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American Morning
President's Plan May Help Nine Million to Keep Their Homes; Search Called Off For Three Men Missing Off Florida; Secretary of State Hillary Clinton Speaks from Middle East; Those Once Saving for Retirement Now Looking to Just Get By
Aired March 04, 2009 - 07:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JOHN ROBERTS, CNN ANCHOR: Just crossing the top of the hour, and here are the big stories on our agenda that we'll be breaking down for you over the next 15 minutes.
We're all over the breaking news. This morning the president's plan for the nation's mortgage crisis. New details will be coming out all morning long. Right now, we know the $75 billion package will call for lenders to cut interest rates for struggling homeowners. The CNN money team is crunching the numbers. Our Suzanne Malveaux live at the White House with the politics of the plan for us this morning.
Secretary of State Hillary Clinton is in the West Bank right now, meeting with Palestinian President Mahmoud Abbas this morning. We are waiting for the secretary of state to speak. It's a live picture here of where the address will happen in Ramallah. They must be having another glass of tea because they're about 45 minutes past their scheduled time to have that press conference. An aide to Mr. Abbas says he want Secretary Clinton to push Israel to freeze construction in the West Bank and open up borders to Gaza. We're using CNN's global resources. Our Paula Hancocks in the West Bank's political capital of Ramallah for us this morning.
And the Coast Guard calling off the search for two NFL players and a third man missing off the coast of Florida. The men had been missing since Saturday, but their families say they're not giving up hope. Our John Zarrella covering the story for us from Miami this morning, and that's what's on the agenda the next 15 minutes.
We start the hour with breaking news on the president's housing plan. Billions of dollars are in play with the promise from President Obama that all of this cash will only help those who really need it.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: It's a plan that won't help speculators or that neighbor down the street who bought a house he could never hope to afford. But it will help millions of Americans who are struggling with declining home values, Americans who will now be able to take advantage of the lower interest rates that this plan already helped to bring about. The average family who refinances today can save nearly $2,000 per year on their mortgage.
(END VIDEO CLIP) ROBERTS: For the latest now from the White House, we turn to our Suzanne Malveaux. She's out on the North Lawn and the big news this morning, Suzanne, would appear to be that they've narrowed the criteria for who is eligible for this based on some early criticisms of the plan.
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Absolutely, John. I mean, this is a campaign promise that Barack Obama made earlier in dealing with the housing crisis. It was something that he introduced two weeks ago in Phoenix, Arizona. Essentially, we're now getting those details, those details going to the banks and the financial institutions, whether or not you actually qualify under his housing plan.
There really is a sense of urgency here, John, that they want to get this out even before the markets open to make sure that it reacts positively. And one of the main things here is, obviously, do you pay too much in your gross monthly income for your mortgage payment. If you pay more than 31 percent, they want to fix this. The government wants to fix this. Not everybody necessarily is eligible for that, so that's just one of the things to look for.
Couple places to go to, one of them is the hud.gov hud.gov site, as well as the treasury site that's ustreas.gov. They're going to be having those details being released very shortly, John.
ROBERTS: All right. Suzanne Malveaux tracking it for us from the White House this morning. Suzanne, thanks so much.
KIRAN CHETRY, CNN ANCHOR: We also have the CNN money team breaking down the president's plan and the impact it's going to have on you. Christine Romans is looking at whether or not this plan will really work, and also our personal finance editor Gerri Willis is here with more on who qualifies and who should be paying attention and, you know, how both of these plans are working.
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Right, exactly. Well, we first brought this to you a couple weeks ago. The details of this plan and let me tell you, it's hideously complicated. Even the reporters are struggling to understand the details, very difficult to get your arms around.
But there are essentially two pieces to the $75 billion plan. The first part really goes to helping people who are underwater on their mortgage, they owe more than the house is actually worth. For that, borrowers who are current on their mortgage but can't refinance because of falling home prices, that loan must be held by Fannie Mae and Freddie Mac. And if you want to know if that's true or not, you just call your lender. You must have sufficient income which is to say you need to have a job. Most of these programs only are for people who are employed.
Now, what it does it would allow a borrower to refinance into a loan with lower monthly payments or avoid a rate reset. The idea here is to reduce your monthly payment. At the end of the day, there would be no principal reduction but borrowers could save money over the life of the loan. One important thing here, the new mortgage can't exceed 105 percent of the market value of the property. So as we talked about in the past, if you're well underwater, if home prices have fallen by 30, 40 percent in your area, this program will probably not be for you but the second initiative might. It's designed to help lower monthly payments for homeowners at risk of losing their home, people who are in default, people who are really behind.
Now, who qualifies for this? These are borrowers who are behind on their payments. The mortgages must be on their primary home mortgages. This isn't for investors, people who are flipping homes. They can't participate. And again, one of the things that could change here is how much of your monthly gross income is currently going to payments. Is it 31 percent? Is it more?
We'll get more details on that in about 15 minutes. Lenders may lower the interest rates and/or principal balance through loan modification. This is expected to help three to four million people.
Big questions here. Will it work? Of course, you know, there are carrots and sticks in this program. One of the big sticks is what we call bankruptcy, cram down lots of conversation about whether that will actually happen or not.
But I do want to talk a little bit about what you should be doing today because I think the big news today for consumers at least, not for the servicers who will be reading the fine print of this is definitely going to be it's in place now. You need to call your lender if you're either underwater on your mortgage or behind and you need help. The plan's in place. It's starting today. Give them a call.
CHETRY: Start getting your own personal documents in order, right?
WILLIS: And these are the documents you want to get in order: proof of income, most recent income tax returns, second mortgage info, your credit card payments, anything about your personal financial situation that you need for a new loan. You need to gather all of that together, have it ready to go in a package to your lender so you can see if you can qualify for this. Obviously, devil in the details here. We'll be waiting for more details and probably maybe earlier than 15 minutes actually.
CHETRY: All right. Thanks so much, Gerri.
ROBERTS: As you mentioned, Gerri, the big question this morning, is all of this going to work? Is it going to stop people from going into foreclosure, stop people from losing their homes? Is it going to help to, you know, sort of buoy up the housing market?
We're gauging reaction, checking with our experts this morning. Christine Romans "Minding Your Business."
So, I mean, what's the early read on this?
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Will it buoy up the housing market or at least stop it from the freefall that it's in? We know it's getting worse and worse.
There's new data this morning from First American CoreLogic that show -- which is a real estate analysis from a real estate tracker that shows at the end of last year 20 percent of homeowners were underwater. That means they owe more on the mortgage than the home is worth. That's what the first chunk of this plan from the Obama administration is expected to help. People who couldn't refinance because their house was worth -- had declined so much, so that should help them.
Will it really help seven million to nine million people? I mean, the jury is out on that. That's the hope of this administration and they're working under the philosophy and the operating assumption that frankly, helping people stay in their homes and making their mortgages more affordable will help the broader economy.
We haven't seen that yet. We haven't seen the plan or the group of plans or the public/private partnership that has worked yet. We've seen a little bit here and there, but there hasn't been this standard across the industry and that's what the hope is here, that a standard is going to help people, is going to help people figure out whether they can refinance.
There's a really great Q&A too for borrowers on the HUD Web site if people want to know specifically if they fit into this.
ROBERTS: Well, would you look at it in a population center like Phoenix, where home prices are down...
ROMANS: Sure.
ROBERTS: ... 40 percent?
ROMANS: Yes.
ROBERTS: What is this going to do to a market like that?
ROMANS: Well, you know, frankly, where the house prices are down so much, I don't know, Gerri. I don't think they qualify for the refinancing.
WILLIS: No. I understand it doesn't -- it doesn't they won't meet the standards for the first program but the thinking is they might meet the standards for the second. The assumption here is that those people have stopped making payments on their mortgages and they could fall into that second group, but maybe not. We're still waiting for all the details and let me tell you, every servicer, every lender in the company will be on that Web site reading all of that.
ROMANS: Yes.
ROBERTS: Everybody we'll be watching. All right.
ROMANS: The other part is the job part of this and people start -- how can you have a mortgage, the 31 percent of no gross income? You know, so the job part of it is hard, too. ROBERTS: All right. We'll keep following all of this this morning. Very important news coming out of the White House today.
Four words that no one wanted to hear in Florida, the search is over. Today, the Coast Guard no longer looking for two NFL players and their friend who were lost at sea. But not everyone is giving up. That story ahead.
CHETRY: Also, remember John McCain's famous line about earmarks from the campaign trail. You will know their names. We're going to see what he tells us he's doing to try to cut the pork in tough times.
It's nine minutes after the hour.
(COMMERCIAL BREAK)
CHETRY: Welcome back to the Most News in the Morning. Here's what we're working on for you at this hour.
There's a warning that your cell phone just might fail you when you need it most. LG is recalling 30,000 of its 830 Spyder touch- screen slider phones. Here's a look at the phones we're talking about. The company says it needs a software upgrade because of poor and dropped connections on 911 calls. If you own one, you should be hearing from your carrier.
There are also some new developments this morning in the Bernie Madoff case. Today's court appearance for disgraced money manager Madoff has been postponed until next week and also we're learning some new details that could benefit some of Madoff's alleged victims. Court documents show that Madoff will hand over his investment firm and company perks like artwork and entertainment tickets which once liquidated could be used to pay back investors. Madoff's lawyers are still fighting to let him keep his $7 million apartment.
Prosecutors now appear ready to charge a jailed Salvadorian immigrant with the murder of Chandra Levy. She's the Washington intern whose body was found in a Washington, D.C., park eight years ago. Witnesses say that Ingmar Guandique already behind bars in California bragged about how he and two teens grabbed Levy and choked her so that passing joggers would not hear her scream.
And new this morning, rescuers have now stopped looking for three men missing at sea off the Florida gulf coast. Any hope the two NFL players and their friend may have survived when their fishing boat capsized last weekend appears to be gone. Our John Zarrella now with the announcement that no one wanted to hear.
JOHN ZARRELLA, CNN CORRESPONDENT: John, Kiran, the families remain hopeful. But after an exhaustive search of some 4,000 square miles of water and saying there's little hope of finding anyone still alive, the Coast Guard has called off the search for the men.
(BEGIN VIDEOTAPE)
ZARRELLA (voice-over): The families of the three missing men cried and embraced, trying to comfort each other, sharing the pain. Their worst fears, the Coast Guard search was over.
CAPT. TIMOTHY CLOSE, U.S. COAST GUARD: We're extremely confident that if there are any survivors on the surface of the water, that we would have found them.
ZARRELLA: The men, four in all, were thrown into the chilly waters of the Gulf of Mexico when their 21-foot boat capsized late Saturday afternoon. Nick Schuyler, the only one rescued, was found Monday sitting on the boat's hull wearing a raincoat and a life vest. Despite the Coast Guard's decision, Schuyler's rescue is something that still gives the other families hope.
BRUCE COOPER, MARQUIS COOPER'S FATHER: I believe in my heart that he's out there fighting to get back, because he knows he has a daughter and a wife and a lot of people who love him to get back to. So that's really what I'm hanging on to.
ZARRELLA: There are so many questions about what went wrong and Coast Guard officials believe Schuyler has many of the answers but his dehydration and exhaustion are so severe he's having trouble filling in the gaps. We do know he told Coast Guard officials and his family that a large wave hit the boat about 5:00 p.m. Schuyler's father, Stuart, hold CNN's Heidi Collins what his son says happened next.
VOICE OF STUART SCHUYLER, NICK SCHUYLER'S FATHER: They were all clinging together helping each other the whole time and you know, of course it's hard to keep track of time out there.
HEIDI COLLINS, CNN ANCHOR: Sure.
SCHUYLER: He was in the water roughly 40 hours and he said that four or five hours he was alone. He said they drifted apart. It's still dark. They couldn't see each other, and he just kept crying.
ZARRELLA: There was a belief that because of their physical condition the others might beat the odds of surviving hypothermia and dehydration. Two of them are NFL players, Corey Smith and Marquis Cooper. William Bleakley played football at the University of South Florida with Schuyler, all in good shape. But grim discoveries Tuesday made the Coast Guard's decision inevitable.
CLOSE: We found one cooler and one orange life jacket in near proximity to each other, approximately 16 miles southeast of where the vessel was found.
ZARRELLA: In the direction, the Coast Guard says, the current would have taken the missing men.
(END VIDEOTAPE)
ZARRELLA: Some of Marquis Cooper's fishing buddies are, according to Cooper's dad, going to go out and continue to search on their own. And Tank Johnson, a friend and fellow NFL player, has told the local media that pilots can volunteer by email to help search the area -- John, Kiran.
ROBERTS: All right, John Zarrella for us this morning.
It's 15 1/2 minutes after the hour.
A lot going on this morning. Let's fast forward to stories that are going to be making news in the next couple of hours.
10:00 a.m. Eastern, Senator Patrick Leahy will hold a hearing proposing a truth commission to investigate the Bush administration. It would look at the controversial Bush administration decisions on such things such as harsh interrogation techniques and warrantless wiretaps to see if they actually violate the law.
British Prime Minister Gordon Brown continues his visit to Washington today with an address to a joint session of Congress. That will be at 11:00 a.m. Eastern. On Tuesday, he met with President Obama in the Oval Office. The two discussed plans for a global response to the economic crisis.
Same-sex marriage supporters will hold statewide candlelight vigils later today in California, protesting Proposition 8 which stopped gay weddings in the state. Tomorrow, the California Supreme Court is set to hear arguments on whether or not to uphold that ban.
And also today, a battle over Mahatma Gandhi's few worldly possessions. An art collector looking to auction off some of Gandhi's personal belongings will meet with Indian officials in New York. The Indian government is claiming rightful ownership of the items which include Gandhi's distinctive wire-framed glasses and his sandals. The auction set for today and tomorrow. The low bids are expected to be between $20,000 and $30,000.
And that's what we're following this morning. Sixteen and a half minutes now after the hour.
(COMMERCIAL BREAK)
ROBERTS: Happening right now, Secretary of State Hillary Clinton's critical Middle East trip. We're looking there at live pictures in Ramallah. An anticipated press conference with the secretary and Palestinian President Mahmoud Abbas, they're about an hour late from their scheduled time which Middle East time would put them just about on time at this point.
It is the first real test of her power of secretary of state, and can she actually bring to bear the Obama administration's vision of a peace agreement between Israel and the Palestinians that would see a two-state solution?
Paula Hancocks joins us now live from the West bank. And unfortunately, Paula, there's not a lot of optimism that that's going to happen.
PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT: Not really, no, John. Many Palestinians have been here before. They've been hopeful before. They've had optimism before but many of these peace accords, many of the peace deals just haven't given anything to the Palestinian people themselves. But there is more hope certainly with Obama than there was with the Bush administration and now as we know the U.S. secretary of state currently meeting with President Abbas.
We are waiting for that press conference, and to see what is going to be said, what can be said. We have to remember that Hillary Clinton is talking to the Palestinian Authority, but the Palestinian Authority does not represent all of the Palestinian people. The Palestinian Authority has no control whatsoever in Gaza, which of course is a very hot topic at the moment after that three-week operation by Israel at the beginning of the year. And also after that donor conference that the U.S. has pledged so much money towards, and that certainly what is going to be talked about as well will be the issue of settlements, Israeli settlements being built from land which Palestinians want for a future Palestinian state.
And this is what we have heard from Hillary Clinton herself saying she believes it is inevitable. It is inescapable that there will be a two-state solution. And, of course, President Abbas and the prime minister that she spoke to earlier today will be telling her that is very difficult to accomplish if these settlements are still being built -- John.
ROBERTS: All right. Paula Hancocks for us this morning. Paula, thanks so much.
Jamie Rubin, the former assistant secretary of state in Secretary of State Hillary Clinton's husband's administration, is with us this morning.
And, Jamie, there's this talk that, you know, if a deal between the Palestinians and the Israelis is not possible at least right now, more fertile ground may be found to the north and east in Syria, where if you could craft a deal with Syria's government you might unlock the entire rest of the Middle East.
JAMES RUBIN, FMR. ASSISTANT SECRETARY OF STATE: Well, yes, that would be a dramatic breakthrough. There is a possibility that the Israeli government, if it did this, if it gave back the Golan Heights might yield a total change in the region. You bring Syria away from Iran. That's one important thing.
Number two, you would allow for Syria to no longer permit Hezbollah and Lebanon, the Iranian ally, to play such an important role. And finally, you would perhaps get Syria to put pressure on Hamas itself, which is based in Damascus. So whether it's Iran, whether it's Lebanon, whether it's the Palestinian issue and also, in fact, Syria is a border country with Iraq, it could help in stabilizing that region so all of American interest in the region, all the foreign interests I just mentioned, could be improved if we were to encourage Israel and Syria to have that agreement.
ROBERTS: It looks like we've got some of the players coming in here. An analysis that I read this morning, Jamie, suggested that if the United States were to craft some sort of deal with Syria, that would allow Iran to engage in direct talks with the United States. And if Iran engage in direct talks with the United States, that would allow Hamas to potentially modify its position toward Israel and bring the Palestinians and Israelis together. And there's the secretary together with the Palestinian president. What do you think of that analysis?
RUBIN: Well, I do think the big $64,000 question in the region is will the United States engage with Iran, and will the United States succeed in bringing Iran closer to the international norms, bringing Iran from its position of being outside the international community to being part of it? If it did that, if Iran was brought in, a whole number of issues could be resolved. But that's a very, very big challenge, something the Obama administration perhaps will look to next after this initiative of sending two diplomats to Syria.
ROBERTS: The Palestinian president is speaking now. We do seem to have a translation. Let's listen in a little bit.
(BEGIN VIDEO CLIP)
MAHMOUD ABBAS, PALESTINIAN AUTHORITY PRESIDENT (through translator): And also for what President Obama expressed as well and what happened recently and (INAUDIBLE) with the support for that vital conference in order to reconstruct the Palestinian territory in Gaza.
(END VIDEO CLIP)
ROBERTS: So the Palestinian president likely to speak for a few minutes then turn over to the secretary of state and then they'll probably take some questions between the two of them. We'll keep an eye on this for the moment, but Jamie, tell us, you know, just in terms of Syria and the United States, you know, they had been such adversaries for so long. What has changed in the last ten years since you were in the Clinton administration to suggest that maybe a Syrian deal is potentially something that could get done here in the next few years?
RUBIN: Well, the first thing is that the new U.S. administration is returning to what I would call diplomatic normalcy. They're trying to engage with Syria to discuss issues with our adversaries directly diplomatically, rather than thinking that some sort of silent treatment will solve the problem. So I think opening the doors again to dialogue with Syria is one thing that's changed.
Number two, Bashar Assad (ph) is isolated. He's been calling, practically begging for international attention from France, from Europe, from the United States, saying you need me. You have to come to me. You must come to Damascus.
So he's interested, too. And that means that there's a possibility with an Israeli leadership. The Likud Party has, in the past, Netanyahu himself agreed to the concept of returning all of the Golan Heights. So the potential is there, but everything in the Middle East is extraordinarily difficult.
CHETRY: And how in your opinion is this going to work? The fact is that really in terms of Palestinian leadership, Mahmoud Abbas is there but Hamas leadership not there and as Secretary Clinton said yesterday if Hamas doesn't recognize Israel, we can't move forward. So how do you solve that?
RUBIN: Well, I don't think you do really in the near-term. I think...
CHETRY: Ignore Hamas and sort of box them out?
RUBIN: I think what they're going to do is keep the pressure on Hamas, keep the international community to put the kind of pressure on Hamas to realize that until it changes its policies, that they're not going to be able to govern successfully in Gaza, and turn your attention to Syria, precisely because with Hamas ruling in Gaza, nobody really sees the possibility of a Palestinian/Israeli peace agreement.
ROBERTS: It looks like President Abbas is going to speak a little longer than we might have initially anticipated, so we'll leave this for just a minute. But when the secretary of state starts to talk, we'll come back with it. And stay with us, Jamie. Thanks.
RUBIN: Thank you.
CHETRY: All right. Meantime, is the president's plan to raise taxes on the richest Americans taking money away from the country's neediest charities. Also, why a tweak to one deduction is raising a lot of eyebrows. We have a nonprofit expert, Stacy Palmer, with some perspective on how charities could be affected by some of the changes.
Twenty-seven minutes after the hour.
(COMMERCIAL BREAK)
CHETRY: Twenty-nine minutes past the hour. Issue number one, the economy, it's our top priority this morning. Actually, we are going to get back to that in just a second.
We're monitoring breaking news out of the Middle East. Let's check in with Secretary Clinton right now. She's holding a press conference. Let's hear from Hillary right now.
HILLARY CLINTON, SECRETARY OF STATE: The courage and the dedication to the Palestinian people, and I am very proud to stand beside President Abbas to deliver a message from my country and our president.
The United States supports the Palestinian Authority as the only legitimate government of the Palestinian people, and as a partner on the road to a comprehensive peace, which includes a two-state solution. Our support comes with more than words. As I pledged in Sharm el-Sheikh, we will work with President Abbas, Prime Minister Fayad and the government of the Palestinian Authority to address critical humanitarian budgetary, security and infrastructure needs both in Gaza and in the West Bank.
As I aid in Sharm El Sheikh, a child growing up in Gaza, without shelter, health care, or an education has the same right to go to school, see a doctor, and live with a roof over her head as a child growing up in any country. That a mother and a father here in the West Bank struggling to fulfill their dreams for their children, has the same rights as parents anywhere else to have a good job, a decent home and the tools to achieve greater prosperity.
The United States aims to foster conditions in which a Palestinian state can be fully realized, a state that can provide these opportunities. A state that is a responsible partner, is at peace with Israel, and its Arab neighbors, and is accountable to its people. That is the state that this government is attempting to build. I met with Prime Minister Fayad this morning, and I expressed to him the appreciation we had for his presentation at Sharm El Sheikh, which outlined the specific needs of the people in Gaza.
I also believe that it is imperative we continue to do the reform work that the president is leading in order to bolster the credibility of the government and to serve the needs of the people. I'm very grateful that President Abbas has remained firm in his commitment to move forward on a comprehensive peace, and the two-state solution.
President Abbas is offering the Palestinian people the chance finally to fulfill the aspirations to be free, independent, prosperous and peaceful, flourishing in a state of your own, and the only way to achieve that goal is through negotiations. So all who believe in this comprehensive peace, we urge you to work with the Palestinian authority, and with us, because we are determined to move forward. Time is of the essence. We cannot afford more delays, or regrets, about what might have been, had different decisions been made in the past.
The Obama administration will be vigorously engaged in efforts to forge a lasting peace between Israel, the Palestinians and all of the Arab neighbors. I will remain personally engaged. As I said in Sharm El Sheikh, this is a commitment that I carry in my heart, not just in my portfolio, as secretary of state. And Senator George Mitchell is the president's and my special envoy.
As you know, he has been here already. He is here today, and he will return soon. We all know and respect that, in the end, it is up to the parties themselves to make peace. We offer you our support, not just today, but for all the tomorrows to come, until the goal is realized. We believe that you have begun...
CHETRY: We were listening to some of the remarks by Secretary of State Hillary Clinton, and she spoke about meeting not only with Mahmoud Abbas but also with the Prime Minister as well, and we're bringing in Jamie Ruben once again. You had a front seat to all of this as well. A couple of things. She said that this is something that she carries in her heart, that she remains personally engaged. It's not just a thing in her portfolio, to move forward with this. She also, of course, talked once again about the only legitimate government of the Palestinian people being the Palestinian authority and she also talked about the fact that the two-state solution is still there on the table. What did you make of it?
RUBIN: Well I think the most important issue here is you're seeing very early in the administration Secretary of State, a presidential envoy, we've only had a few weeks of the Obama administration, they've already been in the region twice. Now this first trip for Hillary Clinton showing the commitment, very early, right away.
I think Mahmoud Abbas, the Palestinian president, was one of the first calls that President Obama made. So all of this is a very, very different situation than the previous administration. Hillary Clinton sending two diplomats to Damascus, something the previous administration was unwilling to do. So early engagement, intensive engagement, focus by the new president and his team, and a return to diplomatic normalcy by this kind of regular, intensive dialogue, whether it will work, how successful it will be, obviously it's the Middle East.
Nobody knows for sure, but the Syria deal is certainly on the table right now, and a focus from the U.S. government, from Washington, on the Palestinian crisis will certainly send a powerful message across the world that there's a new administration in town.
ROBERTS: Yes, big, big difference from the Bush days as well to suggest that we are going to remain engaged in this. It's going to be a big focus and we're there with you day in and day out. Jamie Rubin, thanks so much for joining us this morning with your analysis of all of that. We'll continue to follow what the Secretary says. Certainly, she is going to be taking some questions as well. So we'll keep monitoring all of that.
CHETRY: All right. We're going to take a quick break.
Thirty-six minutes past the hour.
(COMMERCIAL BREAK)
CHETRY: Welcome back to the most news in the morning. (inaudible) and The president's new tax plan, in particular the plans to cut back how much you can deduct when you give to charities especially if you're in the higher income bracket. So with the economy already in recession, will this make a bad situation worse? Joining me now is Stacy Palmer. She is the editor of "The Chronicle of Philantrophy." It's the number one news source for those in the non-profit world. Stacy, thanks for being with us.
STACY PALMER, EDITOR, "THE CHRONICLE OF PHILANTROPHY": Good morning.
CHETRY: So just a quick description of what's happening, if your household earns more than $250,000 a year, and you do your itemized deductions they're going to be capping the charitable giving portion of that. So instead of being able to deduct 35 percent, it's dropping down to 28 percent. In your opinion, how much of an impact is that going to have on giving?
PALMER: It's going to have a serious impact but not one that causes a great big loss. The researchers are saying that we're talking about $4 billion out of the $300 billion that Americans give every year. So it's a relatively small amount but it's an important amount especially as this economy tanks and charities are being asked to do more.
CHETRY: Right. So in general charities are going through a tough time right now because we've seen this recession take hold, and when people feel it, they don't give as much, on top of that you're seeing an increase in people who need help. So how are charities in general doing right now?
PALMER: Many of them say that they're having a very tough time coping, because demand is increasing greatly, donations are not coming in, state and government payments sometimes many states have contracted for services, and they haven't paid the charities for the work that they've done.
The credit crunch that causes problems for small businesses causes problems for many charities, a lot of nonprofit organizations as a result have laid off their staff members.
CHETRY: All right. I want to you hear what Tina Brown had to say. She is the editor in chief of the dailybeast.com, someone who is very supportive of the Obama administration but criticized this tax plan. Let's listen.
(BEGIN VIDEO CLIP)
TINA BROWN, EDITOR-IN-CHIEF, DAILYBEAST.COM: I do think that's a disaster that charity measure. I think that it's a tragedy in a sense that this is suddenly has gone into the bill here. It's not a good idea to do that. It is going to greatly hurt charities. I do think that Obama has got to watch out with the populism that's been unleashed now against anyone with money is going to in a way rebound.
(END VIDEO CLIP)
CHETRY: She makes the argument that you know if people have to feel embarrassed to have money that they're actually going to pull back a little bit in their giving as well. Do you think that's an element here at work?
PALMER: It's possible, but I do think one of the points that the Obama administration has made is unless the economy gets better and wealthy people feel more confident about their giving as well as all Americans feel better that we need to do something to make people give. Because the state of the economy is what affects giving more than anything else, not charity tax breaks.
CHETRY: I got you.
PALMER: So it's very important to get the economy going.
CHETRY: Here's what the White House says, they said they want to raise taxes on people that can afford to pay a little bit more and by limiting charitable deductions it will help pay for health care reform and they also make the argument that the plan will promote charitable giving by boosting the economy and raising incomes so more people will have more to donate. Do you get their point? PALMER: Absolutely. That's a really critical point and the other point that they've made is that they think this is really more fair, because that way, wealthy people won't get such a big deduction compared with average Americans who are the people that fuel a lot of the charitable giving in this country. So that's the other part of their argument, not just the economy should get going but that it would be more equitable.
CHETRY: Now if the Obama administration came to you and said Stacy, should we try to get this measure through or should we leave charitable deductions as they are, what would be your advice?
PALMER: I think it'd be wisest to leave them as is. I think it's an understandable argument why they want to change it but charities are really hurting and anything that is a disincentive is really a problem right now.
CHETRY: Stacy Palmer, editor of the "Chronicle of Philantrophy," thanks so much for being with us this morning.
PALMER: Thank you.
ROBERTS: Well, it is cold in the east and a big storm brewing out west. Rob is monitoring it all from the weather center in Atlanta. Hey, Rob,
ROB MARCIANO, AMS METEOROLOGIST: Hey, John. You know, March could be one of those cookie strange months. We want spring to come real quick but certainly winter-like eastern part of the U.S. and a big storm out west. We'll run it down if you're doing some travel today. There may be some issues. It's 7:43 Eastern time. You're watching the most news in the morning.
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CHETRY: Well from instant messaging, emails, Facebook and all those twitter tweets, are you getting lost in translation? It's probably something we already know but there's new evidence backing up that the best way to talk is still face-to-face. We're "Paging our Dr. Gupta" this morning.
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CHETRY: Welcome back to the Most News in the Morning.
From Facebook to twittering, tweets, emails, text, with all the technology, are your words getting lost in translation? We're paging our chief medical correspondent, Dr. Sanjay Gupta this morning with the result of an interesting study about face-to-face communication. Which we don't have unfortunately. You're in Atlanta, I'm here. I hope we don't get lost in translation.
DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: You know, it is pretty amazing. It's amazing that people have conference calls with people just down the hall. That has become the way of our culture and people decided - researchers decided to put it to the test and figure out if it makes a difference if you can see somebody as well as hearing them. That was the focus of this study.
What they did was they created these specific examples where they had someone mouthing words, for example, and they wanted to show that basically if someone was just hearing the audio in a moderately noisy environment, for example, someone had a bad cell phone connection if they heard the single-syllable words, they only got it right about 10 percent of the time.
Now, if they also saw the person speaking in addition to hearing them, it went up to about 60 percent. So, you have a six-fold improvement if you saw the person as well as hearing them. And interestingly enough if you couldn't hear them at all but saw them talking, you got it right about six percent of the time. So lip- reading together with hearing the person talk can make a huge difference.
That was sort of the focus of this particular study. I should point out, to your point, Kiran, you and I do television together every day. But what's sort of interesting, this might be interesting to the viewers, Scottie, show the viewers what I'm actually seeing. I'm actually not seeing Kiran at all. I'm just seeing this blank screen. Scottie, go ahead and show them the camera over here. It is totally different than what people might expect. Go ahead, Scottie, show them.
CHETRY: Maybe what you're saying to Scottie is getting lost in translation.
GUPTA: I think Scottie is not quite hearing what I'm saying. That's all right. That didn't work the way I hope. But that's all right. The point is I don't get to see you when we talk, I'm just seeing this sort of blank monitor and that's sort of one of the things that happens in television.
CHETRY: Yes, exactly. And you're right, it actually does illustrate the point that face-to-face, you're able to sort of read people's body language or you're able to get a gauge of their stress level. Just all of those things that happened organically in our culture, you know, because of our fast pace and because of all the ways that we're able to communicate besides just being next to a person, it seemed some of that is really getting lost.
GUPTA: Yes, you know, what's sort of interesting about speech from a neuroscience level is that you know, we interpret things the way we see them as well as the way we hear them all the time. Part of the issue is that what we hear and what we see are sort of processed in totally different areas of the brain. But there is one area of the brain called the superior calculus, the name is not that important, if you take away half the brain here and sort of focus on one particular area, it's only here where you actually have both audio and visual sort of coming together.
That's a very important thing because if you can make that area sort of hum and click, then a person's going to have a lot better sense of interpreting you.
CHETRY: All right. Sorry, that you have to just look at that blank screen. It's so much more fun up here.
GUPTA: I'd rather see you face to face, no question about it.
CHETRY: Sanjay, good to see you this morning.
GUPTA: All right, Kiran.
CHETRY: Take care.
GUPTA: See you.
CHETRY: Fifty-three minutes after the hour.
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JAY LENO, "THE TONIGHT SHOW WITH JAY LENO": Totally new method of snow removal. Did you hear about this? What they do is they put AIG in charge of it and the snow just disappears. It's gone, where did it go?
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ROBERTS: That could be true of so many institutions, couldn't it? Welcome back to the most news in the morning.
So your old-school high tops are in style again, some of your favorite bands channeling sounds from decades ago. Well, Wall Street is going retro too with seeking stock prices taking us back to 12 years ago, eating into your investments, the market are in levels not seen since 1997. Our Mary Snow on this unfortunately tragic story this morning.
MARY SNOW, CNN CORRESPONDENT: It really is, John. Not a trend that we want to see in the stock market. The market slide is putting a huge dent in retirement savings and for many older Americans who were hoping to retire in the near future, that is now off the table.
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SNOW (voice-over): Adding to worries about soaring unemployment and home foreclosures, the stock market, dropping to 1997 levels. Wiping out years of investment savings for people like Cory Hutchison.
CORY HUTCHISON, INVESTOR: Damage would be pretty accurate. I've taken a very serious hit on all the investments. All the money that I've put in has seriously depreciated.
SNOW: Hutchinson estimates he's lost 60 percent of his 401(k) investment, but the 30-year-old software consultant who is expecting a second child says he'll keep putting money into his 401(k).
HUTCHISON: I'm fortunate enough that I'm young enough that this hit hurts, but I've got a long time to recover from it.
SNOW: But many others aren't as calm. It's estimated Americans pulled $35 billion out of stock funds last month. And it's turned financial adviser Pran Tiku into more into a therapist these days for his 250 clients.
PRAN TIKU, PEAK FINANCIAL MANAGEMENT: I think that's a major part of our role right now is to hold hands with and make sure that they understand that there is a long term and we will at the end of the day come out of this.
SNOW: To come out of it, though, will take years, years many older Americans were hoping to spend in retirement. But financial adviser Ryan Mack says dwindled 401(k)s are forcing people to change life plans.
RYAN MACK, OPTIMUM CAPITAL MANAGEMENT: We're getting far too many calls from individuals saying, Ryan, I've lost half the value of my 401(k) and I should be retired right now.
SNOW: Cory Hutchison says he tries to help out some of his older relatives who have lost money, and one personal finance columnist says Cory's situation is not uncommon.
TERRY SAVAGE, FINANCE COLUMNIST "CHICAGO SUN TIMES": It may very well be can adult children provide support for their parents as the retirement assets that they expected to have simply have disappeared.
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SNOW: Question, how long will it take to recoup the losses? Now, there's no simple equation and we asked financial advisors who told us that one bright spot is that sharp declines are often followed by sharp recoveries. But some say it could take about three years to make up for most of the lost ground, but that's assuming that that would happen once the market turns. And, John, there are a lot of "ifs" in that equation in terms of making it up.
ROBERTS: Oh, absolutely. There a lot of people who think the recovery in the stock market is going to be very slow. I would like to say, I wouldn't mind my investments being back where they were 12 years ago if I could be 40 again, but I'm 12 years closer to retirement and my funds are still back in the dark ages.
SNOW: And it's really changing people's plans about what they want to they are going to be doing in the next few years.
ROBERTS: You know, I figured in want to stay active in retirement anyway. So that could be forced too. Mary, thanks so much for that. Kiran.
