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American Morning
Paying for the President's Pricey Programs; Citigroup, Government Close to Sealing Deal; Debate Over Changing U.S. Policy With Cuba; Sony President Out After Posting $3 Billion Loss; Arizona Attorney Gerneral Discusses Crime Invasion From Mexico; Restaurants Making Chnages to Keep Guests Coming In
Aired February 27, 2009 - 07:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KIRAN CHETRY, CNN ANCHOR: You're watching the Most News in the Morning. We have a lot to cover for you today. Here's a look at what you'll be breaking down in the next 20 minutes.
Coming home, breaking developments on President Obama's plans to pull troops from Iraq and why some Democrats are seriously concerned.
We have Suzanne Malveaux live at the White House. She's going to be talking about that with us in just a moment.
We also have new details on the president's $3.6 trillion budget plan for 2010 this morning. And how he plans to pay for it. One way -- higher taxes if your salary tops $250,000 a year. Our Carol Costello is crunching the numbers live in Washington. And we're going to check in with her in just a moment.
Also, some major changes in our relationship with Cuba. The country could be taking the first steps or we could, actually toward ending the embargo. Leaders on both sides warming up to that possibility. And Jim Acosta is looking at both sides for us ahead.
First, though, we begin with breaking news, and breaking details of President Obama's strategy for Iraq. The countdown is now on to bring U.S. troops home from the war zone. But if you think that means that all troops are coming home, you are going to be disappointed.
Our White House team has the inside scoop. CNN's Suzanne Malveaux is live at the White House with more details for us.
Hey there, Suzanne.
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Good morning, Kiran.
Two administration officials, senior administration officials telling us this morning that it is August 2010. That is when they're going to withdraw all U.S. combat troops. Not within 16 months as promised by candidate Obama, but within 19 months or so. That is what President Obama is saying.
And this is not all the troops. We're talking about a contingency force that would stay in Iraq some 35,000 to 50,000, that would be on the ground, essentially with a new mission. They're talking about training and equipping Iraqi troops, supporting civilian operations, as well as targeted counterterrorism missions that are actually going to take place.
All of this is after a series of meetings that the president had with civilian and military leaders. One senior administration official saying this is really the reflection of a sober assessment of what the situation is on the ground. And, Kiran, once again, this is three months beyond what candidate Obama had promised. But that senior administration official saying, look, this is really reflecting the reality here which is things are better. But they still believe they need a little bit more time, Kiran.
CHETRY: Yet, they are getting some push-back actually from fellow Democrats. Explain that.
MALVEAUX: Oh, absolutely. There is some disappointment here. Obviously, you're just talking about three months. That is not really the main issue here. But the president late last night had a meeting with the Democratic leadership here at the White House, including House Speaker Nancy Pelosi, who did come out and say publicly questioning that number, about as high as 50,000 U.S. troops staying inside of the country, that they're not going to pull out all of these troops until the end of 2011.
She was questioning that number, thinking, well perhaps it could be a lot less, maybe even a third of the number. And the fear here is that there might be mission-creep. Or the fact that it is so dangerous inside some places in Iraq that they're not combat forces, but they still are in danger. So that's just some of the concerns that the Democrats are talking about -- Kiran.
CHETRY: Suzanne Malveaux for us at the White House. Thanks so much.
You can also see the president's remarks live from Camp Lejeune in North Carolina this morning, 11:45 Eastern time right here on CNN, or CNN.com/live.
JOHN ROBERTS, CNN ANCHOR: Well, now returning to President Obama's budget. We're breaking down the back-and-forth in the $3.6 trillion spending plan. It's a staggering figure. And here's just a few of the big programs that would benefit.
Health care is one of the most talked about. It will be receive $634 billion. Big chunks of money would be spent on covering the uninsured and on cancer research.
Forty-six point seven billions dollars billion is planned for education. In the year 2010, $2.5 billion will be set aside to help low-income students to go to college.
And on defense, nearly $534 billion in spending on tap for 2010. That is up four percent because of commitments in Iraq and troop increases in Afghanistan. The president setting aside $130 billion for those two battlefronts.
Many Republicans are livid at all the spending, including the man who almost became the president's commerce secretary.
(BEGIN VIDEO CLIP)
SEN. JUDD GREGG (R), BUDGET COMMITTEE: Where's the restraint in spending? You know, this budget doubles the debt of the federal government in five years. Triples the debt of the federal government in ten years. Runs up obviously massive deficits over this period. Never really gets us back to a point where we're on a glide path towards getting control over the costs that we're passing on to the next generation.
(END VIDEO CLIP)
ROBERTS: Don't forget that Judd Gregg gave up this idea of becoming commerce secretary over irresolvable conflicts with the administration. That's probably an example of one of them.
All this morning we're going line by line through the $3.6 trillion budget. Our Ali Velshi joining the team this morning. We're going to talk to him.
But who can get stuck with the bill? If you make a healthy chunk of change every year, it could be you.
Our Carol Costello is covering that side of the story. She joins us now from Washington. If you're one of the millions of wealthy Americans, Carol, you're going to get stuck with the bag here on this.
CAROL COSTELLO, CNN CORRESPONDENT: I think so, you know, but the president's job isn't easy. He needs money, and lots of it. And where do you find money these days? Well, you find it in the pockets of those who have it.
(BEGIN VIDEOTAPE)
COSTELLO (voice-over): It is a daunting task. By the end of this fiscal year, America will have a deficit to the tune of $1.75 trillion. How do you cut that in half by 2013, and pay for pricey new programs? At least in part, by taxing the rich.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: And we'll save billions of dollars by rolling back tax cuts for the wealthiest Americans, while giving a middle-class tax cut to 95 percent of hardworking families.
COSTELLO: Not unexpected.
OBAMA: Two hundred and fifty thousand dollars a year?
Two hundred and fifty thousand dollars a year. Yes, asking the folks who are making more than $250,000 a year, a quarter million dollar a year, to go back to the tax rates they were paying in the 1990s.
COSTELLO: Mr. Obama has talked about taxing the rich ever since, well, Joe the plumber. OBAMA: When you spread the wealth around, it's good for everybody.
COSTELLO: Back then spreading the wealth meant Mr. Obama would let the Bush-imposed tax cuts for the wealthy expire. Today, it means a whole lot more.
The president is also proposing to reduce deductions on mortgage interest and on charitable contributions, raise taxes on capital gains and dividends, and require wealthy Medicare beneficiaries to pay more for medical care and prescription drugs.
(BEGIN VIDEO CLIP, "ROBIN HOOD PRINCE OF THIEVES")
KEVIN COSTER, ACTOR: Lady, a woman of your beauty has no need for such decorations.
UNIDENTIFIED FEMALE: How dare you.
(END VIDEO CLIP)
COSTELLO: Some say that amounts to robbing the rich to pay for the poor. "The Wall Street Journal" trashed Mr. Obama's plan, insisting Mr. Obama is selling the country on a two percent illusion. Some economists could not disagree.
GERALAD PRANTE, TAX FOUNDATION: You can't pay for everything with just raising taxes on high-income people. So you have to look somewhere else. You have to either cut spending or raise taxes on other people if you want to solve the entire problem.
COSTELLO: President Obama has vowed to find savings of $200 billion a year. But in order to cut the deficit in half, Mr. Obama would have to double the tax rate for the wealthiest Americans, something he's certainly not proposing now.
(END VIDEOTAPE)
COSTELLO: Imagine the outcry over that.
Now, of course, President Obama's idea could work if the economy starts to boom over the next couple of years, or Congress finds ways to really slash spending. But as economist Russell Roberts from George Mason told me, only one recent president has been able to keep his promise to balance the budget -- Bill Clinton. And he did that with a Republican-controlled Congress. Roberts says the toughest battle Mr. Obama faces, convincing his own party to cut the budget by the billions -- John.
ROBERTS: Not only balance the budget, but was actually running surpluses. But, to quote that old song, "Those were the days, my friend."
COSTELLO: I wish we were back there now.
ROBERTS: Wouldn't that be nice. Carol, thanks so much. Good to see you this morning.
CHETRY: We're going to quit that old song.
ROBERTS: Up in smoke.
CHETRY: Now we have Ali Velshi and Christine Romans here with us this morning. They have a bit of breaking business news that's just crossing.
We told you earlier this morning about the reports that were out, big buzz that Citigroup is actually going to reach a deal with the government, for the government to increase its stake. And according to the "Associated Press," that did happen. So we're...
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Right.
CHETRY: Go ahead, Christine.
ROMANS: We know that they've been talking about this, and we've been talking about it in the markets for sometime. There has been great fear in the markets because this would mean taking the preferred shares and swapping them with common stock.
ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Right.
ROMANS: And what that means, you know, without getting too technical, it means that essentially the United States government would be increasing its stake, but that dilutes the common stock -- and that's what we have in our 401(k)s, it's the common stock.
VELSHI: We should be clear it doesn't mean that the government is putting more money into Citigroup.
ROMANS: That's right. It may not be the money.
VELSHI: There's a bit of an accounting trick. They're taking money that is a liability to Citigroup and switching it over to the equity, the ownership side of Citigroup. So it makes Citigroup's balance sheet look better, but the net effect is that the government and taxpayers own a bigger chunk.
ROBERTS: The big question, though, is this leading to nationalization of one of the biggest banks in America?
VELSHI: That's right because you're switching ownership over. Citigroup was pretty clear on the fact that they never at no point want the government's ownership in the company to go beyond 50 percent.
ROMANS: And we confirmed the broad details of this. CNN Money has confirmed the broad details of this but, you know, I guess not the details, but the big sort of picture items of this. We'll find out if -- see what we know is that it will convert up to $25 billion of preferred stock in Citigroup, giving it an ownership stake of as much as 36 percent. We knew it could be up to 40 percent, so about 36 percent. What this is, is the United States government taking more control of a big, you know, free enterprise, you know, company, Citigroup, a very big deal. And we know that the United States government now, this is the third time they've had to go in and sort of change their relationship with Citi to try to shore it up.
ROBERTS: So, Ali, what does it mean for folks who have their money or investments with Citigroup?
VELSHI: No change for them, essentially. With investments, that's a different story. As Christine suggested, it may dilute your ownership. If you're a stockowner in Citigroup and, by the way, so many of you are.
ROMANS: Right.
VELSHI: It's one of the most widely held stock in the entire world.
ROMANS: It's probably in your 401(k). It's probably there somewhere.
VELSHI: But there's two effects. One is the net short-term effect of diluting a stock, usually means the stock goes down. But in this case, the financial health of Citigroup was in such question, that it could mean a long-term gain for the company. So really, at this point, anything is possible the way stock markets go. They haven't gone in the way you would typically expect them to go on news recently.
ROMANS: Right.
VELSHI: So we'll keep a very close eye on it and keep you posted throughout the morning.
ROMANS: You don't want the government getting involved in the private sector, but you want...
VELSHI: You're looking to save your bank.
ROMANS: But you want these companies to succeed.
VELSHI: Yes.
ROBERTS: Lots to talk about this morning. We'll continue to do it.
Taking another look at a Cold War policy that stands to this day. How our relationship with Cuba is changing at this very moment, and why it could lead to the end of the embargo.
It's 10 minutes now after the hour.
(COMMERCIAL BREAK)
ROBERTS: Twelve and a half minutes after the hour.
Just want to remind you the breaking news we got in. The government taking a larger share in Citigroup. Looks like it's going to be up to 36 percent. Of course, that raises the whole question of whether or not the government is about to nationalize some of America's biggest lending institutions. Ali Velshi and Christine Romans here to talk about that.
VELSHI: Look what it says under your name there.
ROMANS: I know. It said Ali Velshi.
VELSHI: Wow. A better-looking version of me.
ROBERTS: I've come up in the world.
VELSHI: Yes, I like that.
ROBERTS: Let's just open the one day.
ROMANS: No, he said Ali Velshi. It said Ali Velshi under Christine.
ROBERTS: Oh, and Christine. Oh, there you go. A far better- looking version.
CHETRY: Christine, you start it off.
VELSHI: All right. Very good. Let me tell you've got about -- actually, I got to do my Christine voice this morning because she's...
ROBERTS: I know. I'm losing it by the second (ph). I'm sorry.
VELSHI: All right. Actually, they called me in case something goes wrong with Christine's voice.
Let me tell you about the deficit. John, you alluded to this a little while ago, what the sort of the grand themes of the deficit are -- the deficit, look at this, I'm calling it a deficit. The budget, which happens to contain a deficit.
The federal budget is an expression of what you, the voters, decided you want the government to do. It's basically the prioritization of what the government says. In a society, your federal budget would be an entire reflection of what you decided, what you voted for. And this administration, when they were campaigning, said that they were going to do certain things. This is what's happening in the budget.
Defense, John talked about this a few minutes ago. There's actually a small increase in the defense budget for 2010, but part of this budget proposal was an extension out 10 years to see what was going to go on in the future. And it's got long-term, very serious cuts in the budget for defense.
Health care. There's an increase in health care. Again, this year, it's marginal but there's a $635 billion reserve that's been put into place to help fund a more universal form of health care, some modernization of the health care system. So you're seeing a lot more priority going into health care as candidate Obama had promised.
In education, there's an increase in education funding. Again, it will be a longer-term increase over time. One of the things, for instance, is an increase in Pell Grant loans up to about $5,500. But there are lots of other things, including help for low-income students to be able to get a college education.
And finally, alternative energy. There's actually not a lot of money in this budget that's an increase for alternative energy. There was money in the stimulus bill, part of which is included in this budget. But there is some long-term spending on alternative energy in this bill. So it's a shift in commitment. Basically, President Obama saying, getting out of, out of Iraq and spending more money in other areas of priority.
Now, how are they going to deal with the deficit? There's a $1.7 trillion shortfall between what the government is planning to take in for this budget, which is the 2010 budget, and what it is going to spend. A $1.7 trillion shortfall. When you add up all the shortfalls, these deficits, you end up with a national debt, which is right now about $11 trillion and it's going to keep on mounting.
President Obama says by 2013, he's going to cut that shortfall for that year, to just about half a trillion dollars. How is he going to do that?
Well, if you're running out of money, you have to increase your income, or decrease your spending. Tax increases for couples earning $250,000 or more. The president says if you earn less than $250,000, you're not going to see a dime of increase.
Corporate loopholes, he's going to do things that have up until now allowed companies to get away without paying some taxes and to benefit from offshoring or not repatriating the money that they make in other countries. Hopefully that's going to get the government some money, according to this administration.
Here's the big one. They're banking on economic recovery. The White House forecasts that unemployment will peak this year in 2009, and things will start to improve in 2010. We heard that Ben Bernanke, the chairman of the Federal Reserve, earlier this week, saying this recession could actually end in 2010. If that doesn't happen, this part of the puzzle becomes more complicated.
And finally, this emphasis on lowering defense spending. The war in Iraq will end. According to the president, he's going to bring troops back by the middle of 2010, and that is going to save the government a great deal of money. Because of that budget pie, about one-sixth of it is defense spending and if they can loosen that money up, that makes money available for a lot more things.
So it really -- you have to think of a budget, less in terms of what it specifically does for you, and more in terms of a philosophical and ideological shift by this government about its priorities.
CHETRY: It's interesting that you say that because it's getting a lot of criticism as well from some, of course, you're not surprised, from many conservatives.
VELSHI: Sure.
CHETRY: But Martin Regalia, the chief economist at the U.S. Chamber of Commerce, called it the biggest return to the welfare state we've seen in decades.
VELSHI: Yes. I mean, look, this is -- it's an ideological shift. If you don't like the way this government is going, you're going to be really mad at this budget. But it is what they said they were going to do and they're sticking to that.
CHETRY: Ali Velshi for us, great breakdown.
VELSHI: Christine Romans.
CHETRY: Christine Romans for us, great breakdown. Thank you.
Well, under the pressure to end the embargo on Cuba, there's a new Castro at the helm. You still can't get a Cuban cigar legally. Is this Cold War policy just way out of date?
It's 17 minutes after the hour.
(COMMERCIAL BREAK)
CHETRY: Twenty minutes after the hour. Welcome back to the Most News in the Morning.
The Cold War is over, Castro's brother is in charge, and now 50 years after the Cuban revolution, there's support building on both sides to change our policy toward Havana.
AMERICAN MORNING's Jim Acosta is watching this from Washington.
JIM ACOSTA, CNN CORRESPONDENT: John and Kiran, for years, the debate over Cuba has gone like this, pro embargo or anti-embargo? Well, those days are over. Some in Congress are talking about some big changes to U.S. policy on Cuba. Now the debate is how much change and how soon.
(BEGIN VIDEOTAPE)
ACOSTA (voice-over): American travelers are getting closer than they have in a generation. Tasting the forbidden fruit of Cuba. Even some Cubans seem to be saying -- wish you were here.
UNIDENTIFIED FEMALE: I think it's very good. Let them come. Let them come.
UNIDENTIFIED MALE: The ayes are 245, the nays are 178. The bill is passed. ACOSTA: Just this week, the House passed a spending bill that also relaxed travel restrictions on Cuban-Americans visiting the island.
REP. JOSE SERRANO (D), NEW YORK: We've expanded the possibility of families, to visit their relatives in Cuba in this bill.
ACOSTA: Democratic Congressman Jose Serrano hopes it's the beginning of the end to the embargo on Cuba, the Cold War-era policy aimed at toppling the Castro government. The regime has outlasted ten U.S. presidents and is older than Barack Obama himself.
SERRANO: Has failed to accomplish whatever it was it was supposed to accomplish. All it has done is hurt the Cuban people.
ACOSTA: This week, influential Republican Senator Richard Lugar wrote to the Foreign Relations Committee, "We must recognize the ineffectiveness of our current policy." And momentum is building in Congress to remove the restrictions on visits to Cuba for all Americans who can travel freely to Hanoi, but not Havana.
UNIDENTIFIED MALE: The irony is that you could travel to Tehran today as long as your plane doesn't make a stopover in Havana.
ACOSTA: But some Cuban-American groups say ending the embargo would be going too far, too fast.
UNIDENTIFIED MALE: Every year or two, the Cuban government puts on a nice dog and pony show, which they call elections. There's no freedom of political parties. There's no ability for opposition leaders to participate in these elections.
ACOSTA: Presidents have toed the embargo line for years, fearing defeat in the state of Florida at the hands of the powerful Cuban- American lobby. But President Obama may have changed all that, winning Florida, while warning change was coming to Cuban policy.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: It's time for more than tough talk that never yields results. It's time for a new strategy.
(END VIDEOTAPE)
ACOSTA: Just last fall, the United Nations held what has become its annual vote on the U.S. embargo in Cuba. Just three countries voted in favor of the embargo -- the U.S., Israel and Palau -- John and Kiran.
ROBERTS: Got the diploma, now what?
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: It looks like grad school might be my best option.
UNIDENTIFIED MALE: Yes, I've spoken to them. (END VIDEO CLIP)
ROBERTS: With the real world in recession, college grads rethink everything.
You're watching the Most News in the Morning.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
KYLE AEVERMANN, CNN IREPORTER: What am I cutting from my budget? Something I'm sad about. My car. I'm trying to sell it for a couple of reasons.
One, I can't find a new job. So I can't afford the car payments any more. Mr. Obama, this is where you're supposed to come in and give me a job, please.
(END VIDEO CLIP)
ROBERTS: Kyle Aevermann there hit hard by the current economy, having to give up his car because he can't pay for it any more. One of our iReporters.
And keep those iReports coming. We want to hear your concerns about money, what you need out of the stimulus package, the budget, and what you're personally willing to do and to give up to help get the economy back on track. Send us an iReport by going to CNN.com/am.
So, you're entering the real world now -- good luck. Because you just heard many qualified people who are already out there, are stuck with no paycheck and car payments that they cannot make. And too many college students have no idea what's next.
Our Gerri Willis is here this morning, continuing our in-depth look at education and financial aid.
Good morning to you.
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Good morning, John. That's right.
The season's college grads are entering the worst job market in decades, with prospects for landing any job poor. Students are considering a variety of possible alternatives to their dream job.
(BEGIN VIDEOTAPE)
WILLIS (voice-over): Two years ago, college senior, Jameel Merali would have been a prime candidate for a job on Wall Street, thanks to his top-tier education and international credentials. Not now.
JAMEEL MERALI, NYU STUDENT: I realize that the timing is not right right now for what I want to get into. And it's really just about timing, it's not any of our fault.
WILLIS: Jameel is part of a generation of graduating students, who may not get the position they want, because of the worst job market in 35 years.
MERALI: Yes, I've been pretty depressed usually. It's definitely been quite a challenge.
WILLIS: Fifty-seven percent of schools saw a decrease in job interviews on campus this year. And 31 percent say their campus career fairs are down.
UNIDENTIFIED FEMALE: It's definitely added pressure seeing what the recession the way it is.
WILLIS: Mounting challenges and declining opportunities have students changing plans.
ELISSA CLAPP, V.P. OF RECRUITMEWNT, TEACH FOR AMERICA: We have a lot of students who are saying, you know, I sort of feel like I have permission to do something I've always wanted to do.
UNIDENTIFIED MALE: When I got here, the first thing I did was look at other options. Yes, I've spoken to them.
UNIDENTIFIED FEMALE: It looks like grad school might be my best option.
WILLIS: Non-profits are seeing increased interest. Teach for America, who trains graduates to teach in low-income areas, has seen a 50 percent application increase.
UNIDENTIFIED FEMALE: Given that our competitors are banks, consulting firms, corporations, and given that those entities have started to pull back, I think we're just seeing less competition.
WILLIS: Jameel is deciding between working for a nonprofit in Kenya or going back to grad school. But he wonders about the $75,000 he's already racked up in student loans.
MERALI: It's not going to be, you know, making deals and making million-dollar bonuses. That's going to be more the slower pace. It's going to be basically working with governments, with organizations and helping with countries, I guess, you know, build stability in the economy.
(END VIDEOTAPE)
WILLIS: So the options for these students, more school, maybe working for charitable organizations. John, we even heard a few talking about starting out their own businesses.
ROBERTS: You know, can I render just a little bit of an opinion here?
WILLIS: Yes. ROBERTS: You know, to hear him say, well, you know, instead of going out and making the million-dollar bonuses or whatever maybe I'll give back. You know, if we took some of the brainpower that's out there and instead of sending it to Wall Street, where, you know, the culture of greed continues, if they were to go into some areas where they could actually help society, that might not be such a bad thing.
WILLIS: And you know, that's the main advantage of this recession. We're going to see some of the smartest, brightest kids out there, redirected to parts of the economy that really need it. Charitable organizations that really need help, that's going to be a boost long-term.
ROBERTS: It will be nice, giving back a little bit.
WILLIS: That's right.
ROBERTS: Gerri Willis, thanks so much.
Hey, on Monday, kids changing schools as parents lose their homes. A new study shows their grades are suffering and they're falling into the wrong crowds. Plus, how are teachers coping with all these new students?
You can also follow all of the stories online. Head to our Web site at CNN.com/am.
The response from you has been overwhelming. One legal firm in South Carolina says it wants to pay off one student's mounting legal bills, because the firm was so touched by her story. We brought you Nicole's Suissa's (ph) story yesterday, a freshman and inspiring attorney at the University of Hartford.
She's got a 3.73 GPA, but she was afraid that she wouldn't make it to sophomore year, because she owes $5,000. Nicole now says the Bell Legal Group offered her a scholarship to continue her education. She also says another person contacted the school offering help.
ANNOUNCER: This is CNN Breaking News.
CHETRY: We have more news on your money now.
Breaking news just minutes ago that Citigroup reached a deal with the federal government and that the government would take a bigger stake in Citigroup. It would have an immediate impact possibly today on the markets, also on your 401(k)s. Christine Romans is here to make sense of it all for us ahead.
Also, a shakeup at Sony. The company's president now out. A new management team in. All of this is happening as Sony gets ready to post a $3 billion loss, its first loss in 14 years. Many people have a major stake in the electronics giant here. We're going to head to Tokyo for answers, coming up at the top of the hour.
Also, Dutch investigators say the Turkish Airlines flight that crashed in Amsterdam, fell almost vertically into the ground, making only a short track in that muddy field. The reason for the crash is still unclear. You remember these pictures that we brought you where the plane was literally broken in three parts. Nine people died, 60 others injured, but there were 135 people total on board and most of them did survive.
The bloody, drug-fuelled war spilling into this country from Mexico is now reignited the gun control debate here at home. Attorney general Eric Holder said this week that the administration wants to renew a ban on assault weapons. The U.S. is also a major source for powerful weapons being used by Mexican drug cartels. In fact, the ATF is estimating that 90 percent of weapons confiscated in Mexico are smuggled in from the U.S.
Our next guest is on the front lines of this debate. Terry Goodard, Arizona's attorney general, and he joins us live from Phoenix this morning.
Thanks so much for being with us.
So that number sounds unbelievable. I know that the government doesn't specifically track weapon sales, they only track whether or not guns are used in a crime. But the ATF is estimating that 90 percent of these weapons recovered from Mexico come from here. Why is that?
TERRY GOODARD, ARIZONA ATTORNEY GENERAL: Well this is the source. This is the gun store for a great deal of the world. And Mexican criminals, the cartel fighters, are in fact involved in getting guns from a variety of sources in the United States. So they've been showing up at crime scenes in Mexico. Let me emphasize, that is illegal under current law. You can't sell a gun in Mexico under their law, and you can't export it, you have to fill out a form and you would have to lie on that form in order to take the gun to a purchaser in Mexico.
CHETRY: Right. So we understand that what's happening right now is that smugglers are paying, this is the part that's illegal, Americans with clean records, to buy these guns, to purchase these multiple guns from different shops. That part is legal. But the illegal part is them being smuggled over the border. What's the answer to at least trying to stem this growing problem?
GOODARD: Well, there have to be a variety of answers. But one of them is to enforce our laws more aggressively. That's what the Mexican attorney general Eduardo Medina Mora has asked us to do as a country. Here in Arizona, we're as aggressive as we can be, working with the Bureau of Alcohol, Tobacco and Firearms to go after people who are what we call, straw buyers. They're coming in, filling out the form with no intention of owning that particular weapon. Turning it over to somebody who then smuggles it into Mexico.
CHETRY: Right.
GOODARD: That's illegal and that's what we're prosecuting.
CHETRY: The other interesting thing though is at the same time that Attorney General Eric Holder is talking about possibly renewing a ban on assault weapons, it strikes me in some of the research that there seems to be other smaller measures. Right now, I mean, and tell me if this is the case, U.S. law allows the sale of multiple military assault weapons without having to report the sale to the government. Is that correct?
GOODARD: That's right. And that's absolutely right. And if it were a Derringer, a small pistol, and you bought two or three of them, you'd have to fill out a multiple weapon form. But for long guns, AK- 47s, for example, that is not necessary. It seems to me...
CHETRY: If seems completely counter intuitive, why would that be the case?
GOODARD: It is counter-intuitive. And I believe strongly it ought to be fixed. That's something that would make it much easier to find those people who are certainly not collecting or taking weapons for personal use. They are buying them for resale. If we could isolate those, we'd find a lot of the criminals.
CHETRY: You make a very good point with that. Now, here's an interesting argument, I'd like to hear your take on it. The entire trade, of course, is fuelled by the illegal sale, selling and buying of drugs. There are some who make the case, including a former deputy foreign minister of Mexico, who now - writes, I think, or works with the Brookings Institution, somebody by the name of Andre Rosenthal who says maybe we need to rethink our drug laws. He says with "the repeal of prohibition, the U.S. must again follow a common-sense approach by thinking the unthinkable. The gradual legalization of some drugs. The U.S. must recognize that all drugs are not created equal."
They go on to say that marijuana, perhaps some other methamphetamines don't have the same harmful effects and that legalization might make a difference. Do you agree?
GOODARD: Well, I don't. But I do think the debate needs to go forward. We need to find a better way to handle, right now, the item that's fueling the violent cartels, the main - the murders in Mexico, the cartel wars that are going on right now, that have resulted in over 1,000 deaths so far this year. I think we need to take a very aggressive stand on that. And marijuana is the number one producer of funding for the cartels. 60 percent to 70 percent of their gross profits comes from marijuana. And so I think we need to look very hard at something we haven't looked at for years.
CHETRY: So that lends some credence to the argument of legalization?
GOODARD: It certainly is a strong argument for getting that debate, front and center, finding whatever options we may have. To cut off the devastation in Mexico. Because what we fear here on the Arizona border is that the cartel-on-cartel battle is going to end up spreading across the border. If we can't stop it in Mexico, we're going to end up with violence in the United States. And none of us want that. CHETRY: Of course and CNN's been front and center, doing a lot of reporting on this. And we will continue it as well. Thank you for your time this morning, Terry Goddard, Arizona attorney general. Thanks.
GOODARD: Thank you.
CHETRY: It's 36 minutes after the hour.
(BEGIN VIDEOTAPE)
JOHN ROBERTS, CNN ANCHOR (voice-over): Stop the presses.
UNIDENTIFIED MALE: My children do not read the newspaper. My children get all of their news online.
UNIDENTIFIED FEMALE: I don't even subscribe anymore.
ROBERTS: An American staple - falling victim to hard times in technology. Could your local be next? You're watching the most news in the morning.
(END VIDEOTAPE)
(COMMERCIAL BREAK)
ROBERTS: Welcome back to the Most News in the Morning.
Thirty-nine minutes after the hour.
Let's fast-forward to stories that you're going to be hearing about later on today. Billionaire banker, Robert Allen Stanford will appear before a federal magistrate today in Houston, accused of ripping off investors in an alleged $8 billion scheme. Stanford's chief investment officer was arrested and charged with obstruction yesterday.
Vice President Joe Biden speaking at 12:30 Eastern in Philadelphia. Mr. Biden is holding the first meeting of a middle- class task force. President Obama asked the vice president to take the helm. The focus, creating green jobs and helping middle-class Americans deal with the recession.
And after 115 years, the "Rocky Mountain News" is printing its final edition. The Colorado daily is including a special 52-page look back with today's paper. It won four Pulitzers in just the past decade, an archives of papers will remain on-line. The owner has been looking for a buyer since the 4th of December.
The "Rocky Mountain News" is one of many newspapers struggling right now with headlines straight to your cell phone, streaming video online. Newscasts like this one with live reports from around the globe. It's hard to compete these days. Add a global recession and more dailies are stopping the presses for good. Richard Roth has that story for us this morning.
(BEGIN VIDEOTAPE)
RICHARD ROTH, CNN CORRESPONDENT (voice-over): It sounds like newspaper reporter Pia Catton is on a deadline. Instead, she's at home. Pia got her news five months ago, she lost her job as arts editor, after the "New York Sun" shut down.
PIA CATTON, FORMER NEWSPAPER REPORTER: The feeling on that day was pure fear. What is going to happen? What is going to happen to me, to this newspaper, to this industry? Will I have a career? Will I ever work again?
ROTH: She is far from alone. Newspapers used to report other people's problems. Now, they are in a fight for their life.
UNIDENTIFIED MALE: It's in a freefall. And nobody knows where the bottom is. It's kind of like - the water in the toilet, swirling around.
ROTH: The bad news arrives every day across America. Readers, especially younger readers, are shifting to the internet.
UNIDENTIFIED MALE: My children do not read the newspaper. My children get all of their news online.
UNIDENTIFIED FEMALE: I don't even subscribe any more.
UNIDENTIFIED FEMALE: And it's a story about...
ROTH: The morning meeting at the "New York Daily News" seventh- highest circulation in America. Mort Zuckerman is the publisher.
MORT ZUCKERMAN, PUBLISHER "NEW YORK DAILY NEWS": All newspapers are under great difficulty. They'll survive in different forms. Their cost base will have to be dramatically lowered.
ROTH (on-camera): Newspapers have been part of my life since my grandfather dropped off the "New York Daily News" at the front door with some bread. Now it's a hoarding problem. The way things are going though in the industry, I think these piles will be valuable one day, to a museum or collectors.
ROTH (voice-over): A dramatic decline in advertising and in a brutal economy has forced newspapers to cut costs by firing cartoonists, columnists and more. And sharing resources with former competitors.
ZUCKERMAN: So it's a hugely challenging time. We think that some newspapers will survive. And not all of them will.
CATTON: So you got my email about this story on savings.
ROTH: Pia, the reporter, took a short-term gig editing a book. But she's decided she may need a different career.
CATOON: I mean, there always will be a market for this. You always will need to know immediately what is happening. Will there be a market for newspapers? That's another question.
ROTH: Richard Roth, CNN, New York.
(BEGIN VIDEO CLIP)
CHETRY (voice-over): Taking a bite out of business, restaurants offering recession specials.
HUDSON RIEHLE, SENIOR V.P., NATIONAL RESTAURANT ASSN.: This is the most challenging period for the restaurant industry in several decades.
CHETRY: They can't all be McDonald's. You're watching the most news in the morning.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
(WEATHER REPORT)
ROBERTS: Well, it's like high school all over again. The star quarterback ending up with the prettiest girl around. New England Patriot, Tom Brady and super model Gisele Bundchen got married in an intimate ceremony in Santa Monica, California. "People" Magazine reports the post wedding ceremony was held at the couple's home in Brentwood. It is the first marriage for both. But Tom has been out there on the market in more ways than one.
CHETRY: He has a 1 1/2-year-old son with his old girlfriend who is actress Bridget Moynahan. So that 1 1/2-year-old son has Giselle Bundchen as his step-mom. He's going to be the most popular kid on the block.
ROBERTS: How can somebody gets so lucky? That's what I want to know.
Cheap eats, the key to surviving the recession for restaurants and their customers. One famous place is cutting quantity, not quality to stay alive. Why dining out may not be out of your budget, after all.
And President Obama pledging to head combat troops out of Iraq in just 19 months. Is that enough time to do it? Our panel of experts is here to weigh in. We'll hear from them, coming up. It's 48 minutes after the hour.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
JOHNI REDD, IREPORTER: Well, I knocked $90 off my cable bill per month. I just went down to the basic so that I could have them on news channel and get TV reception.
I also dropped the house phones. That knocked 70 bucks a month off of my bills and I now just use my cell phone which I also streamlined by 50 bucks a month and in order to connect to people, what I've done is kept my internet very nice so I can talk to people in Google talk, Google chat and Skype which are free way to connect online plus social media sites like Facebook.
And the other thing that I did was I moved closer to work. I was living an hour and 20 minutes way, now I'm four miles from work. So here we go. Monthly, I saved myself $330 a month and, yearly, $3,960. That sounds like a nice principal mortgage payment to me.
(END VIDEO CLIP)
ROBERTS: There you go. Look at that. Some of the creative ways that people are trying to save money in this recession. And one of the other ways is it's just cheaper to have dinner at home.
And with family budgets shrinking, many restaurants are suffering but some are getting creative to keep you coming in the door and our Jason Carroll joins us now to tell us exactly what they are doing.
JASON CARROLL, CNN CORRESPONDENT: Yes, here's what they are doing. You know why I want to do this story, John, because there has been so much focus on what people cannot do and businesses that are closing. I wanted to take a look at some of the businesses that are succeeding and what they are doing in these economic times.
Restaurant owners were asked in a survey about their top challenge. One out of two, a record high, said it was staying open during these bad economic times but it's a challenge that has inspired some new restaurant owners to stay open in new ways.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: She's going to prep the cocktail menus.
CARROLL (voice-over): It's opening night for Jason Denton and his new restaurant. Actually, a re-opening of sorts. This used to be his old restaurant, Bar Milano, an expensive eatery that folded in a withering economy. Now, a new name, Inoteca, and a different menu.
JACON DENTON, OWNER, INOTECA: Our decision overall was to take the fancy restaurant and go back to more of an inexpensive style restaurant.
CARROLL: It's a restaurant recession strategy slash menu prices.
TOM COLLICCHIO, CHEF OWNER, CRAFT RESTAURANT: We're creating something now for the recession.
CARROLL: Other hot spots like Craft Steak in New York promote two ways to eat for less.
COLLICCHIO: One is the most famous Frugal Friday, there's nothing over $10 on the menu.
And we also offer craft steak, we create half steak and there's nothing on the menu over $14.50.
CARROLL: According to the National Restaurant Association, restaurants are the nation's second largest employer with roughly 13 million workers. Over the past six months, some 100,000 jobs were lost due to the economy.
RIEHLE: This is the most challenging period for the restaurant industry in several decades.
CARROLL: Restaurants have been shutting down in nearly every major city from Los Angeles to Pittsburgh to Minneapolis. But some are opening and succeeding.
ALEX RAIJ, CHEF/OWNER, TXIKITO: I think it's always scary to open any restaurant because you're, I mean, obviously, you're exposed to debt.
CARROLL: Txikito has been around for just a few months and owners cut their prices even before opening.
UNIDENTIFIED FEMALE: You can take a few things and share them with your friends and it's pretty affordable.
CARROLL: Customers here have fallen for the inexpensive vast menu.
UNIDENTIFIED MALE: It's nice to come in and have little snack and have a glass of wine and not kill your budget.
CARROLL: Another key to their early success, there are just 28 seats here.
RAIJ: Being small helps and there is also the privilege that comes with this economy which is actually being able to get to know every single one of your customers.
CARROLL: Keep it small. Keep it cheap or both. Tips to help keep the doors open during tough times.
(END VIDEOTAPE)
CARROLL: And another important point. All of the restaurant owners we spoke to say another key to their success is just because they are cutting back on prices does not mean they are cutting back on their quality. If you're serving bad food, it doesn't matter how cheap the menu is, nobody is going to come.
ROBERTS: The idea of Craft Steak of serving a half steak works in two ways, right? It's easy on the wallet and it's easy on the waistline.
CARROLL: Yes, that's a very good point too.
ROBERTS: An alternative to super...
CARROLL: Yes, lose a little weight while you're at it. ROBERTS: Boom, there you go. Jason, thanks so much for that.
It's 54 1/2 minutes now after the hour.
(BEGIN VIDEO CLIP)
ROBERTS (voice-over): The beginning of the end. In Iraq.
OBAMA: Responsibly ends this war.
ROBERTS: Troops out in 19 months. Three months behind the president's schedule. Hear from reporters who felt the heat of the desert and why out may not mean over.
Plus, for richer or poorer.
UNIDENTIFIED FEMALE: My husband lives in the guest room. It's not perfect. It's been difficult.
ROBERTS: In hard times, unhappy couples can't afford to break their vows.
UNIDENTIFIED FEMALE: Now things have gotten so bad they can't afford to get divorce.
UNIDENTIFIED MALE: People have to decide how much they hate each other.
ROBERTS: You're watching the Most News in the Morning.
(END VIDEOTAPE)
(COMMERCIAL BREAK)
ANNOUNCER: This is CNN breaking news.
KYUNG LAH, CNN CORRESPONDENT: I'm Kyung Lah in Tokyo with the economic news has gone from bad to worse.
From the corporate world, Sony which has been struggling in this recession announced it is scrapping its Japanese president and handing the reins over to British president Howard Stringer.
From the government, industrial output fell 10 percent in January. A record fall. Automobile production down 41 percent in January. Another record fall. Unemployment remain virtually unchanged from December to January, but analysts say it's not that more people are working. Job seekers have simply given up hope that they will find any sort of employment in this global economic slowdown. John, Kiran.
ANNOUNCER: This is CNN breaking news.
CHETRY: That was Kyung Lah for us.
It's 58 minutes past the hour.
