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Burning Victim Describes Attack; North Carolina Port Area Closed; Fatal Errors in CIA Attack

Aired January 12, 2010 - 11:00   ET

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

TONY HARRIS, CNN ANCHOR: And good morning, everyone. It is Tuesday, January 12th. And here are the top stories for you in the CNN NEWSROOM.

A Florida teen set on fire. This hour, listen as Michael Brewer describes the horror of that October day to police.

The Federal Reserve, it prints money, it lends money, it makes money. Yes, a record profit during a year of crisis.

The race of the president. Weighing Harry Reid's comments about light-skinned and Negro dialect as another teachable moment.

Good morning, everyone. I'm Tony Harris, and you are in the CNN NEWSROOM.

A Florida teen doused with alcohol and set on fire describes the horrific attack in his own words. Three teens have pleaded not guilty to charges of second-degree attempted murder in the attack on Michael Brewer. Now authorities have released an audio recording of Brewer's sworn statement to investigators while he was in the hospital being treated for his injuries.

The story from Derek Hayward of affiliate WSVN.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: When he got up to you, what did he say to you?

MICHAEL BREWER, BURN VICTIM: He said, "Nobody is going to hit you."

UNIDENTIFIED MALE: What's your first memory after that?

BREWER: Just cold stuff all over my clothes and all of a sudden I started burning.

DEREK HAYWARD, REPORTER WSVN (voice-over): When detectives were finally able to interview burn victim Michael Brewer, it was six pain- filled weeks after the attack when he was doused with alcohol and set on fire.

BREWER: Somebody poured something on me and lit me on fire. Then I started running. HAYWARD: Fifteen-year-old Matthew Bent, known as "Zeke," is accused of instigating the attack as revenge over his arrest for trying to steal this bike belonging to Michael's father.

BREWER: He came to my house. He tried to take my dad's bike. He threatened me. He threatened my sister.

HAYWARD (on camera): Three teenagers sit here charged as adults in the adult Broward County Jail. Their videotaped statements are not public record yet, but among all this stuff that is are videotaped statements of some of the many witnesses.

UNIDENTIFIED MALE: It was right around here.

HAYWARD (voice-over): Witness Calvin Kenny walked cops through the entire scenario, describing how Matthew Bent, AKA "Zeke," told Denver Jarvis, AKA "DC," to toss the combustible fluid.

CALVIN KENNY, WITNESS: And Zeke is like, "Yeah, yeah, pour it on him." And he poured it on his back.

UNIDENTIFIED MALE: How many times did he shake it out?

KENNY: He held it for, like, three to five seconds and stopped.

UNIDENTIFIED MALE: Was it a lot?

KENNY: It was, like, soaked his whole, like, back.

HAYWARD: Sixteen-year-old Jesus Mendez is accused of lighting the alcohol as his own little brother watched.

JOELL MENDEZ, WITNESS: Yes. I look back and, all of a sudden, I see these lighter in his hand and the boy just caught on fire.

HAYWARD: The victim dove into this pool as three friends ran to try to help him.

BREWER: This guy comes running up, too. He tries to pull me out of the water. I said, "No, leave me, leave me," because my skin was, like, hanging.

HAYWARD: In Fort Lauderdale, Derek Hayward, 7 News.

(END VIDEOTAPE)

HARRIS: An update now on Michael Brewer's recovery. He was released from the hospital last Thursday. He had been readmitted after experiencing breathing problems over the holidays.

Brewer was previously released a few days before Christmas. He suffered burns over 65 percent of his body and still faces a long road ahead.

I want to get to some breaking news now out of Morehead City, North Carolina, part of the outer banks of North Carolina. We're getting word from a police department spokeswoman that officials have shut down the port of Morehead City and are recommending an evacuation of the city's downtown -- pretty significant here -- after containers with highly explosive materials were punctured.

The city police spokeswoman -- her name is Amy Thompson (ph) -- is saying that at this time, the police department cannot disclose the contents of the containers or their size. Police are recommending that people leave the area and that those near the port were being told to stay away from windows and doors.

The police department has apparently sent officers to the downtown area to knock on doors and to relay this information that we're sharing with you to business owners and others in the downtown area. An evacuation has been recommended.

So we are going to continue to work this story, obviously. One of our CNN producers, Tristan Smith (ph), is following this as well.

Additional information here. We may be talking about as many as nine containers punctured, accidentally punctured.

We will continue to work this and get you some additional information. And also, we are efforting getting the public information officer for the Morehead City Police Department on the air so that we can get more clarification, more information on this breaking news story out of Morehead City, North Carolina.

And checking the day's other big stories now.

New Jersey is one step closer to legalizing medical marijuana. Yesterday, state lawmakers passed a bill that would allow chronically ill patients to use the drug.

Governor Jon Corzine is expected to sign it before he leaves office next week. That would make New Jersey the 14th state to allow medical marijuana.

President Obama describes Senator Harry Reid as a good man who has been on the right side of history. The president says he has accepted Reid's apology for remarks in 2008 describing him as light- skinned with no Negro dialect.

In a TV One interview airing later this month, the president says it is time to move on.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I guarantee you, the average person, white or black right now, is less concerned about what Harry Reid said in a quote in a book a couple of years ago than they are about how are we going to move the country forward. And that's where we need to direct our attention.

(END VIDEO CLIP) HARRIS: And live pictures from Wilmington, Delaware, now. A funeral mass for Jean Biden, mother of the vice president, is under way at the Immaculate Heart of Mary Catholic Church. President and Mrs. Obama joined Vice President Biden at the service. There you see the president and the first lady.

Jean Biden died Friday at 92.

Patience, caution, risk, reward, it is all part of the spy game that can be successful or deadly. Just ahead, our Nic Robertson shows how a double agent may have fooled two of the world's best spy agencies.

Rob Marciano tracking the warm weather.

Really, Rob? Warm weather? It's not April, so you're dealing in facts here, not rumors.

Warm weather is on the way?

ROB MARCIANO, CNN METEOROLOGIST: You said it, not me.

HARRIS: OK.

We will talk to Rob in just a couple of minutes. But first, here is the latest on the Dow, the New York Stock Exchange right now.

Let's see where we are. Well, we're selling again, down 27 points.

We're following these numbers with Susan Lisovicz for you, right here in the CNN NEWSROOM.

(COMMERCIAL BREAK)

HARRIS: How did an al Qaeda double agent fool the world's best spy agency? That is the big question following last month's attack that killed seven CIA officers in Afghanistan.

CNN Senior International Correspondent Nic Robertson goes looking for answers in Jordan, home of the alleged suicide bomber.

(BEGIN VIDEOTAPE)

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice- over): In the murky world of spying, there are few rules. No right. No wrong. Only shades of gray.

Success is by its nature rarely noticed, but failure is catastrophic.

(on camera): So how was a Jordanian doctor from here in Amman able to play double agent? Apparently outsmart his CIA handlers and prove that he was better at the deadly game of espionage.

HASSAN HANIEH, REFORMED EXTREMIST (through translator): This is the biggest deception ever of intelligence agencies. Whether CIA or Jordanian intelligence. From the beginning, he was deceiving them.

ROBERTSON (voice-over): Hassan Hanieh should know. He was once an Islamic extremist but not a member of al Qaeda. He has read the bomber's radical blogs and says intelligence agencies made an obvious mistake in believing Dr. Humam al-Balawi could change.

HANIEH (through translator): We have never seen in the history of al Qaeda a person who changed his ideas completely in this sudden way. A person who writes jihadist stuff then suddenly switches sides.

ALI SHUKRI, FORMER ADVISER TO KING HASSEIN: This is always a red flag. It should always be that. For somebody who's been doing this, to be turned is not an easy thing to do.

ROBERTSON: According to Shukri, a veteran of Middle East espionage, it wasn't the only mistake intelligent agencies made. Al- Balawi was in Pakistan only a few months before offering high-grade tips, too soon for him to be trusted by al Qaeda.

SHUKRI: Was he really on the inside, that much on the inside? Or was it a competent intelligence operation?

ROBERTSON (on camera): Would that have been a warning sign for you?

SHUKRI: Exactly. Yes.

ROBERTSON: Because he was providing apparently good information so quickly?

SHUKRI: So quickly. Exactly.

ROBERTSON (voice-over): Sources familiar with intelligence operations here tell us that al Qaeda takes at least a year to screen new recruits, check out their family background, get input from jihadists who know them.

(on camera): And al Qaeda would never trust an outsider who'd been arrested. And al-Balawi blogged about his own arrests by Jordanian intelligence. Ignoring that, sources say, was another fatal error by the spy agencies.

(voice-over): In this picture taken two years before the attack, al-Balawi looks calm, relaxed, but his family say he was under pressure. Sources say if he was pushed by Jordanian intelligence into infiltrating al Qaeda, it's his family believes that made him potentially unreliable.

And tempted by the possibility that al-Balawi might lead them to al Qaeda's number two, American and Jordanian spies dropped their defenses, desperate for what he said he had to offer.

SHUKRI: And so rules are broken when you put something on the fast track. You tend to break rules. Maybe this is what happened.

ROBERTSON: Another of the basic lessons of espionage. Patience and caution are everything.

(END VIDEOTAPE)

HARRIS: Nic Robertson joining me live now from Amman, Jordan.

And Nic, I'm just sort of curious. You listed several signals missed. Were there others?

ROBERTSON: You know what, Tony? The sources that we're talking to here -- and some of them have run agents in this region -- say there were other signals missed.

For instance, the doctor was quite young, only 32 years old, and al Qaeda is a really tough nut to crack in intelligence terms. And they say he really didn't -- he really wasn't sort of old enough, mature enough, had been run as an agent for long enough to have the skills to do it. They say that was probably a push too far.

And the other thing that they say is that it's never in their experience that they have been able to insert somebody into an organization as tough as al Qaeda. They say the only real way you can get a really good source in there is to recruit somebody who's on the inside already, not putting somebody in like this doctor. And they say, again, thinking you can do that in the upper echelons of al Qaeda was a mistake to believe that -- Tony.

HARRIS: And Nic, how good is al Qaeda's counterintelligence?

ROBERTSON: Well, it seems pretty good from what they have been able to do here, picking up an agent that was being run against them. And the sources we talked to here, again, say no surprise in that, because in that region, Pakistan, Afghanistan, the Taliban, the allies al Qaeda, the Taliban, if you go back 20 years, got their training and got off the ground with the help of the Pakistani military and ex- Pakistani military officers and ex-Pakistani intelligence officers.

So they will have already had a really good training in field craft of counterintelligence, how to spot agents, and this is sort of their call today. They still retain that information that they would have had from these former Army and intelligence officers -- Tony.

HARRIS: All right. Our Senior International Correspondent Nic Robertson for us in Amman, Jordan.

Nic, appreciate it. Thank you.

Time to get your tax paperwork together. Personal Finance Editor Gerri Willis has your top "Top Tips." That's next.

(COMMERCIAL BREAK)

HARRIS: All right. Once again, we want to get you up to speed on the breaking news we're following out of Morehead City, North Carolina, part of the outer banks of North Carolina.

A police department spokeswoman is telling one of our producers here at CNN, Tristan Smith (ph), that nine containers reportedly containing highly-explosive materials have been accidentally punctured. Nine containers, and that the police department is recommending an evacuation of downtown Morehead City and also cautioning people that if they choose to stay, to not go near the windows or doors.

No foot traffic, no vehicle traffic is being permitted in the port area right now. And police, again, are recommending that people actually flat-out leave the area right now.

We are continuing to follow developments here, and this is obviously a pretty serious situation. We will get pictures from the ground as soon as we can and additional information to you as soon as possible.

'Tis the season to gather your tax documents. It is time to report to the IRS. Oh, boy.

Personal Finance Editor Gerri Willis joining me now.

And Gerri, a new study is out warning customer service at the IRS may not be the best this year. What's that all about?

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Well, the National Taxpayer Advocate -- Tony, this is a federal official that represents taxpayer interests -- released its annual report on the IRS. And here's what they said you can expect.

IRS expects its own staff to answer only 71 percent of calls from taxpayers with issues this year. In other words, the IRS is planning to be unable to answer about three out of every 10 calls it receives.

Plus, the average phone wait time is expected to be 12 minutes. So if you're planning on calling the IRS at the last minute this season, don't count on it so much. It might not work.

HARRIS: Yes. Any other glitches outlined in this same report?

WILLIS: Well, aside from the poor level of customer service, the report criticized the IRS for what it called excessive use of tax liens. And liens are claims on property or income if you owe the government money.

These liens are automatic, they're processed by a computer, not by people. This way people with fewer assets are impacted more.

In addition, the IRS' system of paying refunds first and later verifying data from employer W-2s and bank and brokerage tax statements, you know, it's not really great for taxpayers. That's because taxpayers may learn later they earn more in taxes, including interest and penalties.

Well, the report wasn't all bad, though, Tony. The report did state that the IRS pulled off what could have been a disastrous tax season last year. They dealt effectively with the Making Work Pay credit and quickly processed claims for amended returns for the first- time homebuyer tax credit.

Now, we, of course, called the IRS, Tony, because they're getting a little criticism, a little heat. For its part, the IRS says that over the last two filing seasons, the IRS assisted an unprecedented number of taxpayers through their own toll-free telephone service and they say overall, taxpayer satisfaction remains extremely high, in their words. In addition, for the first time, the IRS will require registration testing and continuing education for all paid tax preparers who sign returns, which is going to be a lot of work for folks in that business.

And, of course, if you have any questions, send them to me at Gerri@CNN.com. We love to hear from you and we answer your questions right here every Friday.

HARRIS: Time to get ready, tax season. Time to get ready.

All right, Gerri. Appreciate it. Thank you.

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

Labor leaders are pushing President Obama to drop a tax on high- end Cadillac health care plans. The fee may hit a quarter of union workers. Many accepted premium benefits instead of wage increases. The White House hopes to dull the tax's impact to hold big labor support.

(BEGIN VIDEO CLIP)

RICHARD TRUMKA, AFL-CIO PRESIDENT: The Senate bill from our point of view is inadequate. It does not deserve the support of working men and women. But we are a long ways from the finish line yet, and we're going to try to get a bill that does -- should and will garner the support of working people in this country, because bringing health care to every citizen out there is too important.

(END VIDEO CLIP)

HARRIS: OK. Dig deeper for your next Delta flight. The airline is bumping up bag fees -- $25 for the first one, $35 for the second, if checked at the airport. You'll get a small discount by checking your bags online.

Baseball's Mark McGwire admits he was taking steroids in 1998. That's when he broke Roger Maris' single season home run record. McGwire set the record straight as he begins work as a hitting coach for the St. Louis Cardinals. His admissions came in a session of carefully choreographed interviews.

(BEGIN VIDEO CLIP)

MARK MCGWIRE, FMR. MAJOR LEAGUE BASEBALL PLAYER: I apologize to everybody in Major League Baseball -- my family, the Marises, Bud Selig. Today was the hardest day of my life.

(END VIDEO CLIP) HARRIS: Wow.

We want to hear from you. Has the steroid era changed your view of the game of baseball, or do you even care? Do you even care?

Just go to CNN.com/Tony and leave me a comment. We will share some of them next hour.

There's more discussion of baseball and steroids to come. Jose Canseco joins "LARRY KING LIVE" tonight at 9:00 Eastern, right here on CNN.

The federal government has a huge deficit, while the federal reserve makes a record profit. How did that happen?

(COMMERCIAL BREAK)

HARRIS: I want to bring you the very latest information on the breaking news story that we are following out of Morehead City, North Carolina, and the port evacuation there.

We've told you that nine containers, as many as nine containers of highly-explosive material, have been accidentally punctured. We can now tell you, based on the reporting of affiliates in Newbern, North Carolina, and Raleigh, North Carolina, that the substance in question here is PETN.

I think we have all come to be pretty familiar with that explosive recently. Of course it was the explosive powder that was found to be in the underwear of the Christmas Day bomber.

He attempted -- Umar Farouk Abdulmutallab, as you know, attempted to blow up a Detroit-bound plane out of the sky on Christmas Day. Found in his underwear was this explosive chemical PETN. And now comes news that officials in Morehead City, North Carolina, are ordering evacuations of the downtown area of Morehead City because nine containers containing this explosive chemical PETN have been accidentally punctured.

Now, once again, the city police department has recommended that people leave the area and that those near the port are being told to stay away from their windows and doors. And we also understand that the police department has deployed officers into the downtown area, knocking on doors and sharing this information of the PETN, of the puncturing of these containers and the volatile nature of this chemical, sharing that information with folks in the downtown area.

Again, we are continuing to work this story. Obviously, it is a big story now, and this information coming to us, in large measure, from the public information officer there in Morehead City who has been in contact with one of our CNN producers, Tristan Smith (ph). And the reporting that the substance in question here is in fact PETN is coming from a couple of our affiliates in North Carolina, one in Raleigh and one in Newbern.

We are obviously going to continue to work this story and try to get some pictures out of Morehead City for you as soon as possible. We'll continue to update this story when we get additional information for you.

(WEATHER REPORT)

HARRIS: I just want to give everyone a quick update. I was just handed some additional information on this breaking news story that we're following here. That coming out of Morehead City, North Carolina, and the fact that nine containers, as many as nine containers containing the highly-explosive chemical PETN, have been ruptured.

We're learning from North Carolina's emergency management team that there are no injuries at this time and that the leak has been contained to land. Nothing in the water at this time.

Officials have closed the port at Morehead City, again, after nine containers with explosive materials were punctured. That is the very latest information that we have.

We're going to continue to work this, obviously, and get you more as we get it.

We are back in a moment.

You're in the CNN NEWSROOM.

(COMMERCIAL BREAK)

HARRIS: 2009 was a banner year for the Federal Reserve and some. The Central Bank raked in $52 billion. Wow!

Susan Lisovicz is at the New York Stock Exchange with the details. And Susan, his is pretty amazing, considering this isn't a company -- hello -- that's in business to make money.

SUSAN LISOVICZ, CNN CORRESPONDENT: Yes, my producer, Amanda, and I were just crunching the numbers. $52 billion is in the category of ExxonMobil record annual profit.

The big difference, or I should say one of the big differences is that most of that profit, comes right back to us, goes back to the Treasury Department...

HARRIS: Good.

LISOVICZ: But perhaps the bigger question, Tony, is where did it make all that much money? So we have a graphic to show it to you.

The Federal Reserve injected trillions of dollars into the economy. What did it do? It bought government treasuries, it bought mortgage-backed securities from Fannie Mae and Freddie Mac, it made emergency loans to banks and financial firms. We've been talking about that for the last year.

Well, those investments made money either on their return or with interest or fees. And what happens is the Federal Reserve then takes out its own expenses and the rest goes to the Treasury. That's why the Rreasury is getting, i.e. U.S. taxpayers, get $46 billion.

Here's another big difference between corporate America and the Federal Reserve. Ben Bernanke's salary, less than 200 grand. So, the expenses are far lower than what you would see, say, at an oil company, Tony.

HARRIS: And he's not getting a bonus this week?

LISOVICZ: No bonus.

HARRIS: Okay. So all that money, obviously helped keep mortgage rates low and capital flowing. But isn't there a danger in the Fed holding onto those investments?

LISOVICZ: Another excellent question. We are talking about trillions of dollars in investments. You know, the Federal Reserve's mandate is not to make money, spend money or lose money. Its mandate, charged by Congress, is to keep employment high and prices stable. And in order to prop up the U.S. economy, that's why it spent these trillions of dollars.

But these investments, as we talk all the time, have risk. And there are some, certainly, analysts that say if the Fed, when it sells it, if it could sell it at a loss, it's ratcheted up the risk-reward ratio. And Ben Bernanke has said all of the money that it has spent will be returned to the taxpayers. Some of it has a long way to go.

We're looking at the returns on Wall Street today. Well, we're not seeing them. The Dow is under a little bit of pressure because Alcoa shares are down nine percent. A disappointment with its earnings. It's the first big company to report. That's really going to be the focus for the next few weeks. How well is corporate America doing.

The bar is set higher now, Tony. We're supposed to be in a recovery, so they will be -- investors will react accordingly. NASDAQ is under some pressure too.

HARRIS: Maybe you can tell me next hour why Alcoa is always the first company to report. Will you do that for me, please?

LISOVICZ: I don't know! I oftentimes think it's the ticker symbol, it's AA, so there's nothing before it.

HARRIS: That's it?

LISOVICZ: No, that's not it. I don't know why, but I'll get back to you on it. But its ticker symbol is AA.

HARRIS: All right, Susan, appreciate it. Maybe that's it.

Still to come in the NEWSROOM, remember T.A.R.P.? Taxpayers bailed out banks and other financial institutions. Now those same companies might get taxed to make sure you get your money back. Get all the information at CNNmoney.com.

A future with hope. That's how the battered American auto industry is looking at this year and beyond. We are talking cars with Lauren Fix (INAUDIBLE) next in the NEWSROOM.

(COMMERCIAL BREAK)

HARRIS: All right. Our top story is the latest information that we have on the situation in Morehead City, North Carolina. The port under some real stress right now.

And here's the story, nine containers of the highly explosive material PETN accidentally punctured today. We received word a short timing that came out of a 10:30 a.m. briefing with the North Carolina Emergency Management Team that there are no injuries at this time. The leak has been contained to land.

None of this substance is apparently in the water. We are checking with local businesses in the downtown area to find out specifically what guidance has been given to them from the police department. We do know that police have recommended that people leave the downtown area, leave the port area and that those who are making the decision to stay, stay away from windows and doors.

The police department has sent police officers to this area to relay that information to everyone. Again, officials have closed the port at Morehead City after nine containers with explosive materials -- the material in question here is PETN -- explosive materials in nine containers punctured at some point today. We will continue to follow developments in this story and get pictures from the area as soon as we can.

It is the North American Auto Show, post bankruptcy edition. Buzz words this year, small, frugal and electric. Automotive expert Lauren Fix, the Car Coach. Happy new year, Lauren. Good to see you.

LAUREN FIX, "CAR COACH": Good to see you as well.

HARRIS: Well, let's star here. I want to talk about Ford in a minute here, but we own a large chunk of GM and Chrysler. So, what's the buzz around those companies this year? Let's start with Chrysler Fiat. I mean, what kind of presence at this year's auto show and are we seeing any new product from this company?

FIX: There were absolutely zero press launches both at L.A. and Detroit this year, and the journalists are well aware of it. Actually, I went up to the booth, they had two Fiat 500s, cute little cars. No press materials whatsoever. They sent me to their Web site. They had a (INAUDIBLE) there with a Chrysler (INAUDIBLE) star on it, and that was pretty much it. So pretty much consistent, no product changes at all. Who knows what the future will be. Let's hope they'll have something for New York.

HARRIS: Wow. Okay. So the GM story now, GM's Bob Lutz says the company is not so internally focused anymore, it is more focused on the cars and trucks people want to buy. FIX: Right. Well, actually, yes, they have the CTSV Coupe, they have the Buick GS, which is a little performance car. So, they're kind of making some performance cars, but yet making huge commitment to green. They are connecting with their partner Daewoo to bring in the Aevo and the Spark.

And so, these are cars that consumers are going to want. And if you haven't been there in a while, take a look. I'm impressed with what they have put together quickly. And OnStar is a big part of their program, and that's one of the exclusive things that they offer.

HARRIS: What's the future for GM? How is it positioned, given that it eliminated so much debt, right? Legacy cost during the bankruptcy process. What do you think, is a GM IPO, initial public offering, is that a possibility by the end of the year?

FIX: I think maybe 2011 you're going to see that. I think that once they start making some money they're going to pay back the government. I'm sure they want the government out of their business and their business to stand alone. They have got four brands left. They're winding down Saab. I think they have got something to grow on, and will really try. But they're going to have one heck of a time trying to catch up with Ford.

HARRIS: Well, there you go. Perfect segue. That's why we love you on the program. Ford gets Truck of the Year.

FIX: Yes.

HARRIS: Ford gets car of the year with the Focus.

FIX: Mm-hmm.

HARRIS: How strong is Ford right now? I guess I'm asking how far ahead of GM and Chrysler is Ford? I'm hearing a couple of years in some cases. What do you think?

FIX: They're big on technology. They're very eco-innovative. They're using recycled plastics. Believe it or not, I just found 85 percent of their vehicles are recycled, both cars and trucks. That's their whole product line. That's really smart because it helps cut costs, which helps the price be more innovative and better for consumers. Makes the cars have better design, makes them lighter.

So, all these plastic composites and recycling of detergent bottles and drinking bottles. is actually pretty cool. I thought it was pretty cool. Second and third lives of a water bottle.

HARRIS: Okay. I'm also hearing that China -- I mean it's official now, is the largest vehicle market.

FIX: It's true.

HARRIS: Do you think moving forward, vehicle design is going to more closely reflect China's tastes? FIX: I think it's going to depend on the market. They're never going to be able to sell a call that -- actually BYD was there doing a presentation as I left, and I think we were all kind of stunned because it's not the way we're used to seeing product presentations.

We want to have cars that we want. We are not going to take cars from other countries that we don't want. We are Americans. And that's my big concern. I keep going back to this, plug-in cars, I've been saying it all along. You have to offer a multiple group of solutions for consumers.

They want cars that are fuel efficient, but everyone I've talked to, not just journalists but consumers, and people e-mail me all the time from CNN saying "I don't want to be forced to buy a car the government is telling me to buy. I want to buy what I need and what I want." And that's a big problem.

And that's what GM is trying to do. Ford is doing that with the Taurus and the Focus. You're seeing a lot of the imports. Kia has definitely stepped up their game. They made money. Subaru is 15 percent ahead in their sales.

So when you start seeing this? Why is it? They're building cars that we as consumers want to buy. I think that's going to be one of the biggest things we're going to have to start looking at down the road. If you're building cars we want, we'll buy them. If the Chinese come into our country, just like the Indian manufacturers, you better build something that we want that's safe and meets our needs.

HARRIS: It's great to see you. Great to spend some time with you, Lauren. Happy new year.

FIX: I miss you.

HARRIS: Yes, yes, me too.

All right. Still to come in the NEWSROOM, a lovefest going on here. Congress gets back to work on health care reform and several of the nation's unions are speaking out.

(COMMERCIAL BREAK)

HARRIS: All right. We want to get back to our breaking news story.

Yes, I suppose at this point it is a developing story that we're closely following, and we're talking about the port in Morehead City, North Carolina, being evacuated now. Nine containers of a highly explosive material, you're totally familiar with it at this point, PETN. Those containers accidentally punctured.

The mayor is on the phone with us. Jerry Jones. Mayor Jones, thanks for your time this morning. What can you -- what exactly, to the best of your knowledge, happened in your city, in your port area this morning? JERRY JONES, MAYOR, MOREHEAD CITY, NORTH CAROLINA: Well, at 4:44 a.m. this morning, we received a call from the port that a -- that there was a hazardous material spill down at the port. And when we responded, we noticed that there was some product spilled out of a drum -- drums on the port property.

And so we immediately identified it was a hazardous material. Assessed that it was contained on the port and not to go into our neighboring waters, into the waterway. Then we notified our neighboring emergency offices, which would also include our Cherry Point, which is a military base, and their EOD department and the Carter (ph) County emergency services and have contained this now in this area. We've also set up an incident command center here in Morehead City approximately a half mile away.

HARRIS: All right. I'm sorry, did you want to add more?

JONES: Well, I was just going to -- go ahead and ask your question.

HARRIS: OK. Can you confirm for all of us that the substance in question here that we're talking about is this highly explosive chemical PETN?

JONES: I can confirm it is PETN, and I can confirm, yes, it is explosive.

HARRIS: Were you aware before this morning that your port was handling this material?

JONES: I personally was not aware of it. But it is regulated that the people that are transporting any highly flammable explosive devices have to notify our police department and the port and the emergency service department, and they were notified.

HARRIS: So, how do you feel about the fact that PETN was being handled at your port given what we all, everyone knows about it now as a result of, as a result of the episode on Christmas Day?

JONES: Well, yes, it's quite obvious that we are all more familiar with it than we have been in the past. Being an international port, we handle highly flammable explosive material all the time. Jet fuel comes through here all the time. Gasoline, propane, so it's not unusual to have explosive material coming through Morehead City.

HARRIS: Yes, you mentioned the leak. Was it a liquid, a powder?

JONES: What I understand about the PETN, it is a -- it's a crystal. It is packaged in water for stability, but the actual product itself is a crystal. And when it does spill on the ground, it is not quite as simple, I'm sure, as I'm describing it, because there are precautions you have to take. But you scoop it up and contain it, again.

HARRIS: Mr. Mayor -- on the phone with us right now, is the mayor of Morehead City, North Carolina, Jerry Jones. Mr. Mayor, what's your advice to your residents?

JONES: Well, as of this moment, we do have an involuntary evacuation for downtown Morehead City. We are advising everybody to stay away from the windows and doors, and please, don't get out and sightsee and meander around. It is dangerous, and we need to ensure the safety of our public.

As the day goes on and we feel like that we have more information, we will pass that information on. But right now, our advice to everybody is if they're uncomfortable staying in downtown Morehead to evacuate further west. And if they choose to stay home, stay away from windows and doors.

HARRIS: Well, if I was a resident in your city and I just heard that admonition, I guess one of the questions I would ask you, Mr. Mayor, is how dangerous a situation is this? How volatile a substance are we talking about? And what kind of quantity are we talking about? And, I mean, how delicate a situation is this?

JONES: Well, my information, my advice, is given to me directly from the professionals over at the emergency management. And they, at these early stages, they feel that everything is contained. And their advice is just to prevent people from getting any closer to the port within -- it's about a half mile of the roads we have blocked off down to the port...

HARRIS: All right.

JONES: ... and for them to stay inside.

HARRIS: And to stay inside.

JONES: Yes.

HARRIS: Jerry Jones is the mayor of Morehead City, and, Mr. Mayor appreciate your time. Thanks.

JONES: Thank you.

HARRIS: We're back in a moment.

(COMMERCIAL BREAK)

ANNOUNCER: This is CNN.

HARRIS: OK. Here's what we're working on for the next hour of CNN NEWSROOM -- a cold, hard reality. The frigid weather proves costly for a Florida fish farmer. Seventy-six frozen ponds add up to financial disaster.

Nigeria, one of the countries on a government watch list for terror suspects. We will talk with a Nigerian prince about the impact of being placed on that list.

(COMMERCIAL BREAK) HARRIS: Turning now to Rhode Island, where stimulus money is creating jobs across the state, but there is concern that other government money coming in to Rhode Island is ending up in other states. Jim Tarcani (ph) is tracking the money for us. He is with affiliate WJAR.

(BEGIN VIDEOTAPE)

JIM TARCANI (ph), WJAR-TV CORRESPONDENT (voice-over): So far Rhode Island has received $157 million in federal stimulus funds, earmarked for road construction. And that has produced jobs, according to the state department of transportation.

UNIDENTIFIED MALE: That is a very difficult question to answer, depending on how you look at that. But based on the data we have received, 1,800 people have got paid a total of $9 million.

TARCANI: (INAUDIBLE) says $45 million of the stimulus money has been spend so far on 44 project. He says when all the money is spent, more than 1,600 jobs will have been created, most of those jobs filled by Rhode Islanders.

But the building trade is not so happy or fortunate. No stimulus money is being allocated for the building construction industry, and of the projects that get other federal dollars, Rhode Island seems to be losing out in a big way.

GREGORY MANCINI, EXEC. DIRECTOR, BUILD R.I.: One of my biggest concerns, Jim, is on the building side the money coming out on the federal level is being awarded more times than not to out-of-state contractors.

TARCANI: A recent example? The new building for the school of pharmacy at URI, a multimillion dollar contract that went to a Massachusetts company, resulting in hundreds of layoffs at Rhode Island building companies that lost the bid.

(END VIDEOTAPE)

HARRIS: All right, back to the stimulus money for a second here. Rhode Island is set to hand out $3.5 million today for sidewalks and road construction. That should create about three dozen jobs.