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Stocks Slip on Wall Street; Members of Congress Taking Trips at Taxpayer Expense; Freshman Congressman Provides Behind-the-Scenes View of Life on the Hill; Study Links Stroke Risk to Living Near Fast-Food Restaurants

Aired February 20, 2009 - 13:00   ET

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

KYRA PHILLIPS, CNN ANCHOR: Recession in the city. We're pushing forward on the economic crisis in urban America. The mayors press the president for help.

Main street in shambles. Wall Street's on the skids. Pushing forward on a downward market. Where are all the buyers?

Hello everyone, I'm Kyra Phillips, live from the CNN world headquarters in Atlanta. And you're live in the CNN NEWSROOM.

First up, the president calls it a partnership and the stimulus is just the first step. As you may have seen live here on CNN, President Obama met today with 85 of the nation's mayors. And issue number one was issue number one, the president promised on open door and a willing ear to deal with the cities' struggles, economic and otherwise.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: What is required in return, what I will need from all of you, is unprecedented responsibility and accountability on all of our parts. The American people are watching. They need this plan to work. They expect to see the money that they've earned, that they've worked so hard to earn, spent in its intended purposes without waste, without inefficiency, without fraud.

(END VIDEO CLIP)

PHILLIPS: And getting to know you, getting to know all about you. That's Michelle Obama's mission right now. She's all over D.C., meeting with federal workers at cabinet departments. This hour she'll be pressing the flesh at the Department of Transportation.

But it's more than a social call. Transportation and the infrastructure that supports it are key parts of President Obama's plan to jump-start the stalled economy.

Now no one knows that more than the nation's mayors who just to hear from. They've put out a long -- and I mean long -- wish list of projects they say are shovel-ready. That is, ready to go. Some are practical; others, pie in the sky. All cost money. Akron, Ohio wants $50 million for its Central Interchange Project. The city says roads are congested, and they haven't been repaired for decades. And in Albuquerque, New Mexico, well, it wants $300 million for, among other things, cutting congestion. The city says that that would create 10,000 jobs.

Atlanta wants $122 million for street resurfacing and nearly $200 million more for what amounts to an infrastructure overhaul. And would this be a Rodeo Drive redux? Beverly Hills -- that's right, Beverly Hills -- wants a facelift, $10 million to improve streets there.

Well, those are the wishes. This is the reality. The Missouri bridge project, $8.5 million. It's the first in the nation to break ground using money from the stimulus package.

(BEGIN VIDEO CLIP)

PETE RAHN, DIRECTOR, MISSOURI TRANSPORTATION DEPARTMENT: The stimulus bill is funding work in Missouri that otherwise would not be taking place.

(END VIDEO CLIP)

PHILLIPS: Well, so who's paying for all this? That's right, you. Sure, you already pay gasoline taxes, but that might not be enough. Transportation Secretary Ray LaHood is looking into taxing the number of miles that you drive. He tells the AP that gas taxes alone no longer raise enough cash for road projects.

A proposal in Massachusetts would put GPS chips in cars to charge motorists by the mile. Critics say that's too much of a government intrusion and that it discourages people from driving fuel-efficient cars, since they would be taxed at the same rate as gas guzzlers.

And speaking of mileage, the speaker of the House has put quite a few miles on government planes lately. Guess what? You've paid for that, too. A congressional delegation led by Nancy Pelosi has spent the week in Italy.

(BEGIN VIDEO CLIP)

DREW GRIFFIN, CNN CORRESPONDENT (voice-over): So what's the cost of her Italian trip to the taxpayers back home? We won't know yet. Congress gives its traveling members several weeks to file their expenses, to tell us what hotels they stayed in, to tell us who took their spouses or staff.

But the government-owned Boeing executive jet doesn't fly cheap. About $10,000 an hour, according to the Air Force. Twenty hours flying between Washington and Italy adds up to about $200,000.

(END VIDEO CLIP)

PHILLIPS: Well, you can see all of Drew Griffin's report, his investigation. That's coming up in just a few minutes right here in the NEWSROOM.

Well, on Wall Street, it was less than a year and a half ago that the Dow topped 14,000. Euphoric investors were talking about 15,000, even 20,000. Well, today investors would be happy to see 8,000 again.

Susan Lisovicz at the New York Stock Exchange with all the details of today's sell-off.

Hey, Susan.

SUSAN LISOVICZ, CNN CORRESPONDENT: Hey, Kyra.

Well, as one trader put it, sentiment here today is staggeringly bad. You know, just you mentioned, a year and a half ago, the Dow hit all-time highs. Well, now we're at six-year lows, and the Dow is basically flirting with the closing low of the last bear market. That is in October of 2002. That's how far we've come. Just a massive destruction of wealth.

You know, the stock market isn't without risk. Over time, of course, tremendous gains, but these can happen in a nasty bear market. And that is what we're seeing.

Blue chips have lost half their value in that time since hitting the all-time high. The S&P 500 is getting real close now, about five points from its low of this bear market.

And why all the concern today? Well, it remains rooted in the banking sector. Big concerns about whether two of the nation's biggest banks, Citigroup and Bank of America, will be taken over by the government, and the remaining shareholder equity would be wiped out.

Looking at Bank of America shares right now, down 23 percent. Ditto for Citigroup. They're trading -- Bank of America, a $3 stock. It's the biggest bank in America, Kyra. And Citigroup is a $2 stock. So it's just a frightful -- a frightful sell-off that we've seen in those two -- in those two stocks and just a very nasty sell-off.

No one's calling a bottom yet. It's not this kind of vertical fall that you see a lot of times when you establish a bottom. So we're going to have to hang in there yet. We've got three more hours to go before a weekend, which is oftentimes a trigger point for a sell-off -- Kyra.

PHILLIPS: Well, we'll keep talking a lot in the next three hours. Thanks, Susan.

LISOVICZ: You're welcome.

PHILLIPS: OK, we've got a reading on the market, so let's get a reading on you. A CNN/Opinion Research Corporation poll just came out. Sixty percent of Americans surveyed this week say they favor President Obama's economic stimulus plan. Thirty-nine percent oppose it.

But will the plan improve your financial situation? Thirty-one percent think it will; 67 percent say no.

Billionaire financier Robert Allen Stanford served with papers accusing him of orchestrating a $900 billion investment fraud. FBI agents tracked Stanford down in Fredericksburg, Virginia. The Securities and Exchange Commission says that Stanford used rosy financial predictions and deceit to lure investors into a scam.

Right now, no criminal charges have been filed, and Stanford was not taken into custody.

(BEGIN VIDEO CLIP)

RANDI KAYE, CNN CORRESPONDENT: What was allegedly going on at Stanford that didn't seem right to you?

CHARLES RAWL, FORMER STANFORD EMPLOYEE: Our clients were not receiving the returns that the literature says they were receiving. That was disturbing.

KAYE: Are you surprised at all by the charges now against Stanford?

MARK TIDWELL, FORMER STANFORD EMPLOYEE: I'm shocked. I didn't realize the depth of the problems.

(END VIDEO CLIP)

PHILLIPS: Well, the SEC shut down three of Stanford's companies this week, and the allegations against him sparked a run on his banks in Antigua and Venezuela.

Well, in New York a gathering of angry investors. The trustee in the Bernard Madoff case met today with people who lost money in the alleged fraud case. He told them there's no indication that Madoff brought any securities for his clients. He said that his office has received more than 2,300 claims so far, and that number is expected to double.

Madoff is accused of swindling investors out of $50 billion in the biggest investment scam in American history. He is confined to his Manhattan penthouse under House arrest.

Illinois Governor Pat Quinn says that Senator Roland Burris has a cloud over his head, and it's time for him to quit. Quinn says it was a gigantic mistake for Burris to accept the Senate appointment from disgraced former Governor Rod Blagojevich.

The Senate Ethics Committee is now investigating Burris, who revealed that Blagojevich's brother had contacted him about raising money for the now-ousted governor. Burris failed to reveal those conversations to state lawmakers during Blagojevich's impeachment hearing.

A brand-new member of Congress learns that it's not all roll calls and committee hearings.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: You might like a cocktail. Can I get you some hors d'oeuvres?

(END VIDEO CLIP)

PHILLIPS: All right. Well, guess what? This freshman could teach Washington a thing or two about fiscal discipline. He's coming up in this hour.

(COMMERCIAL BREAK)

PHILLIPS: Members of Congress rarely sit still. That's been true since the horse and buggy days. But nowadays, with the worldwide recession, lawmakers may think twice before they fly off on junkets for fact-finding missions at taxpayer expense. Then again, they may not.

Here's Drew Griffin of CNN's special investigations unit.

(BEGIN VIDEOTAPE)

GRIFFIN (voice-over): Shortly after passing the Reinvestment and Recovery Act and shortly after making this statement about struggling Americans...

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: The American people are feeling a great deal of pain.

GRIFFIN: Speaker Nancy Pelosi and seven fellow Democrats in the House boarded a military charter -- like this government-owned Boeing 737 executive jet -- and flew off to Italy.

Why, in a time of economic crisis, would the speaker, who happens to be of Italian heritage, travel to Italy? "The United States has no greater ally in NATO than Italy," the speaker said in a statement, "which is why the delegation looks forward to meeting with President Giorgio Napolitano" and other Italian government official.

She also has been going to museums in Florence, receptions at night, and was even presented with the birth certificates of her grandparents by the head of the Italian Chamber of Deputies.

PELOSI: Surprised me with a birth certificate of my grandfather and my birth grandmother.

GRIFFIN: Wednesday Speaker Pelosi, a Roman Catholic, and her husband, Paul, also on the trip, had a private audience with the pope. Her office would not release the entire Italian itinerary of the all- Democratic delegation, due to security reasons.

So what's the cost of her Italian trip to the taxpayers back home? We won't know yet. Congress gives its traveling members several weeks to file their expenses, to tell us what hotels they stayed in, to tell us who took their spouses or staff. But the government-owned Boeing executive jet doesn't fly cheap: about $10,000 an hour according to the Air Force. Twenty hours flying between Washington and Italy adds up to about $200,000.

That is interesting news to the president of the U.S. Travel Association. For weeks now, Congress has chastised banks and bailout recipients for unnecessary trips and conferences. Roger Dow says that has hurt the travel industry.

ROGER DOW, U.S. TRAVEL ASSOCIATION: By demonizing or by sensationalizing travel, all you're doing is -- you're not hurting the businessman. You're hurting the bellman, the maid, the town that counts on that travel for taxes.

GRIFFIN: He hopes Congress, maybe after these trips, will recognize the value for doing business.

Right now there's a congressional delegation in Gaza, another in Brussels and Paris, and CNN caught this group of House members on their way to India last Friday to mark the 50th anniversary of Reverend Martin Luther King Jr.'s journey to study Gandhi. The details: six members of Congress, Martin Luther King III, Andrew Young, musician Herbie Hancock and others. Both the U.S. State Department and Congress are picking up the bill.

Martin Luther King III, who along with his siblings, sold his father's papers for $32 million two years ago, was among the guests of the State Department. He called it the trip of a lifetime.

(END VIDEOTAPE)

PHILLIPS: Oh, boy. All right, Drew joins us live now.

Let's backtrack a second to the Italy trip.

GRIFFIN: Right.

PHILLIPS: I'm just curious.

GRIFFIN: Right.

PHILLIPS: Any members of Congress who blasted auto execs or any of the bankers, were they on this trip?

GRIFFIN: You know, there was one guy that should have known better. It's Mike Capuano. Mike Capuano, he runs a debt clock on his Web site. He was in -- he's in the House Financial Services Committee, and he blasted bankers. He blasted the auto executives about their bailout money. And here he goes right -- you know, right away he heads off on this trip.

PHILLIPS: Takes this trip. All right. Let's take a listen. Let's go ahead, see what we have. Let's listen.

(BEGIN VIDEO CLIP) REP. MIKE CAPUANO (D), MASSACHUSETTS : Basically, you come to us today on your bicycles after buying Girl Scout cookies and helping out Mother Teresa, telling us, "We're sorry. We didn't mean it. We won't do it again. Trust us."

Well, I have some people in my constituency that actually robbed some of your banks, and they say the same thing. They're sorry; they didn't mean it; they won't do it again. Just let them out. Do you understand that this is a little difficult for most of my constituents to take? Did you learn your lesson?

(END VIDEO CLIP)

PHILLIPS: OK. I guess I would now like to ask him what his constituents think of him taking a trip to Italy with taxpayer money.

GRIFFIN: Yes. If I was in the district in Massachusetts, I'd be asking the same thing. And if I was one of those bankers getting chastised, I'd be saying, "Hey, man, are there two sets of rules here?"

PHILLIPS: Pot calling the kettle black.

OK. What about the India trip? Were there any members of Congress on that trip that blasted bankers or auto execs?

GRIFFIN: You know, not -- not per se. Jim McDermott has been very outspoken against the -- what he would call the Republican administration's overspending and getting us into huge debt. He also has a debt clock on his Web site and has blasted the big trade deficits in the past. He's on the India trip, as well.

We actually reached out to his office, and when we asked his press secretary, who's also his chief of staff, what are the taxpayers back home in Washington -- Washington state is where he's from -- getting out of this? The guy actually said, "Is this a joke? Is your reporting a joke?"

PHILLIPS: Wow.

GRIFFIN: Yes.

PHILLIPS: Well, this is not a joke. Who tracks their travel expenses? Who signs off on travel expenses? Who monitors travel expenses?

GRIFFIN: Like almost everything else in Congress, Congress keeps track of Congress. So approval for the trips comes from the speaker of the House, or the chairman of a committee. Any kind of approval on expenses comes from within their own committee chairs. So...

PHILLIPS: So taxpayers are going to have to step up, complain, make a big beef about this?

GRIFFIN: Listen, but here's what you'd have to do. If you're just a taxpayer wanting to find out if they're wasting your money, you've got to do what we do. We get hassled by these people when we ask questions.

PHILLIPS: Right.

GRIFFIN: You have to go down to, literally, the basement of the Capitol, try to get some unhelpful staff person to dig into travel records that are filed 60 days after the fact. If there's partial reporting being done, you have to go back to the member. It's very, very difficult to get all of these records and...

PHILLIPS: Well, in 60 days, then, I'm assuming you're going to go after those travel expenses. And I'd sure love to say...

GRIFFIN: You know what?

PHILLIPS: ... see where did they stay in Italy? Were they at a Tuscany winery? Were they...

GRIFFIN: When we -- when we -- McDermott's office actually said, "You can check this in 60 days."

And we said, "Well, we will. We'll come back to you."

PHILLIPS: OK.

GRIFFIN: They said, "Is that a threat?"

PHILLIPS: It's not a threat. It's just good reporting. Yes. We look forward to it. Sixty days from now, I'm counting down. T minus 60.

GRIFFIN: There you go.

PHILLIPS: All right.

Well, we asked Speaker Pelosi to join us today to talk about this. Her office says that her travel schedule wouldn't permit it. We also asked the White House to comment on it, and it actually referred us back to Congress.

Well, you can bet that Pelosi and the other members of Congress on the Italy junket weren't sleeping on cots, but freshman Republican Congressman Jason Chaffetz sure is.

(BEGIN VIDEO CLIP)

JASON CHAFFETZ, FRESHMAN REPUBLICAN CONGRESSMAN: I will save about $1,500 a month for our family by doing this. And I -- you know, I got a wife. I've got three kids.

(END VIDEO CLIP)

PHILLIPS: And he's famously frugal for literally sleeping in his office. He's also giving us a behind-the-scenes look at life in Washington with his video postings on CNN.com.

Congressman Chaffetz is in his home of Salt Lake City today, joining us live.

Good to see you, Congressman.

CHAFFETZ: Hey, thanks for having me. I appreciate it.

PHILLIPS: It's our pleasure. And of course, with the developing news today, I've got to ask you about your House speaker. I mean, I'm assuming that she's not sleeping on cots anywhere. You might be the Lone Ranger on this one.

CHAFFETZ: No, I've been eating SpaghettiOs. You know, I wasn't able to go on the trip to have, you know, tea in Europe. And so, yes, I understand the speaker is not going to sit on a middle seat like I do, fly you know, on a Delta flight to Italy, and there are security concerns.

But at the same time, this country's $12 trillion in debt. Twelve trillion! I don't know that we can continue to jet off to Europe. We have got to learn to do more with less, and if that means SpaghettiOs for House members, hey, I'll open the can for them.

PHILLIPS: Well, so let me ask you this, Congressman. The Obama administration is all about transparency, capping paychecks of political types. Yet, we find out about this trip to Italy now.

Do you think Pelosi, Congress, you, the Obama administration are all on the same page when it comes to, "Hey, we got to really watch what we do. We're in an economic crisis, and we, the politicians, are in charge of doing something about it. And at the same time, we have to really watch what we do"?

CHAFFETZ: No, we're not on the same page. My concern is that the rhetoric is there, but the action is not there. We're not walking the walk.

And, you know, you can only be accountable for yourself. I hope the taxpayers will hold people accountable and go back and look. There are very justifiable trips. But Herbie Hancock in India? I mean, come on!

PHILLIPS: Well, and I was looking at your behind-the-scenes video that you've shot. And this one little moment caught my attention. Let's go ahead and listen.

(BEGIN VIDEO CLIP)

CHAFFETZ: I got some members of Congress here. It's a nice dinner.

I'm going to have to go back to that burger plate, get some hamburger. Cheeseburger and fries after this. Maybe even throw in a milkshake. That just ain't going to cut it.

(END VIDEO CLIP)

PHILLIPS: So here you are at this lavish dinner on the Hill, and you're thinking, "No, I got to go back for the hamburger." I'm wondering if maybe you should take Pelosi with you to the, you know, Five Guys Burger or whatever the name of that place is.

CHAFFETZ: Yes, Five Guys Burgers and Fries. I'll take the speaker.

Madam Speaker, this is my official invitation. I've several got several Five Guys Burgers and Fries. Let's get a cheeseburger.

PHILLIPS: Well, let me tell you -- why take on this project? Why -- and also, too, how transparent will you be able to be as you take this camera and you shoot behind the scenes?

CHAFFETZ: You know, I try to give people an insight. I think Washington, for a lot of people, seems so far, so distant. People are totally out of touch. And I want to just do everything I can to be as open and transparent, let them know what's happening, not only on the legislative side but behind the scenes in the deal making and what really goes on.

And so far, it's been -- it's been great. I'm glad CNN's doing it. I think it's a fun project.

PHILLIPS: And let me ask you, too, if you don't mind, Congressman. You heard Drew Griffin say we have to wait 60 days to be able to see these expense reports that have been filed.

CHAFFETZ: Yes.

PHILLIPS: Tell me about limitations with regard to trips like this. Are there any? Is there a manual that you guys get, that you can only spend a certain amount of taxpayer dollars on certain hotels? Or is it really up to each individual representative?

CHAFFETZ: Well, we're given an individual budget. A congressman, my case, has about a $1.4 million budget. That's for payroll and travel and paper and photo copies. Anything you use, the phones, anything you can think of.

But these co-dels, as they call them, the congressional delegation trips, those are put together through the committees. And like I said, there's some real value in doing those. If you're going to be voting and creating public policy on certain things, to go visit the border, for instance, that makes a lot of sense.

It's the opulence. It's the -- it's the duplicity of jetting off to Europe to have tea that, I think, infuriates Americans. So we've got to find the right balance.

But these records should be available online. Right now the reporter is right: you have to go down to the basement and literally get a hard copy. My guess is that's more expensive than just putting them online, and Congress should change that.

PHILLIPS: Congressman Jason Chaffetz, I look forward to more of your behind-the-scenes video. I know we're going to check in with you on a regular basis. And I can't wait to talk to you in about ten years to see if, you know, you're still being this frugal.

CHAFFETZ: Absolutely. Thank you.

PHILLIPS: Congressman, thanks.

CHAFFETZ: Thanks.

PHILLIPS: Well, fast-food restaurants may be risky business, a new study says. What you need to know to live and stay healthy.

(COMMERCIAL BREAK)

PHILLIPS: For anybody who takes psoriasis drug Raptiva, some news that you need to know about now. The FDA is warning that the medication could cause a serious potential fatal brain infection known as PML. There have been three confirmed cases and a fourth possible case of Raptiva patients coming down with PML. Eighty percent of people who get it die.

And the FDA says that it will take steps to make sure that patients are fully informed about the risk.

Now, if you pass a lot of drive-throughs on your drive home, you'd better listen up. A new study links stroke risk to the number of fast-food places near your home.

Senior medical correspondent Elizabeth Cohen has more on this, with us now.

Hey, Elizabeth.

ELIZABETH COHEN, CNN CORRESPONDENT: Hey, this is definitely an interesting study. What these folks did at the University of Michigan is they looked at a county in Texas, and they looked at who lives near a high-volume, high-capacity of fast-food restaurants. What they found is that folks who live near a lot of fast-food restaurants had a higher incidence of stroke.

Now this is not the first time that it's been found that people who live near a lot of fast-food restaurants have more of a chance of getting a stroke or heart disease. In fact, in Los Angeles County last year, the city council decided to -- Los Angeles, rather, the city council decided to ban new construction in certain neighborhoods of fast-food restaurants, because they were concerned about people's health.

PHILLIPS: So what is the restaurant industry -- industry saying about this?

COHEN: The restaurant industry says that this is completely flawed, that the study is completely flawed. And I do want to make a few notes here. Because even the authors say that this is not proof that fast-food restaurants cause strokes.

For example, it is possible that folks who lived in these areas have a lot of fast-food restaurants. Maybe they were lower socioeconomic standard kind of -- kind of areas, and perhaps they had a lot of people who didn't have health insurance. Perhaps a lot of people smoked. It's unclear whether it's really the fast-food restaurants that are doing the damage.

So this is not one of these studies where you're like, "OK, this is definitely it. It's been proven." That's not the case here.

PHILLIPS: Well, come on. We all eat fast food -- fast food once in a while. So are there specific smart choices?

COHEN: There are some smart choices. What's nice is I remember doing these stories years ago. There were no smart choices. You went to a fast-food restaurant, you were going to get something with a lot of cholesterol in it. That is no longer the case.

So let's take a look, for example, at McDonald's. When you go to McDonald's -- and here's the nutrition facts right on their Web site -- you can order a Big Mac and a small fries and get 770 calories and 40 grams of fat. You can make that choice. Or you could choose to have Asian Chicken Salad and yogurt and get 320 calories and 12 grams of fat.

So it's your choice: 40 grams of fat, 12 grams of fat. You can make good choices. And they're pretty obvious. I mean, I don't think you need to be a nutritionist to know that, you know, yogurt is better than fries.

PHILLIPS: That's true, obviously (ph). But, you know, for many years we all thought Caesar salad was the way to go.

COHEN: That's true.

PHILLIPS: And then, you know, that dressing has 50 grams of fat!

COHEN: That's true, that's true. But all that information is now on the Internet, and often it's at the restaurants themselves. I know because whenever I go, I ask for it.

PHILLIPS: All right. Very good.

COHEN: OK.

PHILLIPS: Happy Meal now. We'll have lunch.

COHEN: Absolutely.

PHILLIPS: Thanks.

One 11-year-old Alabama girl is fighting for her life today after police say that she drank a chemical from a bottle used to make meth.

(BEGIN VIDEO CLIP)

DENISE KELLEY, MOTHER: You know, with the help of God and the prayers, my baby will live, but she'll never be the same. She'll never be the same. (END VIDEO CLIP)

PHILLIPS: Well, the girl's mother says that her daughter innocently drank from a soft-drink bottle. Liquid immediately burned her throat. Police say the liquid was hydrochloric acid linked to a meth lab located in a backyard trailer where a relative lived.

Well, it's almost briefing time. And we're watching the White House for another lively session of a world of issues. We'll take it live when it happens.

(COMMERCIAL BREAK)

PHILLIPS: Hello, everyone. I'm Kyra Phillips live at the CNN headquarters in Atlanta. You're live in the CNN NEWSROOM.

We're still waiting for the White House briefing. It was first set for 12:45 Eastern, then pushed back to 1:30. Now it is due to start at 1:45. You'll see it live whenever we see the president's spokesperson, Robert Gibbs.

Well, earlier today the White House was wall to wall with mayors - big city mayors, small town mayors, dozens of mayors in between. They came to share horror stories from the recession and to get assurances that better days are ahead.

(BEGIN VIDEO CLIP)

OBAMA: Now it falls to us to seize the possibilities of this moment and convert peril into promise. See to it that our cities and our people emerge from this moment stronger than they were before. Starting today, that's what you and I are going to do, together. I'm absolutely confident that our people will benefit and people will look back and say that this was a turning point, this was a moment where in the midst of great crisis, leadership was shown and we created a new platform for success for all Americans in the future.

(END VIDEO CLIP)

PHILLIPS: But it wasn't just a pep talk. Mr. Obama warned he'll call out any feds or mayors misusing their share of the stimulus fund.

So what do the mayors think?

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We get called out every day at the local level. We have plenty of constituents who will be doing that before the president does.

(END VIDEO CLIP)

PHILLIPS: Well, the biggest city represented in today's gathering was Los Angeles by Antonio Villaraigosa.

(BEGIN VIDEO CLIP) JOHN STEVENS, CNN IREPORTER: I've been unemployed, going through a foreclosure. I don't have a lot of income coming in, which is not enabling me to pay my mortgage and keep up with it.

But besides that, I was so excited yes when President Barack Obama announced his foreclosure fix, the housing fix, and it kind of took a weight off my shoulders. Today, I find out that since President Obama announced his housing fix program, that Citi mortgage, who is my mortgage company, is now barreling full force to take me out of this house.

(END VIDEO CLIP)

PHILLIPS: That was one of our iReporters who is struggling to pay his mortgage trying to find out if President Obama's housing plan will help him before it's too late.

And critics of the president's plan are also making their voices heard. Listen to part of a rant from Rick Santelli from CNBC Business News.

(BEGIN VIDEO CLIP)

RICK SANTELLI, CNBS BUSINESS NEWS: How many of you want to pay for your neighbor's mortgages who has an extra bathroom and can't pay their bills? Raise your hand? President Obama, are you listening?

(END VIDEO CLIP)

PHILLIPS: Rick is a classic. President Obama's plan calls for spending $75 billion to stem the soaring rate of foreclosures that helped ignite the recession.

Anger over the foreclosure crisis pouring out of the streets of Oakland, California. Protestors held a rally in a neighborhood where last month more than 165 people actually lost their homes. They now face the possibility of foreclosure. They're vowing to stop the banks from taking control of the properties.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: To get them to do some things to change the quality of life in the neighborhood.

(END VIDEO CLIP)

PHILLIPS: Many troubled homeowners refinanced their mortgages with an adjustable rate and when the rates shot up they couldn't keep up with the payments.

California's state government can't keep up with its payments either. It's $42 billion in the hole. Next hour, Governor Arnold Schwarzenegger plans to sign a big package of tax hikes and spending cuts into law. The goal to try and wipe out that massive deficit. State lawmakers finally pushed the budget bill through yesterday after a grueling 106-day legislative battle. And a vow to work together in Israel. President Shimon Peres has picked former Prime Minister Benjamin Netanyahu to form a new government. He'll have to build a coalition with other parties since there was no clear majority winner in Israel's elections last week. Netanyahu has six weeks to put the pieces in place or the process starts all over again.

A U.N. nuclear watchdog group now says that Iran has the capability to build a nuclear weapon. An Institute For Science and International Security report says Iran hasn't built a weapon yet. Iranian scientists have enough low enriched uranium to actually build a single nuke. The report also says that Iran has built new facilities to enrich more uranium but they aren't being used yet.

Secretary of State Hillary Clinton is in China, the last stop on her Asian tour. She says disagreements over human rights in Taiwan cannot be allowed to interfere with attempts to reach a consensus on broader issues. Among other things, she and Chinese leaders are expected to talk about climate change and security issues, but a key focus will be the global financial crisis.

(BEGIN VIDEO CLIP)

HILLARY CLINTON, SECRETARY OF STATE: I think that the Chinese economy is incredibly dependent upon the American consumer. That has been the source of a lot of the growth in China. They have 20 million migrant workers who are unemployed as of today. They are having to do their own stimulus package. So how China moves through this economic contraction is not determined yet, just like how we're going to move through. We've got to work together.

(END VIDEO CLIP)

PHILLIPS: Clinton will spend two days in the Chinese capital before returning home.

Former-White House Press Secretary Ari Fleischer is speaking out about the U.S. decision to wage war on Iraq and he's defending former- President Bush. Here's what he told CNN's D.L. Hughley.

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ARI FLEISCHER, FMR. WHITE HOSUE PRESS SECRETARY: We were wrong about weapons of mass destruction being in Irqaq. Had he had been right and we found the stockpiles, as bad as the war turned out to be and much worse than they thought it would be, I think most Americans still said, I don't like to go to war but thank god we stopped Saddam from using those. We were wrong.

D.L. HUGHLEY, HOST, "D.L. HUGHLEY BREAKS THE NEWS": When you found out - I don't know I've ever heard anybody associated with the president say that. I just don't know.

But when you found out you were wrong...

FLEISCHER: Yes. HUGHLEY: How did that make you feel? You knew you had been part and parcel of the war.

FLEISCHER: You just scratch your heads and say, how could we be wrong? It wasn't just us that thought he had weapons of mass destruction. The Egyptians thought it, the French thought it, the Germans thought in, the United Nations thought it, Bill Clinton, CIA thought it; we all thought it. Saddam was the big liar here.

(END VIDEO CLIP)

PHILLIPS: Well, you can hear more of the Fleischer interview on D.L. Hugley's "BREAKS THE NEWS" which airs Saturday 10:00 p.m. Eastern and Sunday at 11:00 p.m. Eastern right here on CNN.

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(WEATHER REPORT)

PHILLIPS: We're also monitoring the White House briefing. Of course, as soon as Robert Gibbs steps up to the mic we'll take it live. But of course, there's our Ed Henry, front and center. He's going to bring us all the latest form there. We're going to take a quick break, we'll be right back.

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PHILLIPS: Take you live now to Washington, D.C. as we waiting for Robert Gibbs to step up to the mic for the White House press briefing. Ed Henry is there, of course.

And you know, Ed, we realize, you know, the president is not Pelosi's boss, but of course the big question that we all want to know is with the Obama administration talking about being so transparent, watching all the dollars and cents as we're in a pretty disastrous time economically, and now this story surfacing about Pelosi and her crew taking this trip to Italy with taxpayer money.

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Certainly a lot of members of Congress do that during breaks like this when they're not working and it periodically comes up....

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PHILLIPS: ... of course. You mention the mayors meeting with the president. Everyone putting in for their dibs on how much money they want, where - oh, here comes Gibbs. We'll go ahead and take it live.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: I thought maybe you were going to say I'm wearing the same tie as Chuck. I thought I was going to have to go back and change. I don't come out here until I see Chuck on TV. How is everyone today? Good.

QUESTION: How's your son?

GIBBS: He's wonderful. Thank you for asking.

All right. Let's - maybe we should do this in a more dignified way.

All right. I'm resisting temptation. I don't have any announcements. Obviously, we'll have a week ahead, through the process of playing "Jeopardy!" with you guys doesn't give everything out before we do that. I'll start with you, Miss Levin (ph).

QUESTION: Thanks. I would like to ask about the market. How concerned are you all at how they're reacting to what's being done this week, in the markets? Is the president doing anything, does he have anything different on his schedule or his agenda?

GIBBS: Obviously, he met with a fairly big group of advisers to have his presidential daily briefing on the economy. And the economic situation certainly continues to be at the forefront of his actions.

But as I've said a couple of - more than a couple of times, actually, up here, which is, I think it is unwise to believe that either everything we do is designed to cause an immediate market reaction, or that the score should be kept by that. I think that if you look at the news of the week, I think the market probably prices in, not just - probably prices in a lot of information, whether it's price increases, whether it's - I think a lot of news throughout the globe about a deteriorating economy.

I think it's more likely that what you're seeing is what the president continues to talk about, some of our greatest challenges, but certainly not just a reaction to what we're doing.

QUESTION: I understand what you're saying about it, not wanting to sort of have a daily scorecard that's only kept by what Wall Street does, but at some point you want that taken as well as other indicators, and for the economy to turn around. What is the president being told by his advisers about when there might be some sort of turning point on some level or another, whether it's markets or somewhere else.

GIBBS: Well, you know, again, as I've said before, I think we all recognize, and I think forecasters recognize, that the downturn in the economy is very serious. Very analogous to some of the past deep recessions that we've seen. And that it's going to take some time to get out of that hole.

The question is whether that hole gets deeper - or how much deeper that hole might get. We believe, obviously, the president signed into law the Recovery and Reinvestment Plan, which was a good first step in cushioning the blow of the recession, and working aggressively to put people back to work. But I've also said from up here any number of times, there's not just one thing that we need to or can focus on. We've got financial stability. You've got home foreclosures. You've got re-regulation. There's any number of things that the president continues to work on that have to be solved and it's going to take quite some time to do it. When that turn-around happens, it's hard for me to say. The president and his team believe that the actions that we're taking now will have a direct impact on making that happen quicker. The investments that we make, that you saw the president sign into law earlier this week, we think will have an impact. A home foreclosure plan that will stem the rising tide, and spread of home foreclosures, which is tremendously important. And obviously working on both financial stability and regulatory reform to ensure that this doesn't happen again.

But we've got - I think the president would be frank and forthright in saying we've got a long way to go. He's certainly said that. And that's what he's going to continue to work on.

Yes.

QUESTION: Bank of America and Citigroup shares have been pummeled today on Wall Street for fears they're going to be nationalized. Can you assure people that that step is not going to be taken and will be avoided?

And also separately, on the automakers, you had a couple of days to review their plans. Is there any early read you can give? And can you talk about the meeting at Treasury?

GIBBS: I believe the meeting is over at Treasury, and I will attempt to get something for you all on that based on that ending. And we've talked a little bit about that this week.

Let me reassure, as best I can, on your first question, on banks. This administration continues to strongly believe that a privately held banking system is the correct way to go, ensuring that they are regulated sufficiently by this government. That's been our belief for quite some time and we continue to have that.

QUESTION: Robert, the president this morning spoke to the mayors about accountability, making sure he's paying taxpayer money wisely and getting it to the people who need it. I think he also spoke about corporate leaders taking corporate jets and spending money unwisely. Does he have similar concerns about lawmakers in Congress, since they're off this week, flying around? A lot of stories about Speaker Pelosi in Italy and several other countries, Republican lawmakers flying around the world as well. Should the Congress at a time of crisis be cutting back as well and not flying around on Air Force jets?

GIBBS: Well, I mean, let me split your question a little bit. I'll address the - I mean, obviously, I think members of Congress going overseas on important trips is something that the president did when he was a senator. Going several times with - or once with Senator Luger, and a longer trip to Africa because of the importance of it, that the continent played in our security concerns. So, obviously, I think that they are - many of those trips are important.

I think what you saw the president do today was reiterate what we have said throughout this process. Which is - and there were stories about this even today, that we have - we've been entrusted with the taxpayer money, and appropriate it in a way in which the president and his team, and the Democrats and Republicans will best think move this economy forward. We understand that - bless you - that that level of trust is extraordinary. And that whether this money goes to the states through a formula grant, whether it goes through the states or local entities through a transportation grant, or something like that, that great care has to be used when dealing with the taxpayer money. The money should not be spent on wasteful projects or pet projects, but instead spent on projects that we know can and will move this economy forward.

Let me - you didn't ask me this, but I'll add it anyway. It has been amusing this week to read the many press releases and twitter comments on those that found the stimulus on CSPAN during the vote something that they didn't necessarily think was a good idea until it came time to break ground on projects in their home district.

QUESTION: Are you talking about Republican lawmakers specifically?

GIBBS: Many of them, yes.

QUESTION: So does the president believe there's some hypocrisy going on?

GIBBS: As I've said before, old habits are hard to break. And I think that the American people readily understand when - when this town gets dominated by games playing rather than problem solving.

QUESTION: Quick follow-up. The first week in office, the president signed the executive order to close down the military prison camp at Guantanamo Bay. The attorney general is going on Monday for the first time to get a closer look at it. This is very serious, something...