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American Morning

North Korea Threat; President's Pitch to Overhaul Health Care; Same-Sex Marriage Battle; Surviving the Recession; Families of Missing Boaters Continue Search; Michael Jackson Planning a Comeback

Aired March 05, 2009 - 08:00   ET

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

JOHN ROBERTS, CNN ANCHOR: Coming up now to the top of the hour here on AMERICAN MORNING, a lot to cover for you. Here are the stories affecting you that we will be running down in the next 15 minutes. We begin with breaking news.

North Korea firing off another threat across the DMZ. A statement from Pyongyang saying it could not, "guarantee the safety of South Korean civilian aircraft passing near our air space." Our Christiane Amanpour is following that story for us this morning. We'll hear from her in just a couple of seconds.

Health care at the top of the White House agenda today. The president just hours away from announcing plans to overhaul the country's health care system. Critics, however, already digging in for a fight. So will the plan ever get off the ground?

Suzanne Malveaux is live at the White House. New this hour, she has an early look at part of the argument that the president will be making today. And when it comes to the president's $75 billion mortgage fix, Americans are waking up with more questions than answers. Many people are still unsure if they even qualify. We've got the latest poll numbers on the plan as well to share with you and our personal finance editor, Gerri Willis is here to answer your questions.

But first to breaking news. And disturbing word from North Korea that it's now threatening South Korean civilian aircraft flying not in its air space, but near its air space. We're working the story from all angles. And joining us now on the phone is CNN's chief international correspondent Christiane Amanpour.

Ratcheting up the saber rattling once again, Christiane. What do you think is behind this?

CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: Well, it's unclear at the moment, and certainly most of the news is coming out of South Korea in the form of a news alert on South Korean wires.

And this has been a bit of a pattern over the last several days and weeks. And so far, it's amounted to saber rattling and nothing else. If you remember over the last couple of weeks, there was a potential threat from South Korea saying that North Korea was about to test fire a missile, and North Korea talking about that as well. And that has not happened. North Korea is saying that in any event, it just wants to put a communication satellite up, but officials here in the United States is saying there is no evidence that any missile is on any launching pad. So it's unclear what the aim of the North Koreans is, except in the view of some American officials to try to get back into the game, to try to make an impression on the new U.S. administration, and with secretary of state just recently in that region saying that North Korea had to abide by the United Nations Security Council resolution and to get back into talks about its nuclear program.

But certainly, there has been very bad relations between North Korea and the latest South Korean president who when he came into office, was much more hard line towards North Korea than the previous South Korean president.

ROBERTS: But, Christiane, back to this threat that was just issued, the one as you said was broadcast by South Korean media, this idea that North Korea might shoot down a South Korean civilian airliner not violating its air space but flying near to its air space. If that were to happen -- if North Korea were to make good on that threat, how would that be taken by South Korea? As an act of war?

AMANPOUR: Well, it would obviously be pretty grave. I'm not sure that I've heard North Korea saying it's going to shoot down anything. What we're hearing is the belligerent rhetoric that we have heard over the last several days and weeks. But there is no evidence, at the moment, of anything other than that happening.

And that's why we're being cautious about it. CNN has been trying to chase it down in that region, but it's, obviously, on a completely different time zone and as yet been unsuccessful in trying to find out the precise details.

But at the moment, we're also checking with the Pentagon and nothing coming out of there that we can report at the moment. They're obviously monitoring the same wire reports. But at the moment, it's words and, obviously, everybody in the region and those with the surveillance are watching closely on it.

ROBERTS: All right. Christiane Amanpour for us. We should clarify that the actual statement says, "it cannot guarantee the safety of South Korean civilian planes."

Christiane Amanpour for us this morning. Christiane, thanks so much.

AMANPOUR: Thank you.

KIRAN CHETRY, CNN ANCHOR: And now to your health and your future. Doctors and patients and health care professionals will be on hand at the White House. And President Obama hosts a health care summit in just a few hours. It marks the start of the president's campaign to build public support for a major health care overhaul, eventually hoping to cut costs and expand coverage. And estimated 46 billion Americans are currently uninsured.

Suzanne Malveaux is following it for us this morning. She's live at the White House.

And we had a chance also to talk to Melanie Barnes a little while ago who is going to be spearheading this up as well. They want to put a big initial investment into this, but say that in the end it means we'll all be saving money.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: At least that's the argument. The case that they're making. One of the things that they are going to be doing is investing some $634 billions, billion dollars when it comes to this health care fund, reform, fund. This is a lot of money, but they say this is really the commitment that they are going to put into this.

What are they trying to do? Essentially to cover the 46 million who are uninsured to provide health care, and one of the things that they're saying, the argument they're making this morning is we've got to get everybody to the table. The detractors, the critics, as well as the supporters and say, look, there is something in this for everyone.

So doctors, nurses, hospitals, patients, everybody is going to have to make a sacrifice, but everybody ultimately is going to gain. That's why they're going to put everybody in the same room - 150 or so - Kiran, they say, at least just to start the dialogue - Kiran.

CHETRY: And a Clinton administration as we know tried for health care reform, and it did not prove to be successful. What lessons are they learning to make sure it's different this time around?

MALVEAUX: Well, you know, it's interesting. Because they certainly -- they want to be transparent. They want to put everybody in the same room. But you've got a lot of old hands here who have done this before. They were in the trenches with Hillary Clinton. John Podesta, who is the chief-of-staff in that administration. Really on team Obama. He has an advocacy group that he's been working on this for years now. So they feel like they are very much prepared if there is a battle to ensue.

The other thing that's fascinating, Kiran, is that they are making the case. They are linking health care reform to the financial crisis. So we know that President Obama is going to say just in a few hours, the cost of health care now causes a bankruptcy in America every thirty seconds. By the end of the year, it could cause 1.5 million Americans to lose their homes. So he is clearly making a link here between the housing crisis, the health care crisis and, overall, the economic crisis - Kiran.

CHETRY: Suzanne Malveaux for us, thanks so much. And we want to have a note for our viewers that President Obama will be making his opening remarks at the White House forum on health care reform at 1:00 Eastern Time. You can see it, here on CNN and on cnn.com.

ROBERTS: Well, we are getting emails, iReports, all kinds of reaction on President Obama's $75 billion mortgage plan. We even have the latest poll numbers for you. In a Quinnipiac University survey 64 percent of people say the president's plan is not fair, only 28 percent say it is. But a majority of those polled, 57 percent still say that they support President Obama's plan.

CNN money team is making sense of it all, including our own personal finance editor Gerri Willis this morning.

Good morning, Gerri.

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Hey, good morning, guys. Great to see you.

You know, it's called Making Housing Affordable, and there are two different programs to serve two different groups. The idea of the first program is to help people who are underwater in their loans. If you owe more than your house is worth. Now to qualify, you can't have missed a mortgage payment. If you participate, you get to refinance into a lower cost loan even if you don't have a lot of equity. Now this is supposed to help up to five million homeowners.

Here are the details. It allows you to refinance to the current prevailing mortgage rate if you have less than 20 percent equity in your home. Look, you can't owe more than 105 percent of the value of your home. So you can't be deeply underwater. You also have to be current on your payments like we just said. The program ends in June 2010. I know that sounds like it's a long way away, but you really need to get on it now.

The second part of this program is supposed to help struggling borrowers by modifying loan so housing payments are no more than 31 percent of monthly gross income.

If you miss payments, you've loss a job, this program is for you. Now to participate, here are some guidelines. You must obtain your new mortgage -- your mortgage that is before January 1, 2009. So before the start of the year. You have a primary mortgage that is less than $729,500. That's the jumbo limit. You'll have to sign a statement of financial hardship, and go for counseling if your total household debt is more than 55 percent of your income.

Now the loan modification will probably take the form of lowered interest rate on your loan and that rate will lasts for five years. And then it slowly readjusts upwards every year from there. The modification program will be in effect until 2012. The Treasury Department says the number of lenders, including Bank of America, this is new step, JPMorgan Chase, and Wells Fargo have signed on to the program. So lots of questions, you know, about is this going to work. Are banks going to get involved? We're already seeing banks sign on.

ROBERTS: So you can imagine a lot of people at home who might be facing foreclosure are worried that they could at some point are saying, OK, information, information, where do I get it from?

WILLIS: Yes. Well, you want to go to your lender, obviously. You want to talk to a housing counselor if you have one. But I have to tell you, yesterday, we were told by Treasury, this is starting now. This is starting now. But the lenders are saying we're not ready yet, and it could take several weeks they were telling CNN yesterday before they are ready with the appropriate paper work. So devil in the details. We'll continue to follow this.

CHETRY: This is voluntary for them, right? I mean, they are adding incentives, but technically it's voluntary.

WILLIS: There are lots of sticks that they don't participate. These are banks that have gotten a lot of money from the federal government. So you've got to think at the end of the day, they are highly incentive to participate. They're also getting dough if they -- if they refinance these loans successfully.

ROBERTS: All right. Gerri, thanks so much. Good tips this morning.

WILLIS: My pleasure.

ROBERTS: All of CNN's resources, by the way, tracking issue number one for you. Our chief business correspondent Ali Velshi joining Anderson Cooper this Friday for an "AC360" special. We're calling it our "CNN MONEY SUMMIT." That's at 11:00 p.m. Eastern, only here on CNN.

CHETRY: All right. Well, California's ban on same-sex marriage heading straight to the state's Supreme Court just hours from now. The court will hear oral arguments on why Proposition 8, the ban on same-sex marriage should be overturned.

Joining me now is one of the state's biggest supporters of same- sex marriage, San Francisco Mayor Gavin Newsom.

Thanks so much for being with us this morning.

MAYOR GAVIN NEWSOM, SAN FRANCISCO, CALIFORNIA: Good morning. Good to be here.

CHETRY: You know, you really become the face of advocacy for same-sex marriage. Back in 2000, 61 percent of voters supported Proposition 22, which at the time also sought to ban gay marriage. And then again this past November, they voted for Prop 8.

You know, when you talk about this ballot measures, is the way that California allows this type of voting on various issues needing to be called into question as well?

NEWSOM: Well, I mean, the whole history of the rights movement is an interesting history. Rights have been afforded people not because of public opinion polls and not because of the will of the voters. Think back to 1967 when there were 16 states that banned interracial marriage. Over 70 percent of Americans opposed interracial marriage until the U.S. Supreme Court finally adjudicated that it was unconstitutional.

In California, the Supreme Court did exactly the same in May of last year. And as a consequence, Prop 8 was formed. People were upset about that. The question the court is going to be asked this afternoon or rather this morning is a simple one. Was Prop 8 appropriate? Was it a simple amendment to the constitution or was it a revision of the constitution? And therein lies the distinction.

If it was indeed a revision, a dramatic change to the constitution, they don't require a different process. Two-thirds of the California legislature and/or a constitutional convention before the voters can determine the fate of a minority. In this case, it was simply a petition and 52 percent of the vote.

CHETRY: Right. But it also begs the question about these propositions getting on the ballot in your state in general. I mean, aside from this one, this is highly controversial as we know, and it really split your state pretty much almost 50/50. I mean, this passed by 52 percent I think of the vote.

NEWSOM: Yes.

CHETRY: What about -- what does it say about whether or not that process by which California voters are able to sort of weigh in directly on certain issues and how that affects your legal system?

NEWSOM: No, it's a legitimate point. In 2000, it was one thing, but in 2008, it was different, because it was the same California Supreme Court that's going to be hearing the arguments this morning that had the opportunity to make that decision whether or not Prop 8 was appropriate to go on the ballot. They deferred on that. And that's why there's a lot of questions about whether or not they're now going to subsequent to the vote, overturn, quote/unquote, "will of the voters." So there's a legitimate process argument.

There is also hanging in the balance, back to the human side of this, 18,000 couples that are waiting for their fate to be determined. Their friends and families and loved ones, those are the couples that got married between May and November before the voters overturned the court decision in this.

CHETRY: And, you know, we have you on and we know you're a proponent. So I want to ask -- I want to ask you about the other side. Supporters of Prop 8 say this. They say Proposition 8 is about preserving marriage. It's not intact on a gay-like style. Proposition 8 doesn't take away any rights or benefits of gay or lesbian domestic partnership. They make that argument by saying that under California law, domestic partners shall have the same right, protections and benefits as married spouses. They say there are no exceptions and it will not change this. What do you say about that?

NEWSOM: Yes. Well, I say -- I thought we dealt 55 years ago with the notion that separate is not equal. They are arguing that separate is somehow equal. I thought that we had worked through that. And the consciousness of people's minds.

I don't believe in running the 90-yard dash on equality. I believe a marriage is marriage. And I believe there is a reason they spent $40 million on a word is they understand that the institution is different and it's superior to civil unions. So the construct is one I just fundamentally don't accept. I believe in full equality for everybody. And I'm very, very concerned that if the will of a majority, a simple majority can take the rights any time in place of a minority, then there is nothing to stop a subsequent majority to take away your rights or my rights or someone else's rights based upon religious or ethnic or any other construct. Not just the issue of sexual orientation.

So there is a profoundly important question here where a constitutional democracy, not a pure democracy, and wherein does the constitution lie in this debate.

CHETRY: Right. And I guess, you know, taking this very thorny issue aside, is it time for your state to rethink propositions in general?

NEWSOM: Well, that's a -- that's an all together different point. Because I think there's a lot of folks who disagree. It's getting out of control in the state. We pay -- we spent $85 million on Prop 8 on both sides.

CHETRY: Right.

NEWSOM: It's the most money ever spent on. It's just -- it's getting absurd. And you can see these ads. You can't tell which is confusing. The whole process from my perspective is broken. It begs for a constitutional convention out here in California. We need to revisit this whole system, you're right.

CHETRY: All right. Mayor Gavin Newsom from San Francisco. Thanks so much for joining us this morning. I know it's a little early for you guys.

NEWSOM: It's all right. Thanks for having me up.

ROBERTS: We're covering the president's mortgage fix from all the angles. One plan with different groups and different ways to qualify. We are making sense of it all, and talking to a team of housing experts to answer your questions. We'll have all the answers coming up.

Fourteen minutes now after the hour.

(BEGIN VIDEO CLIP)

DAVID LETTERMAN, HOST, "LATE SHOW WITH DAVID LETTERMAN: Great story in New Jersey. Somebody bought a lottery ticket, $212 million. $212 million. Now, under the new Obama plan, after taxes, that person will have enough money left over to buy another lottery ticket.

(LAUGHTER)

(END VIDEO CLIP)

(COMMERCIAL BREAK)

ROBERTS: Welcome back to the Most News in the Morning.

All of us are feeling the pain of this recession, including one woman who lived through the Great Depression in the 1930s, and now finds herself forced out of retirement and back to work.

Sandra Endo now live in Washington to introduce us to an American story worth hearing.

Boy, you would think if you went through it once, Sandra, you get a pass from the second time.

SANDRA ENDO, CNN NATIONAL CORRESPONDENT: Absolutely, John. It's really a touching story. And although the economy is tough right now, times aren't as bad as during the Great Depression. But there are some important lessons to be learned from people who have lived through the worst.

(BEGIN VIDEOTAPE)

ENDO (voice-over): At 86-years-old, Elvira Grady has gone back to work. Serving meals at the senior center she has belonged to for 18 years. Ms. Elvira, they call her, needs a paycheck since her social security check doesn't go as far as it used to.

ELVIRA GRADY, GREAT DEPRESSION SURVIVOR: My social didn't take care of my bill. You know, the gas bill and light bill and other bills you have.

ENDO: Here in Washington, D.C., the landscape is completely different from where she grew up in South Carolina, daughter of a sharecropper just before the Great Depression.

GRADY: I call it down home. You didn't have any money there. We didn't have too many clothes to go ahead. Nothing to buy the clothes with. And sometimes you didn't have, you know, food like we wanted to.

ENDO: Ms. Elvira has known tough times before, and she has some tough advice for people coping with the current economic downturn. Save everything you can.

GRADY: If you have leftovers, you put it in those containers and put them away until you get ready to use them.

ENDO (on camera): So it's good not to throw things out like that?

(voice-over): Having learned many of life lessons the hard way, she imparts this wisdom.

GRADY: Don't run through your money like that. When I get the little change that I get, I try to hold onto it. I call it a dollar, because we're going to have bad days just like we have now. And if you don't have nothing, as far as I'm concerned, you can go hungry -- yes.

ENDO: For Ms. Elvira tightening her belt when times get tough is something she has overcome before.

GRADY: I don't know what we're grumbling about. I really don't. (END VIDEOTAPE)

ENDO: A little perspective there for you. Times could be much worse. Now, Ms. Elvira says during the Great Depression, people really scrounged around for food. And with what little people did have, they tried to make it stretch and last for as long as they could. Now these days she says people should just try to live simply - John and Kiran.

ROBERTS: Yes. Oh, bless her heart that she has got to go back to work.

Sandra, thanks very much for that - Kiran.

ENDO: Sure.

CHETRY: All right. Well, President Obama unveiled his plan to stop Americans from losing their homes to foreclosure. It helps two types of struggling homeowners. And it is a bit complicated so we have experts who are going to help you pinpoint whether or not you qualify. It's 19-1/2 minutes after the hour.

(COMMERCIAL BREAK)

CHETRY: Welcome back to the Most News in the Morning.

President Obama is unveiling his costly and ambitious plan to stem the tide of foreclosures. His plan went into effect yesterday, but is it enough and who exactly does it help? Let's bring in our expert panel now. Jacki Zehner is a founding partner of the Circle Financial Group. She joins me now with some Brillo pads, which I don't know why, but I guess we'll find out in a second. And Also Richard Bitner. He's the publisher of Housingwire.com. He also spent years in the mortgage industry as well.

Thanks to both of you for being with us.

JACKI ZEHNER, FOUNDING PARTNER, CIRCLE FINANCIAL GROUP: Thank you.

CHETRY: All right. So Richard, let me start with you. And I want to ask you about this part of it. He says the plan -- the president says the plan will help as many as four million people avoid foreclosure. This is a two-pronged plan, as we've talked about before, but the first people that qualify, these are people who need an actual loan modification. So how will that part work?

RICHARD BITNER, ASSOC. PUBLISHER, HOUSINGWIRE.COM: Right. Well, clearly, what we're looking at is -- and I'm assuming you're referring to the people who are in default at this point, right?

CHETRY: They have already been in default already and these are people who really are - who -- really the only other option would be foreclosure.

BITNER: Correct. Right. Well, certainly one of the things that lenders are going to have to do is conduct what we refer to as a net present value test, trying to determine is there greater value by trying to put them in a loan modification than there is by taking them into foreclosure. And, of course, what the government is encouraging lenders to do is that if it makes more sense to put them in a loan modification, to do that.

Now, one of the problems with this, of course, is -- we talked about this before -- is that for those of us who have been in this industry for a while, we understand that when we take a borrower who's currently in default, if you look historically over the last 20 to 30 years, and you put them into a loan modification program, the recidivism rate, which is a fancy word for re-default, has historically been over 50 percent in a normal market. And, of course, we're not dealing with a normal market.

So, my guess is that I think the four million figure is probably a little bit aggressive.

CHETRY: Right. And it's interesting, Richard brought up a point which I was going to bring up as well which is, you know, how do you make sure that it doesn't happen again, especially in a climate where we're seeing more layoffs? And also, the second part of the plan, which is for people whose homes are under water, which, as you reported for the first time yesterday, this is now 20 percent of mortgages, meaning that you owe more than your home is worth. They're trying to help those homeowners as well with refinancing. So how is that going to work?

ZEHNER: Well, we need to lower interest rates in general. A lot of people don't qualify right now because of income or LTV issues, loan-to-value issues. So, really, they're trying to suspend that, raise that, give Fannie and Freddie Mac, who own most and guarantee most of the mortgages in this country under $700,000, the ability to lower interest rates without those qualifications.

So that's really important. They're also talking about costs, reducing the cost and the friction around doing this. The government owns Fannie Mae and Freddie Mac now. So, really, they can do whatever they want to...

CHETRY: Right.

ZEHNER: ... and they need to leverage the power that they have, the portfolio they have of mortgages to do as much as they can for that in which they already control.

CHETRY: And Richard, this is interesting, because one way that I think they're trying to try to help turn around those statistics that you mentioned, which is when people get a modification, 50 percent end up falling behind yet again, incentives for both the borrowers and the lenders in the form of money to make this happen. Is that going to make a difference?

BITNER: Well, you know, that's a touchy subject because -- in fact, Kiran, you and I, we talked about this a couple of weeks ago when this plan was initially rolled out. You know, on the surface you stand here and say, you know, it makes a lot of sense to motivate the servicer, because we talk about the costs that are associated with doing this. Servicing operations are not built to do mass modifications from a business standpoint. So I think that makes sense.

The concern I kind of always had has been to throw money at a borrower and pay them an incentive to stay in their house to make their payments. Seems to be counterintuitive. Isn't that what we, as homeowners, should be trying to do regardless? So I'm a little concerned about that.

CHETRY: And Jacki, that brings me to my next point. Go ahead, first of all, go ahead and explain why you have Brillo pads with you.

ZEHNER: Well, this is my soap box and I'm actually carrying it around with me everywhere I go now. And the opportunity is to talk about money on the soap box.

CHETRY: I got you. Go for it.

ZEHNER: Got it? So -- and this addresses a point. You know, we have to be very responsible about money. As far as I know, there are three things, important things you need to do with money. You can spend, you can save, and invest and you can give. And maybe you could do some other things, but I wouldn't recommend them.

And we need to embrace money as a tool and as a resource and think about how we use our money to pay our mortgages, to buy the things we need for the family and let's not forget giving. I think we can't stop giving and doing charitable things in times of need. So this is my soap box. This is about money. And this is all part of a plan and the mortgage component, how much we pay for it to stay in our houses is a big component of that. So I carry this around.

CHETRY: I got you. All right. That's very helpful.

(CROSSTALK)

CHETRY: Yes, you never know. Richard and Jacki, thanks for being with us this morning. And we'll continue, as we said, to try to help clarify this issue as I'm sure as we get more details, there are more and more questions and we're going to continue to follow it here on AMERICAN MORNING. Thanks.

ZEHNER: Thank you.

BITNER: Thank you.

CHETRY: John?

ROBERTS: You know, soap boxes just aren't what they used to be. They used to be made out of wood and you can stand on them. I dare say you stand on that, you'd crush it.

CHETRY: Well, these are steel wools, so maybe not. ROBERTS: All right. The Coast Guard called off the search but the families refuse to stop looking. The siblings of an NFL star lost at sea tell us why they still think they can find him.

It's 27 minutes after the hour.

(COMMERCIAL BREAK)

CHETRY: Twenty-nine minutes past the hour. A look at the top stories.

Developing right now -- two of former President Bush's top aides will be questioned by Congress -- former adviser Karl Rove and counsel Harriet Miers will be deposed by investigators from the House Judiciary Committee. Critics argue that they are -- they used improper influence on the Justice department and in the firings of federal prosecutors. The Bush administration had said that Rove and Miers are protected by, quote, executive privilege from discussing that issue. Also happening right now -- a car bomb exploding near busy livestock market in Iraq. It occurred in Hamza, a small Shiite town 75 miles south of Baghdad. Police there say at least 10 people died and dozens of others were hurt.

And a developing story in Washington. Today, two Senate democrats now urging President Obama to veto an emergency $410 billion spending bill. Russ Feingold of Wisconsin and Evan Bayh of Indiana said they are voting against it this week. They say it's too expensive and it has too many earmarks.

Well, Rush Limbaugh is calling out President Obama and while it's not likely to happen, he wants to go toe-to-toe with the president in a debate. He issued the challenge yesterday on his radio show.

(BEGIN VIDEO CLIP)

RUSH LIMBAUGHT, CONSERVATIVE RADIO HOST: But I have an idea. If these guys are so impressed with themselves, and if they are so sure of their correctness, why doesn't President Obama come on my show? I am offering President Obama to come on this program without staffers, without a teleprompter, without note cards to debate me on the issues.

(END VIDEO CLIP)

CHETRY: The debate is raging this morning about whether democrats are pulling a Rush job. Accusations are flying at the White House is orchestrating an inside campaign to position Limbaugh as a leader of the republican party. Our Carol Costello was live in Washington now where the finger-pointing continues this morning. Hey, Carol.

CAROL COSTELLO, CNN CORRESPONDENT: I like that, a rush job. That's a good one. You know, every since the chair of the RNC apologized for criticizing Rush Limbaugh, democrats have been getting louder in their search in a talk show host leads the republican party. It is now at fever pitch. (BEGIN VIDEOTAPE)

COSTELLO (voice-over): Behold, the liberal attack ad from Americans United for Change designed to anoint Rush Limbaugh as king of the republicans.

UNIDENTIFIED MALE: Who is the leader republicans hailed as a hero last weekend? Was it Sarah Palin?

GOV. SARAH PALIN (R), ALASKA: Nope, nope, nope.

UNIDENTIFIED MALE: Then who? Not Rush Limbaugh?

LIMBAUGH: Yes, yes, yes.

(LAUGHTER)

COSTELLO: Limbaugh used the ad and more to accuse the White House of orchestrating a campaign to destroy him, pointing a finger directly at President Obama's chief of staff, Rahm Emanuel. Emanuel, along with democratic strategists and CNN contributors James Carville and Paul Begala, have talked about Limbaugh as the leading voice of the republican party, but Begala told us democrats never came up with an official Limbaugh strategy. It just happened organically. Although John Avlon of the "Daily Beast" said however it happened it was a master stroke.

JOHN AVLON, "DAILY BEAST.COM": Choose your enemies wisely because they will define you. There's no question the Obama administration has chosen their enemy wisely and wanting to bait Rush Limbaugh seen as the face of the republican party.

COSTELLO: The Democratic Congressional Campaign Committee jumped on the informal strategy too, designing a website urging visitors to create an "I'm sorry" letter to the great leader of republican party, on behalf of republicans who dared disagree with Limbaugh. The GOP wasn't happy.

REP. JOHN BOEHNER (R), HOUSE MINORITY LEADER: This is nothing more than a distraction created by the administration to take people's attention away from the fact that they're trying to raise taxes and grow the size of government.

COSTELLO: And some wonder if the president's right-hand man really is orchestrating that distraction or is he undermining President Obama's promise to reach across the aisle. Democrats say no, insisting republicans are writing their own partisan script.

REP. DIANE WASSERMAN SCHULTZ (D), FLORIDA: Rush Limbaugh is doing that all by himself and doesn't really seem to need help. Every time he opens his mouth and talks about his desire to see Barack Obama fail, and then defends his reasoning for wanting him to fail, he does that job for us.

(END VIDEOTAPE) COSTELLO: A senior administration official says the idea that democrats created a Limbaugh strategy is ridiculous. The website politico.com claimed Rahm Emanuel and others inside the White House are part of the effort. When asked if that was true, the official responded no, with an exclamation point.

CHETRY: All right. There you have it. You know the one people who is eating it up and loving it is Rush Limbaugh. Because he says it's getting me more listeners and more attention.

COSTELLO: Exactly. Can you see him spiking the football and doing the victory dance? Because that is what he is doing.

(LAUGHTER)

CHETRY: Thanks, Carol.

ROBERTS: Thirty-four minutes now after the hour.

NFL players Corey Smith and Marquis Cooper and friend Will Bleakley are still missing after their small boat capsized on Saturday. Survivor Nick Schuyler was pulled from the chilly waters from the Gulf of Mexico on Monday. And there is the picture of the boat being towed back in to shore. While the Coast Guard has called off the search, family members are still holding out hope.

Joining me now from Tampa is Corey Smith's sisters and brother, Yolanda Newbill, Rhonda Lilly (ph) and Wyman Smith, Jr. Folks, thanks for being with us this morning.

Let me preface all this by saying I can't imagine what you're going through with your brother missing and his two friends still missing out there. But let me just say that, you know, from all of us here at AMERICAN MORNING, our thoughts and prayers are with you, that somehow a miracle might happen and they might be found alive.

Let me start with you, Yolanda, if I could. It's been 120 hours now since the boat flipped over. As we mentioned, the Coast Guard called off the search on Tuesday. What gives you hope this morning that your brother might still be alive?

YOLANDA NEWBILL, COREY SMITH'S SISTER: Well, John, first and foremost, thank you for having us here this morning. What gives us hope is truly our faith, first and foremost. But also who our brother is, knowing that he is a fighter, that he would never give up, that he would want us to do the same thing. He would do the same thing for us. But this is what he would want us to see so that's the reason why we want to continue.

ROBERTS: On that point, Rhonda, can you tell us a little bit about your brother's spirit. What is it inside him that would keep him fighting against what are seemingly increasingly long odds?

RHONDA: OK. Personally, and I know you said Rhonda. I'm Yolanda. Unfortunately, Rhonda can't speak right now.

ROBERTS: I'm sorry.

NEWBILL: But you want to know what is it that makes us feel that he would have put up a fight?

ROBERTS: What is it about his spirit that would have kept him fighting through all of this?

NEWBILL: My brother is just one of those positive people. I think, if nothing else, he is the type of person who will fight to the end. He is a team player. Being a free agent, first and foremost, that is a job each and every year that you have to fight for and he has been doing it for six years. And personally, having the work ethic, having the sportsmanship that he has had, being the family man that he is, being the type of friend that he has been, and will continue to be and being out there with the friends that he loves out there with. There is no question that he would not have just given up. That is just a reflection of the character of who he is.

ROBERTS: Well, Wyman, maybe we could ask you this question. There are reports on this idea, that Yolanda talks about, about not giving up. There are reports that Nick Schuyler said that both Corey and Marquis Cooper at one point, after hanging on to that boat for a number of hours took off their life jackets and simply floated away. Does that sound right to you?

WYMAN SMITH, JR., COREY SMITH'S BROTHER: No, it doesn't sound right. We heard several different stories and one story talks about them seeing a Coast Guard helicopter and all four of the men were together and I know that the search for them didn't start until 2:00 in the morning and the boat was capsized at 5:00 on Saturday.

ROBERTS: Right.

SMITH: So I know that story couldn't be correct.

ROBERTS: You know, Yolanda, I'm sure that you really want to get the opportunity to talk with Nick Schuyler. Do you know if you'll have that opportunity, if you do, when you do, when you might be able to talk to him and what you hope to learn from him? NEWBILL: John, if nothing else, yes, I do hope to speak to Nick and I know I will. I actually made contact with his family, so I'm hoping that we will get an opportunity to speak very soon. If nothing else, it allows us to hear that story from Nick as opposed to the speculations, the different versions, the timelines as to what happened when. I think a lot of it is hearsay, secondary information, but to hear it from Nick, it will give a little closure, help us to understand exactly what his experience is and we are very happy that Nick is recovering. He has given us hope and that is one of the reasons that we are still hopeful.

ROBERTS: Yes. He certainly made it against the odds as well. We certainly hope you do get the chance to talk to him at the very least. Yolanda Newbill, Rhonda Lily, Wyman Smith, Jr., thanks for being with us this morning and, again, our thoughts and prayers are with you as the search continues.

Private boats and small aircraft...

NEWBILL: Thank you.

SMITH: Thank you.

ROBERTS: All right.

Private boats and small aircraft continue to look out there off the shore of Clearwater. If you'd like to offer some help, if you're a private plane owner or you got a boat yourself and you want to donate it for the search efforts, you can just simply email nflsearchandrescue@gmail.com. That's nflsearchandrescue@gmail.com.

CHETRY: Just in this morning. We have new numbers on the economy. The state of the economy. It's a weekly report on how many people line up for first-time unemployment benefits. CNN's Christine Romans joins us now with more on those numbers.

Hi, Christine.

CHRISTINE ROMANS, CNN CORRESPONDENT: Hi, Kiran.

That's right. These are the people who find themselves at the unemployment office or find themselves filing for unemployment benefits for the very first time. Six hundred and thirty-nine thousand people in the most recent week did that. Really, anything above 400,000 is a sign of a labor market in distress.

What accounts for good news in this economy is that slightly less than the number of people who lined up the week before. So a slight improvement there but we look at some of the other numbers, a number over four weeks, also the number of people who are continuing to get claims. These numbers are still pretty big and what they're showing us, Kiran, is the job market is worsening and that it is difficult to find a job once you've lost one. So some more layoffs in manufacturing and in construction are what accounting for these numbers, Kiran.

CHETRY: All right. Christine Romans with that news for us this morning. Thank you.

And still ahead, do you know where your tax dollars are going? The new administration promising to cut back on pork barrel spending in Washington. So how is President Obama doing with that pledge? We'll take a look.

It's 40 minutes after the hour.

(COMMERCIAL BREAK)

ROBERTS: The Capitol Building this morning on what looks like a beautifully sunny day in the nation's capital. Washington now clear and 29 going up to a high of 48 later on today. It's going to be mostly sunny and even warmer weather coming in for the weekend. So we're looking forward to that.

Welcome back to the Most News in the Morning.

Every new administration brings the same promise to cut back on wasteful government spending and President Obama is no exception and just like those before him many of the president's critics say he is not keeping that promise. Jason Carroll is following your tax dollars this morning. Good morning to you.

JASON CARROLL, CNN CORRESPONDENT: Yes, a lot of people wondering where some of this money is going. Yesterday the president made it very clear. His administration will change the way that government contracts are awarded. It's part of his - the president's plan to save taxpayers billions but some still say he's spending too much in the wrong places.

(BEGIN VIDEOTAPE)

CARROLL (voice-over): One might think the democrats and republicans don't have much in common but they do. A shared history of wasteful government spending. Remember the '80s and those military contracts that had the government shelling out $435 for a hammer? $640 for a toilet seat? That type of spending stopped but over the years, the waste has not.

BRIAN RIEDL, THE HERITAGE FOUNDATION: Every president since Ronald Reagan has promised his own crackdown on waste, fraud and abuse and none have been particularly successful.

CARROLL: True, promises have been made.

GEORGE W. BUSH, FMR. PRESIDENT OF THE UNITED STATES: So let us work together to reform the budget process and cut the number and costs of earmarks at least in half.

CARROLL: Presidents have tried to carve the fat when they found it...

BILL CLINTON, FMR. PRESIDENT OF THE UNITED STATES: There was $1 million to study stress in plants and $12 million for a tick removal program that didn't work.

CARROLL: Now it's President Obama's turn.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The American people's money must be spent to advance their priorities, not to line the pockets of contractors or to maintain projects that don't work.

CARROLL: Even as the president has promised to save taxpayers $40 billion a year, a stop-gap spending bill currently making its way through Congress has come under attack for having the same type of wasteful spending President Obama wants to eliminate.

According to the citizens watch dog group, Taxpayers for Common Sense, it includes nearly $1.8 million for pig odor research in Iowa? Another $1 million for cricket control in Utah. President Obama says his plan will save taxpayers money by not outsourcing services the government can do, ending no bid contracts that have led to abuses in the past, and strengthening oversight to help maximize accountability, but still some consumer groups and critics question what incentive there is in President Obama's plan for lawmakers to change their old ways?

TOM SCHATZ, CITIZENS AGAINST GOV'T. WASTE: It's a full-time job requiring the attention of every secretary and every appointee and every agency, because the individuals that are involved in those systems don't always have an incentive to change them.

(END VIDEOTAPE)

CARROLL: Critics say for some lawmakers fighting wasteful spending doesn't provide enough political gain to make for their time so they focus on bringing back the pork to their states instead.

ROBERTS: And the last time you reported this story this morning on the pig pork - the smell mitigation that Tom Harkin was, you said use a air freshener.

CARROLL: Yes, I was making a joke.

ROBERTS: I'm (inaudible)

(CROSSTALK)

CARROLL: I was. I was. And actually when I got off the set, Christine Romans who is from Iowa came up to me and she brings up a good point, you know, that these hog confinement facilities is not just about the odor, it's about economic development and it's about getting rid of the waste. But I think what some people would say is OK, can you spend that kind of money but does it need to be spent right now? I think that's what the (inaudible)

ROBERTS: I mean, obviously, it's a huge problem there in Iowa but as one emailer wrote.

CARROLL: Yes, please don't email me anymore about the air freshener joke.

ROBERTS: This morning it does smell like money. So there you go. So Jason, thanks so much for that. I hope you didn't get beaten up too badly. Kiran.

CHETRY: We were kidding about the Febreze. We know that wouldn't do the trick.

President Obama just hours away now from hosting a 150 doctors, drug makers and patients at the White House. He wants their help to help reform health care. Ahead, how to cover every American with so many of our hospitals and emergency rooms on life support themselves.

BECKY ANDERSON, CNN CORRESPONDENT: And I'm Becky Anderson in London where the rumor mill is in overdrive. Michael Jackson, it seems, is staging a comeback. More after this.

(COMMERCIAL BREAK) CHETRY: Look, there's Christine lecturing Jason Carroll, once again, about pig odor removal in Iowa. Can't get over this this morning.

Welcome back to the Most News in the Morning.

From across the pond we're getting new reports about the man who once reigned at the top of the pop world. Live from London, our Becky Anderson is looking into a possible comeback by Michael Jackson. So a couple of questions. First of all, is he really going to follow through with this? He is going to have these 10 concerts and, number two, are people going to buy tickets?

ANDERSON: Well, let's find out. We're going to have to wait and see. He is holed up in a central London hotel this hour. Ahead of what is the expected announcement that he will be back in July for 10 concerts which is promoters now hope will net him some $100 million. This is a man who hasn't been seen in public or very rarely seen in public since 2005 in the acquittal of those child molestation charges. A possible sense of excitement by the oh, so expected Motley Crue outside that hotel this morning.

Listen to this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We can't say a comeback as he's always been around. If he go to a club every day, you can hear Michael's music.

UNIDENTIFIED FEMALE: For me, his music is amazing and despite what has happened. You know, he was acquitted of all charges so what is there to question?

UNIDENTIFIED FEMALE: I like him. I like his dances.

UNIDENTIFIED MALE: He's the best! He is an inspiration! And there will be no one ever to touch the planet like he has.

(END VIDEO CLIP)

ANDERSON: So why the comeback and why now? Well, he says that he wants his kids to see what old dad does. He is 51 years old this year for a day job. I think the answer should be this. He needs the money. He's hot to the tune of some of tens of millions of dollars. His Bel-Air mansion on a monthly basis cost him some 75 grand. So yes, he needs the money. It's a tough one. Will they go and buy the tickets? Who knows at this point. The O2 Arena holds 20,000 people. This is over 10 days. I'm not sure but we'll wait and see -- Kiran.

CHETRY: All right. We sure will. Becky Anderson, thanks so much -- John.

ROBERTS: For millions of uninsured Americans, the local emergency room is their only option for medical care. Ahead on AMERICAN MORNING, the president's challenge of reforming health care with so many hospitals in critical condition. (COMMERCIAL BREAK)

ROBERTS: President Obama now four hours away from kicking off his health care reform summit. He has an ambitious and expensive plan and with so many Americans unable to afford health insurance, emergency rooms are often their only option for medical care. Not just critical care, but regular medical care. That is putting many of our hospitals on life support.

Our senior medical correspondent Elizabeth Cohen is already getting a handle on how all of these will impact your family's health care options.

Elizabeth, emergency rooms already in pretty bad shape before the economic crisis hit. How bad has the situation become?

ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: We've been talking to emergency room doctors, John and they say the situation is getting much worse that they've noticed how many people have lost their health insurance. They say look, if health care is a battlefield we're on the front lines and we're seeing the effects. Take a look at this. In just January and February alone, more than a million people lost their jobs. And it's estimated that about half of those lost their health insurance.

So if you don't have health insurance, you don't have a doctor to go to, where do you go when you get sick? Often, the emergency room. Also if you don't have insurance, it also probably means you can't pay for your prescription drugs the way you used to. So you stop taking your blood pressure medication or maybe you don't your asthma inhaler. So there's more of a chance that you're going to get sick in the first place and end up in the ER.

One doctor we talked to called this a slow-motion disaster. John.

ROBERTS: So with these emergency rooms already facing an economic crunch, how are they responding to these additional patients who are coming in?

COHEN: You know, John, some of these hospitals are actually closing down. I mean, in Queens, in New York City where you are, two hospitals this week closed their doors. That means - there you see them there. That means that local hospitals, you know, other ones that are still open are going to have to absorb some of these patients. And so what that means is that they will now become, excuse me, even more overcrowded than they already are at the hospital that is absorbing from these places that have closed. They now say that they have six to 10-hour waits.

ROBERTS: Wow. So what do you do if you want to try and get good service?

COHEN: Right. It's really hard in a place that has a six to 10- hour waits. Well there are certain places, certain things that you should and should not do to get good service in a crowded emergency room. If you go to cnn.com/americanmorning, you can see an "Empowered Patient" column that I wrote called "Five Things You do Not want to do in a emergency room if you want to get good service."

ROBERTS: I would suspect one of those is complain?

COHEN: Complain but complain nicely. There's an art to it.

ROBERTS: All right. Elizabeth Cohen for us this morning. Elizabeth, thanks so much.

COHEN: Thanks.

ROBERTS: And that's going to wrap it up for us. Thanks so much for joining us on this AMERICAN MORNING. We'll see you bright and early tomorrow morning for Friday.

CHETRY: That's right. CNN NEWSROOM with Heidi Collins gets going after a break. Have a great day.