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AMERICAN MORNING

U.S. Marines Launch Afghan Surge; Taliban's Human Shield; Santa Barbara Burning; Drew Peterson Indicted for Murder for Third Wife; Army National Guard Officer, West Point Graduate Speaks Out About His Experience With Being Gay in the Military

Aired May 8, 2009 - 08:00   ET

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


CAROL COSTELLO, CNN ANCHOR: Good morning, everyone.

KIRAN CHETRY, CNN ANCHOR: It's Friday. It's May 8th. And I'm Kiran Chetry along with Carol Costello. She's in for John Roberts.

And it's good to have you with us on this Friday, by the way.

And we have a lot going on today. Some stories on the agenda. The big stories that we're breaking down in the next 15 minutes.

Toyota reporting its first ever annual net loss. The Japanese automaker said it lost $4.4 billion in the last fiscal year, and the company is predicting that the loss will nearly double to more than $8.5 billion in the next fiscal year.

CHETRY: Well, in about 30 minutes, a key jobs report is going to be released. Expected to show job losses slowed in April. So could this mean that the worst of the job cuts, the layoffs, is over? Our CNN Money Team and some of the best minds in the business are standing by with what we need to know.

Also, out of control wildfires still a major problem in Santa Barbara County, California. 30,000 residents now forced to leave their homes. So far, more than 75 homes have been destroyed.

These are live pictures right now, just astounding to look at those flames. It's coming to us from KTLA.

And again, we have our reporters right there on the front lines with the firefighters as they try to deal with this situation. They have not been helped at all by the weather. The strong winds have continued to fan the flames. The hot, dry conditions that have taken over much of that part of the country right now also making things worse. So a really big fight on their hands and these live pictures really tell the story. We're going to bring you more just a bit later.

Also, Secretary of the Interior Ken Salazar announcing that the crown of the Statue of Liberty is going to reopen July 4th. Lady Liberty completely closed to the public after the September 11th attacks. And since then the base opened and then the pedestal and the lower observation deck, but now they are going to open the crown. It was closed out of just security concerns of how could you really get people out quickly. You have to climb a nearly 200 circular stairs to get up there. But it is an incredible view, and it's something that a lot of people love to be able to do. So, again, July 4th, Lady Liberty's crown will open once again.

We begin the hour with the start of President Obama's surge in Afghanistan of troops. Military officials confirming dozens of Marines are now on the ground. They are only the first of around 21,000 troops the president is sending in to take on the Taliban and al Qaeda.

And it comes just as CNN is learning, the Taliban may have used men, women and children as human shields during U.S. air strikes earlier in the week.

Our Barbara Starr is live at the Pentagon.

And Barbara, I understand you're hearing some new details now from the U.S. military about the situation that's caused a lot of outrage in Afghanistan.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Indeed, Kiran. This was an air strike on Tuesday in Afghanistan in western Farrar Province. U.S. and Afghan troops had come under heavy fire they say from Taliban and insurgent fighters. Air strikes were called in.

The Afghans have said since then that perhaps as many as 100 civilians killed in those strikes. Now U.S. military officials are telling CNN the preliminary conclusions, perhaps as many as 50 people killed in those strikes, including men, women and children civilians. They are trying to determine still how many civilians. But, yes, now the U.S. says civilians were most likely killed in those strikes.

We are also learning that in those air strikes, the U.S. dropped some 13 bombs on eight different buildings. A mixture of 500 pound, 1,000 pound bombs. But here's what's critical. They say these buildings were in the middle of poppy fields and wheat fields, not in villages and towns, and it was from those buildings they say the troops were taking fire - Kiran.

CHETRY: All right. Barbara Starr for us this morning.

We'll continue to follow this story with you today. Thank you.

And just ahead here on AMERICAN MORNING, we're going to be getting a reality check of the situation on the ground in Afghanistan. We're going to be talking to Naval Lieutenant Michael Husband. He's just back from a nine month tour of duty. That's coming up in about 25 minutes.

Also at 4:00 p.m. Eastern today, our Wolf Blitzer sits down with Afghan President Hamid Karzai in "THE SITUATION ROOM." This is the first interview Karzai has given since his meeting at the White House with President Obama, as well as Pakistan's president Asif al Zardari.

COSTELLO: Turning to a story now that just keeps getting worse and worse. Firefighters still battling that out of control wildfire in Santa Barbara County. We just got these pictures in a few hours ago. And it's just -- actually, these are live pictures, I take it back.

As you can see, things are just getting worse. Thirty thousand people now told to get out of their homes. I think about 10 percent of this fire has been contained. And then this goes over hundreds of acres, obviously.

Kara Finnstrom joins us now live with the latest.

Kara, this just looks awful.

KARA FINNSTROM, CNN CORRESPONDENT: Yes. You know, those winds really whipped up this fire once again, pushing those flames into some new neighborhoods overnight. The pictures we were showing you yesterday largely in remote areas where these homes are kind of scattered throughout the canyons and the hillsides.

The pictures that we're showing you now that we took overnight and this morning, more in traditional neighborhoods, these homes very close together. That, of course, clearly, raises the fear of the fire spreading more quickly. Firefighters also say they are, though, able to get into these neighborhoods a little bit easier. They have better access. They can get the water in and they are staging a full-on firefight at this hour.

Joining us live right now we have Captain Mike dePonce (ph).

And we really appreciate you taking a moment for us. You were speaking to me earlier that you are concerned about the safety of the firefighters, and you've been speaking with them because they've really kind of been thrown full force through this fire season.

CAPT. MIKE DEPONCE, FIRE DEPARTMENT, SANTA BARBARA CITY: That's correct. We've been preaching to safety for firefighters safety, public safety from the onset of the incident. We had a burn over situation of firefighters early in the incident to reinforce what we've been telling the troops on the grounds.

We spoke earlier -- traditionally, this is the time of the year that we're doing the training for wild land season. We're doing the classroom training, the mock, training up in the foothills without the live fire. Here we are with live fire on the ground with extreme weather conditions that we're now doing our live training with.

FINNSTROM: Thank you for joining us.

And Carol, the one bit of good news in here is the weather is slightly starting to change. Those winds are expected to die down, especially into tomorrow and temperatures to cool. So firefighters are hoping for some relief there.

COSTELLO: I hope so, because, you know, in looking at these pictures, you can see, you know, it seems like new flames are popping up as we're watching these live pictures. So, hopefully, the winds will stay died down today and firefighters will catch a break.

Kara Finnstrom live from Santa Barbara County this morning.

CHETRY: Seven minutes past the hour.

A look at your Monday -- Monday "Political Ticker." Wow! Friday.

COSTELLO: It's Friday. What are you doing?

CHETRY: I know. If it was Monday, I was just going to hang my head down and cry.

We told you just a moment ago, Interior Secretary Ken Salazar announcing that the Statue of Liberty crown will be reopening to the public, July 4th. He made the announcement earlier on NBC.

(BEGIN VIDEO CLIP)

KEN SALAZAR, U.S. SECRETARY OF INTERIOR: Statue of Liberty really is about hope and optimism for America. It's also about jobs that come with tourism all over this country, and it's about President Obama's agenda. And so, today, we're announcing that on the 4th of July, we will open up the crown of the Statue of Liberty here in New York and New Jersey to the entire people of America in a way that we'll be able to manage the crowds.

(END VIDEO CLIP)

CHETRY: Well, new intelligence records show House Speaker Nancy Pelosi was briefed in September 2002 about the harsh interrogation techniques he used during the Bush administration. This report seems to contradict her repeated statements that she was never told those techniques were actually being used. It's not clear still, though, whether waterboarding was mentioned at that briefing.

Alaska Governor Sarah Palin canceled a scheduled appearance at the annual White House Correspondents Association Dinner, which is happening tomorrow night. Palin is staying home to monitor the flooding situation in the town of Eagle, Alaska, where she declared a state of emergency earlier in the week.

And mom-in-chief Michelle Obama speaking about the ongoing struggle of finding a balance between work and family. She told executives at a Corporate Voices for Working Family's conference that she knows the challenges of being a working mom and feeling that one is never doing enough.

(BEGIN VIDEO CLIP)

MICHELLE OBAMA, FIRST LADY OF THE UNITED STATES: I personally, as Donna described, know the challenges of leading a busy life at work and at home, trying to do a good job at both -- and always feeling like you're not quite living up to either.

And even though my current life, trust me, is very different than it was and for most people -- and I do know that; I know that right now I am living, as challenging as it may seem, in a very blessed situation, because I have what most families don't have, is tons of support all around, not just my mother but staff and administration. I have a Chief of Staff and a personal assistant, and everyone needs that; that's what we need.

(LAUGHTER)

Yes, everyone should have a Chief of Staff and a set of personal assistants.

(APPLAUSE)

But one thing I know from meeting women and men across the country is that the work-life challenges that I've faced aren't different from the challenges facing other families and undoubtedly many of you.

And even when I had sick leave, I found myself, you know, hoping that the kids would stay well, just because I couldn't afford to take the day off because there was a meeting, or something was going on. So your whole life is just contingent upon everything working perfectly.

(END VIDEO CLIP)

CHETRY: And certainly a lot of people can relate to what she's saying.

And she's saying, even when she had paid sick time - and as we talked about this before, some 60 million Americans don't get paid when they have to call out sick. We were talking about that during the swine flu outbreak. And the advice was if you feel sick, stay home. And a lot of people said, that would be nice, but I have to pay the bills.

COSTELLO: Yes, exactly.

Does she ever say the wrong thing, Michelle Obama?

CHETRY: She's been doing pretty well.

COSTELLO: I think so. Maybe the president should put her in charge of health care.

I talked to Joe Klein earlier. He said Hillary Clinton was a terrible flop at it, but Michelle Obama probably could do it.

Unbelievable.

Former police sergeant now accused of killing his third wife, and the woman he married next is still missing. We have new details about Drew Peterson's indictment.

It's 10 minutes past the hour.

(COMMERCIAL BREAK)

CHETRY: Developing story right now. Former police Sergeant Drew Peterson has been indicted for the murder of his third wife, Kathleen Savio. He was arrested last night during a traffic stop in Bolingbrook, Illinois. Peterson also remains the prime suspect in the disappearance of his fourth wife, Stacy Peterson, who's been missing since October of 2007.

CNN's Susan Roesgen is live for us in Joliet, Illinois, this morning with an update on this case that certainly has a lot of twists and turns - Susan.

SUSAN ROESGEN, CNN GENERAL ASSIGNMENT CORRESPONDENT: Absolutely, Kiran.

We're here actually in front of the jail in Joliet, Illinois, where this former police sergeant, Drew Peterson, spent the night locked up on a $20 million bond.

(BEGIN VIDEOTAPE)

ROESGEN (voice-over): They arrested him easily at a traffic stop. Illinois state police took former cop Drew Peterson into custody for the murder of his third wife, Kathleen Savio. It is the latest twist in an investigation that started a year and a half ago.

In October 2007, Drew Peterson's fourth wife, Stacy, disappeared.

(BEGIN VIDEO CLIP, "LARRY KING LIVE," 2007)

LARRY KING, CNN HOST, "LARRY KING LIVE": Were you ever physical with her?

DREW PETERSON, INDICTED FOR FORMER WIFE'S MURDER: Never. And I kind of challenge anybody out there to find anybody that has ever even seen me mad.

KING: You don't have a temper?

PETERSON: No.

KING: Are you in love with Stacy?

PETERSON: Very much so.

(END VIDEO CLIP)

ROESGEN: Peterson says he believes Stacy, who is 30 years younger than he is, ran off with another man. But police named Peterson their number one suspect in her disappearance. Then they decided to exhume the body of wife number three, Kathleen Savio. Kathleen and Drew had been divorcing three years earlier when she drowned in her bathtub, originally ruled an accident. But a second autopsy revealed bruises and a gash on the back of her head. And the coroner called it a homicide. Peterson is now charged with that murder, indicted by a grand jury, Thursday. And although he often laughed and joked with reporters during the investigation, he's locked up now on a $20 million bond.

JAMES GLASGOW, WILL COUNTY STATE ATTORNEY: We want to send a strong message that that's a grave and serious matter. It's not a laughing matter, as has been made with this case.

ROESGEN: Peterson's lawyer Joel Brodsky says he's going to fight that $20 million bond and the second autopsy.

JOEL BRODSKY, DREW PETERSON'S ATTORNEY (via telephone): The Savio case is a purely circumstantial case, which is tough for the prosecution in the first place. It has problematic forensic evidence. The original finding of the pathologist was that it was an accidental death. It's going to be a prosecution without a crime scene. It's going to be a very tough case for the prosecution. And, you know, we're going to defend it tooth and nail.

ROESGEN: Peterson's lawyer also says his client won't be tied to Stacy Peterson's disappearance, because although she's been gone a year and a half, no body has ever been found.

(END VIDEOTAPE)

ROESGEN: And we will here see Drew Peterson in court in just a few hours, Kiran. He's going to have his bond hearing at which the lawyer is going to argue that that $20 million bond is just way too high - Kiran.

CHETRY: You know, we also understand it that he had, you know, the four children, two, with Kathleen Savio and two with Stacy living with him at the house. I understand that the police were trying to, you know, arrest him somewhere outside of that so they didn't have to see that.

What's happening to them now? Who are they going to be with?

ROESGEN: Well, he has an older son, Kiran, a son, Steven, who is actually a police officer himself in Oak Brook, Illinois, here. He has apparently asked his son, Steven, to take custody of those four other children.

The two with Stacy Peterson are really young, 4 and 6 years old. The two with Kathleen Savio, two teenage boys. They also are all juveniles. So Steve Peterson, the police officer's son, the older son will apparently look after those younger children.

CHETRY: All right. Susan Roesgen for us this morning. Very sad case.

Thank you.

COSTELLO: Dozens of Marines touched down in Afghanistan, launching President Obama's troop surge. Will more troops help fight against al Qaeda and the Taliban? We're going to talk to one naval officer about that. He's just back from the war-torn nation. And out in Santa Barbara, California. Live pictures to show you of this uncontrolled wildfire. Firefighters having a tough time dousing this thing. But hopefully the winds will die down in California. They have so far. And hopefully firefighters will make some headway.

It's 16 minutes past the hour.

(COMMERCIAL BREAK)

CHETRY: Happy Friday. It's 19 minutes past the hour. We're going to fast forward through the stories that will be making news later today.

And in just a few minutes, we're expecting those big jobs numbers coming out from the Labor Department. Not surprisingly, jobs, the focus at the White House today as well. President Obama is going to be giving remarks on job creation and training today at 11:30 a.m. Eastern. And we'll have that live for you here on CNN.

At 2:00 p.m. Eastern Time, there will be a memorial service held for former Congressman Jack Kemp. Kemp was the 1996 Republican vice presidential nominee as well. He also played professional football as a quarterback for the "Buffalo Bills." The service will be at the National Cathedral in Washington.

And it's a countdown to launch. At 5:00 p.m. Eastern, astronauts who will go on a mission to upgrade the Hubble Space Telescope will be arriving at Kennedy Space Center. The shuttle Atlantis is scheduled to blast off, Monday, at 2:01 p.m. Eastern - Carol.

COSTELLO: Take a look at some more live fire shots from Santa Barbara County, California.

You know, one California student described it yesterday. The sun was rising, but he said you couldn't tell. It looked more like a sunset. That's how darkened the skies are because of all the smoke from this fire. Obviously, it's still dark because it's very early out in California. But, you know, thousands of people have been evacuated, 200 homes destroyed, 2500 acres on fire. The winds are dying down today. So firefighters are hopeful they'll be able to control this fire.

CHETRY: Yes, they're ordering, I guess, 6,000 more people to evacuate. They did that yesterday. And so now they say the total number of people being evacuated, 18,000. And that's just in that area, that Santa Barbara County area, and a couple of those neighborhoods.

But, you know, this is a real tough fight for them. You know, they have hilly terrain. They have the flatlands. They've got brush around these homes and they have really dry conditions. And when the wind whips up there, this is what we see happen.

COSTELLO: Good thing, though, people are leaving.

CHETRY: That's right.

COSTELLO: Not many people are staying behind, and that's a good thing.

Also, dozens of Marines just touching down in Afghanistan. What it's really like to take on the Taliban in that war-torn nation. We're talking to one naval officer. He's just back, nine months on the ground.

And we're just minutes away from new unemployment numbers and they're expected to show some glimmers of hope. Really? Really.

It's 21 minutes past the hour.

(BEGIN VIDEOTAPE)

SHIN FUJIYAMA, YOUNG WONDER: That period of life when you're like 18 to 22 is very transitional. Whatever it is that happens during that time has this amazing ability to really mold your future. I went and volunteered in Honduras. After my first trip, I wanted to keep helping. I saw such a great need. I knew I had to do something.

My name is Shin Fujiyama and I mobilize college students help kids and families in Honduras. I started to talk to all my friends about a lot of poverty, a lot of kids just sleep in the streets.

My little sister Cosmo (ph) joined the cause.

UNIDENTIFIED FEMALE: Please, check it out.

Nice to meet you.

Thanks, again.

FUJIYAMA: Our motto is students can make a difference.

We're all here for one thing -- we came for Honduras. We have had hundreds of bake sales and car washes, little things, but they've added up.

We have about 20 trips that we organize every year. We've had about 500 students go to Honduras with us. A lot of our focus is with children and with education. We've raised money to be able to send girls in Honduras to college. We built two schools. We're also building an entire village with the people. We have big goals, but I know we can do it together.

When I wake up in the morning, when things are tough in Honduras, I think of all the members that have come to Honduras and the ones that are thinking of going. And that's what keeps me going.

When people say that young people like us can't do anything, we have proven to them over and over that we can do anything that we dream of. And so can these kids in Honduras.

(END VIDEOTAPE) (COMMERCIAL BREAK)

COSTELLO: Oh, I'm thanking the weather guys this morning. Sunshine. We see sun in New York City. It's fair and 57 degrees. But thunderstorms are expected later with a high of 74.

Welcome back to the Most News in the Morning.

Dozens of Marines just touching down in Afghanistan. They're the first of around 21,000 new U.S. forces being sent by President Obama to fight the al Qaeda and the Taliban.

So what's it really like to take on these militants on their home turf? Lieutenant Commander Michael Husband is a naval reservist. He's just back from a nine-month tour of duty in Afghanistan and he supports President Obama's surge strategy. He joins us now from our Washington bureau.

Welcome.

LT. COMMANDER MICHAEL HUSBAND, U.S. NAVY RESERVIST: Welcome. Good morning.

COSTELLO: Good morning.

Well, let me start with a tough question, because the United States has now admitted that it killed some civilians in U.S. air strikes over the western part of Afghanistan. It claimed that the Taliban were using some civilians as human shields and that's why some civilians may have died.

As someone in the military, when you hear something like that, what goes through your mind?

HUSBAND: Well, you know, it's pretty disturbing that the Taliban actually do this type of things to inflict casualties among their civilian population. At the end of the day, our fight in Afghanistan is actually to support, provide security, governance and development for the Afghan people. So this definitely is a hindrance to what we aim. But it also shows the desperation of the Taliban.

COSTELLO: True. But for civilians on the ground whose loved one have been killed by U.S. air strikes, isn't it difficult for soldiers to create a dialogue with them, to get them to trust American troops?

HUSBAND: Well, to build that trust, you can't always do it at the end of a gun. I think the new strategy that we're working on, from reading all the newspapers, is the joint Department of State and Department of Defense efforts to work on creating these networks and creating these relationships specifically with the Afghan national police, who are the focus of the government and the face of the government to the Afghan people.

COSTELLO: You know, we hear a lot about service in Iraq, but we don't hear a lot about what it's like for soldiers, for troops, in Afghanistan. Tell us what it's like. Tell us what it was like from your perspective when you were on the ground there.

HUSBAND: Well, in 2008, we were -- from my perspective -- we were -- we were treading water, making some progress, but we're severely limited because of the assets on the ground. And there's an actual -- there's a definite need for more personnel and more money flowing into Afghanistan to support that effort.

COSTELLO: So the president is sending 21,000 more troops.

Is it enough?

HUSBAND: Well, I think that's a great start. But the thing I think we really have to realize is that this isn't a two or a four- year effort. This is a long-term effort to support and to get the Afghan people on your side. You have 80 percent to 90 percent Afghan population that's illiterate. We need to build schools. We need to build infrastructure. We need to build up their local governance and their capabilities so that they can have that house over their head. They can have the security that they need and they can have the utilities that they need.

COSTELLO: And a final question. You know, our Chris Lawrence is traveling with Secretary Gates to Afghanistan. Some of the troops there complained they don't have the right equipment, it's not arrived, they can't effectively fight.

What types of things do they need there?

HUSBAND: You actually need typical load-out of body armor, but you also need vehicles and that logistics support, once you get the vehicles, to repair them. There's new forward operating bases that have to be built and communications equipment that has to be there so you can stay in touch with those personnel that are out in the community really focusing on creating those networks between the Afghan national security forces, the local population and the coalition forces.

COSTELLO: Thanks for your service and thanks for joining us this morning, Lieutenant.

HUSBAND: It was a pleasure. Thank you.

CHETRY: Well, it's 30 minutes past the hour.

Checking our top stories now. Interior Secretary Ken Salazar is announcing that the crown of the Statue of Liberty will reopen to the public on July 4th. Lady Liberty was completely closed to the public after the September 11th attacks and then since then, the base, the pedestal and the lower observation deck were reopened. But again, the news that by July 4th, the crown will be open again as well.

Wall Street looks likely to rebound today. The future showing a positive start for the Dow, the Nasdaq as well as the S&P. In Asia, the Nikkei and the Hang Seng both closed with solid gains. Europe's main markets are also in positive territory. So is an economic turnaround coming soon? We are waiting for new jobs numbers out any minute which could give us a better indication. And when I say, any minute, I'm speaking about seconds away. We'll bring them to you.

Well, North Korea vowing this morning to bolster its nuclear arsenal responding to what it calls persistent hostile policy from Washington. White House special envoy Steven Bosworth is traveling to Seoul trying to lure the secretive state back to the negotiating table.

And Pope Benedict XVI is in Amman, Jordan, starting a week-long trip in the Middle East. He will also visit Israel and the Palestinian territories. This is the first papal visit to some of Christianity's holiest sites since Pope John Paul II made a similar pilgrimage nine years ago.

And again, as I said, right now, we are waiting for new unemployment numbers which are expected out any second. And while recovery may still be months away, the numbers expected to show that the jobless rate is at least slowing.

Joining me now is Chrystia Freeland, U.S. managing editor manager of the "Financial Times" and William Cohan, former Wall Street banker, a columnist for the dailybeast.com and author of "House of Cards."

Great to talk to both of you this morning.

So we're awaiting these jobless numbers. And as I said, we're expected to show that the jobless rate is slowing. And then we also heard reports earlier in the week that both jobless claims hit a three month low and some improvement in private sector job losses. So what's the assessment? Are we turning the economy around?

CHRYSTIA FREELAND, U.S. MANAGING EDITOR, "FINANCIAL TIMES": Well, I think the jobless numbers will be an important indicator to help judge that. Certainly I think the message that we're getting right now from the White House, from the fed, from the verdict that we had on the stress test last night is the government is trying to say, you know what, the end is not in sight, but we're at the beginning of the end.

CHETRY: All right.

FREELAND: Things are getting a little better.

CHETRY: And we are actually just getting the numbers right this second. So I'm getting them in my ear. Unemployment rate 8.9 percent right now. So that is a little bit of a bump. But overall, total jobless claims. Go ahead, 539,000 for the week. So what do you make of that?

WILLIAM COHAN, DAILYBEAST.COM: Well that doesn't do anything for the 539,000 people who lost their jobs last month. And I guess what the best news is that you look at the slowing of the rate of job loss decline. OK. That's a pretty technical way to look at things. I think that's the way the Treasury secretary looks at it. It's the beginning of a glimmer of hope, as they like to say in Washington. But I think that what this really does is it begins to restore, along with the stress test, results, begins to restore confidence in the financial markets, which is a big part of recovery.

CHETRY: And the other thing that is actually interesting - there are some sectors where it's just probably not going to be coming back. I mean, in the manufacturing sector, we're looking at the auto industry struggling right now. We're looking at them shuttering(ph) plants.

The president today is going to be talking about the importance of this retraining situation. I mean, how vital is that? Because if they're slowing and if businesses start to think it's OK to eventually high again and we sort of seen the dip and we're coming up, where do people get the skills needed to find these new jobs?

FREELAND: I think that idea of retraining is important. And more generally I think people have to be prepared for a reset. I don't think this is a garden variety recession. This is going to be a real step change in how the economy works and most importantly in how much debt American households can take on and, therefore, how much they can consume.

But I think Bill's point about confidence is also really essential. And one of the things that we're seeing coming very strongly from the White House, from the treasury, is this sense that it's safe to go back in the water as it were.

CHETRY: Right.

FREELAND: And I think the figures will encourage people.

CHETRY: We got through the stress test of the banks, which is what I want to get to with you in just a moment. We're going to go over to Carol right now and she's going to give us some more breaking news about the job numbers. We'll be right back. Carol.

CAROL COSTELLO, CNN ANCHOR: You know, this breaking news takes place in Hong Kong. And these are just incredible pictures. We wanted to show them to you. As you might know, 280 guests have been holed up at a Hong Kong hotel for a week because of the flu. You know, then Hong Kong, they were so freaked out by the SARS virus in 2003, that they decided when one Mexican who stayed in the hotel came down with swine flu, they decided to quarantine the hotel and kept the guests inside.

These people have been inside that Hong Kong hotel since last Friday. They were going crazy with boredom. As you can see, some people are hugging each other. A short time ago, one man broke into song. They're so happy to get home and to see their families. Most of them are quite upset with the government in Hong Kong, because they thought it was ridiculous.

Nobody was sick inside the hotel and people just wanted to go home. But as you can see, their long ordeal has come to an end. They are free from the hotel and I'm sure there will be a lot of parties tonight. It's 35 minutes past the hour.

(COMMERCIAL BREAK)

CHETRY: The latest unemployment report is out right now and Christine Romans has the numbers. She is breaking them down for us right now. Hey, Christine.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Good morning.

Job losses are slowing. We had expected maybe 600,000 lost their jobs in April but only 539,000 did. And that, folks, is seen as good news that the pace of the jobs lost is slowing. If you've just lost your job, obviously, it is tough right now and, in fact, we're going to expect more job losses in the future.

But we can say that the peak, that peak of 600,000, 700,000 job loss seems to have been hit at least for now and you have lower job loss than expected. The unemployment still 8.9 percent. That is the highest unemployment rate since 1983. So what you're seeing is companies are not having the mass, mass layoffs that they did at the very beginning of the year and the end of last year, but they're also not turning around and hiring very aggressively. So that's why the unemployment rate is still rising even as the mass layoffs are slowing. Kiran.

CHETRY: And we always say we're looking for the floor. Hopefully this is the floor.

ROMANS: Yes. And a lot of new hires in the federal government. Census probably 66,000 jobs were hired there. There is census hiring, probably happening in your neighborhood right now. So that's something to think of. Also, in state and local government and in health care, 17,000 people hired in health care. It's something you and I have talked about a lot, that there are also local jobs in health care. That is an area that continues to grow.

CHETRY: All right. So let's talk about this news coupled with the bank stress test as well. We still have William Cohan and Chrystia Freeland with us. So how does this all factor in? And we take a look at the overall health and picture of our economy.

COHAN: I mean, when people lose their jobs, that is not good, in any economy. But I think there has been a few bright spots in our economy, specifically in the capital markets. What I mean by that is there's been pent-up demand for companies who need capital to grow, to invest in new businesses so that they can hire people.

In the last month or so, there's been an unfreezing of the capital markets. People have been - companies have been able to raise money capital debt, both debt and equity. Wall Street firms have been able to raise debt and equity on their own balance sheets which is a good thing.

It will lead to more lending, that will lead to return of the TARP money back to the government and that will lead to a relative normalization again of our capital markets, which is the best thing, if people can just focus on that. That will be the best thing that can come out of this at the moment.

FREELAND: And I think what's important to understand is the connection between the jobless numbers and the financial sector. One of the stressful parts of the stress test for the banks was how they would get through deeper unemployment. And the fact that as Christine was saying, the loss of jobs seems to be decelerating, it's slowing down. It's good news for the banks, too. So -

CHETRY: Yes, so just we have to figure out a way not to make the same mistakes again. So hopefully, that's the million dollar question.

COHAN: Good luck with that.

ROMANS: And know that the unemployment rate is going to continue to rise I think into next year, don't you think? I mean, the unemployment rate is at 8.9 percent. It could go up a little bit more, you know.

FREELAND: Well people are still losing jobs.

ROMANS: Right.

COHAN: And it's a lagging indicator.

ROMANS: Right.

COHAN: That takes a little more time to get over it.

CHETRY: All right. Well, Wall Street likes what it hears. We still have futures up more than 100 so far today. And they've been rallying.

FREELAND: It's nice timing for Tim Geithner because some people were saying the stress tests were insufficiently stressful. This tends to be an vindication.

CHETRY: All right. Thanks to all of you. Chrystia Freeland, great to see you. William Cohan and Christine -

COHAN: Thank you.

CHETRY: Thanks.

Also, next Thursday night, join Anderson Cooper, Ali Velshi. They're going to be having real solutions from people who are surviving the tough times. It's another "CNN MONEY SUMMIT," it's a primetime special. It's next Thursday night 8:00 p.m. Eastern -- Carol.

COSTELLO: He's an Iraq war veteran, ready to serve. He is fluent in Arabic. But the military says he's got to go because he admitted he's gay. Coming up, you'll meet Lieutenant Dan Choi and hear his message to the Obama administration.

(COMMERCIAL BREAK) COSTELLO: The fog is starting to lift in Atlanta. Later today it's going to be storming in Atlanta, too. 86 degrees, though. At least it will be warm.

You know, with two wars being fought and the military stretched thin, one West Point graduate and officer in the Army National Guard was just told to go home because he has admitted he's gay. Lieutenant Dan Choi is an Iraq war veteran, he is fluent in Arabic and he just received word that the military is discharging him under the don't ask, don't tell policy. That's been the law since 1993 and still is today under the Obama administration.

Joining us now is Lieutenant Dan Choi. Thanks for being with us today.

LT. DAN CHOI, OPENLY GAY MEMBER OF THE MILITARY: Wonderful to be here.

COSTELLO: So the reason the military found out that you were gay is because you announced it on national television.

CHOI: Right. Well, I publicly admitted who I was. I refused to lie and to hide my identity. And because of that, they said, it doesn't matter that you graduated from West Point. It doesn't matter that you're fluent in Arabic. It doesn't matter that you went to Iraq and that want to deploy again. You know, pack your stuff and go home. You're fired.

COSTELLO: And you got a letter in the mail, right? Is that how it happened?

CHOI: Right.

COSTELLO: I want to read a bit of the letter because it sounds so cold. The title is - well, this is what it says. I'm going to read a bit to our audience. "This is to inform you that a sufficient basis exists to initiate action for the withdrawal of federal recognition in the Army National Guard for moral or professional dereliction." And I won't go on. But it seems so cold and business- like. So when you received that letter, how did you feel?

CHOI: A big slap in the face, really. It's an insult to me. I mean, I raised my right hand and said I want to serve. The president, my commander in chief is going to send 21,000 troops overseas. I want to be one of those. So they slapped me in the face. But I'm really angry because they're slapping my unit in the face and they're saying, you know, you're not professional enough to deal with somebody who has capabilities to serve with you.

COSTELLO: So it condemned your whole unit?

CHOI: Right. Basically, by me saying I am gay, they're saying that that ruined the good order and discipline of the entire New York Army National Guard which is very ridiculous. From what I've seen, my unit has been very professional. I'm very proud of my unit. They respect all soldiers, what they can do as members of their team. COSTELLO: Now, some people might say, you know, if you wanted to serve your country, you know, President Obama has said he does - he wants the don't ask, don't tell policy to go away. Why didn't you wait -

CHOI: Right. Why didn't I just shut up and not say anything?

COSTELLO: Exactly.

CHOI: Well, the Army values teach us, have courage, take personal courage, stand up, don't lie, be honest about who you are. In addition, you got to trust the people that are in your unit. I trusted my unit so much that they should know who I am. And they respected the fact that I trusted them that much. It actually strengthened the unit, because now we're - hey, we're trusting each other enough that we're a family. We support each other. And no soldier should be isolated. No leader allows their soldier to be alone.

COSTELLO: Now, I know that your unit has been great toward you. I mean, they really get it. But you said you're going to fight this tooth and nail.

CHOI: Right.

COSTELLO: How can you fight this when, you know, it's moving slowly through Congress and the president is not exactly moving forward on this at lightning speed.

CHOI: I have a lot - I have a couple of options. They said that you can just resign and we'll give you an honorable discharge. You can just be quiet and go away. Or you can go up before a board and argue why you should stay in. With help from a group of legal experts, service members, legal defense network. They've helped a lot of soldiers go through these legal proceedings.

And I said, no, I want to prove that being in the military is something that's good for all Americans. And I'm just one of them. There's so many thousands of them out there. And taking a stand and being a leader is more important. Doing the right thing is more important than following a law that says, don't ask, don't tell. You got to hide, you got to lie.

COSTELLO: Then getting an honorable discharge.

CHOI: Right. You take the consequences. And it's more about what your responsibilities are than what you want or what you're comfortable with.

COSTELLO: Thank you so much for joining us. We really appreciate it, lieutenant.

CHOI: Thank you.

COSTELLO: Kiran? CHETRY: All right. With the new "Star Trek" movie is now out. If you're a trekkie, what is not to like. Our Jason Carroll, a trekkie himself has seen it. He's going to give us a little bit of a preview about what you have to look forward to. It's 49 minutes past the hour.

(COMMERCIAL BREAK)

COSTELLO: A look this morning, don't be fooled by that - by those...

CHETRY: I know a meteorologist, you told me, that, Carol...

COSTELLO: You do.

CHETRY: It was not dreary out there. It is just the beginnings, it's a morning fog. It's going to burn off. And there you have it.

COSTELLO: That man must be brilliant! Who is that brilliant meteorologist?

CHETRY: Genius. He's my hubby. Anyway, so thunderstorms later on. So don't forget your umbrella but you will get a little bit of sunlight. All right?

COSTELLO: I'm loving it. Good.

CHETRY: And meanwhile, welcome back to the most news in the morning.

The new "Star Trek" movie boldly going into theaters this weekend. It's expected to be a box office bonanza. And we are beaming in our Jason Carroll.

JASON CARROLL, CNN CORRESPONDENT: Thank you.

CHETRY: Our resident trekkie. Who knew? And it's turned out to be such a delight. The actors are signing on for another one -

CARROLL: Oh, yes.

CHETRY: And another one after that.

CARROLL: You know, I remember the original series only because when it went to reruns, I used to sit down and watch it with my dad. That's how I became a Trekkie. So props to him. You know, this original series broke barriers. The new movie is hoping to break some box office records. Why has the franchise been loved by so many for so long? Well, you're about to see the reason why.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Space, a final frontier.

CARROLL (voice-over): Final? Not when it comes to the "USS Enterprise." An action-packed "Star Trek" prequel warping into theaters.

UNIDENTIFIED MALE: I wasn't really prepared for how physical - how intense it was going to be.

CARROLL: A new Captain Kirk. Spock too, almost a dead ringer for the original.

UNIDENTIFIED MALE: I'm infusing it with my own perspective. My own point of view.

CARROLL: Scotty, Chekov, Uhura and McCoy, all on board. A sword-wielding Sulu, feeling nervous about stepping into the space shoes of the original.

UNIDENTIFIED MALE: The planet -

JOHN CHO, "HIKARU SULU": You know, in order to function, you have to put that aside and go forward. For me that involved some nice words from George Takei.

GEORGE TAKEI, ORIGINAL SULU: I told him, don't worry. You're a fine actor. You're going to do a good job. I think Sulu is in good hands with you.

UNIDENTIFIED MALE: Good luck.

CARROLL: But what is the fascination with "Star Trek"? Director J.J. Abrams.

J.J. ABRAMS, DIRECTOR, "STAR TREK": That sense of discovery is intrinsic to "Star Trek" and unique and refreshing idea.

UNIDENTIFIED MALE: Attention, all hands.

CARROLL: In 40 years, six series, 11 movies, books, conventions, the cover of "Newsweek"? The power to turn a renowned astrophysicist into a philosopher.

NEIL DEGRESSE TYSON, ASTROPHYSICIST, AMER. MUSEUM OF NATURAL HISTORY: Practically every episode, you reach back into some aspect of modern life, modern morays and had us think another way about ourselves.

CARROLL: Why has it endured? Look back to the 1966 original. A multicultural crew working together.

TAKEI: That was a very hopeful thing, but it wasn't very real at that time. So that hope was one of the components that made "Star Trek" so relevant.

UNIDENTIFIED MALE: Pull your chute!

CARROLL: And a new movie with more to come.

UNIDENTIFIED FEMALE: We know you want to do another one.

UNIDENTIFIED MALE: I would love to do another one.

(CROSSTALK)

UNIDENTIFIED MALE: We want you to do another one.

UNIDENTIFIED FEMALE: Yes!

UNIDENTIFIED MALE: The movie has to find an audience first. So buckle up, "Star Trek" is ballistic, it's sexy and it's back.

(END VIDEOTAPE)

CARROLL: Well, the new cast tells me that many of them have already signed on for two more pictures after this one. So they say they'll be around as long as a new generation wants them to be.

CHETRY: How about it? All right. Give me the hands.

CARROLL: There you go.

CHETRY: I practiced. I needed the help of some tape, but I got them.

COSTELLO: That's so wrong.

CHETRY: What? I can't do it without taping them. I'm sorry.

CARROLL: At least you're trying.

CHETRY: I'm trying.

CARROLL: We'll let you into the club with that one.

CHETRY: Thank you.

COSTELLO: She's training her fingers with tape.

CARROLL: There you go.

COSTELLO: I'll give her the Balkan nerve pincher.

After "24" star Keifer Sutherland - actually, he was accused of hitting head butting a fashion designer. Jeanne Moos uses her head and her hard news context to find out if head butting is the new punching. Heads up. In about two minutes.

(COMMERCIAL BREAK)

(MUSIC PLAYING)

COSTELLO: I'm dancing here. Time for some hard news, though, that might require a helmet. After the star of the TV show "24" is accused of head butting a fashion designer, Jeanne Moos says there's a right way and a wrong way to head butt. Here's a little head-butting 101 for you.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): Bulls do it, sheep do it. And now the guy who plays Jack Bauer has been charged with misdemeanor assault for doing it. Though a head butt must seem pretty tame to an actor who's been kicking guys and suffocating them, choking them with chains and kneeing them in the groin. What's a little head butt? Something Dennis Rodman did to a ref, something we love to see on TV.

UNIDENTIFIED MALE: I own you.

MOOS: And at the movies.

UNIDENTIFIED MALE: That's it!

MOOS: No tears from Kiefer Sutherland after attempting a gala at the Metropolitan Museum of Art. Sutherland allegedly head-butted a fashion designer, who may have accidentally jostled Brooke Shields while Sutherland was talking to her. Sutherland isn't talking to us. We tried.

MOOS (on camera): An eyewitness told "The New York Post" that he supposedly saw Kiefer Sutherland earlier in the evening wearing a giant feather boa and acting crazy.

(voice-over): Now he's poised to join the ranks of fabled head- butters, like the French soccer star. He head butted an Italian during the World Cup. The French lost the cup but comedians gained -

JIMMY KIMMEL, HOST "JIMMY KIMMEL LIVE": Miss France. Miss Italy.

MOOS: That's allegedly what singer Amy Winehouse did to a guy outside a London pub. And she's got a lot of head to butt.

MOOS (on camera): When head butting, use your head. Head butting dos and head butting don't. Ouch!

(voice-over): Conveniently demonstrated in this how to head butt video.

UNIDENTIFIED MALE: Don't just go for one massive banging shot. Boom, boom, boom.

MOOS: Even Jack Bauer could use some street fighting tips.

UNIDENTIFIED MALE: Pull his face into your head as you strike him with a two-way motion.

MOOS: At least this jockey didn't use two-way motion. His horse unseated him. So to make him stock horsing around, the jockey brought things to a head butt.

Jeanne Moos, CNN, New York.

(END VIDEOTAPE) CHETRY: Very nice. Well, thanks so much for joining us on this AMERICAN MORNING. Play us off, keyboard cat!

(MUSIC PLAYING)

COSTELLO: Betty, we did that just for you. Now to Atlanta and Betty Nguyen.

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