Return to Transcripts main page

American Morning

Payback for Bailed Out Bosses to Be Cut; White House Pressures Afghan President to Cooperate on Afghan Election Runoff; Feds Insist Swine Flu Shot is Safe; Navy "Gay Hazing" Scandal; Medical Rip-offs; No Walk in the Park

Aired October 22, 2009 - 06:00   ET

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

KIRAN CHETRY, CNN ANCHOR: Welcome. Glad you're with us on this Thursday. It's October 22nd. I'm Kiran Chetry.

JOHN ROBERTS, CNN ANCHOR: Good morning to you. I'm John Roberts. Thanks so much for being with us. And here are the stories that we'll be telling you about in the next 15 minutes here in the Most News in the Morning.

Your money bailed them out. Now the White House says it's payback time. Executives at companies that received the biggest government bailouts are about to see their total compensation slashed. The CNN money team is here to break it all down for you this morning.

CHETRY: Afghanistan speeding toward a presidential runoff in just about two weeks, but there are still some major roadblocks to a second round of voting. The White House is hinting that a troop increase could hinge on a successful runoff election. We're going to get a live report from Kabul just ahead.

ROBERTS: Plus, as swine flu keeps spreading across the country, new poll numbers show most Americans still afraid of getting vaccinated. Now the feds are trying to reassure folks and offering a new timeline on when millions of doses of the H1N1 vaccine will be ready for you. We're going to have the latest from Washington.

CHETRY: But first, it's sure to have Wall Street and Main Street talking this morning. The Obama administration targeting those fat paychecks of America's top bailed out bosses.

President Obama's pay czar is saying enough is enough when it comes to these bonuses, perks, sky-high salaries at some of the companies that sparked the worst market meltdown in generations. The top 25 bigwigs at seven companies which have a combined $300 billion of your tax money could soon see their average salary slashed by as much as 90 percent. Companies say they risk losing their best talent if this happens.

Our Christine Romans joins us now. So, when we talk about this, this is something that they've talked about a lot. What will the impact of this new announcement be?

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: This is about the administration trying to rein in wild risk taking and pay for risk taking and instead reward performance, and they're trying to figure out a way to do that. Because the administration, the White House, the Treasury Department thinks this is one of the reasons why we had this huge financial crisis because people were allowed to get superrich by making very short-term bets that had no bearing on how well the company would do in the future.

Who is this? These big pay cuts are coming to the bail out hall of shame, as I call it. This isn't every company that got bailed out. These are the seven big companies, AIG, GM, Citi, that some of them would not be alive. None of them would be alive right now if it weren't for your money and my money propping them up.

So how can a CEO or a top official or a top earner at one of these companies get $10 million, $20 million, $30 million when the company wouldn't exist? What they're trying to do is change the pay culture. Again, to pay to reward for performance, not for having a pulse and not for taking risks. And the companies all, frankly, knew this was coming. The question now is have their negotiations benefited them or have they been able to mitigate the damage.

I think AIG is going to see the biggest cutbacks here. I don't think anybody at the financial products division, that now famous division that helped bring the global economy to the brink, I don't think anybody there is going to see a salary of more than $200,000. That's going to be a big pay cut for a lot of those people.

ROBERTS: They certainly will. The companies, are they going to be able to get around these new restrictions?

ROMANS: They might be able to get around these in some ways like they can push things off to long-term stock rewards or restricted stock rewards. I mean, this is salary, so this is the money. They're going to slash the money, but there are other ways that they can try to retain them through other kinds of means.

But that goes back to what the White House has been trying to do in the first place. If you reward people with stock that pays out over five years, six years, seven years, then you're not rewarding them for those short-term risk taking, that really wild, risky behavior that they think led us to this. So that is what they're trying to do. They're trying to change the pay culture, and that's what this is about.

CHETRY: Very interesting. Christine, thank you.

ROBERTS: We're also following developments overnight from Afghanistan. The United States raising the stakes for the runoff election between Afghan President Hamid Karzai and his chief rival Abdullah Abdullah. The Obama administration signaling that a troop increase could hinge on Karzai's cooperation during the second round of voting. But this morning, the reality of trying to pull off a new vote in two short weeks is settling in.

We're live in Afghanistan this morning. Chris Lawrence on the ground in Kabul.

And, Chris, a serious task at hand there. CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: John, any chance of the government's legitimacy really hinges on it. But right now, right this minute, a major meeting has just kicked off in Europe among NATO defense ministers. They will be talking about overall troop contributions to Afghanistan. So help possibly down the road, but not in time for this election.

(BEGIN VIDEOTAPE)

LAWRENCE (voice-over): Afghanistan is trying to pull off an election a little more than two weeks' official notice. And these are the problems it's facing. Logistics, lack of awareness, fraud and fear.

ABDULLAH ABDULLAH, AFGHAN PRESIDENTIAL CANDIDATE: That people of Afghanistan were threatened. They lost their fingers in the last round elections.

LAWRENCE: Eight stained fingers were proof of voting which made them targets of the Taliban. But a U.S. defense official says there are more American and Afghan troops in place now than in August. And a U.N. official says they're reducing the number of polling stations so security teams won't be spread so thin.

On Thursday, the U.N. is launching TV and radio spots trying to make voters aware there is another election. It's not a given that people know. Less than 30 percent of Afghans can read.

(on camera): A high turnout and a safe election -- those are fine goals for politicians and officials to have. But what about the Afghan people, the ones who maybe risking their lives to come out again to cast their vote?

(voice-over): We found mixed opinions in this crowded Kabul market.

UNIDENTIFIED MALE (through translator): We want to build up our country. Despite the problems, I will go to vote in the next election.

LAWRENCE: Officials threw out more than a million votes because of suspected fraud. And now a European Union official says there will be far, fewer election monitors for the run-off because the EU can't deploy them all on such short notice.

(on camera): Do you trust that your vote will be counted fairly?

HABIB HAKIM, AFGHAN VOTER: I don't think so.

LAWRENCE (voice-over): And Habib Hakim can't see how President Karzai or his challenger will improve security.

HAKIM: And I'm not sure that Abdullah Abdullah will be able to stop that insurgency in Afghanistan or at least to limit the level of insurgency in Afghanistan.

LAWRENCE: At the least, they want to limit the reach of that insurgency on election day.

(END VIDEOTAPE)

LAWRENCE: For example, the mayor of Kandahar says he thinks that this runoff is only going to try to attract more Taliban attacks in his area. But officials tell us they have learned lessons in pinpointed trouble areas from two months ago and this time they can better deploy some of their security forces to deal with those areas during this election -- John.

ROBERTS: Chris Lawrence for us in Kabul this morning. Chris, thanks so much.

CHETRY: Also new this morning, former Vice President Dick Cheney is blasting the White House for "waffling over its strategy in Afghanistan" while American troops face constant danger. Cheney says signs of indecision from Washington hurt America's allies and embolden its enemies. He also rejected claims by senior Obama advisers that they had to start from scratch because the Bush administration left them without a war plan for Afghanistan.

ROBERTS: A Massachusetts man arrested and charged in a terror plot to kill two U.S. government officials and attack Americans at a shopping mall. But prosecutors say the 27-year-old pharmacy college graduate and two other men were never close to carrying out those plans because they couldn't buy any weapons. Court documents say the men traveled to the Middle East to allegedly join terrorist groups but repeatedly failed to get in.

CHETRY: Well, for all the guys out there a reason to do the dishes. It's an aphrodisiac. A new study published in the journal of "Family Issues" looked at close to 7,000 married couples. And what did they find?

Well, the couples who spent more time doing housework had more sex with each other. That's right. Dishes equal sex. Researchers say that many couples who shared the daily chores had more energy to do other things.

ROBERTS: What do you know about that?

The H1N1 vaccine, it's not widely available just yet but more and more medical offices are getting it every day. Big questions though on Capitol Hill. Is it safe?

We'll take a look coming right up. Seven minutes after the hour.

(COMMERCIAL BREAK)

ROBERTS: Welcome back to the Most News in the Morning. And burn, baby, burn. In the ancient Greek sanctuary where the games began, torch bearers lift the Olympic flame early this morning. They're going to carry the torch through Greece for eight days before it starts its 106-day trek across Canada next Friday for the 2010 winter games in Vancouver. CHETRY: Facebook and Google taking on iTunes, introducing new features for you to get your music. Google is going to officially announce its plans next week, but reports say the company has deals in place to let you sample and buy songs from other sites straight from its own search pages. Facebook, meanwhile, will reportedly link up with music sites like iLike. It's a division of its rival MySpace.

ROBERTS: And last year's World Series champions get a chance to do it all again. The Philadelphia Phillies celebrating after dominating the Dodgers and winning the National League championship series, four games to one. The Phils will play the New York Yankees or the Los Angeles Angels in the World Series. The Yankees lead that series, three games to one.

CHETRY: They're playing tonight, right?

ROBERTS: Yes. And it could be a case of the Yankees win. We'll see.

CHETRY: Well, we will see.

More Americans say that they're worried about getting the swine flu. They're not sure if the H1N1 vaccine is safe. Senators actually quizzed the president's top health officials about those concerns on Capitol Hill yesterday. And our Brianna Keilar is now breaking it down for us this morning.

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: John and Kiran, with more cases of the swine flu popping up, senators brought in top administration officials to ask them what they're doing to fight the outbreak and when Americans can expect to get their vaccinations.

(BEGIN VIDEOTAPE)

KEILAR (voice-over): Dressed for the cold and huddled together in the predawn darkness in Rockville, Maryland, around the country people like these are lining up to get the swine flu vaccine.

UNIDENTIFIED MALE: We got here around 1:00 in the morning.

UNIDENTIFIED FEMALE: I want him to get it this morning. Look at the line. It's bad.

UNIDENTIFIED FEMALE: We have a limited amount of injectable vaccine.

KEILAR: Many are disappointed when they can't get a shot.

UNIDENTIFIED MALE: With the year advance that they had on this disease, I am amazed at the lack of response by the medical community in the United States.

KEILAR: The lines are fueled by the newly available H1N1 flu vaccine and warnings from government officials trying to avert a wider outbreak. The secretaries of homeland security, health and human services and education testified before a Senate panel Wednesday. KATHLEEN SEBELIUS, HEALTH & HUMAN SERVICES SECRETARY: There are actually 86 H1N1 lab confirmed pediatric deaths since we began reporting this in April, and the number is equivalent to the entire flu season of past years. So we are already at that level.

KEILAR: Despite the scary statistics, many Americans have no plans to get the shot concerned about the safety of the vaccine. In a new CNN/Opinion Research Corporation poll, 43 percent of respondents said they are afraid the vaccine could lead to death or serious health problems.

SEN. SUSAN COLLINS (R), MAINE: They want to know if it's safe to give to their children. What kind of testing was done and whether it contains any dangerous additives.

KEILAR: But just steps from where congressional staffers and high risk categories were receiving their H1N1 vaccines, officials told Congress it is safe.

SEBELIUS: We have a vaccine. Go get vaccinated.

(END VIDEOTAPE)

KEILAR: But that's easier said than done right now. Health officials were hoping to have 40 million doses of the vaccine available by the end of the month. And so far, they're 10 million to 12 million short. Secretary Sebelius said the vaccine should be widely available by the beginning of November, John and Kiran.

CHETRY: Brianna Keilar for us. All right.

So what do you want to know about the vaccine, about the plans and are you planning on getting vaccinated for swine flu? Is it safe?

We want to call our hotline, 877-MY-AMFIX and weigh in. Leave us some messages. Also, we're trying to bring you all of the information as we get it as more and more of the vaccine is getting set to roll out in the coming weeks.

ROBERTS: A couple of weeks ago, we brought you a stunning story. Allegations of hazing in the Navy. Well, there's been an update on that. An officer is out. We'll tell you what's going on coming right up.

It's 14 minutes now after the hour.

(COMMERCIAL BREAK)

ROBERTS: Welcome back to the Most News in the Morning. An update now on a CNN exclusive that we first brought you last week. After allegations of hazing and sexual argument against a gay sailor and others, the man at the center of a Navy scandal is gone.

Our Carol Costello broke the story and has new information for us this morning, live from our Washington Newsroom. What's this all about now, Carol? CAROL COSTELLO, CNN CORRESPONDENT: John, for those who love the Navy and wondered why such abuse was allowed to happen, finally, there is justice.

(BEGIN VIDEOTAPE)

COSTELLO (voice-over): It's what Joseph Rocha and others in his Navy unit had hoped for - accountability.

JOSEPH ROCHA, FORMER NAVY DOG HANDLER: I feel good about what the Navy has chosen to do.

COSTELLO: Rocha was 18 in 2005 when he joined the Navy's Canine Unit in Bahrain. He played by the military's rules and kept his sexual orientation under wraps. But even though he says no one in his unit knew he was gay, he still suffered because of something the Navy had long outlawed - hazing.

ROCHA: I was ordered to get on my knees, pretend to have oral sex with another service member. I was instructed as to how to be more queeny, more queer, more homosexual, more believable and...

COSTELLO: And who was instructing you to do these things?

ROCHA: My chief.

COSTELLO: Rocha says the hazing was widespread: Gays, straights and women in his unit were targets, too. And in its own investigation of the Bahrain unit, the Navy found more than 90 incidents of hazing and other abuses.

If the man who allegedly ordered the hazing, Senior Chief Michael Toussaint, was promoted and assigned to the elite Navy SEALS - until now. After Congressman Joe Sestak told the Navy to further investigate and CNN's own investigation, Senior Chief Michael Toussaint has been removed from his current leadership position and forced to leave active duty in January.

ROCHA: This is a great day for everyone, for our men, our women, heterosexual, lesbian or gay - for everyone, this re-establishes what Navy leadership is, that anything less than leadership that meets the core values will be punished.

COSTELLO: For Jennifer Valdivia's family, Toussaint's punishment comes too late. Valdivia was Toussaint's second in command. Fellow sailor Shaun Hogan -

SHAUN HOGAN, NAVY RESERVIST: On video, I witnessed another training scenario where Michael Toussaint ordered Jennifer Valdivia, his second in command to - well, she was dressed apparently only in a bed sheet and she was handcuffed to a bed in a barracks room and she was in a - almost like a cat fight with two other women.

COSTELLO: Valdivia's family told CNN she expected to take the fall for the hazing incidents. She committed suicide after posting this message on MySpace: "Tired of being blamed for other people's mistakes."

We asked the Navy why Toussaint wasn't facing more serious punishment. The Navy told us, "Court martial is not an option. The situation presented unique circumstances," but that's not quite good enough for Congressman Sestak.

REP. JOE SESTAK (D), PENNSYLVANIA: That indicates to me that there's a failure of what accountable leadership is.

COSTELLO: Still, news of Toussaint's demotion has restored Rocha's pride in the Navy. Finally, justice, even after four years of waiting.

(END VIDEOTAPE)

COSTELLO (on camera): We tried to contact Michael Toussaint for a comment. We did not hear back. The Navy told us the investigation is continuing and that this incident was not in keeping with its values and standards - John.

ROBERTS: Did anyone else might be disciplined in connection with this?

COSTELLO: We'll see. I mean, Congressman Sestak says someone ought to be because, you know, he wants them to go up the chain of command and find out who allowed this to go on for so long and let it go unpunished because, surely, someone heard about it if there were 90 incidents of hazing within this unit in Bahrain. So the investigation continues.

ROBERTS: You would think that a lot of people might have known about it.

Carol Costello for us this morning. Carol, thanks.

CHETRY: Well, as we talked about before, health care fraud a multibillion-dollar business. Wait until you find out who's behind some of it. Allan Chernoff reports.

Twenty-one minutes after the hour.

(COMMERCIAL BREAK)

ROBERTS: Welcome back to the Most News in the Morning. Health care fraud. As you just saw, it's a multibillion-dollar business, and wait until you hear who is secretly behind it.

CHETRY: In this exclusive report, our Allan Chernoff shows you who's cheating the system and stealing money from you.

(BEGIN VIDEOTAPE)

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT (voice-over): Federal agents in Los Angeles last week arresting two Nigerian members of an organized crime ring. They're charged with defrauding Medicare of $6 million. It's the latest strike in a growing battle against organized crime's newest scheme...

GLENN FERRY, SPECIAL AGENT IN CHARGE: These are big checks.

CHERNOFF: ... ripping off taxpayer-funded Medicare and Medicaid programs.

FERRY: They are definitely well organized, well schooled in how to commit Medicare fraud. Easy with (ph) sort of the heavy hand...

CHERNOFF: Organized crime groups of multiple ethnicities and nationalities are muscling in on the action in health care fraud hot spots like Los Angeles. Crime boss Konstantin Grigoryan, a former Soviet army colonel. He plead guilty to stealing $20 million from Medicare.

Karapet "Doc" Khacheryan, boss of a Eurasian crime gang. He and five of his lieutenants were recently convicted of stealing doctor identities in a $2 million scam.

CHERNOFF (on camera): The Khacheryan gang filed Medicare claims for patients receiving treatment at an office here in downtown Los Angeles. But there's no doctors office here, only a mail drop. Prosecutors say the crime ring received hundreds of thousands of dollars of Medicare reimbursement checks.

FERRY: Medicare was - had no idea that a lot of this was going on because they assumed a legitimate doctor was providing services.

CHERNOFF (voice-over): In this undercover sting, Khacheryan was caught giving instructions on how to set up bogus medical clinics that bill Medicare using stolen doctor IDs.

KARAPET "DOC" KHACHERYAN, EURASIAN GANG BOSS: Doctors that do know, they can claim identity theft any way.

UNIDENTIFIED MALE: Yes.

KHACHERYAN: That's pretty slick.

CHERNOFF: Dr. Gianfranco Burdi had his identity stolen when he was recruited to join what appeared to be a new medical practice here. After the managers failed to show a business license, Dr. Burdi pulled out. Two years later, the FBI came calling.

DR. GIANFRANCO BURDI, PSYCHIATRIST: I was actually pretty - pretty frightened.

CHERNOFF: The FBI questioned Dr. Burdi, a psychiatrist, whether he had prescribed electric wheelchairs for Medicare patients - $800,000 worth.

BURDI: And I said, no. I'm a psychiatrist. Why would I prescribe electric wheelchairs?

CHERNOFF: To file fraudulent claims, criminals need beneficiary ID numbers. They're easy to collect along LA's Skid Row. Residents tell CNN they've accepted cash from recruiters known as cappers to go to bogus medical clinics. There they share what they call their red, white and blue - their Medicare card that has a beneficiary number for billing the government.

And that happens all the time around here?

UNIDENTIFIED MALE: Yes. Always (ph).

CHERNOFF: Yes.

UNIDENTIFIED MALE: Everyday. People down here need to eat. Somebody who comes up with a quick hustle, with quick money, they're going to jump on it. I'm one of them. I will.

(END VIDEOTAPE)

CHERNOFF: And there are many more desperate people on Skid Row who are more than willing to sell their Medicare numbers. This kind of health care fraud costs billions and billions of dollars, and because government health programs operate on the honor system, it's easy for organized crime rings to cash in at the taxpayers' expense.

Those two Nigerians this week pleaded not guilty to defrauding Medicare. They're being held without bail in the Federal Detention Center.

CHETRY: Oh, and these health care reform bills that are making their way through both Houses of Congress right now, did - did any of them tackle this issue?

CHERNOFF: They wouldn't tackle it. They allot several hundred million dollars more to - to fighting Medicare, Medicaid fraud, but that is a very small number when you consider that the quantity of fraud out there, more than $70 billion. Of course, that includes not just Medicare, Medicaid but also fraud against private health insurance companies as well.

CHETRY: Huge problem.

CHERNOFF: It is. It is a massive, massive problem facing us. It's draining the Treasury and it's not getting a lot of attention.

CHETRY: Allan Chernoff, you're doing some great reporting on it. Thanks for joining us this morning.

Right now it's 28 minutes past the hour, and we have other stories new this morning. A warning coming from Secretary of State Hillary Clinton as she outlines the administration's nuclear arms agenda, saying if we don't stop North Korea from developing a nuclear bomb, it may not be long before terrorists get their hands on nuclear weapons. Secretary Clinton also said that the UN needs to get tougher with its nuclear monitoring programs.

ROBERTS: The Obama administration wants to overhaul the college programs that train more than 80 percent of America's teachers. Education Secretary Arne Duncan calls them cash cows that do a mediocre job. Many teachers complain that their training does not prepare them to properly manage a classroom. Duncan says the government needs to do more to make sure the teachers are licensed based on whether they are ready to perform in a classroom.

CHETRY: Actress Nicole Kidman believes that the Hollywood film industry contributes to violence against women by casting them as weak sex objects. The Oscar winner made the admission to a House Foreign Affairs subcommittee yesterday. That committee is working on legislation that would offer grants to organizations trying to stop abuse of women. Kidman is also acting as an ambassador for the UN to stop violence against women worldwide.

ROBERTS: Well, you've heard the expression, pay to play? It's becoming an all too familiar refrain for a group of young schoolgirls in a Baltimore suburb.

CHETRY: The kids are learning a painful lesson about politics and economics, and all they really want to do is have some fun again in their favorite park.

We get more now from Deborah Feyerick in this "AM Original."

(BEGIN VIDEOTAPE)

DEBORAH FEYERICK, CNN CORRESPONDENT (voice-over): These days, the girls from Brookewood School walk down the road for recess. It's not far, but they used to play here, right across the street from their classes in Kensington, Maryland.

Not anymore. They were banned from using this public park and headmaster Joe McPherson says it's just wrong.

FEYERICK (on camera): So we can't even step on the park. We can't even step on the grounds here (ph).

JOSEPH MCPHERSON, HEADMASTER, BROOKEWOOD SCHOOL: No. That's why I'm still (ph) here in the sidewalk, because it's illegal for any adult without a child 5 or under to go in the park during a daytime.

FEYERICK: The mayor and town council passed a resolution earlier this month making Rinehart Park off limits from 9:00 to 4:00, not only for the not for profit all girls school but for all kids older than 5.

(on camera): Can you ban people from using a public park?

JOHN THOMPSON, COUNCILMAN, KENSINGTON, MARYLAND: Can we? Yes. It is our park. It is a facility owned and operated by the town of Kensington.

FEYERICK: The entire town is a half square mile. Town hall where the mayor and city council passed the resolution is across from the school which is across from the public park

(voice-over): The controversy began after a group of Kensington moms complained to the mayor accusing the K Through 12 girls of breaking swings, harming trees, littering and generally overwhelming toddlers.

THOMPSON: The moms and their small children felt they were being crowded out when the, you know, large body of middle-aged school students showed up in the park.

FEYERICK: The girls disagree.

UNIDENTIFIED GIRL: The mayor thinks that we sort of didn't -- disuse the park, abuses it and scared the little kids, but I don't really think we did.

CLAIRE, BROOKEWOOD STUDENT: We picked up trash. And there were like cigarettes and we don't smoke.

FEYERICK: There was also the issue of money. The town council wanted a fee similar to one paid by another school in the area.

MCPHERSON: Just paying $4,000, it strikes me as somehow wrong in principle that a not for profit group has to pay money for using a public park.

FEYERICK: The town council says the school has ignored attempts to work out a compromise.

THOMPSON: It is not about the money. It is about coming to an understanding, which has yet to take place.

FEYERICK: The girls of Brookewood are upset that the controversy has cast them in a bad light. Still they say they miss their park which now stands empty most of the time.

(on camera): By a show of hands, do you guys want to go back to the old park?

(END VIDEOTAPE)

FEYERICK: Now the moms who logged the complaints did not want to be interviewed by us. The school and its family say that they'd love to help maintain the park, maybe even plant flowers. The town council is considering it. And in the meeting Monday, council members reduced the fee to $2,000 saying they were pleased that the school finally came to the table - Kiran, John.

CHETRY: I am sure everybody thinks those moms are monsters, but you know when you have a little, little kids, it can be overwhelming. I know you have no control over what people do in a public park, but when the middle school or high school kids come running in there...

FEYERICK: Right. When there are 2 you protect...

(CROSSTALK)

FEYERICK: When they are 2, you protect them. When they're 7, you have to defend them.

CHETRY: Exactly. Deb Feyerick for us this morning. Thanks.

FEYERICK: Of course.

ROBERTS: So the government is implementing new pay rules for organizations, companies that received taxpayer dollars. They're reducing compensation for some employees by as much as 90 percent.

Is it going to work and what effect is it going to have on Wall Street? Andrew Ross Sorkin is coming up to talk all about that.

It's 33 minutes now after the hour.

(COMMERCIAL BREAK)

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

Time now to fast forward through the stories you'll be hearing about later today.

At 10:00 a.m. Eastern, President Obama has a video conference in the situation room with his ambassador to Afghanistan. This comes as the president reviews war strategy and also considers whether or not to send in more troops.

Also at 8:30 this morning, new jobless claim numbers coming out for the week. Top economists have been saying that we are back from the brink. Experts are predicting a very slow but steady improvement in the numbers.

And I guess you can say Hasta La Vista to Vista. Microsoft scheduled to launch its new Windows 7. This would then replace the Vista operating system today. Microsoft says that the new Windows 7 was built around customer feedback and is designed to be easier to use.

And, of course, John, you know firsthand, we all love it when our computers are easy to use.

ROBERTS: Yes, absolutely. If only that were the truth, you know.

Taking photographs that appear in "National Geographic" can take you to some of the most remote corners of the world.

So how does well-known photographer Robert Clark stay safe and healthy while on the move? It's today's "Road Warriors."

(BEGIN VIDEOTAPE)

ROBERT CLARK, PHOTOGRAPHER: My name is Robert Clark. I'm a photographer based in Brooklyn, New York. And I travel around the world and shoot pictures for different magazines.

I'm gone at some point during each month. I've been to about 50 countries now. I also try to find some literature that's written about where you are going that was written by somebody who lives there. It makes a big difference when it's written in their voices.

I always travel with a few medications. I'm going into places like Cambodia and Vietnam. I always travel with a bunch of different kind of antibiotics just to keep myself safe.

My wife is kind of a foodie. I end up shooting pictures of a lot of the food that I eat on my cell phone and just e-mailing her pictures of food.

I can't do without my cell phone. It's just important for me because you are staying in touch with not only people who have hired you or e-mailing you and family members, but also my separate business, which is the studio. It's a way of just having your office on the road.

My name is Robert Clark. Keep shooting pictures.

(END VIDEOTAPE)

ROBERTS: Got to be able to move fast when you are taking those photographs. And "National Geographic" photographers do it so well.

CHETRY: It's amazing. And they have the best equipment, too.

ROBERTS: So we had a little bit of delay this morning. Logistical problems. But Andrew Ross Sorkin coming right up. He is the author of course of "Too Big to Fail." He'll be talking to us this morning about the government's new plan to cut compensation at some firms that received taxpayer bailouts by as much as 90 percent.

Is the White House at war with big business? We'll find out.

Thirty-eight and a half minutes after the hour.

(COMMERCIAL BREAK)

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

A live look at New York City. 56 degrees, should be going up to 73 today. And mostly sunny. It's going to be a beautiful day. Not so much of a beautiful day, though, on Wall Street, for certain companies.

Back to this morning's big story. It's payback time for fat cats who received eye-popping bonuses, salaries and perks, even after their companies received billions of dollars in taxpayer money to stay in business.

President Obama's pay czar, Ken Feinberg, is demanding that the 25 best paid executives from seven companies that received taxpayer funds cut their salaries on average by 90 percent. Their total compensation cut in half.

Joining me now is author Andrew Ross Sorkin to break it all down for us this morning. So, Ken Feinberg, the pay czar, said yesterday, quote, "When I issue these packages, I'm going to move to Pluto, which I suspect will be too close to Earth."

ANDREW ROSS SORKIN, AUTHOR, "TOO BIG TO FAIL": That's probably right.

ROBERTS: Is Wall Street being declared war on by the White House here?

SORKIN: I think this is a war. And I think that this is symbolic really, more than anything else. It really will hopefully fulfill at some level the sort of public outrage and public lust for blood on Wall Street.

But it also, as satisfying as it may feel for us, it creates a conundrum at the same time.

ROBERTS: Yes. What is it -- what will the net effect be?

SORKIN: Well, you know, we own these companies. We're taxpayers, we're shareholders in these companies. And there's something slightly strange that's going to happen, which is these top 25 guys may end up getting plucked out of these companies.

So, the best people may end up leaving these companies, oddly enough, because companies like Goldman Sachs and JP Morgan, which took TARP money but now have given it back, well, they can still pay whatever bonuses they want.

So there's an argument to be made and I know it sounds perverse that you're actually going to lose your best guys and actually the companies that are in the worse shape are going to get even in worst shape.

ROBERTS: So, is this an economic problem or is it merely a political one?

SORKIN: At the moment, it's a political one, but there's a larger sort of incentive problem on Wall Street, which is sort of the next step. This is sort of a band-aid in a larger sort of financial reform package.

And I think what people are actually hoping for, when you look at this, you say this hopefully is one piece of a puzzle because what you really want is one standard, one level. And you want reform so that everybody is on the same playing field. So that Goldman Sachs and JP Morgan and all these other firms can't pay the same type of bonuses. So that everyone can play on a fair field.

ROBERTS: The president yesterday was indicating that this is just temporary. He said there will be a time to make profits, a time to make bonuses, now is just not the time. Is he basically saying clean up your act, put your house in order, this is some temporary pain here. But when you get everything back in order, you pay back the taxpayers... SORKIN: Yes, but there's a larger issue. I think -- I think he is trying to appeal to everyone's sense that we will get back -- get back to normal.

But what's the new normal? What's the reset? Should you be able to make 10, 20, 30, 40, you know, in the case of the fellow at Citigroup, $100 million in bonus? I'm not so sure. And the real question then becomes, what type of regulatory reform can we put in place that's going to prevent that.

ROBERTS: But, I mean, is it possible to make that money as long as you're not taking taxpayer dollars? And secondly, you...

(CROSSTALK)

SORKIN: There's an issue which is, it's the public TARP, but also, are you putting the system at risk? And that's the question. Are the things that you're doing within the firm going to put the system at risk?

And I think what people are now looking for is what they call capital ratios to improve. That actually is what will change the whole system. That means currently banks have to keep a certain amount of money in the bank. But not that much money. That's what got us in trouble the first time.

And if we raise that number, all the money that's going up, the profits that are being made now that everyone says where are these profits coming from and the bonuses, that money goes back in the bank and that makes the system safer.

Now, the other side of that, though, is if you have to put more money in the bank, that's less money to lend to the homeowner and to the folks that needed all of them. So, it's a complicated topic.

ROBERTS: Of course, if you do have a problem with lending anyways because a lot of that money is just being taken and then being put into investments.

SORKIN: And that's a whole other set.

ROBERTS: So, reports are that this is going to come down particularly hard on AIG. That there will not be anyone at that company that makes a salary greater than $200,000. Now, in the real world, that's a heck of a lot of money anyways, but you know, in that world, it's pocket change.

SORKIN: There's one caveat to that, which is the folks will make $200,000 in cash. It is possible that some of these folks will make more on paper, meaning in stock. So, today they may take home $200,000 in cash. But the real question will be two, three years out if AIG returns to profitability or even improves at all, does that stock become worth so much more and then is their public lost and outrage all over again?

ROBERTS: Right. But, are there ways around this too such as even deferred compensation or stock options or whatever so that these people actually will be making a lot of money. They just won't be taking it home today?

SORKIN: I think there probably is. But I think that the real issue is, can we create an incentive system so people aren't doing risky things today without caring about what happens later. You want people have skin in the game. But you know, some people tell you, by the way, and this is not going to sound particularly popular, that the whole compensation issue is a myth.

When you go back and look at people like Richard Fold, he was the CEO of Lehman Brothers. He had a billion dollars in the company. He had all the skin in the game that you can imagine. He went down with the ship. Ended up with $65,000. So there is an argument to be made that it wasn't actually comp. But, I think the comp issue appeals and resonates with the public and it also is an issue that we need to improve.

ROBERTS: For the moment, it looks like the administration is getting its pound of flesh. We will see what that's worth at the end of the day. Andrew Ross Sorkin, great to have you in this morning. Thanks very much. Andrew Ross Sorkin, by the way, author of "Too Big to Fail." Great book. You should pick it up and read it - Kiran.

CHETRY: All right. Thanks. Still ahead, as we talk about this executive compensation, the mess on Wall Street, our President has been talking about how he's had to mop up the mess. He's kind of mopping up the floor with his critics as well as Jeanne Moos shows us. It's 47 minutes past the hour.

(COMMERCIAL BREAK)

CHETRY: Ten minutes before the top of the hour. Welcome back to the Most News in the Morning. President Obama has talked a lot about cleaning up the mess he inherited. Now he's going after critics with a metaphor. Here's Jeanne Moos.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN NATIONAL CORRESPONDENT: He is chortling. He is chuckling. Not even a mop could wipe the smile off the president's face.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I'm grabbing my mop.

With our mop, cleaning up somebody else's mess.

MOOS: It's one thing for a politician to wrap himself in the American flag, but to wrap yourself in a mop?

President Obama is trying to mop the floor with critics who go after him for not having fixed the country's problems yet.

OBAMA: We don't want somebody sitting back saying you're not holding the mop the right way. MOOS: Not since Gene Kelly practically made love to one has such attention been lavished on a mop.

OBAMA: Don't just stand there and say you aren't mopping fast enough. Don't accuse me of having a socialist mop.

MOOS: But that's exactly what some are saying. There's even a socialist mop tie for sale. Critics of the President say the mop stops here. That President Obama can't keep blaming his predecessor for the mess.

RUSH LIMBAUGH, RADIO TALK SHOW HOST (voice-over): Then he says you aren't holding the mop the right way. Well, there is a right way to hold the mop. I'm using the wrong end of the mop. It's a socialist mop. I hate bush.

MOOS: Conservative seem to take the mop riff as a slap in the face. Everyone is putting their own twist on the metaphor.

Even Jay Leno.

OBAMA: Why don't you grab a mop. Why don't you help clean up.

You're not holding the mop the right way. That's a socialist mop.

MOOS: President Obama's supporters even taunted the opposition.

So while Mrs. Obama is grabbing a hula-hoop to promote exercise for kids, Mr. Obama is grabbing his imaginary mop.

OBAMA: You aren't holding the mop the right way.

MOOS: And while critics call it stupid, and may wish it would kick the bucket, the president is holding on to the metaphor like a dog with a mop.

Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

ROBERTS: Cleanup on aisle four.

CHETRY: Exactly.

ROBERTS: Maybe they could start with a sweeper and move their way up to a mop.

So, a second stimulus package to create jobs. Something that's beginning to gain traction on Capitol Hill. But whatever you do, just don't call it a second stimulus.

CHETRY: That's right.

And also ahead, we're talking about swine flu. Some schools are closing. Hospitals are on alert. There is a lot of sick kids out there. Is it swine flu? Ted Rowlands is looking into it. It's 53 minutes after the hour.

(COMMERCIAL BREAK)

ROBERTS: Welcome back to the Most News in the Morning. The $787 billion stimulus package that President Obama signed in February has helped heal some economic wounds, but not all of them. Unemployment is at its highest level since 1983 with nearly 1 in 10 Americans now without a job.

And three quarters of the stimulus funds have not even been spent yet. The democrats have some ideas to get the economy going. Just, whatever you do, don't call it a second stimulus. Our Dana Bash has got the story.

(BEGIN VIDEOTAPE)

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Four-hour meeting with economists where house democratic leaders heard a lot of doom and gloom.

MARK ZANDI, MOODY'S ECONOMY.COM: And the possibility of the economy slipping back into recession next year are uncomfortably high.

UNKNOWN MALE: It's an unsatisfactory recovery still with a lot of risks.

UNKNOWN MALE: We've avoided great depression, but we are at still risk of a great stagnation.

BASH: The economist offered a slew of ideas to address the still ailing economy. Some, no coincidence, mirrored what democrats are already considering. Extending unemployment insurance benefits now set to expire at the end of the year through 2010.

Extending the tax credit for firsttime home buyers expiring next month into 2010. Sending emergency funds directly to the states and extending some tax breaks to small businesses.

UNKNOWN MALE: I think just about everybody in the room feels that there needs to be more stimulus.

BASH: But when we asked the house speaker if she planned to push a second stimulus package, the answer was no.

REP. NANCY PELOSI (D-CA), HOUSE SPEAKER: We do not have plans for an additional stimulus package. But we do have plans to stimulate the economy in the work that we are doing here.

BASH: In other words, Democrats will try to pass new proposals intended to spur the sluggish economy, but do it piecemeal to avoid the label stimulus. Democratic leadership sources tell CNN there are two big political reasons why. One is this...

Bailout and spending fatigue in the country and congress. Second, CNN is told the White House opposes anything appearing to be stimulus too for fear it would be a tacited (ph) mission that the president's $787 billion package didn't work and undermine arguments like this.

OBAMA: There's no question that our recovery act has given a boost to every American who works in a small business or owns one.

BASH: Regardless of what democrats call, any new economic proposals they are pushing, republicans have a refrain that they are not letting go of. That the President's economic stimulus plan, so far, has not created enough of what everyone agrees matters most -- jobs.

Dana Bash, CNN, Capitol Hill.

(END VIDEOTAPE)