ROMANS: There you go. That's -- absolutely right. Maybe almost $11 trillion on the national debt. OK, $1 million is a lot of money. $1 billion is a thousand million, and a trillion is a thousand billion.
John and Kiran, you still with me?
(BEGIN VIDEOTAPE)
ROMANS (voice over): A little gut check. Just how big $1 trillion is. It's got 12 zeros. That's easy to understand. Or think of it this way, 1 trillion one-dollar bills stacked high would reach nearly 68,000 miles into space, one-third of the way to the moon.
Republicans are hardly over the moon.
SEN. MITCH MCCONNELL (R), MINORITY LEADER: If you started spending the day that Jesus was born and you spent $1 million every single day, you still wouldn't have spent $1 trillion.
ROMANS: We checked the senator's numbers with noted mathematician John Allen Paulos.
JOHN ALLEN PAULOS, AUTHOR AND PROFESSOR OF MATHEMATICS, TEMPLE UNIVERSITY: If you have $1 million a day for 2,000 years, it's only about three-quarters of $1 trillion. It's a big number no matter how you slice it.
ROMANS: So let's slice it another way.
PAULOS: A million seconds is about 11 and a half days, a billion seconds is about 32 years and a trillion seconds is 32,000 years. People tend to lump them together, perhaps, because they rhyme.
ROMANS: Million, billion, the national debt tops $10 trillion. After a $700 billion bank rescue and proposed $800 billion stimulus, are we numb?
PAULOS: The number itself can be parsed "number" or "number," and maybe in this case the latter is a better pronunciation.
(BEGIN VIDEO CLIP)
MIKE MYERS, ACTOR: $1 million.
(END VIDEO CLIP)
ROMANS: Just like Dr. Evil discovered in the movie "Austin Powers" times have changed. Back in 1993...
BILL CLINTON, FORMER PRESIDENT: The media package of jobs investment of over $30 billion.
ROMANS: He didn't get it. Just last year...
GEORGE W. BUSH, FORMER PRESIDENT: The whole purpose of a stimulus package is to have something robust enough to make a difference.
ROMANS: President Bush signed emergency economic stimulus of a now paltry $168 billion. And now...
UNIDENTIFIED MALE: Trillion.
UNIDENTIFIED MALE: A trillion.
UNIDENTIFIED MALE: $1 trillion.
ROMANS: Can we afford it? PAULOS: The Gross National Product is, you know, $12 trillion, whatever it is. We do have a big economy that may not be as vibrant as it was, but it's still a powerful economic engine so knock on wood. We'll see what happens.
(END VIDEOTAPE)
ROMANS: Knock on wood, we'll see what happens. The stimulus probably won't reach a trillion but consider this. All the financial interventions, the loans, the guarantees, the bailouts, the rescues, they're now more than $7 trillion.
John and Kiran, $7 trillion. Let's try to all wrap our heads around that. How -- can we get to the moon with the $7 trillion?
ROBERTS: I could hardly wait until we reach the next level of $1 quadrillion.
ROMANS: Next year. No, I know. It's crazy, isn't it?
CHETRY: Maybe you should have asked the president yesterday, you really want this job?
(LAUGHTER)
CHETRY: Because even the smartest economists are saying knock on wood, we'll see what happens.
ROMANS: I know. And he said every day he's having this economic briefing in these -- you know, he said I'm not a trained economist, but I'm certainly learning a lot about the economy. And he's learning a lot about higher math, I'm sure right now, too.
CHETRY: Great piece, Christine. Thank you.
Thirty-six minutes after the hour.
(BEGIN VIDEOTAPE)
ROBERTS (voice over): From executive bucks to Starbucks.
MICHAEL GATES GILL, AUTHOR, "HOW STARBUCKS SERVED MY LIFE": And just sweeping up like this piece of paper or getting this thing here, there's an enjoyment.
ROBERTS: Trading long hours and stress for peace of mind.
GILL: I can walk out and I have all these hours, and I'm not thinking about internal corporate politics.
ROBERTS: Our richest-to-rags story like no other ahead on the most news in the morning.
(END VIDEOTAPE)
ANNOUNCER: "Minding Your Business" brought to you by... (COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
DAVID LETTERMAN, HOST, LATE SHOW WITH DAVID LETTERMAN: Why exactly are you here? Honest to god? What...
(LAUGHTER)
ROD BLAGOJEVICH, FMR. ILLINOIS GOVERNOR: Well, you know, I've been wanting to be on your show in the worst way for the longest time.
LETTERMAN: Well, you're on in the worst way, believe me.
BLAGOJEVICH: I sure am.
(LAUGHTER)
(END VIDEO CLIP)
ROBERTS: Oh yes. Great to be Rod Blagojevich these days.
Welcome back to the most news in the morning. In today's political ticker, former vice president Dick Cheney giving a grim warning in an interview to Politico saying there is, quote, "high probability that terrorists will attempt nuclear or biological attacks in the next few years."
And here's the money quote for you. Mr. Cheney also says he fears that President Obama's policies will make such attacks more likely to succeed.
Obama's campaign manager, David Plouffe, has landed a seven- figure deal to write about last year's history making presidential election. The publisher says the book, "The Audacity to Win," will be out next fall. Two publishing executives say the bidding topped $1.5 million, which, in case you're interested, is 66,000 times smaller than $1 trillion.
(LAUGHTER)
CHETRY: That's what we're comparing everything to, right? That's our bar this morning.
Well, the company behind the Beanie Baby craze is renaming the two dolls that sparked controversy inside the White House. Ty Inc. says that their Marvelous Malia and Sweet Sasha dolls are being renamed. They're now Marvelous Maria and Sweet Sidney.
First Lady Michelle Obama's office said that using the first daughter's names was inappropriate but appreciates the change.
And in a surprise visit, the president and the first lady visited with some second graders in Washington. The kids were curious about what life was like inside the White House.
(BEGIN VIDEO CLIP)
MICHELLE OBAMA, FIRST LADY: There's a bowling alley and a movie theater. And there's a florist shop and a place where they make candy and chocolate.
(LAUGHTER)
M. OBAMA: And I have to keep my kids from going down there. But it is one of the most important houses in the country, so we feel like we have a real big responsibility.
OBAMA: Not to break anything.
M. OBAMA: To not to the break anything.
(LAUGHTER)
(END VIDEO CLIP)
CHETRY: Later this afternoon, the first lady will visit the Department of Housing and Urban Development. She's going to be meeting with staff, giving brief remarks. She's doing that with all the government agencies.
It's so funny, how -- simple life was when you were a second grader, right? Just talk of chocolate and candy makes you happy.
ROBERTS: Yes. I bet, you know, it's great, the outreach program that they're doing. Showing up at schools and, you know, showing up in the neighborhood, that sort of thing. They really are injecting new life into Washington and it's great to see.
Well, talk about an economic downturn. He went from a high- flying executive to getting coffee and sweeping floors at Starbucks. So why is this man smiling?
And his reputation is taking a hit. He may also now face criminal charges for apparently smoking pot, but swimmer Michael Phelps is getting plenty of support online. Jeanne Moos looks at the bong photo fallout.
It's 43 minutes now after the hour.
(COMMERCIAL BREAK)
ROBERTS: Welcome back to the most news in the morning and here's what you might call a real riches-to-rags story. As President Obama tries desperately to kick-start the economy, it continues to bleed jobs. And for many people who suddenly find themselves unemployed, some drastic action is required to keep food on the table and a roof over their head.
Our Lola Ogunnaike found a former advertising executive who is now pulling coffee and sweeping floors at Starbucks. And, get this, he says his fall from grace has been a blessing in disguise.
(BEGIN VIDEOTAPE)
UNIDENTIFIED FEMALE: He's always cheerful, he's always funny.
UNIDENTIFIED MALE: He can make a latte. Yes.
UNIDENTIFIED MALE: He is quite a character, yes.
LOLA OGUNNAIKE, CNN CORRESPONDENT (on camera): How did you end up as a barista at Starbucks?
GATES GILL: First of all, I was fired.
OGUNNAIKE: You were designing commercials. You were creating massive ad campaigns for huge companies.
GATES GILL: Right. Yes.
OGUNNAIKE: And now you're sweeping floors and changing milk?
GATES GILL: Yes. And the big surprise is in just sweeping up like this piece of paper or getting this thing here that there's an enjoyment. My life is my own. I mean I -- say open at 5:00 a.m. but by noon or 1:00 I can walk out and I have all those hours and I'm not thinking about internal corporate politics.
My job is to keep them fresh and make sure that the whole condiment bar itself is clean.
OGUNNAIKE: OK, so...
GATES GILL: For example...
OGUNNAIKE: So there's milk here.
GATES GILL: Yes.
OGUNNAIKE: So you look at this condiment bar and you're like, I've got to clean this up.
GATES GILL: Yes. That's right. Stirring sticks here. People love these.
By the way, I'm still struggling with making the ideal drink. And I -- but I'm good a cleaner. I think -- you know, I can sweep. I can clean the toilet. I really make it sparkle like a Ferrari. You get a mug award. And what it is, is the person with you, the shift manager or one of your other partners can say, boy, Mike, you did a great job of taking out the gar badge, or, Mike, you really did a good job connecting with the guests today.
All these awards are almost a constant stream of encouragement for positive, whatever you're doing that day. It makes you feel good.
OGUNNAIKE: If someone called you today and said we want you to be the CEO of this advertising agency, we're going to pay you $500,000 a year. GATES GILL: Yes.
OGUNNAIKE: And you're making $10 at Starbucks, you mean to tell me that you would stay at Starbucks making $10?
GATES GILL: Yes, because I know the price is. The price is you have to give up your life, 12 hour-day, 20-hour days. The little detail as you never stop thinking about that job.
OGUNNAIKE: You heard that Starbucks is actually closing some stores and laying off people?
GATES GILL: Yes.
OGUNNAIKE: What if it happens to you again?
GATES GILL: Well, if it happened to me again, I'd be much more relaxed because it turned out to be a gift in disguise last time. And I realize that whatever happens externally, because you can't control whether you're going to be fired or whether stocks go up or down, what you can control is your internal happiness.
(END VIDEOTAPE)
OGUNNAIKE: You know, John, I thought I was going to feel sorry for this man. He'd lived this fabulous life and completely lost all of it. But I actually left that interview feeling envious of him.
Tom Hanks is about to make a movie of his life. Gus Van Sant is going to direct. And he cannot be any happier. I mean you look at this man and he's at complete peace.
ROBERTS: He does seem to be at peace. But you told me something really interesting off-camera. I said, you know, he doesn't have the penthouse apartment anymore or, you said or the corner offices or the penthouse apartment would be more important than the corner office, but where is he living now?
OGUNNAIKE: He lives in an attic that is five minutes away from the 25-bedroom home that he grew up in as a child.
ROBERTS: Unbelievable.
OGUNNAIKE: So talk about a real reversal of fortune. But, again, it's a small little apartment, doesn't have a microwave. But he's OK.
ROBERTS: As long as you're happy. That's what really counts.
OGUNNAIKE: As long as you're happy. Exactly.
ROBERTS: Fascinating story. Lola, thanks for bringing it to us.
OGUNNAIKE: Thank you.
ROBERTS: Kiran? CHETRY: Well, still ahead, get ready for cold, wind and snow. It's an arctic cold front that's sweeping the country even all the way down to Florida. Our Rob Marciano is tracking it all for us from the CNN Weather Center.
Hey, Rob.
ROB MARCIANO, CNN METEOROLOGIST: Hey, Kiran, yes, freeze warnings as far south as South Beach and inland areas as the southern tip of Florida, talk about that, when's it going to change, and the biggest snowballs you've ever seen. It's coming up when the most news in the morning comes right back. It's 49 minutes after the hour.
(COMMERCIAL BREAK)
CHETRY: A look right now at some of our most popular videos on CNN.com. We brought this to you yesterday as well. Actor Christian Bale going ballistic during a big temper tantrum on the set of the new film "Terminator Salvation." All was caught on tape.
Again, you heard it first here on AMERICAN MORNING. Bale ripping into his director of photography for walking on set during a scene, dropping the f-bomb dozens of times.
And workers at Denny's getting slammed. People lined up for hours yesterday all across the country. Denny's was offering a free grand slam breakfast. It was a 30-second ad they ran during the Super Bowl offering a free meal to promote Denny's affordability and, boy, did people take them up on the offer.
Fifty-three minutes after the hour. That's why Rob wasn't here yesterday. He was leading the line over at Denny's for his Rudy Trudy fresh and fruity, right, Rob?
MARCIANO: Oh, yes, exactly. I mean who wouldn't be waiting in line for that especially on a cold morning.
(WEATHER REPORT)
MARCIANO: A quick check on what's going on as far as London. There you go. Clearly these folks don't know what to do with snowballs. I mean that looked like something out of Cirque de Soleil. And that's one of the largest snowballs I've ever seen in my life.
CHETRY: How about that one? A snowball...
MARCIANO: John and Kiran?
CHETRY: A snowball so huge people can, like, ride on it. All right.
ROBERTS: These are some people who chase a wheel of cheese...
MARCIANO: Not bad at all.
ROBERTS: ... down a hill, don't forget so... (LAUGHTER)
CHETRY: That's right.
ROBERTS: They're used to that sort of thing.
CHETRY: They've been proud of it. Right?
ROBERTS: Absolutely.
Well, he was caught on camera allegedly doing something illegal, Olympic swimming champ, Michael Phelps, isn't just getting criticized, he's also getting credit. Jeanne Moos shows us how.
It's five minutes to the top of the hour.
(COMMERCIAL BREAK)
ROBERTS: Welcome back to the most news in the morning. Michael Phelps has taken a big PR hit for his now infamous bong photo, but who says the super swimmer's reputation is going to pot?
CNN's Jeanne Moos takes a look.
(BEGIN VIDEOTAPE)
JEANNE MOOS, CNN CORRESPONDENT (voice over): People are always taking pictures of Michael Phelps. But he really caused a splash being photographed smoking a bong. And the time it takes to exhale, Phelps was being parodied, toking during a medal ceremony.
And the iconic Weedies box was transformed into a Weeding t- shirt. There was late-night applause at the mere mention of the deed.
CONAN O'BRIEN, HOST, LATE NIGHT WITH CONAN O'BRIEN": Taking a huge hit from a bong.
MOOS (on camera): The bong incident (INAUDIBLE) brought the potheads out of the woodwork, particularly on the Web, people seemed to be high on Phelps.
UNIDENTIFIED MALE: Is he still a hero? He's even more of a hero.
UNIDENTIFIED MALE: So we found out Michael Phelps smokes pot, which is awesome.
UNIDENTIFIED MALE: It's even cooler that he can (INAUDIBLE) and then do all that.
UNIDENTIFIED MALE: It's just cool to know that Superman can get high.
MOOS (voice over): Yes, well, it's cool to know Superman may also get charged for pot possession by the county sheriff where the photo was taken. LEON LOTT, RICHLAND COUNTY SHERIFF: I just don't think you can have something like this done and publicized and say I'm sorry and then we're supposed to forget about it. He broke the law.
MOOS: Or as one YouTube-er put it.
UNIDENTIFIED FEMALE: You have to pay the piper.
MOOS: Or at least pay for the pipe.
On Facebook fans established an "I don't care that Michael Phelps smoked a bong" page. Blogger Andrew Sullivan linked to the Stoned Olympics like comedian Eddie Izzard.
EDDIE IZZARD, COMEDIAN: They saw it in Athens where a joint is lit. And then they ran the three feet to the next athlete.
MOOS: Meanwhile on "The View," Whoopi Goldberg made a confession.
WHOOPI GOLDBERG, CO-HOST, THE VIEW: I have smoked weed, I'm sorry. I have. Yes.
(LAUGHTER)
MOOS: And Ashton Kutcher was Twittering that, though he hasn't smoked in quite some time, Michael Phelps can smoke a whole bowl in one breath, swimmers lungs.
Some on the Web were...
UNIDENTIFIED MALE: Angry, angry, angry.
MOOS: That Phelps apologized.
UNIDENTIFIED MALE: All sorts of people are incredibly successful and have been known to smoke dope. Deal with it!
MOOS: In Japan, they're dealing with it all right. A sumo wrestler was arrested for pot possession, beat the little guy, slapping the bigger one.
UNIDENTIFIED MALE: Wow, wow, wow.
MOOS: The pot arrest led to the sumo's dismissal. But don't try slapping around this guy.
UNIDENTIFIED FEMALE: Leave Michael Phelps alone.
UNIDENTIFIED MALE: Leave him alone.
UNIDENTIFIED MALE: Leave Michael Phelps alone.
MOOS: Leave him alone with his air freshener.
Jeanne Moos, CNN, New York. (END VIDEOTAPE)
CHETRY: I don't think that guy is really a swimmer.
(LAUGHTER)
ROBERTS: No, there's -- I could be wrong, but I don't think smoking it is a crime. It's possessing it.
CHETRY: Yes, I was...
ROBERTS: So may be a difficult charge to make stick.
CHETRY: You're looking at the fine print, I think the -- key on that phrase was "on campus" because I guess you can't on campus but...
ROBERTS: Maybe.
CHETRY: You know, colleges.
ROBERTS: We'll see the way this goes.
CHETRY: Yes. Well, thanks so much for joining us on this AMERICAN MORNING. We'll see you right back here tomorrow.
ROBERTS: And right now, here's "CNN NEWSROOM" with Heidi Collins.
