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AMERICAN MORNING

Iran Clamps Down, Reporters Banned from Demonstrations; Citizen Journalism Key to Coverage in Iran; President Obama to Announce Extension of Health Care Benefits to Same-Sex Partners of Federal Employees; U.S. Journalists' Family's New Plea to North Korea; Obama Calls North Korea "A Grave Threat"; Obama to Announce Wall Street Overhaul

Aired June 17, 2009 - 07:00   ET

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


KIRAN CHETRY, CNN ANCHOR: And we're coming up now right at 7:00 here on the East Coast, 4:00 a.m. on the West Coast. Welcome to AMERICAN MORNING. I'm Kiran Chetry.

JOHN ROBERTS, CNN ANCHOR: And good morning to you. I'm John Roberts. Here is what's on the agenda this morning, the big stories that we'll be breaking down for you in the next 15 minutes.

The clampdown in Iran, all foreign journalists now banned from covering demonstrations on the streets, told to stay in their hotel rooms but we have the pictures that the Iranian government does not want you to see. Our Christiane Amanpour on the government crackdown and its attempt to control the message.

President Obama ready to grant health care and other benefits to same- sex partners of federal employees. Suzanne Malveaux on whether it's enough to win over gay and lesbian groups who say they're disappointed by the president's policies.

And new developments on the fate of two American reporters sentenced to hard time in North Korea. That country now claiming Laura Ling and Euna Lee admit to committing the crimes with which they were charged. This morning an exclusive interview with Laura's sister, Lisa Ling.

New developments in Iran this morning. The government now banning some 400 international journalists from attending all rallies and protests. After images of Monday's deadly demonstrations played out around the world, Tehran has decided to confine all non-Iranian reporters to their offices or hotel rooms. They claim that they're doing it out of fear for their safety.

Iranian TV only covered a huge rally that supported President Ahmadinejad, and police in Tehran have reportedly removed or destroyed people's satellite dishes.

Our Christiane Amanpour joins us live this morning. She's in London.

Christiane, you had to leave Iran 24 hours ago. What can you tell us about your departure and the crackdown on foreign journalists that we're hearing about today?

CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: Well, I think it's a two-prong effort. On the one hand, the ministry of info of culture which is the one that hands out press passes really does not want journalists' blood on their hands or anything happening to the journalists at the hands of those Basij, the hard line religious revolutionary militias, which were aligned with the Revolutionary Guard. I think that's one thing. And I think also there's a huge amount of pressure to stop foreign journalists as you're getting into the protests and to be reporting them.

When we were there, interestingly, pre-election and after the elections, we were able to report. Even though it was getting tense, there was no censorship. We broadcast live with no vetting, no censorship about what we could say or do. And we put out some pretty real stuff that we were seeing on the ground.

And now, what they're doing is not renewing visas that they had granted for a period. Some had them for weeks. Some had them for ten days, not renewing them, saying that you had those visas just to cover the elections and we're not going to renew them at this time.

But obviously, pictures are coming out. Cell phone videos coming out. Things are coming out from journalists who are still there.

So now that this information genie is out of the box, it's not going to be easy to put it back in the bottle. And as for satellite dishes, you know, they're actually banned in Iran anyway. And periodically at times like this of heightened tension, the authorities do go around and try to get them off people's roofs and wherever they're hidden in people's gardens.

ROBERTS: Christiane, President Obama has been very cautious in the last couple of days regarding what he said about Iran seemingly continuing to distance himself to some degree from the situation. He was interviewed by CNBC last night. Let's listen to part of what he had to say.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: It's important to understand that although there is amazing ferment taking place in Iran, that the difference between Ahmadinejad and Mousavi in terms of their actual policies may not be as great as has been advertised.

(END VIDEO CLIP)

ROBERTS: Christiane, we had Karim Sadjapour from the Carnegie Endowment on a little while ago. He thought that that was a gross misstatement by the president, that there is quite a substantial difference between Ahmadinejad and Mousavi. Where is all of this heading here and what impact are statements like that having on the ground in Iran?

AMANPOUR: Well, let me tell you what I know from the ground. When we were there even before the election, you know, there were candidates who were using change as their campaign slogan, the reformist candidates. And people on the ground, particularly post-election as they were rallying for Mousavi, were using change and talking about how President Obama had talked about change.

They were talking about how President Obama had sent messages to Iran, people and their leaders over the last several months, his speech in Cairo. So people were very much looking for some kind of change, and particularly with relations with Iran.

Now, in fact, there is difference between Mousavi and Ahmadinejad in domestic policy. And that is why the crowds came out for Mousavi in order to vote for them. They were voting for better relations with the U.S., for better relations with the world. They were voting for more freedoms, more reforms inside Iran.

Those who voted for Ahmadinejad were voting to continue the sort of belligerent posture to the world sawing we're glad that Ahmadinejad stood up to the world and the U.S. and didn't force us to kowtow. They were voting for more of the same at home. So in that regard, there is a vast difference between the two.

In terms of foreign policy, it's Ayatollah Khamenei, the supreme leader, who actually runs foreign policy, whether it's relations with the U.S. and the outside world, whether it's military policy, nuclear policy. So in that regard, there is -- there is a sort of uniform leadership policy on that regard -- John.

ROBERTS: All right. Christiane Amanpour for us live this morning from London. Christiane, thanks so much for that.

CHETRY: So this old school government crackdown not doing enough to stop people with the will, the passion, and an Internet hookup. Social networking sites and your iReports have actually become a critical component of CNN's coverage of Iran.

In fact, we've been getting so much information from you on-line that we've actually set up what's called the Iran desk, and this is an on- line information clearinghouse where we can make sure that what you send us is being seen and heard.

And Isha Sesay is there this morning at the Iran desk in Atlanta joining us with more on what people are saying this morning. Even though the Islamic Revolutionary Guard issued a statement saying if you put things on the Internet that inflamed tensions, you could get in trouble. People are still blogging and twittering this morning.

ISHA SESAY, CNN INTERNATIONAL ANCHOR: Yes, absolutely, Kiran. I mean, it's an important point you mentioned there.

The Revolutionary Guards are Iran's most powerful military force. And as you say, they're now warning Iranian Web sites and bloggers to basically refrain from getting that information out there. But people continue to get that stuff out. They continue to post it on the Web, and we feel it's important that our viewers see what is out there. Because the bottom line is the Web has become a critical tool in getting the message out, showing people what's happening on the streets of Iran, particularly as international media is now confined to those bureaus. We want to show you some of the stuff that we had managed to pull out for you. This coming to us from YouTube. Right off the top, we want to stress to our viewers it is unverified, but again important that you see the dramatic scenes that are playing out on the street.

This video we believe was shot some point of the last couple of days as people took to the streets of Tehran. It really gives you a sense of the tension there. You can clearly see -- see the security forces there in their riot gear, clashing with the protesters. You see a young woman going down. She gets up. She's still defiant.

Moving on, we want to show you this video which we believe was shot on Monday in Azadi Square where pro-Mousavi supporters gather. Now that was the day Mousavi made his first appearance since the disputed election result and that was the day things turned deadly. As you may remember, seven protesters losing their lives in those clashes with pro-government militia.

The other thing we want to tell you on that day, as we say, more people coming out. More people protecting the result of this election.

The last piece of video that we came to stress and show our viewers were shot in Esfahan (ph). The point of bringing you this video is it proves that these protests aren't just happening in Tehran which really has dominated a lot of the discussion, but Esfahan (ph), a major city in Iran also saw its crowds of people turning out. Thousands of people coming out. Again, all of them unhappy with the way the presidential election turned out -- Kiran.

CHETRY: Isha for us this morning. Thanks so much.

And, John, we're going to keep following, of course, all of those developments and keep bringing our viewers this fascinating video and some of the information that we're getting out of Iran from the citizen journalists.

ROBERTS: Very important story and a fascinating one to watch unfold as well.

We're also following several major developments at the White House today. President Obama is set to announce sweeping new regulations for the financial industry. The new rules designed to protect consumers and prevent another Wall Street meltdown.

And in the face of growing frustration from gay and lesbian groups, the president is also set to announce that he'll extend health care and other benefits to the same-sex partners of federal employees.

CNN's Suzanne Malveaux is live from the White House with details on all of this. Good morning, Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Good morning, John. We expect an announcement later today. Obviously, this is what a lot of people have been looking for. President Obama to sign a memorandum essentially granting some benefits to same-sex partners of federal employees whether it's pensions maybe, some health care.

John, this is very important for this president because it really comes amid some significant criticism from his supporters from the gay community who expect quite frankly a lot more from this president by now. They are frustrated.

They say that the Justice Department just last week filed a friendly motion in support of the Defense of Marriage Act which is against same-sex marriage. People are upset about that. They are also frustrated that he has not yet moved forward to repeal the military's Don't Ask, Don't Tell policy which does not allow openly gay service in the military.

These are the kinds of things that gay activists are talking about. They have been lobbying the president quietly over the phone, in person. They will be here at the White House.

Administration officials here say privately this president is very much in support of gay rights but taking it rather slowly. It's a big issue, a social and cultural issue, very important but nevertheless sensitive as well -- John.

ROBERTS: Suzanne Malveaux for us live at the White House. Suzanne, thanks so much.

A busy day for the president. We're covering it all live for you. This afternoon at about 12:50, the president will lay out his plan to overhaul the U.S. financial regulatory system from the East Room. And tonight at 5:45 from the Oval Office, he'll deliver brief remarks and sign a presidential memorandum regarding federal benefits and nondiscrimination for same-sex partners. You can catch both events live on CNN and on CNN.com/live.

CHETRY: In a CNN exclusive, the families of Lisa -- of Laura Ling and Euna Lee are speaking out for the first time since their sentencing in a secret trial in North Korea.

Lisa Ling is pleading with the North Korean government to show compassion and to let her sister go. We're going to hear more from her still ahead.

It's 11 minutes past the hour.

(COMMERCIAL BREAK)

ROBERTS: There are new developments to tell you about today in the fate of two American reporters, Laura Ling and Euna Lee, sentenced to hard time in North Korea at a secret trial. Their family speaking exclusively to CNN, making a plea to North Korea to let them come home.

Here's Laura's sister, CNN's special correspondent Lisa Ling, on "AC 360" last night.

(BEGIN VIDEOTAPE) ANDERSON COOPER, CNN ANCHOR: Lisa, I mean, does it concern you that the North Korean government is saying that they were there for a smear campaign not acknowledging that they were independent journalists?

LISA LING, LAURA LING'S SISTER: All we can say is that they are journalists and they were doing their job. My sister has been a journalist for years. And that's really all we can say.

You know, we weren't in the courtroom. We don't know any sort of specifics other than what was released. We just hope, you know, given the fact that we know the girls have apologized profusely, that they will let the girls come home to us. It's been -- it's been three months and that's been too long.

Since the verdict, no one has seen them. So frankly, we don't even know exactly where they are. And we're particularly concerned about their mental state because when you tell two women that they've just been convicted and sentenced to 12 years hard labor, we can't even imagine what they're feeling and what they're going through. I mean, I'm sure they are just traumatized. And because we haven't heard anything from them or about them, we are particularly worried.

COOPER: If by some chance they are able to hear this or someone in North Korea is hearing it who can pass along something to them, what will you say, Lisa?

LING: I would just tell the girls to please stay strong and know that we are trying to do everything we can. Our government is trying to do everything they can to try and bring you home and to just focus on the day when we can all be together again is what I would say to the girls.

(END VIDEOTAPE)

ROBERTS: Lisa made that plea just hours after North Korea revealed the evidence it says it has against the reporters. It includes videotapes documenting Ling and Lee's alleged illegal entry into the country. The report goes on to say that the pair admitted to their offenses and admitted they were criminal acts, but there is no way of knowing why or even whether that really happened.

President Obama calling a nuclear North Korea a "grave threat" after meeting South Korean President Lee Myung-bak at the White House. He's calling on the world to enforce new United Nations sanctions against the nation instead of rewarding it for its threats.

Our Barbara Starr live at the Pentagon this morning with details on the U.S. military's role in enforcing them. And I know, Barbara, that the military is really concerned about what's going on in North Korea.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Absolutely, John. This new sanctions may put the U.S. military in the position of using its power, but will the U.S. military use its force?

(BEGIN VIDEOTAPE) BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I don't think there's any question that that would be a destabilizing situation that would be a profound threat to not only the United States security but to world security.

STARR (voice-over): A new U.N. Security Council resolution calls for inspecting North Korean ships to stop exports of arms and nuclear technology. President Obama is prepared to order the U.S. Navy to take part, but U.S. Navy officials say they won't challenge North Korean ships at gun point. So some analysts wonder if the plan will work.

UNIDENTIFIED MALE: And you know the North Koreans aren't stupid. They're going to figure out a way to get around this. What they may do is just transfer things at sea and never go in a port.

STARR: Moreover, administration officials say North Korea is preparing to test more ballistic missiles that could threaten the U.S.

SEN. JOHN MCCAIN (R), ARIZONA: Obviously it's very difficult to predict North Korean future behavior.

UNIDENTIFIED MALE: It is entirely difficult to predict North Korean future behavior.

MCCAIN: But, to be on the safe side, we should prepare. We should be prepared to counter at least bad if not worse-case scenarios as far as North Korea is concerned? You would agree?

UNIDENTIFIED MALE: Yes, I would.

(END VIDEOTAPE)

STARR: Bottom line, John. These new sanctions from the United Nations will put the U.S. Navy in the position of trying to board North Korean ships but they will ask for permission if the North Koreans as expected deny, it all goes into diplomatic channels. Nobody is looking for a shooting war here -- John.

ROBERTS: That would not be good. No question about that. Barbara Starr for us this morning from the Pentagon. Barbara, thanks so much.

So a big speech from the president coming up a little bit later on today. He's going to be talking about new regulations for the financial industry, try to prevent future meltdowns as we saw last fall.

We've got one of the White House's chief financial gurus, Christina Romer, coming up in just a few minutes' time.

Eighteen minutes now after the hour.

(COMMERCIAL BREAK)

CHETRY: Welcome back to the "Most News in the Morning." President Obama today is going to be announcing some big changes to the way the government watches over the financial industry.

Meantime, we're still dealing with many, many problems when it comes to the financial soundness of states and the federal government. California officials, in fact, went hat in hand to the administration warning of a fiscal meltdown in their state and they were turned away.

Christina Romer is the chair of the White House Council of Economic Advisors. She's here to talk more about the new plan.

Dr. Romer, thanks for being with us this morning.

CHRISTINA ROMER, CHAIR, WHITE HOUSE COUNCIL OF ECONOMIC ADVISERS: Great to be here.

CHETRY: I do want to ask you about California before we get to the president's plan. It's a state that has the eighth largest economy in the world and they're facing a lot of trouble right now. They say that they now have a $24 billion budget deficit and the state comptroller last week said they were less than 50 days away from a meltdown of the state government. Why did the White House decide against giving the state an emergency loan when the governor came to you guys last week?

ROMER: You know, of course, the important thing to realize is that the administration has been working very closely with all the states. If you look at the recovery plan that we put in place back in February, that certainly had a lot of relief for the states to try to help them through this crisis.

You know, at this point, we're obviously watching and making sure that things are going all right. Right now, we're -- we're confident that California is going to be able to deal with it.

CHETRY: Right. One of the things that the White House said when talking about bailing out AIG and General Motors was the notion of too big to fail, meaning a big impact. You have AIG employing about 116,000 employees, GM with 266,000, California, 242,000 people. And when you have their state comptroller saying we might not be able to operate in 50 days, isn't that -- will that qualify as too big to fail?

ROMER: We're certainly confident that the state of California is going to be able to make it through this. And as I said, we are going to be watching and certainly working with them as need be to make sure that we all come through this as we would every other state in the union.

CHETRY: Well, talk about the president's plan that he's going to be unveiling a few hours from now. The White House and treasury deciding against a complete overhaul of the regulatory system. They refer to it as a "harmonizing of the rules" amongst some of the existing regulatory bodies that are already out there. Explain to us how this will better protect us from what we saw happened last fall?

ROMER: You know, what this is is a very big overhaul. You're right. It's not a wiping away of everything. It's a building on the existing structure, making sure it works better.

One of the key things is just more and better regulation especially of our largest financial institutions. One of the changes that we'll be proposing is that the Federal Reserve take responsibility for any financial institution whose failure would be a threat to the whole system. That is even if you're not a bank, if you're something like a big -- something like AIG whose failure could bring down the whole system, the Federal Reserve, we're going to give the job of really watching them closely.

So that's going to be crucial because absolutely what we saw this past fall is a lot of firms, financial firms get into a lot of trouble and it put the whole system at risk.

CHETRY: And we certainly did see that. And you did refer to that that the Federal Reserve under this plan if approved by Congress would have the power to seize and dismantle firms that are deemed systematically dangerous. How would that work, though?

ROMER: Well, it's very much what we're proposing. What goes by the name of resolution authority is exactly what we have now for small and medium-sized banks through the FDIC, and that is a plan that we think works very well. When a small bank gets into trouble, the FDIC can come in often on a Friday and by Monday, the bank is back up and operating and they dealt with the problem.

What we need is that same kind of authority for big complicated financial institutions. What we learned this fall is something like an AIG, we just didn't have the tools. We had to choose between two lousy alternatives -- a bailout and a catastrophic bankruptcy.

CHETRY: Right.

ROMER: We need something for an organized receivership, dismantling that can happen fast and doesn't put tons of taxpayer dollars on the line.

CHETRY: Also, another centerpiece of this plan is this creation of the Consumer Financial Protection Agency. If approved by Congress, this would basically be able to regulate some of the financial products that are being sold out there and what we mean mortgages, lending. Would this agency been able to avert the subprime mortgage crisis that we saw have such a devastating impact?

ROMER: We think it absolutely could have helped. We do think that a large number of people were taking out loans in the last several years that perhaps they didn't understand that had clauses that they didn't realize would come due at a certain point. And so, absolutely.

We think more transparency, making sure that consumers always have a plain vanilla option as well as a more complicated one. All of that we think could be both good for consumers and ultimately for making the financial system more stable.

CHETRY: All right. And we're going to hear more details about it from the president today. Christina Romer, chair of the White House Council of Economic Advisers, thanks for being with us this morning.

ROMER: Great to see you.

ROBERTS: Twenty-six minutes after the hour. So this was a real "what the moment" that we saw the other day.

It was an aide to a state senator in Tennessee, sent out an e-mail that had this photo attached to it. All of the presidents of the United States. Look down there in the lower right-hand corner. That is supposed to be President Obama. White eyes on a black background.

So what is going on? Is it 1959 or is it 2009? We've got more on this coming right up. Stay with us.

(COMMERCIAL BREAK)

ROBERTS: Welcome back to the "Most News in the Morning." We're coming up at 29 minutes after the hour now. And checking our top stories, a new development out of Iran this morning to tell you about.

The opposition leader Mir Hossein Mousavi is now calling for a mass rally tomorrow as a direct challenge to the Iranian government. The Iranian government is now telling all foreign journalists to stay in their rooms, that is if they weren't kicked out of the country already.

The pictures of protesters who say their election was stolen, some screaming from rooftops, others being beaten are still more coming out. More of what the Iranian government is trying to put a lid on ahead here on the "Most News in the Morning."

A painting that features Hitler and Jesus together seized from the home of the suspected Holocaust Museum killer and white supremacist James von Brunn. The FBI says it was one of dozens of items removed from his home, including a rifle and some ammunition.

And California Governor Arnold Schwarzenegger refusing to get behind Proposition 8. That's his state's ban on gay marriage. Schwarzenegger filed a brief and a federal case challenging Proposition 8 saying that it should be decided by the courts. Today is the one-year anniversary of gay marriages being allowed in California before Prop 8 stopped them.

Well, outrage is building this morning over a racist e-mail depicting President Obama as a pair of white eyes on a black background. Today, the punishment handed out to the woman who sent it is being called into question. Some say it symbolizes a disturbing pattern. Jason Carroll has been looking into this one for us this morning, and he joins us.

Good morning.

JASON CARROLL, CNN NATIONAL CORRESPONDENT: Yes, a few more developments on this one. We first showed you the e-mail yesterday and this morning calls from some to fire the woman who said she mistakenly sent that e-mail to the wrong list.

(BEGIN VIDEOTAPE)

JASON CARROLL, CNN CORRESPONDENT (voice-over): This is the e-mail that has outraged Democrats. It shows an image of each president. But down in the bottom right corner where President Barack Obama should be, there's a pair of white eyes on a black background sent by an assistant to Tennessee State Senator, Diane Black.

"I regret that this happened in my office, and when it did, I took action and I feel comfortable with the action that I took."

CARROLL: So what action was taken? Black says she placed a, "very strongly worded reprimand in the assistant's file." Not enough for the Democrats in the state who say the assistant should be fired.

CHIP FORRESTER, TENNESSEE DEMOCRATIC PARTY CHAIR: Obviously, it's clear that Republicans don't take this seriously.

CARROLL: The Republican party in Tennessee denounced the e-mail saying it does not reflect the views or values of the Tennessee Republican Party. But it's not the first time that the actions of the Tennessee Republican Party have come under fire.

During the campaign, they put out a news release highlighting then Senator Obama's middle name, Hussein. It included this photo of him wearing traditional African attire during a visit to Kenya. And when Michelle Obama came to town, state Republicans welcomed her with an ad that questions her patriotism.

MICHELLE OBAMA, U.S. FIRST LADY: For the first time in my adult life, I'm proud of my country.

CARROLL: And it was yet another Republican from Tennessee who sent out a holiday CD that included this song. Barack the magic Negro -

(END VIDEOTAPE)

CARROLL: Well, the man who was communications director of the Tennessee Republican Party when that controversial CD was sent out was reassigned earlier this month. And in a separate incident, the South Carolina branch of the NAACP is demanding a an apology from the former Republican election commission chairman. This after Rusty DePass suggested a gorilla that had escaped from the Colombian Zoo was an ancestor of First Lady Michelle Obama.

Depass posted the comment on his Facebook page saying, "I'm sure it's one of Michelle's ancestors, probably harmless." He later said he was sorry if he offended anyone, saying the comment was not his but the first lady's. DePass claims Michelle Obama made a recent remark about humans descending from apes. That's according to what he said.

We should tell you we did reach out to Depass, actually got his wife on the phone and she said that he's likely made all the public comments he's going to in that particular incident. JOHN ROBERTS, CNN ANCHOR: Well, if you're a person who believes in the theory of evolution, then yes, we are all descended from apes but a little sensitivity is always -

CARROLL: Just a little bit, yeah.

ROBERTS: Thanks, Jason.

The Obama e-mail, by the way, only a series of embarrassments for the GOP in Tennessee. In a few moments, two guests will talk about that and what it says about our society. Stay with us.

KIRAN CHETRY, CNN ANCHOR: Also new this morning, would you work for free for a month? That's what British Airlines is basically asking 40,000 employees to do, calling it the biggest crisis the industry has ever faced. The airline CEO says it's a request, not an order. Okay. Take unpaid leave or work for free? A spokesman for one of Britain's biggest unions said that it's workers could not afford to work that long for nothing.

Former baseball star Sammy Sosa reportedly testing positive for a performance-enhancing drug back in 2003, according to the "New York Times," the legendary ex-Cub was one of 104 players who tested positive that year. Part of that, you remember magical home run chase with Mark McGuire back in 1998. The one that many credit with saving baseball. Sosa is sixth on the all-time home run list with 609 home runs.

Well, a new warning from the FDA about a very popular cold remedy. The agency says to stop using certain Zicam nasal product immediately or you risk losing your sense of smell. Dr. Sanjay Gupta weighing in on that scary possibility and what could possibly be causing it. It's 34 minutes past the hour.

(COMMERCIAL BREAK)

(MUSIC PLAYING)

ROBERTS: Welcome back to the most news in the morning. Before the break, we showed you this racist picture depicting President Obama on a portrait of presidents as two white eyes on a black background. It was e-mailed by an assistant for a Republican state senator in Tennessee and it's another embarrassment to the Republican party there.

Here to talk about that, Ron Christie, Republican strategist and CEO of Christie Strategies as well as Michael Eric Dyson, a cultural critic and sociology professor at Georgetown University. Gentlemen, great to see both of you. Ron, let's start with you. You probably saw Jason Carroll's piece recapping a history of some of the problems recently in Tennessee. What is going on there?

RON CHRISTIE, CEO CHRISTIE STRATEGIES: I think it's really unfortunately, John. I think when you're a member of a congressional staff, your obligation is to represent not only the member of the state senate but the state it represent but the people from that district. And this racist cartoon reflects very poorly on the member of Congress or I should say the state senator and it's despicable. We need to stand out for those people who are involved in public service to a higher calling and a higher standard and say we do not accept any form of racism in public service. This staffer needs to go.

ROBERTS: So Michael Eric Dyson, do you see this as being an institutional problem with the Tennessee Republican party? Or is this a series of individual events?

MICHAEL ERIC DYSON: Well, it would be hard to see it simply as a series of individual events. After all, if it was a statistical aberration, that would be one thing. It seems to look like a trend. But it's deeply rooted in ancient beliefs about black people. To Mr. Christie's credit and to the credit of those who have seen this abhorrent, they have spoken out and said so and refused to accept it. I personally believe that the staffer should be fired as a way to suggest that this is a deeply entrenched but also serious problem that the Republican party takes on to itself. And as a result of that, must speak in very uncertain terms that it doesn't tolerate or accept the kind of bigotry that was reflected in this vicious e-mails.

ROBERTS: So this legislative aide, Sherry Goforth is here name. She works for state senator Diane Black. She admits to sending out the e- mail. She says she sent it to the wrong list. Ron, it sounds like she got caught in an oops moment there. She did intend to send those e-mail out. So what do you think should be the appropriate course of action that the state senator takes regarding this person?

CHRISTIE: Well, John, again, I cannot say it any more clearly. Racism cannot be tolerated for those who have the public trust. This individual said that I sent it to the wrong person? Well, she needs to be looking for a new job. She needs to be fired. It's a poor reflection on the institution that she works in the state senate in Tennessee and a poor reflection on her member. I will say however that we shouldn't go too far to draw this out that the Republican party is racist.

This does not reflect on the Republican party. It's an incident that Republican leaders in Tennessee as well as Washington is very cognizant that this sort of behavior cannot be tolerated and needs to be eliminated immediately.

ROBERTS: Michael Eric Dyson, five months into the Obama presidency here, we thought that there was this great sea change in America and yet this stuff keeps dripping out here. You know, I don't want to say we've gone back to 1959, because I don't think we've gone there. But certainly, you know, in some areas, it doesn't look like 2009. It doesn't look like progress in America?

DYSON: Absolutely right. And though we don't want to quarantine this problem to the Republican party, the Republican party has had a disproportionate share of these kinds of gaffes and goofs that reflect upon, not a slip of the tongue but a slight of the heart. So I think an institutional framework that needs to be rethought. Even as the Republican party rightfully and courageously confronts this issue, it must also look deeper into its own, if you will, institutional net worth and say that we don't tolerate this.

The Rush Limbaughs of the world and the people who create this kind of vicious network and associations must at least be intelligently rebutted and suggested that, yes, in many ways, this country still is on the course of racial practices that need to be reconstituted and as a result of that, all of us together have to work on this problem.

ROBERTS: Well, Ron Christie, other than terminating the offending employee here which you and Michael suggest should happen, how can this be used as a teaching tool going forward?

CHRISTIE: Well I think we can use this as a teaching tool for all Americans to recognize that we need to stamp out racism where it exists, be it in our places of worship, be it in our places of work. But racism can't be tolerated. And for those who are involved in the political process, they need to recognize that again this is a public trust. You cannot employ people who look at other people as other than equal individuals. We're all equal under the law, we're all equal under society. Racism has to be stamped out. That's why the staffer needs to go.

ROBERTS: Yes.

CHRISTIE: I think the appropriate course of action would be for the staffer to be dismissed.

ROBERTS: It certainly is a troubling incident. No question about that. Ron Christie and Michael Eric Dyson, it's always great to see you folks. Thanks for being with us this morning.

DYSON: Thanks, John.

ROBERTS: Appreciate it.

Kiran?

CHETRY: It's 42 minutes past the hour. A look now at what's on the "A.M." rundown. These are stories that we're going to be breaking down for you in the next 30 minutes.

Avon calling and calling and calling. We're going to tell you what the economy is doing to the direct sales industry. Companies like Avon.

And president Obama officially extending health benefits to some same- sex - to same sex partners of federal employees. He's going to be signing that memo in the oval office today. We're going to be live at the White House for more on that.

And Senator John McCain live. He's been harshly critical of the way that President Obama has handled the Iran uprising post election. We're going to hear him explain specifically why and what he thinks the best course of action is. He'll be joining us in a few minutes. It's 42 minutes after the hour.

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CHETRY: Things looks so tranquil at Columbus Circle. That's because there's a light but once the cars start going, you never know what's going to happen. All right now. It's partly cloudy, 57 degrees. A bit later it's going to be sunny. Is it really going to be sunny in New York? I didn't know if it was going to happen until August. But still only 68 degrees.

But, speaking if you watch that. See if you see any road rage out there. Because the first thing that comes to mind when you think of road rage? What is it? New York? Well, the city with drivers most likely to yell, honk, or give the one-finger salute - that'd be New York. The Big Apple is back on top in a new study as the city with the angriest drivers.

Miami has been number one actually for the past five years. New York though reclaimed that spot this year. Other cities include Dallas-Ft. Worth and Detroit. The friendliest drivers in the big cities can be found in Portland, Cleveland, and Baltimore.

ROBERTS: Is that Portland, Oregon, do we know or is it Portland, Maine?

CHETRY: Yes.

ROBERTS: It's Portland, Oregon. OK.

CHETRY: There they are.

ROBERTS: Way back west coasters.

CHETRY: Yes, my friend lives in Bend. They're really nice too.

But you know, New York, --

ROBERTS: The folks in Eugene are very happy.

CHETRY: Exactly.

ROBERTS: Hello. Gerri Willis is here. She's "Minding your Business." And maybe some good indications from the banks here that there's a light at the end of the tunnel. Or want to see around here, it might not necessarily be an on coming freight train.

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Right. Exactly. Well, there could be some good news on the horizon according to the American Bankers Association. The nation's biggest banks expect the recession to end during the third quarter of this year. That's right around the corner, guys, July, August, September. So what they say is that the economy will grow again by the late summer. And here's the really happy part of this.

They say home values will rise slightly next year which is shocking to some housing economists because they're not that upbeat. They expect unemployment to peak at 10 percent next year. Now, interestingly, President Obama yesterday in response to a question from a reporter said he sees unemployment going to 10 percent this year. So, you know, lots of questions about how high unemployment is unemployment going to get?

I want to tell you the head of this organization, Bruce Carson, says the economy is returning to growth, but not health. He says that the hangover of unemployment which is going to continue to rise, 9.4 percent now, going to 10 percent, the fact that we're going to have these huge budget deficits, this hangover on the economy is going to make the recovery feel anemic, not really strong. So, you know, good news but tempered with this idea that there will still be tough time for consumers. Of course, the banks are very excited about the fact that the consumers are spending again and they like to see that as well.

ROBERTS: Yes, Well, you got to wonder too, is the price of gasoline going to have some effect on the economic recovery? Because it continues to shoot up.

WILLIS: The price of gasoline, foreclosures are continuing to rise. It will be four million this year. There are still lots of hurdles for the economy out there.

CHETRY: All right.

ROBERTS: Well, let's hope we have some good sprinters that can leap over them.

WILLIS: There we go.

ROBERTS: Thanks very much, Gerri.

WILLIS: My pleasure.

ROBERTS: 48 minutes now after the hour.

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CHETRY: The favorite music here on the show. We love it.

ROBERTS: You know it sounds very similar to the theme for "How it's made."

CHETRY: Exactly. You're right.

ROBERTS: On the discovery or Learning Channel program? Sounds very similar to that.

CHETRY: I love it. It revs you up in the morning. All right.

Well, this doesn't mean that on this show we always are trying to avoid getting sick. The hours sometimes and lack of sleep make your immune system let's say a little challenged. Well, having a cold though is nothing compared to some of the serious side effects that the FDA says that a very popular cold remedy could cause. We're "Paging Dr. Gupta" to explain the new warnings about Zicam. Zicam is something that a lot of us use. Something that you can either take right as a lozenge. But they're talking about the one that you actually use in your nose.

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: That's correct, the intranasal form of this. Kiran, this is a very interesting interplay between the FDA and the makers of this over the counter homeopathic medication. Now, as you mentioned, it's a cold supplement that you take at the first sign of a cold, It's supposed to reduce the duration and the severity of your cold. The concern is an interesting one. They say people are using some of the intranasal varieties of this to get something that's known as anosmia. That's the word of the way. It means loss of smell, you simply can lose smell not only for the time that you're taking the medication but more scarcely, you could lose it long term or even permanently. So a pretty significant potential side effect from these homeopathic, over-the-counter remedies.

Now there are three types that we are talking about specifically. As you mentioned, they can come in an oral form, a lozenge form, but we are talking about the nasal gel, cold remedy nasal gel. The cold remedy nasal swabs or the kids size remedy swabs as well which incidentally have already been taken off the market. But some people may have them in their home still.

The problem seems to be this, Kiran, really quickly. Zinc is one of the big components of Zicam. And it's believed that there might be some irritation from the zinc on the olfactory nerves which regulate your sense of smell. Now as I said this is an interesting interplay between the FDA and the makers because the FDA can't officially recall this stuff. They are saying they can no longer market Zicam the way it is currently being marketed. Kiran.

CHETRY: That's the problem with some of the medications that are out there, the homeopathic remedies are not monitored, right? By the FDA and they are not controlled by the FDA. But the other interesting thing is the notion of zinc. Does zinc help, I mean, is the reason we're using this because zinc helps prevent a cold in your nose?

GUPTA: Right. That's a good question as well. First point, exactly what you said - the FDA typically when it comes to over the counter things does not have the power to prevent it from going to market. They actually only have the power to pull something potentially if it is found to be unsafe. Unlike prescription meds which you have to get FDA approved before it's ever on the market.

And to your second point, exactly there hasn't been a lot - we studied this last night trying to find any good studies to back up what zinc does actually shorten the duration or severity of a cold and there are not good studies to back that up either. So a very good point there, Kiran.

CHETRY: Yes, I've been taking this immune defense right now because I felt a cold coming on and it's enhanced zinc. I don't know if it's going to do anything either but I do feel a little better today. You never know.

GUPTA: Yes. Some people swear by these products. I don't know, maybe it is placebo. Maybe people take it already at the end of a cold so you're already starting to get better. So who knows.

CHETRY: All right. Just a warning and a look into this, if you are using that Zicam. Thanks so much, Sanjay.

GUPTA: Thank you.

CHETRY: 53 minutes after the hour.

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ROBERTS: Good morning, Chicago! Where it is decidedly foggy this morning, nothing a bit like jolly old London town there. 63 degrees later on today. Scattered thunderstorms and a high of 76 as the summer without a summer continues even though it's not officially summer yet.

In a bad economy, people often take on second jobs out of sheer necessity. If they can get them, that is. And professional people are moving into areas that you might not expect. Our Alina Cho joins us now with more on that. Good morning. So where are people headed?

ALINA CHO, CNN, CORRESPONDENT: Remember the Avon lady? Who doesn't remember the Avon lady. It's so cool back in the day. Well it's cool again, guys. Good morning, everybody. You know, when you hear about companies like Avon, Mary Kay and Tupperware, you may think throwback to the 1950s. But direct selling, as it's called, is back in a big way. Many women - and in some cases men - are ringing doorbells again as a second job and they're hoping to make some extra cash in this bad economy.

(BEGIN VIDEOTAPE)

ANNOUNCER: Avon calling at your door.

UNIDENTIFIED FEMALE: Avon calling.

CHO (voice-over): That was then. This is now.

UNIDENTIFIED FEMALE: I have a busy I can count on.

CHO: The Avon lady is back with a twist. These days more an more Americans are turning to direct selling.

AMY M. ROBINSON, VP, DIRECT SALES ASSOCIATION: When people are feeling like they might get laid off or frankly have been laid off or they're just looking for something to kind of cushion that checkbook a little bit more, this is a great opportunity for people.

CHO: Not as their primary source of income, but as a second job, a financial safety net. Selling products from household names of decades past. Remember Tupperware parties? They're back. So are the products in the pink packaging.

ANNOUNCER: Modern makeup and skin care that women love into extra income.

CHO: Exactly what Kim Joseph is doing.

KIM JOSEPH, CONSULTANT, MARY KAY COSMETICS: And I just began to open my mouth, hey, I'm a Mary Kay consultant, try this lip gloss.

CHO: The 27-year-old started selling Mary Kay cosmetics about a year ago to help pay for her wedding and her new home.

UNIDENTIFIED FEMALE: Beautiful.

CHO: Today she makes about $1,000 a month, extra money on top of the salary she makes as a marketing manager.

JOSEPH: Now for the test - feel your face. How does your face feel? Smooth?

CHO: She's not alone. In the past 20 years, the number of direct sellers in America has nearly quadrupled from four million to 15 million. The Direct Selling Association says nearly six in 10 take it on as a second job. But in this economy, are people really buying?

JOSEPH: It's a low-ticket feel-good item.

CHO: And Joseph says for her, direct selling is the ultimate in job security.

(on camera): No worries about being laid off in this job, right?

JOSEPH: Absolutely.

CHO: What's that like?

JOSEPH: We are recession-proof.

CHO (voice-over): Her goal to sell enough makeup to win one of these, a Mary Kay Pink Cadillac.

(MUSIC PLAYING)

I love you for your pink Cadillac, plush velvet seats.

(END VIDEOTAPE)

CHO: And they're singing on the set. You know, so what happens if you want to become an Avon lady or a Mary Kay consultant? Well for Mary Kay, you need to buy a starter kit and that will cost you about $100. At Avon, they say you can start selling for the price of a lipstick, just a couple dollars. In all cases, guys, the reps say you make as much as you put into it. Kim Joseph, the woman we profiled says she gives parties on Tuesday nights and she spends all day Saturday selling and she makes about $1,000 a month.

CHETRY: She seemed very into it.

Feel your face, it's so smooth.

CHO: She's totally into it.

You know, she may, that may become her primary job. Who knows? You know, when you're very successful, you can do that.

ROBERTS: Every time I think about direct selling I go back to the Tupperware scene in "Napoleon Dynamite" where the woman looks at the sailboat and says "I want that."

CHO: Is there a movie you haven't seen?

ROBERTS: A lot. I like the quirky ones though.

Thanks, Alina, so much for that.