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Terror in Pakistan; 'Super Bowl' of Lobbying; Troop Levels in Afghanistan

Aired October 15, 2009 - 12:00   ET

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

TONY HARRIS, CNN ANCHOR: Time for your top of the hour reset. I'm Tony Harris in the CNN NEWSROOM. It is 10:00 p.m. in Pakistan, where terrorists strike for the fifth time in just 10 days.

It's 11:00 a.m. in New Orleans, where President Obama arrives shortly for his first visit as president.

It is noon in Washington, where lobbyists are spending what may be record amounts of money to help shape health care reform.

Let's get started.

Several brazen attacks today by militants in Pakistan hitting directly at law enforcement. It is the latest in a growing pattern of attacks against the key U.S. ally.

Live now to CNN's Reza Sayah in the Pakistani capital of Islamabad.

And Reza, our understanding is that 37 police and civilians have been killed, along with 11 militants. Does that coalesce with your numbers?

REZA SAYAH, CNN INTERNATIONAL CORRESPONDENT: Actually, the total number of dead is about 35 to 37. Eleven of them have been militants, about 24, 25 are police and civilians. But you get an idea how tough it is to keep track of the death toll with an awful day like this.

We've seen bad days in Pakistan. This is perhaps one of the worst.

The first attack taking place at 9:00 a.m. local time. That's when a suicide car bomb rammed into a police station in the district of Kohat, killing 11 people.

Kohat has been plagued by militancy because it's right next to Pakistan's tribal region along the Afghan border or region. The Obama administration calls it a safe haven for al Qaeda. That was in northwest Pakistan.

Thirty minutes later, all the way across the country, in eastern Pakistan, three separate attacks on police compounds. Armed militants shooting and throwing grenades, fighting their way into these compounds.

Standoffs ensued. By the time everything was over, 11 militants killed, several police officials killed.

Lahore had been pretty quiet for the past few months, but obviously that peace and quiet was shattered today. These attacks rattled local citizens.

Here's what some of them had to say...

(BEGIN VIDEO CLIP)

AMJAD ALI (through translator): I have small children. My area is very near from here. We are so scared.

We could not send our children to school. We are really worried. We are in tension. The government should take some solution now to solve this.

(END VIDEO CLIP)

SAYAH: It didn't end with those attacks in Lahore. Hours later, in the city of Peshawar, another explosion. Officials tell CNN a remote-controlled bomb brought down an apartment building that houses government officials. Tragically, a little boy was killed in that explosion, several people injured.

You can be sure government officials in Washington, the Obama administration, are very concerned about these developments. Tonight -- actually, today, over there in the U.S., the Obama administration, President Obama, signed $7.5 billion non-military economic aid that's designed to help Pakistan. But you have to wonder, how is economic aid going to take effect in regions where security has yet to this be established -- Tony.

HARRIS: Reza, what's going on with all these attacks? Is this simply revenge for the killing of a militant leader? You told us a bit about that yesterday. Or is there something more going on here?

SAYAH: Well, the Taliban is taking responsibility for most of these attacks. And they say it's for two reasons.

One, this is payback for the recent military offensive in the Swat Valley. And it's also a warning to Pakistani security officials and the military not to launch this upcoming offensive, this ground offensive that's surrounded by a lot of hype, targeting south Waziristan.

South Waziristan was called by Defense Secretary Robert Gates the epicenter of jihad in Pakistan and the hub of Taliban activity. One Pakistani official called it the mother of all battles.

So, here you see the dilemma the Pakistani security forces are facing. Every time they launch these offensives, these militants hit back with these deadly suicide attacks. And right now there's no indication that the security forces here have the ability of stopping this awful cycle -- Tony.

HARRIS: Yes. CNN's Reza Sayah for us.

Reza, thank you.

President Obama gets an update on the recovery effort from Hurricane Katrina. The president is expected to arrive in New Orleans this hour. It is his first trip there as president.

He will visit a school in the Lower Ninth Ward and hold a town hall meeting. Some residents are upset the president is only spending a few hours in New Orleans and that he is not visiting Mississippi.

A new sign that layoffs may be bottoming out. The Labor Department says first-time jobless claims dropped last week to 514,000. Now, that is the fifth decline in six weeks and the best showing since January.

In Puerto Rico, labor unions led protests today against government layoffs. The governor has ordered 17,000 workers dismissed. He is trying to cover a $3 billion budget shortfall. The territory's unemployment rate is 15 percent higher than any state.

The Dow started today above 10,000. That's the first time that's happened in a year.

Right now, stocks are selling off, I believe. Oh, we've rebounded a bit from session lows. Stocks are down seven, as you can see here.

Got to tell you, though, stocks have made a remarkable comeback since they hit bottom last March. And that point not lost on former Fed chairman Alan Greenspan today.

(BEGIN VIDEO CLIP)

ALAN GREENSPAN, FORMER FED CHAIRMAN: The markets are beginning to stabilize. And going from an extreme negative to zero change was actually a significant plus. And, indeed, we have since recovered very significantly, and the total amount of equity recovery since March is $15 trillion, $17 trillion, globally, and it's almost $5 trillion, incidentally, in the United States.

(END VIDEO CLIP)

HARRIS: Well, seniors will not get a Social Security cost of living increase next year. That's because there's no inflation. Prices fell two percent during the government's fiscal year which just ended September 30th.

To help seniors, President Obama wants them to get a stimulus payment of $250. The president has not decided on a way to pay for the program. It is tagged at about, wow, $13 billion.

You need a job to make a mortgage payment. And rising unemployment helped fuel the foreclosure frenzy over the summer, to be sure. RealtyTrac says close to 938,000 homes were somewhere in the foreclosure process during the third quarter. RealtyTrac also says one in every 136 homes received some type of foreclosure filing over the summer. That's up 5 percent over the second quarter.

Now to the hard work on health reform. Senate Democrats get briefed today on efforts to merge two very different bills into one. Negotiators will meet again on Monday.

Just moments ago, we heard from Senate and House Republican leaders. Representative John Boehner says the Democrats' plans will mean more government involvement.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R), MINORITY LEADER: The House bill alone has 53 new boards, bureaucracies, commissions, and programs that all amount to more bureaucracy at the expense of doctors and patients. This trillion-dollar government approach will lead to higher premiums, higher taxes, fewer jobs, and fewer benefits for seniors.

Republicans offered -- have offered commonsense solutions to lower the cost of health care and increase access to affordable health insurance. It's time for Democrats to scrap their big government plan, sit down and work with Republicans on commonsense solutions that will make our current health care system work better.

(END VIDEO CLIP)

HARRIS: The amount of money lobbyists are spending to try to shape health care reform could break all records. Now that all five reform bills have been voted out of committee, the lobbyists are going all out.

That story now from CNN's Jim Acosta.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: Congress is proposing over $100 billion in cuts to Medicare advantage.

JIM ACOSTA, CNN CORRESPONDENT (voice-over): It's war. And the insurance industry is launching its first air attack on health care reform with an ad aimed at seniors.

UNIDENTIFIED FEMALE: We need health care reform that protects seniors.

ACOSTA: Liberal reform supporters and armies of special interests groups are entering the fray.

UNIDENTIFIED MALE: It's the case against health insurance reform always gets down to one word.

ACOSTA: Then there's the ground offensive, lobbyist hitting the Capitol to schmooze lawmakers. Members of Congress feel they're getting slimed.

REP. DONNA EDWARDS (D), MARYLAND: I arrived today just weeks before Halloween to unmask the health insurance industry. Now we see the industry and their lobbyists for what they are. A little shop of horrors.

ACOSTA: A government watchdog group estimates the health care sector has spend more than a quarter billion dollars so far this year, lobbying Congress for changes to reform plans.

DAVE LEVINTHAL, CENTER FOR RESPONSIVE POLITICS: This is one of the biggest lobbying pushes that we've seen on a single issue in U.S. history.

ACOSTA: Many of the lobbyists are former members of Congress and staffers from both sides of the aisle, and it's all legal.

LEVINTHAL: It's like a sports team. If you want to put together a good team, you're going to have to hire some pretty big dollar players.

ACOSTA: They are sort of Torello and Tom Brady of the lobbying world? Is that it?

LEVINTHAL: Absolutely.

REP. JIM COOPER (D), TENNESSEE: It is kind of a Super Bowl of lobbying on health care reform. And the lobbyists are winning so far but the game is not over yet.

ACOSTA: Democratic Congressman Jim Cooper, who resisted Clinton care back in the '90s, says President Obama put himself in a tough position when he invited the health care sector to help craft reform.

COOPER: There are a number of groups that are threatening to revolt on the White House deals or the congressional deals.

SEN. RON WYDEN (D), OREGON: They're slicing the fat hard, and they like the way things are today.

ACOSTA: Oregon Senator Ron Wyden says that's why it's critical for Congress to draft a reform bill that works for consumers.

ACOSTA: And which lobbyists do you fear the most?

WYDEN: I call them the status quo caucus. You've got some people in the insurance lobby. Obviously, they don't want the citizens to have more choices. Choices that would hold them accountable.

ACOSTA (on camera): Republican leaders in Congress are now quoting that insurance industry study on the Senate Finance Committee's version on health care reform predicting higher premiums for consumers. But the accounting firm that authored that study is now clarifying its findings, noting that it did not analyze all aspects of the legislation. Jim Acosta, CNN, Washington.

(END VIDEOTAPE)

HARRIS: President Obama is considering thousands of additional troops to Afghanistan. The question is, where is the military going to get those troops?

(COMMERCIAL BREAK)

HARRIS: President Obama is still deciding whether to send thousands more troops to Afghanistan after his latest meeting yesterday with military strategists. But there are new questions today about the number of troops available.

Here's CNN Pentagon correspondent Barbara Starr.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): As the White House continues to talk about the way ahead in Afghanistan, the president signaling one of his concerns.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: And we just want to make sure that at all times, not only the young men and women who are already there, but also any additional young men and women, both military and civilian, who might be working there, are served by a policy that's sustainable and effective.

STARR: One potential problem, the Army which will provide the bulk of any additional forces may be hard-pressed to come up with the numbers. Consider this; the Army has 44 combat brigades, about 175,000 troops. But 19 brigades are already deployed. Another dozen already committed for deployment.

That leaves about a dozen brigades that could be sent to the war zone, about 48,000 troops. But if all of those troops go to Afghanistan, the Army could be stretched too thin to deal with other threats. And troops potentially face not getting the promised year at home in between combat deployments.

GEOFF MORRELL, PENTAGON SPOKESMAN: I see no indication at this point that that would have to be adjusted. But I think we always reserve the right to make adjustments if that's what national security dictates.

STARR: But the head of the Army sees less time at home with families as a real possibility.

GEN. GEORGE CASEY, U.S. ARMY CHIEF OF STAFF: You can do the math as well as I can. More troops makes it harder to get, you know, more troops (INAUDIBLE). There's no question about that.

(END VIDEOTAPE)

HARRIS: And Barbara Starr live in our Washington bureau. OK, Barbara, so that's the Army. What about the Marine Corps?

STARR: Well, you know, Tony, the Marines have also run the numbers, and what they calculate is they can send just about 8,000 more Marines to the war in Afghanistan before they might have to cut time at home with their families. But, first, they have to get all of their Marines out of Iraq -- Tony.

HARRIS: OK. Barbara Starr at the Pentagon -- I'm sorry, in our Washington bureau.

Barbara, thank you.

You know, a lot of folks weighing in on Afghanistan. Here's what some of you have had to say.

(BEGIN AUDIO CLIP)

UNIDENTIFIED MALE: Hi. My name is Charlie. I'm from New Hampshire.

And I think a lot of people have forgotten that we were attacked, our country was attacked, unlike Vietnam, by the al Qaeda, and with cooperation from the Taliban. And I think that the United States should do whatever is necessary to take care of this situation so they pose no threat not only to the United States, but to or allies. And I have confidence that our present government will do what is needed to see this war to a just finish.

UNIDENTIFIED MALE: Hi. My name is John, from Modesto, California.

I think they should bring all the troops home, every last one of them, not only from Afghanistan, from Iraq, immediately, if not sooner.

UNIDENTIFIED MALE: My name is Darren (ph) from Ohio.

I think we should either finish it quick or pull out now. I think the war is a sham. I think too many innocent people on both sides have died.

I think we should focus more on ourselves before we go into another country and try to fix them, because we're hurting. And with technology nowadays, if we can't do that, someone's holding out on us.

(END AUDIO CLIP)

HARRIS: Hey. And we still want to hear your comments. Just give us a call at 1-877-742-5760, and let us know what you think the U.S. should do next in Afghanistan.

A Tennessee father accused of going to Japan to take his kids from his ex-wife is now out of jail, with kidnapping charges said to be on hold. Christopher Savoie is involved in a custody fight for his 6-and-8-year-old children. The prosecutor says he was released after promising not to take his children back to the United States.

His current wife spoke this morning to CNN.

(BEGIN VIDEO CLIP)

AMY SAVOIE, WIFE OF CHRISTOPHER SAVOIE: I found out this morning. At around 3:00 in the morning, I received a phone call from him. He said that he was out, and I was just really happy to hear his voice.

(END VIDEO CLIP)

HARRIS: The prosecutor's office in Japan implied Savoie has agreed not to have any contact with the children.

We'll have to check that out.

It is open enrollment season at many companies. Gerri Willis has some tips for picking the best health insurance options. She is with us next.

Good to see you, Gerri.

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Good to see you.

(COMMERCIAL BREAK)

HARRIS: Let's take a look at our top stories now.

Almost 40 people are killed in Pakistan in a string of bold military strikes. Authorities say police facilities and local government offices were targeted.

No cost of living increase this year for the 50 million Americans receiving Social Security. The increase is pegged to inflation, which is negative this year. President Obama is pushing to give seniors and others $250 in stimulus payments.

A brutal beating in New York. Two men caught on tape punching and kicking another man. Police say he was targeted because he's gay. He has collapsed lungs and broken bones. The suspects in the attack in court today.

We will get another check of our top stories in about 20 minutes.

Your most important employee benefit, health care, is up for grabs with open enrollment season on the way. And here to guide you through the process is Personal Finance Editor Gerri Willis.

And Gerri, good to see you.

WILLIS: Good to see you.

HARRIS: What's the checklist for going through the paperwork?

WILLIS: All right. Well, first off, you've got to know there are big changes under way in your health care options. We've been talking about it all week.

So, when you get the documentation together, the first thing you want to do is check and make sure your doctor is still in plan. Be sure the drugs that you take are still in what they call the formulary. That's how you get the best possible price. If you can't find that, ask for help from your HR professional.

Also, read the fine print when it comes to dependent coverage. Companies are raising contributions for dependents. As an example, an employee might be asked to bay 150 bucks for themselves, but an extra $300 to add their spouse.

And by the way, this is the year you must compare plans between you and your spouse if you're both working, because there's so many changes to these plans. Just because your plan was better one year doesn't mean it will be this year -- Tony.

HARRIS: Yes. And Gerri, what about this concept of co- insurance?

WILLIS: Yes, this is crazy. OK, a long time ago, before co-pays and HMOs...

HARRIS: Right.

WILLIS: ... patients were responsible for meeting a deductible until their health care insurance kicked in, and some companies are going back to those old days. The thinking behind co-insurance is that if you share a bigger chunk of your health care risks, you'll take more care with yourself. So, when the doctor -- you have a procedure done, instead of paying a flat co-payment, which is what a lot of us do right now, you pay a percentage of the entire bill.

Now, depending on your plan, you may have to pay both co- insurance and a co-pay for a given doctor's visit. Once you meet a predetermined out-of-pocket expense cap, your health insurance plans step in and pick up 100 percent of your costs.

Now, likely this will mean your coverage will cost more if you have co-insurance. You're going to want to be prepared.

HARRIS: Yes.

And Gerri, I got one more for you. How do you know -- and I'm really curious as to your answer on this. How do you know what health plan is right for you?

WILLIS: You've got to make some comparisons. You really want to compare the numbers.

Look, here's what you need to know. The premiums and deductibles, most people know that for each plan you're offered. Then dig deeper. Find out if any of the plans you're looking at have what they call an out-of-pocket limit on spending.

A limit is a good thing. It means that if you have a catastrophe, you will limit your own spending.

For example, treating breast cancer costs $100,000 on average. If there is no maximum exposure for plan participants, you could be on the hook for thousands of dollars if you had breast cancer. Now, add up the potential costs of each plan, then you can determine which makes the most economic sense for you.

And, of course, if you have any questions, send them to me at Gerri@CNN.com. We love hearing from you.

HARRIS: Awesome. Thank you, Gerri. Appreciate it.

WILLIS: My pleasure.

HARRIS: President Obama visiting New Orleans for the first time since taking office.

Take the shot full here. Air Force One on the ground now at Louis Armstrong International Airport.

In addition to holding a town hall meeting on Katrina recovery efforts, he will visit Dr. Martin Luther King Charter School in the Lower Ninth Ward.

Let's talk more about charter schools and their role in New Orleans and elsewhere.

Education contributor Steve Perry joins us on the phone. He is the principal and founder of the Capital Preparatory Magnet School.

Steve, always good to talk to you.

What's a charter school?

STEVE PERRY, CNN EDUCATION CONTRIBUTOR: A charter school is a publicly-funded, privately-run school that's available to children throughout the community. Typically, there's a process of getting in either through lottery or some other admissions process. But it's not typically driven by where you live.

HARRIS: Got you.

Steve, more than half of New Orleans schoolchildren attend charter schools, and our understanding is more are on the way.

What's going to happen to the public school system in New Orleans?

PERRY: Hopefully every failed school will stay closed or will close, never to reopen. And children will get access to quality education.

HARRIS: Wow. Because you -- you feel, what, more and more public schools are just not getting the job done and there is something -- something special about what these charter schools offer that is better than what kids are getting in public schools now? PERRY: Traditional public schools have, in fact, failed, especially in communities where there's a large number of poor students of color. In fact, the research is very clear that our students are performing very poorly in those schools, and where they're performing best are in charter and magnet schools. And there are a number of reasons why.

One, it's because of the size. But also, it's because of the staff that are in those schools.

The staff are typically organized around a particular theme or notion and strategies of running a school, versus the very generic and often isolating large, urban schools, which many children of color are, in fact, educated in. But it's not an issue just of kids of color. Students from many socioeconomic levels, as well as different racial groups, are performing better in these schools.

Now, we shouldn't think just because it's a charter, it's a better school. Now, that's an absurd notion. Just because it's one doesn't mean it's better. But, in fact, we are seeing trends of students' performance being better, even if only by a couple percentage points, in charter and magnet schools versus the traditional public schools.

HARRIS: Are we finding public school systems responding to the kind of information you're sharing with us about some of the success of these magnet schools incorporating some of these practices into their public school curriculums?

PERRY: There are profound limitations about integrating some of these strategies in, because the public schools, as they currently exist, are typically run by teacher union contracts and administrator union contracts. And so, extending the school year could become costly in a traditional public school, but not in a charter or magnet school.

Likewise, extending the school day, teaching during their lunch. Many schools, they have what's called a duty-free lunch, which means if you want to help a child in math, and you're a math teacher, while you ate, in a traditional public school you would not be able to do that, and the teachers union would, in fact, grieve you and win that grievance. But in the nontraditional charter or magnet schools, children have access to teachers and faculty and administrators who, in fact, have become -- have come together for a shared notion. And I think there's something really powerful about that.

HARRIS: Yes.

PERRY: And the research also is clear because that's what the communities want. Every single community that has school choice has a high participation in that choice.

HARRIS: Got you.

Hey, Steve, you know, back to the New Orleans situation here, parents, my understanding is, can shop from among, what, 80 schools with different approaches to teaching and different success rates? I'm just curious, is that putting too much of the work, the responsibility, the effort, to sort all of this out for their kids on the parents?

PERRY: Absolutely not. You don't need a Ph.D. to choose a preschool.

HARRIS: Yes. Yes.

PERRY: You can -- every single school that's a good school has a waiting list whether it's public or private. Look around. And we as parents get to make that decision, especially those of us in the middle class. We'll move to a particular community...

HARRIS: That's true.

PERRY: ... because of the school system. So -- and this is no different than college.

I mean, there are thousands of colleges all over this great nation of ours, and some -- you know, and then you can go internationally. And every single year, parents who have never even been to college help their children pick a college. So, if we can pick colleges, we can pick preschools.

HARRIS: Steve, and I'm wondering about the parents in, say, the Lower Ninth Ward who are sort of locked into their financial circumstances and can't do, as many of us can, which is to pack up and move our kids to better school districts. They're at a bit of a disadvantage here, aren't they? And the other side of that argument also is that some critics are suggesting that too much choice can be confusing.

PERRY: So, then, we should stop going to Wal-Mart, then, because there's just too much choice there, too. We have to give parents more credit than this. And this solution of charter and magnet schools, or a choice system or vouchers in any form where we have choice, parents finally are not bound by the limitations of their community.

We wouldn't tell somebody who had to go to an oncologist that they could only go to the oncologist in their community. You go to the one that works best for you. And the same is true for schools.

When a child wants to go to an arts school, but there is no arts school in their community, but there is one that they can get into, shouldn't they be able to get into that school? What charters, magnets and choice do is they allow for parents to select schools.

And we can look. And many charter or magna schools, there are more -- and I repeat more poor students, more students from historically disadvantaged populations than there are in some of the traditional schools, because these parents understand that they don't have the option to pick up and move to a suburb. So they have to pick among the choices that are there, and it's the public options that are there.

HARRIS: Yes, good stuff, Steve. Appreciate it. Thank you.

Steve Perry, CNN contributor and our education analyst.

You can see the president and his top aide, Valerie Jarrett, meeting with state and local officials there in New Orleans and Louisiana. I saw Governor Jindal a moment ago. Senator Mary Landrieu, Mayor Ray Nagin, of course. The president on the ground to go to Dr. Martin Luther King, a charter school in New Orleans, and then will hold a town hall meeting in the New Orleans area as well.

Some criticism that the president is only on the ground for a short period of time and some criticism coming from the governor of Mississippi, Haley Barbour, that the president didn't, on this trip, stop in Mississippi and take a look at the recovery efforts going on there. But there you see the president on the ground now at Louis Armstrong International Airport.

Let's get you quickly over to Chad Myers now in the severe weather center.

I haven't had an opportunity to talk to you, Chad. What are you following today?

(WEATHER REPORT)

HARRIS: Scary new foreclosure figures out today. We've got our favorite housing and mortgage expert here, John Adams -- where are you, John -- to tell us what all this means for you and you're home. We're back in a moment. You're in the CNN NEWSROOM.

(COMMERCIAL BREAK)

HARRIS: The number of Americans saying good-bye to home sweet home climbed sharply over the summer. RealtyTrac reports a record 938,000 properties got some type of foreclosure filing in the third quarter. The states with the highest foreclosure rates continue to be Nevada, Arizona, and California. States with the lowest foreclosure rates, Vermont, North Dakota, and West Virginia.

Real estate columnist and radio host, John Adams, is here with us.

John, it's always good to see you.

Put this number in some type of perspective here. That's a big number, 937,000-plus homeowners in the system now. At some point on the road to a possible foreclosure. But that doesn't mean that these folks are just days away or even months away from getting kicked out of their homes.

JOHN ADAMS, REAL ESTATE BROKER: Well, it depends on what the lenders decide to do. In many cases, the lenders don't want to proceed with a foreclosure because they don't want to take the house back. But we're seeing a lot more people come closer to foreclosure now because of the unemployment problem. People that didn't get these crazy mortgages. Not the original wave of foreclosures that we saw. But now these are people that used to be regular, middle-class Americans, they were paying on time, they've lost their job. They've used up their reserves. They aren't able to make payments now.

HARRIS: So give us a bit of a reset on where we are in the housing crisis. Because we get some conflicting information. There are days when we get information that suggest that housing starts are up, that the home price, the median home price is up. But give us a reset on where we are right now.

ADAMS: Well, we've got a huge glut of foreclosed homes. Bank- owned and government-owned homes that are unsold and sitting around the market. Those have kicked the feet out from the regular retail market and made it impossible for people to sell their homes. That has just immobilized the marketplace.

And when we can begin absorbing those homes, we're going to see the market begin to return. Jobs is the key. We need to continue the first-time home buyer tax credit, encouraging people to get . . .

HARRIS: Oh, you believe that it absolutely has to be continued?

ADAMS: Absolutely. Absolutely.

HARRIS: Should it be expanded to beyond just the first-time home buyers, but for everyone?

ADAMS: I think that would be helpful. And it doesn't have to go on forever. But the real estate market is on life support right now. And what the -- the oxygen tank, literally, is that first-time home buyer program.

HARRIS: But you're talking about foreclosures, pulling the rug out from under the recovery.

ADAMS: Yes.

HARRIS: But the flip side of that is that we're seeing a lot of these folks who are taking advantage of this tax credit, we're seeing them buying those foreclosure homes, those properties, first, aren't we?

ADAMS: That's correct because they represent the best values, Tony.

HARRIS: The best deals out there.

ADAMS: Absolutely. And they're tremendous values. This is an opportunity for somebody to buy a house at prices that just weren't available for the last 10 or 15 years.

HARRIS: The other side of this is that we would love for more folks to be able to stay in their homes. What is your view of what's going on with the administration's efforts to modify a lot of these loans and to head off foreclosure? ADAMS: The loan modification program simply has not worked to the extent that the administration hoped that they would. The incentives to the lenders that they thought would be something to push them forward really have not worked. Yes, we're seeing some loan modifications, but it is slow. Fannie Mae is actually going door to door now trying to meet to people to talk about . . .

HARRIS: Are you kidding me?

ADAMS: Yes, door-to-door modifications. They're not -- some people won't even respond. And they're trying to work with people. But the outreach simply has not worked yet.

HARRIS: What are the prospects for say -- for 2010?

ADAMS: Well, the solution is, we've had home prices go up in value nationwide, according to the Case-Shiller Index . . .

HARRIS: Right. Right.

ADAMS: Three months in a row. This is the solution to the foreclosures. Remember that prior to the year 2002, 2003, this number of bank-owned homes was simply unheard of.

HARRIS: Yes. Yes.

ADAMS: And it's because the market would naturally absorb them. As home values went up, these homes would be purchased. They never would go into foreclosure in the first place.

HARRIS: Yes.

ADAMS: But today we've got so many people that are upside down. They owe more on the house than the house is worth. It's going to take a while, Tony, for those values to climb, get back to the point where they can cover the mortgage.

HARRIS: And, John, it's good to see you. We don't see you nearly enough. Thanks for taking the time to come on.

ADAMS: Thank you, sir.

HARRIS: Yes, good to see you.

Let's get you caught up now on today's top stories.

President Obama arrived in New Orleans just a short time ago on his first visit there since taking office. He will get an update on efforts to recover from Hurricane Katrina. The president then holds a town hall meeting and visits a school in the lower ninth ward.

Supreme Court Justice Ruth Bader Ginsburg released from a hospital this morning. The court says she was admitted overnight for what appeared to be a reaction to medication. Ginsburg had surgery earlier this year for pancreatic cancer. In Pakistan, dozens killed today in several militant attacks. Authorities say police buildings and government offices were targeted. The Taliban claiming responsibility for some of those attacks.

President Obama is in New Orleans this hour. We're breaking down the progress made in rebuilding the city since Hurricane Katrina hit. We're back in a moment.

(COMMERCIAL BREAK)

HARRIS: So, the Dow hit 10,000 and analysts are saying the recession is over. But for the economy to stage a real turnaround, we need the banking sector to get in better shape. And this week we're hearing from the nation's biggest financial companies. Susan Lisovicz at the New York Stock Exchange with details.

And, all right, Susan, what's the verdict here?

SUSAN LISOVICZ, CNN CORRESPONDENT: Well, the verdict is that we can see the clearing, but we're not out of the woods yet, Tony. And, you know, this is by -- on the basis of three big report cards over the last 24 hours. Let's start with the 800-pound gorilla, Goldman Sachs.

HARRIS: Oh, yes.

LISOVICZ: Which made more than $3 billion in the last quarter. I should also say that JP Morgan also reported over $3 billion in a three-month period. Lloyd Blankfein, the CEO of Goldman, says that there is evidence of improving business and stabilization. And even growth across a number of areas.

But is there weakness? Oh, sure. Sure. You look. I mean, for instance, JP Morgan increased its loan-loss reserves by $2 billion. Why would even a bank that's in good, solid position, condition, do that? Well, when the unemployment rate rises there's a natural connect that people have a hard time paying their bills, paying their loans.

Citigroup is the third company. The third big bank we should mention. It saw its consumer deposits and loans in the U.S. grow. That's good. But it also got hit with a nearly $9 billion loss, loan losses, just what we were talking about.

HARRIS: Yes.

LISOVICZ: So, that's why you're seeing those stocks getting hit today. But overall, you can see in the rally that we've seen, that certainly some of those stocks have taken part. Goldman Sachs shares have more than doubled over the -- of this year. JP Morgan shares are up 50 percent. Bank of America shares were up 30 percent. It reports tomorrow.

Citi, not taking part. Down 30 percent. Because it still needs to pay back TARP, among other issues. Got those loan losses and $45 billion is the bill it owes the government. Dick Parsons told me he's going to pay back every penny with interest so that we should make some money on it.

HARRIS: I like the sound of that.

LISOVICZ: Oh, yes, we hope so.

HARRIS: Yes. What's happening with stocks? I'm looking at the ticker here. It looks like we're down a little bit?

LISOVICZ: We're down a little bit, Tony, but we're still above 10,000. You know, I thought I would read something to you from one of the veteran traders. Of course, the Dow first hit that 10,000 level a year ago. It's kind of a different thing, been there, done that. This trader said yesterday he felt a little bit like Zsa Zsa Gabor's eighth husband on their honeymoon. "I think I knew what I'm supposed to do, but I'm not sure I can make it as exciting as it should be."

You know, they were popping champagne 10 years ago. You were lucky if you got one of these prized hats this time around. And which I have one.

HARRIS: Come on, save one for me, I'll be up there in a couple of weeks. Save one for me.

LISOVICZ: You got it, Tony.

HARRIS: All right, Susan, appreciate it. Thank you.

LISOVICZ: You're welcome.

HARRIS: As President Obama considers a new war strategy, a lot of CNN viewers are weighing in on Afghanistan.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I say we definitely need to send more troops over to Afghanistan. If we pull out now and take our troops out now, not only will we be admitting defeat to terrorists, but we'll be walking -- welcoming them to come over to the U.S. and get another attack on us. I mean, it's just crazy.

UNIDENTIFIED MALE: We need to focus on al Qaeda and terrorism as a global problem for all governments and get their supports and bring our troops home as soon as possible.

UNIDENTIFIED FEMALE: We need to pull our troops out of Afghanistan. No more fighting. No more killing. But we need to help with the infrastructure, help with their hospitals, help with their schools, cleanup, and in a friendly way take care of Afghanistan and help the people of Afghanistan.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

HARRIS: President Obama is in New Orleans today for the first time since taking office. The city's economy was in free-fall after Hurricane Katrina, but is it coming back? Perhaps led by tourism? Stephanie Elam is in the cnn.com -- wait a minute, no, cnnmoney.com newsroom.

Stephanie, you're all over the place. Good to see you.

Are things getting any better, any easier, in New Orleans?

STEPHANIE ELAM, CNN CORRESPONDENT: No doubt, Tony, there's still some challenges. There's still some challenges in New Orleans. Four years after Hurricane Katrina, the city is still struggling. Job growth there is lagging behind other Gulf Coast communities. And a recent study finds New Orleans won't add enough jobs next year to even reach its 1980 employment level. That's a long time ago.

The study's author says the main problem is uncertainty. He says companies are afraid to build operations in New Orleans because the rebuilt levees, they just are untested. For many businesses it's just not worth the risk of another Katrina, Tony, so that's why a lot of people are being a little bit easy about getting back into the big easy.

HARRIS: Yes. Are there any bright spots in the New Orleans economy?

ELAM: Have you visited New Orleans any time in the last four years?

HARRIS: I have not.

ELAM: Well, believe it or not, it's actually tourism that is coming back. I have gone down there. I've done my part to help out New Orleans.

HARRIS: Oh, yes, you have.

ELAM: That's true.

HARRIS: And we have the pictures to prove it, by the way, thank you very much.

ELAM: Oh, no, you don't have them. Somebody does, but you don't.

Anyway, but, yes, it's increased every year since Katrina. The tourism industry is big for New Orleans. And in an average pre- Katrina year, the city welcomed 8.5 million visitors. Last year the number hit 7.6 million. So getting right -- in the right direction here.

But the convention business still lagging behind. The year before Katrina, attendance at the New Orleans Convention Center was more than 1.2 million. Next year, as of right now, attendance is expected to be about 750,000. So, obviously, a big way to go there on that number.

Tony.

HARRIS: What about all the construction projects in New Orleans? Are they creating jobs?

ELAM: Yes. No, there's definitely some good coming from construction. That's, two. $10 billion worth of construction projects are propping up New Orleans' economy and creating jobs. The problem is, at the same time other jobs are disappearing, particularly in manufacturing. Case in point, the Lockheed Martin plant in New Orleans that makes external fuel tanks for the space shuttle, it currently employs 1,500 workers. But with the shuttle project winding down, next year there will be likely only 400 to 600 jobs at the facility. So until more new businesses picks up the slack, job growth is expected to remain weak.

But, Tony, you know, you should go down there and check it out in New Orleans. It's a fun town.

HARRIS: Stephanie photos, YouTube. Now, see, I've got everybody going to YouTube now to see . . .

ELAM: I was with my husband. It was all above the board.

HARRIS: All right, Stephanie, good to see you. Thank you.

ELAM: Good to see you, too.

HARRIS: Timeless skills are important for one man who's found a job that lasts.

(COMMERCIAL BREAK)

HARRIS: Time now for "Americana in Focus." Photojournalist Jeremy Moorhead talks with a repairman who, after 36 years, still fixes clocks the old-fashioned way, with his hands.

(BEGIN VIDEOTAPE)

DONNY SOBEL, CLOCKMAKER: The Clock Shop of Vienna. Used to be a sleepy little town. Now it's the one that you tend to avoid at rush hour.

What's your clock doing wrong?

UNIDENTIFIED MALE: When you wind it, it usually, as I remember, goes about seven or eight days. It's supposed to. It's only going about four.

SOBEL: You gave this five half turns. Notice it's still got room to turn.

UNIDENTIFIED MALE: Oh, my God, I've never done this. Nine.

SOBEL: Now it's fully wound.

UNIDENTIFIED MALE: Son of a gun.

SOBEL: We established this store in 1973. Essentially the family has run this business since its inception. Oh, it's hard to think of myself as unique, but I guess I'm one of the last people around that still makes parts for old clocks.

Somebody says, are you still doing it the way it used to be done? We kind of -- we were the way it used to be done.

We're horologists. We're clockmakers. Most of what we do is repair or replace or refinish parts that have worn in an old clock. You can't buy parts off the shelf for these. So anything that you make or anything that you need, other than a piece of glass or a chain or a cable, is going to be created from scratch.

There's the old and new. They go back in here.

There's less and less people doing this.

This place is like a toy store for us.

Ryan's my competitor. His father-in-law owned a clock shop in Alexandria.

RYAN: It's critical that you seek out knowledgeable people.

SOBEL: Ryan asked if he could come in to pick up some pointers. What Tony Sigudo (ph), my mentor, taught me . . .

It has to come apart before you can clean it.

RYAN: Ninety percent of the previous generation of clockmakers, the skill level, the high skill level ones, have not had an opportunity to have somebody come up behind them and stick with it.

SOBEL: It's a nice feeling to know that all of these things are running because you've done something to help them go. Thank you for visiting The Clock Shop of Vienna, where all we have is time.

(END VIDEOTAPE)

HARRIS: Can I get some of that time?

Kyra, you want some of that time?

KYRA PHILLIPS, CNN ANCHOR: That's what I was just saying. You know what, there is not enough time in life, Tony Harris. It goes too fast.

HARRIS: Well it need -- well it needs some -- it goes to fast. OK, once again, that was photojournalist Jeremy Moorhead reporting. And you -- time. You can find more information about "Americana in Focus: Jobs that Last" online at cnn.com/americana.

Let's do this. Let's push forward now hard and fast. The next hour of CNN NEWSROOM and Kyra Phillips!