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American Morning
Christmas Day Terror Suspect Talking Again; Michael Jackson's Doctor to Surrender; Pilot Faulted in Fatal Buffalo Plane Crash; Bonus Day at AIG; Autism Vaccine Study Found to Be Flawed; America: $12.3 Trillion in the Red; War on Government-Funded Benefits
Aired February 03, 2010 - ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JOHN ROBERTS, CNN ANCHOR: Good Wednesday morning to you. Thanks for joining us on the Most News in the Morning. It's the 3rd of February. I'm John Roberts.
KIRAN CHETRY, CNN ANCHOR: I'm Kiran Chetry. Glad you're with us. Here are the big stories we'll be telling you about in the next 15 minutes.
First, the suspected Christmas Day airline bomber is talking to federal investigators again. The White House says that Umar Farouk Abdulmutallab is now providing important intelligence after weeks of silence. In a moment, Homeland Security correspondent Jeanne Meserve will tell us how FBI agents finally got him to cooperate.
ROBERTS: The last man to treat Michael Jackson and possibly the last to see him alive could be charged with his death today. Dr. Conrad Murray is expected to turn himself into authorities in Los Angeles, no later than tomorrow. Ted Rowlands is standing by in Los Angeles with new developments this morning.
CHETRY: And important medical news to tell you about. A prestigious medical publication, "The Lancet, is retracting a landmark study that caused many parents to believe that the MMR vaccine was linked to their child's autism. We're going to tell you why and find out where this leaves the highly-charged debate over the causes of autism.
ROBERTS: We begin this morning with a chilling assessment of just how vulnerable we are to another act of terror. The heads of the five major U.S. intelligence agencies, including the FBI and the CIA, all sat before the Senate Intelligence Committee and one by one without hesitation they all came to the same sobering conclusion.
(BEGIN VIDEO CLIP)
DIANNE FEINSTEIN, CHAIRMAN, SENATE INTELLIGENCE COMMITTEE: What is the likelihood of another terrorist attempted attack on the U.S. homeland in the next three to six months? High or low? Director Blair?
DENNIS BLAIR, NATIONAL INTELLLIGENCE DIRECTOR: An attempted attack, the priority is certain, I would say. FEINSTEIN: Mr. Panetta?
LEON PANETTA, CIA DIRECTOR: I would agree with that.
FEINSTEIN: Mr. Mueller.
ROBERT MUELLER, FBI DIRECTOR: Agree.
FEINSTEIN: General Burgess?
GEN. RONALD BURGESS: Yes, ma'am, agree.
FEINSTEIN: Mr. Dinger.
DINGER: Yes.
(END VIDEO CLIP)
CHETRY: There you see it. Those five men would also agree that the key to disrupting a terrorist attack is timely intelligence. And the White House claims that's exactly what they're getting from Umar Farouk Abdulmutallab, the alleged underwear bomber, now talking to federal investigators again. Homeland Security correspondent Jeanne Meserve is live in Washington following the latest on this story.
How did they get Abdulmutallab to cooperate?
JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: Kiran, it's interesting. Abdulmutallab's family played a key role. According to senior Obama administration officials, shortly after the attempted bombing, two FBI investigators flew to Nigeria, and by mid-January they persuaded two family members to come to the U.S. and talk to the suspect.
According to these officials, they told Abdulmutallab they have complete trust in the U.S. system and believe he would be treated fairly. Last Thursday, according to a law enforcement source, Abdulmutallab started talking and he still is, Kiran.
CHETRY: Information -- do we know what he might be handing over, what he might be telling authorities?
MESERVE: According to law enforcement authorities, he's been providing useful, current and actionable intelligence including the information about his training overseas, who he met with, people he worked with and others that were part of his plot. One official says the initial read is that this is extremely valuable information. Another says it could be used to disrupt other attacks. It has been shared with the intelligence agencies and every lead is being tracked down, we're told.
CHETRY: Also interesting, the political aspect of this, why the White House is coming out now talking about this. There was some criticism about the way that he was questioned and then the questioning stopped and perhaps also, you know, whether or not he's being treated as an enemy combatant or is he being treated, you know, as part of our civilian court system.
MESERVE: Yes, you're right, Kiran. He was talking to the FBI immediately after his arrest. But after being read his Miranda rights, Abdulmutallab clammed up.
Republicans have attacked the decision to treat him as a criminal defendant rather than a military combatant, saying the opportunity to interrogate him further and get more information was lost. A senior administration official said last night those attacks from Republicans have, quote, "frustrated the hell out of me." And in revealing this information that Abdulmutallab is cooperating, the administration is pushing back trying to show that the case has been properly handled and the administration is doing all it can to keep the country safe -- Kiran.
CHETRY: Certainly interesting developments this morning. Jeanne Meserve, thank you.
ROBERTS: New developments this morning on those 10 Americans arrested for trying to take 33 Haitian children to, what they say was an orphanage to be built in the Dominican Republic. Today, a judge will question the men after meeting with the women for several hours yesterday. A U.S. official says it's up to Haiti to decide what happens next.
Haiti's prime minister says it's clear the group was kidnapping the children, something that the Americans deny. But a world expert on adoptions is casting doubts on the group's efforts.
(BEGIN VIDEO CLIP)
TOM DIFILIPO, PRESIDENT & CEO, JOINT COUNCIL ON INTL. CHILDREN'S SERVICES: The first impression was that something was obviously illegal and almost bewildering as to how a group could attempt to bring children across the border without documentation.
(END VIDEO CLIP)
ROBERTS: Next hour here, new information that's raising questions about the church group's capabilities to effectively run an orphanage.
CHETRY: Federal investigators are looking into whether Toyota's fix for the sticking gas pedal problem involves the vehicle's electrical system. Now you may remember yesterday, we told you Toyota says that is not the case, that they are also considering civil penalties for the lawmaker (ph). All of it comes as Toyota sales tumbled 16 percent last month from just a year ago. U.S. automakers are also trying to take advantage of Toyota's pain. Ford soared 24 percent compared to last year. GM was up more than 14 percent.
ROBERTS: The investigation into Michael Jackson's death may be coming to a close this morning. We are waiting for his former doctor to give himself up to authorities in Los Angeles. Jackson's death was ruled a homicide from an overdose of the powerful and dangerous knockout drug Propofol, and Dr. Murray has been the sole focus for months.
Ted Rowlands is live in Los Angeles for us this morning. And, Ted, do we know when the doctor might be turning himself in.
TED ROWLANDS, CNN CORRESPONDENT: We don't know when or where, but what we do know is that Dr. Murray and his entire legal team are here in Los Angeles, anticipating a surrender. And what they're trying to avoid is an arrest. They don't want that image of their client in handcuffs being led into a jail to be processed.
One of the options is to come here to the criminal courts building and just walk right into the public entryway here, go and see a judge, get processed and set an initial court appearance probably later in this week. That's when and if these charges come down.
Now if they do that, of course, they're not going to avoid the flair of the media or the eyes of the media, especially here in Los Angeles. This building, of course, has been the home of a lot of high profile trials. And when people come in and out of this building, this entire area is filled with cameras and we do expect that starting today to be the case at this building as the anticipation grows for the surrender.
A lot of worldwide interest in this case because not only is it dealing with the death of Michael Jackson, the pop icon, but also it has to do with an ongoing problem of overmedicating possibly of physicians with prescription drugs. So there'll be a lot of eyes on this courthouse and on this town in the next days as we wait to see when and where Dr. Murray turns himself in. But according to his legal team, they are here and ready and willing to answer charges.
We're not hearing anything from the D.A. at this point. They say we'll find out when they actually file the charge. Could come as early as today but again, we expect it at some point this week.
ROBERTS: Ted, you know, over recent weeks, this had almost fallen off the radar screen and maybe many people thought that Murray might escape prosecution. What was it that turned the tide here that led prosecutors to have enough information on him, enough evidence that he would surrender himself?
ROWLANDS: Well, we won't know that until we actually see the complaint and then as we move forward through the legal process, one thing to keep in mind, a lot of this has still been sealed, including the toxicology report on Michael Jackson. What was actually in his system? We know what Dr. Murray gave him, but we don't know what was in his system. And it's been six-plus months of investigating. Obviously, the D.A. wanted to have all their ducks in a row before they move forward in this very, very complicated case. But it appears all signs are leading to a decision to go ahead and prosecute Dr. Conrad Murray for the death of Michael Jackson.
ROBERTS: All right. Ted Rowlands for us this morning, watching the latest developments in Los Angeles. Ted, thanks very much. We'll keep in touch with you.
CHETRY: Seven-and-a-half minutes past the hour. We woke up to some snow today.
ROBERTS: Go find it.
CHETRY: Yes, a little bit of snow as we're walking through the streets this morning in New York. Our Rob Marciano in the extreme weather center this morning covering it all for us.
Hey there, Rob.
ROB MARCIANO, AMS METEOROLOGIST: Hey, how much did you guys get? A little dusting? Half inch?
CHETRY: Just enough to cover the sidewalk slightly, nothing major.
MARCIANO: That's perfect, just enough to make New York look clean at least for the time being. And once the morning rush gets cooking, it will get dirty again.
All right. Here's the snow on the radar scope. The heaviest amounts across Philadelphia and Baltimore and in through D.C., anywhere from four to five, in some cases six inches, but those are the higher amounts. As you can see, it's quickly moving offshore there into parts of eastern New England and then back towards the cape as well. So that's where the snow is now.
It will cause a little bit in the way of delays over the next couple of hours maybe at some of the airports. But the focus will shift I think down to Texas where a big storm is brewing down there and that will affect much of the southeast again, and will probably also sneak up into the mid-Atlantic Friday and Saturday with more wintry precipitation.
We'll talk more about that in about 30 minutes. John and Kiran, back up to you.
ROBERTS: Looking forward to it, Rob. Thanks so much.
Still ahead on the Most News in the Morning, almost a year later, a report is finally released on the deadly Colgan Air crash near Buffalo. Why some investigators say the pilot was not qualified to be at the controls that day.
It's nine minutes after the hour.
(COMMERCIAL BREAK)
CHETRY: Welcome back to the Most News in the Morning. Eleven minutes past the hour right now. A quick check of the other stories new this morning.
A roadside explosion near a girls school in northwest Pakistan. Pakistan's military says that three American soldiers are among at least seven people killed when this happened. The soldiers were part of a mission to help train Pakistani forces to take on Al Qaeda and Taliban militants along Pakistan's border with Afghanistan. So far, U.S. officials have not commented on this attack.
ROBERTS: President Obama outraging Nevada lawmakers again after singling out Sin City during a speech in a New Hampshire high school yesterday. Listen to what he said.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: When times are tough, you tighten your belts. You don't go buying a belt when you can barely pay your mortgage. You don't blow a bunch of cash in Vegas when you're trying to save for college.
(END VIDEO CLIP)
ROBERTS: The comment infuriated politicians in the Silver State where unemployment hovers now at 13 percent and tourism is essential to the economy in an attempt to smooth things over. The president wrote to Nevada Senator Harry Reid. Quote, "There is no better place to have fun than Vegas. Also making the point that, you know, you want to spend your vacation cash in Vegas. You don't want to spend your college fund."
CHETRY: Right. Because you definitely don't go to Vegas to gamble, not (INAUDIBLE). Do other things besides.
ROBERTS: Gamble -- still gamble with your college money.
CHETRY: But didn't he --
ROBERTS: Hey, I've got one year's worth of money. Maybe if I get --
CHETRY: Right. Put it all on black. No, but didn't this happen before? He made a snub about Vegas at another time and then the mayor went crazy.
ROBERTS: He did.
CHETRY: All right. There you go.
Well, Sarah Palin is calling for the president to fire his chief of staff over Rahm Emanuel's use of the word, quote, "retarded" to describe liberal activists. Now the former vice president nominee whose son Trig has Down syndrome called Emanuel's language, quote, "a slur on all God's children" on her Facebook page. The White House says Emanuel has apologized to Tim Schreiber, the CEO of the Special Olympics.
ROBERTS: It's been nearly a year now since Continental Flight 3407 fell out of the sky near Buffalo, New York killing all 49 on board and one person on the ground. Critical problems in our aviation system still have not yet been fixed.
CHETRY: Sounds amazing, but it's true. After the latest hearing, federal officials say they are worried that history could repeat itself. Our senior correspondent Allan Chernoff has been tracking the investigation. He joins us now with new developments this morning.
What did they learn from this crash? I mean, they were hoping that they'd be able to learn something to prevent it in the future.
ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Absolutely. And there are a lot of lessons here. The safety board, first of all, does point to pilot error as a cause of the terrible accident but it also highlights a system that allowed a pilot who appeared to have been poorly qualified and poorly trained to be in command of an aircraft with four dozen passengers dependent upon it.
(BEGIN VIDEOTAPE)
CHERNOFF (voice-over): When Continental Flight 3407 was about to stall, Captain Marvin Renslow reacted with tragic mistakes, ignoring warnings the plane was slowing and then overriding an emergency system that tried to point the aircraft nose down to regain speed.
EVAN BYRNE, NTSB HUMAN PERFOMANCE CHAIRMAN: The captain's improper flight control inputs were instead consistent with startle and confusion.
CHERNOFF: Renslow, a pilot for regional airline Colgan Air which operated the flight, had repeatedly failed test drives but withheld some of the failures from his employer. Colgan Air never trained Renslow in a simulator to use the emergency stick pusher that warned of an imminent stall.
ROGER COX, NTSB OPERATIONS GROUP CHAIRMAN: The captain would have been a candidate for remedial training, but Colgan did not have a formal program for pilots who demonstrated weakness.
CHERNOFF: From Renslow's student days at Gulf Stream Training Academy to his rise as a pilot at Colgan, the NTSB chair says the aviation system failed to hold back an aviator who simply didn't have the right stuff.
DEBORAH HERSMAN, NTSB CHAIRWOMAN: The pilot needed a good day to pass a test, and I liken it to a student that keeps getting passed from grade to grade to grade and ultimately, upon graduation, hasn't mastered the material.
CHERNOFF: The NTSB found Renslow and co-pilot Rebecca Shaw were not well rested and engaged in conversation unrelated to the flight through much of the evening, a violation of cockpit rules.
BOB PERRY, SON KILLED IN CRASH: There was no reason why this should have happened. Had he been properly trained -- the pilot had been properly trained and the co-pilot been properly trained, my son would be alive today. They cannot bring my son back.
CHERNOFF: The Federal Aviation Administration is demanding better performance from airlines, reviewing pilot training and plans proposals to address pilot fatigue later this year.
But to the NTSB, the FAA is doing too little, tool late. HERSMAN: The same thing over and over again. We have made recommendations time after time after time. They have not been heeded by the FAA and they haven't pushed it across the finish line.
(END VIDEOTAPE)
CHERNOFF: In a statement, Colgan Air said we want to make clear again that our pilots are highly trained to handle all situations they may encounter. And the FAA said pilots must be trained for the mission they are flying, and the FAA already is working to further improve their professional qualifications -- Kiran and John.
ROBERTS: Hersman sounded very frustrated there, and the NTSB pointed out that Renslow did have three opportunities to save the aircraft and fumbled every one of them.
CHERNOFF: Absolutely. It seems to have just been an unbelievable case of a tragic situation, a person who really was way over his head, absolutely not qualified, clearly, and had just failed his way up the system.
ROBERTS: Amazing.
CHERNOFF: So the system needs to be able to catch people like that. It's not happening.
CHETRY: Wow. Scary stuff.
Allan Chernoff for us this morning. Thanks so much.
Also, still to come this morning, AIG at it again, handing out multimillion dollar bonuses. Our Christine Romans is on the case. She's "Minding Your Business". She joins us in just a moment.
It's 17 minutes after the hour.
(COMMERCIAL BREAK)
ROBERTS: It's 20 minutes after the hour now. That means it's time for "Minding Your Business".
Christine Romans is back with us again today and hold out your tin cup because they're giving out money over at AIG.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: This is the bonus pool that keeps on giving. AIG looks like they're getting set to pay out the next installment of those big bonuses that caused all the outrage that began last year, another $100 million to the Financial Products Division.
What is this division? You remember, they are the people who wrote the -- the insurance contracts on complicated mortgage-backed securities. When those mortgage-backed securities tanked, then AIG had to pay out all this money to cover those insurance contracts and the company went south, fast, and now you and I own $181 billion worth of AIG. Now, the company says, however -- we don't know exactly when they're going to pay this. They're due in March, but we think it's pretty imminent here. The company says that the staff had agreed to take some $20 million involuntarily pay cuts. So they're going to take less of the money than they're owed, but, still, it could be about $100 million that they pay out.
This is what Mark Herr, the AIG spokesperson, told -- told us in CNNMoney.com, "We believe this allows us to largely put this matter behind us, that the staff took the bonus cuts." Well, I'm not sure that everybody in Congress really feels the same way. I mean, already people who are critical of the administration and its handling of the -- of this bonus pool have been criticizing the president, saying why couldn't they have figured out a way to not have to pay out all this money?
CHETRY: How is it allowed, though? I thought that the whole point was if -- if they had taken bailout money or if they needed to be bailed out, they were owned by the government, that there's -- that we had some control over the bonus process?
ROMANS: This money is from the 2007 retention contract. It -- it precedes Kenneth Feinberg, the special pay masters -- it precedes him. So they have agreed -- a lot of people have agreed to -- to give up some of the money. Not all of that has been actually given up, but they've agreed to give up the money.
But now there are people working in this division who are unwinding these complicated derivatives contracts, and we own the company so we need them to be doing good work, right, because we don't want this company to go down.
CHETRY: You have a "Numeral" for us this morning?
ROMANS: I do, and it's $435 million. This is a pool of money we've been talking about for a year now. That's the overall pool from 2007 that's still being paid out to that AIG Financial Products Division.
ROBERTS: $435 million?
ROMANS: So this $100 million we're talking about now is still part of that overall $435 million pool.
It is -- I'm telling you, it's -- the outrage just doesn't go away. It's been a year we've been arguing about this money. Yes.
ROBERTS: Hold out -- hold out your cups. Maybe some will fall in.
Thanks, Christine. "Minding Your Business" this morning.
Coming up next in the Most News in the Morning, it was the leading study linking childhood vaccines to autism, why researchers 15 years later are now saying the study was wrong.
(COMMERCIAL BREAK)
CHETRY: Twenty-five minutes past the hour. Our top stories five minutes away.
But, first, an "AM Original", something you'll see only on AMERICAN MORNING.
It was a landmark study that helped fuel the highly-charged debate over whether the MMR vaccine was linked to autism in children.
ROBERTS: Well now, more than a decade later, the medical journal "The Lancet" which published the study is retracting it. Our Alina Cho joins us now live with details.
Wow! This is a real about-face.
ALINA CHO, CNN CORRESPONDENT: Yes. I mean, the CDC even calls this significant.
Guys, listen, there were a lot of questions about methodology. There was even a question about ethics. The lead researcher was shown to have taken money from a lawyer representing parents of children who were harmed by the vaccine in question.
So, yes, a lot to sort of chew on, guys, but because this study was published in "The Lancet", a prestigious medical journal, parents took it as fact. They believed it. Well, now "The Lancet" has made the rare decision to retract the study.
So the debate over whether vaccines are safe should be over, right? Wrong.
(BEGIN VIDEOTAPE)
CHO (voice-over): For 12 years it has been hotly debated by doctors...
UNIDENTIFIED MALE: It's much more complex than just vaccinated versus unvaccinated.
CHO: ... parents...
JENNY MCCARTHY, ACTRESS: Everyone's going, I'm too scared to vaccinate my child.
CHO: ... even Congress.
UNIDENTIFIED MALE: What we don't know is is there any causal relationship between the number of vaccines.
CHO: The controversy over whether childhood vaccines cause autism stems from a 1998 study published in the medical journal "Lancet", that study citing a link between autism and the measles, mumps and rubella vaccine was the catalyst for widespread panic among parents, who wondered whether vaccinating their children would ultimately harm them. Now, in a stunning turnaround, "Lancet" is renouncing the study, saying "It has become clear that several elements of the 1988 paper are incorrect."
UNIDENTIFIED MALE: Despite the fact that, you know, dozens of studies came out afterwards which didn't support an association between autism and MMR, everybody remembered this study.
CHO: The retraction was in response to a ruling by British medical authorities that lead researcher, Dr. Andrew Wakefield, acted unethically in the original study of just 12 children, carrying out invasive and unnecessary tests, even paying kids $8 to give blood at his son's birthday party.
In a statement to CNN, Dr. Wakefield said, "The allegations against me and against my colleagues are both unfounded and unjust, and I invite anyone to examine the contents of these proceedings and come to their own conclusion." Which begs the question, what does all of this mean?
Many say the case is now closed, while others still question the safety of vaccines.
Actress Jenny McCarthy is the mother of an autistic child and an outspoken critic. Her Generation Rescue Foundation condemned "Lancet's" retraction, telling CNN, quote, "This is nothing more than a witch hunt. The evidence finding a connection between vaccines and autism continues to grow unabated."
But parents like Harry Slacken (ph), father of an autistic son, David, say blaming vaccines would be easy. The "Lancet" retraction, he says, is evidence it's time to move on.
HARRY SLACKEN (ph), FATHER OF AUTISTIC CHILD: I'd give anything tomorrow to have any answer in autism, that something has affected David and that's the reason he is the way he is. But it isn't vaccines, and we need to now put this to bed.
UNIDENTIFIED MALE: The shame of this is that what this does is divert resources and people's time in autism research towards something that's not the answer. We've wasted a whole lot of time chasing down vaccine theories that have been proven to be wrong.
(END VIDEOTAPE)
CHO: And that money, some doctors argue, could be used toward finding a cure.
So, the bottom line question remains, if you're a parent of a young child, should you vaccinate? Well, several doctors I spoke to, including the Chief of Child Psychiatry at Columbia University says, yes, you should, he says not because "The Lancet" retracted the study, but because of years of cumulative data, definitive studies over 12 years that show vaccines do not cause autism.
This doctor told me there is an enormous risk, guys, when you don't vaccinate your child. It is literally life and death. There are long term, you know, neurological and -- and physical risks, not just for your child but for the children around them.
ROBERTS: But it's such an emotional issue, that these parents of these children, they -- they want to think that there was a causality here...
CHO: That's (INAUDIBLE) and you heard...
ROBERTS: ... and -- and the vaccine looked like the best route and they still believe, as you say, that it is.
CHO: Some parents do, including Jenny McCarthy. Listen, Harry Slacken (ph), the parent of another autistic child you heard from there, told me "I would kill to be able to say that my son David had autism because of a vaccine. Then we could move on, put this to rest, help find a cure" but let -- keep in mind, guys, this -- these medical researchers in Britain who decided to study this and retract this study, this was not done haphazardly.
This right here is the 143-page study looking into this. They decided to retract it. It is rare in the medical world. And as I said the CDC calls this significant.
CHETRY: Right. They have made changes over the years as well. They tell you not to vaccinate your children if they are sick. They also -- doctors (INAUDIBLE) split up the vaccine so you don't get...
(CROSSTALK)
CHO: And that's smart and all of the smart minds in the medical world will say, if you have any questions, of course, consult your doctor. But that, of course, is a good idea.
ROBERTS: Alina, thanks so much.
CHO: You bet.
ROBERTS: Crossing the half hour now. That means it's time for this morning's top stories.
The suspected terrorist who allegedly tried to blow up the Christmas Day flight with an underwear bomb is cooperating with federal investigators again and the White House claims that he is turning over useful information. FBI agents convinced family members from Nigeria to come to the U.S. and they got Umar Farouk Abdulmutallab to break his silence.
New questions this morning about a group of American missionaries in jail in Haiti. We're waiting for a decision on charges after a hearing yesterday. The prime minister there says they were kidnapping 33 children across the border into the Dominican Republic. Some adoption expert are now saying they had good intentions but what they did was misguided at the very least and maybe illegal.
And Michael Jackson's personal physician could give himself up today. Dr. Conrad Murray is expected to turn himself into authorities in Los Angeles after being the sole focus of the investigation for months. An autopsy show that the King of Pop died from an overdose of the knockout drug Propofol, something rarely used outside the O.R. And investigators believe Murray administered that drug -- Kiran.
CHETRY: Thirty-one minutes past the hour now, and President Obama laid out his 2011 budget which will add to the American's already ballooning debt. Right now, according to the Treasury Department, as a nation, we owe more than $12.3 trillion -- a lot of that to China and Japan.
So, can America keep its global superpower status when we're so far in the red?
Here "Minding Your Business" this morning, we have Lakshman Achuthan. He's the managing director for the Economic Cycle Research Institute. And also, Marcus Mabry, international business editor with the "New York Times."
Thanks to both of you for being with us.
You know, this year alone, it's very interesting. The government will borrow $1 out of every $3 that it spends, and many of these funds, as we said, come from foreign countries, like China and Japan. How can America retain its superpower status if we're broke?
LAKSHMAN ACHUTHAN, ECONOMIC CYCLE RESEARCH INSTITUTE: Well, it can't ultimately. In the short term -- meaning like the next few years, something like this, this isn't that big of a deal. It's not going to change things overnight because we have a lot of debt.
But if you stay on these paths, right, where we're continuing to do a lot of deficit borrowing and mounting and surging deficits while at the same time other countries are, you know, living a little bit more within their means, there's going to be a time when these two paths are going to across and the U.S. will have a declining influence as a result of it.
CHETRY: And, Marcus, you talked about the historical context of this, the last superpower being Britain which, you know, owed America a lot of money. And eventually, what happened is that they succeeded Britain as the most powerful nation. Can China do the same with us?
MARCUS MABRY, "THE NEW YORK TIMES": Absolutely. It's almost inevitable. In mean, in America, we have very historical to some extent positively. We have a very historical -- a historical memory. So, we don't really think about the past a lot in our country. We think always about the future.
The problem is, we've seen this before in history. And every great empire before us has fallen and usually often under a load of debt that it cannot repay. America has been on a debt binge. It didn't start with this administration, of course, at all and the administration, to its credit, is trying to do some things that it says over the long-term will wean us from our debt diet. However, we've been bingeing on debt and China has been our drug supply. They've been the one who's facilitated that binge. China will, in fact, own a great deal of us if we don't stop our spending binge.
CHETRY: And what are the implications of that?
ACHUTHAN: Well, you know, look, longer term, they are very dire. And it's almost inevitable that there come a time when you're going to have U.S. and China rivaling each other as the superpowers.
CHETRY: And you're talking about a communist nation, you're talking about a nation that, you know, our government has expressed concerns about human rights issues.
ACHUTHAN: And this...
CHETRY: And the fact of the matter is that because of their -- we need them economically, there's been a lot that we sort of turn a blind eye, too.
ACHUTHAN: Sure. Well, I mean, this is absolutely true. There's a lot of things going on with new structural changes in global trade where we're willing to have others manufacturer things for us because they can do them cheaper -- all kinds of complicated issues here. But we should get -- we have to keep these kinds of time frames in perspective. This is not happening today or next year or five years, but the trends are very much in place that longer term, if we keep up the current patterns, we're going to see China rival us.
Also, let's keep in mind, the really time frames for millennia, for thousands of years, China was near the top of the heap globally. And it's only for a couple of centuries that China, maybe two or three centuries that China has fallen behind -- and lo and behold, that's about as old as the U.S. is.
MARBY: You cannot remain a military superpower, an economic superpower, if you are in debt. It's inevitable. You just can't do it.
ACHUTHAN: Or the military will get weaker if the economy is ultimately falling.
MARBY: Exactly. There's nothing to finance it. And that's we're going to see. Already, we're seeing China exercise its diplomatic prerogatives. So, plainly, it's ignoring to the demands of the United States on any number of international issues.
CHETRY: Including the trade deficit.
ACHUTHAN: Absolutely.
CHETRY: It's a huge problem for us right now.
ACHUTHAN: You see, the short term they've not -- China has to really deal with us. They can't just, all of a sudden say, we're going to dictate to you. That's impossible.
MARBY: Sure.
ACHUTHAN: The U.S. is almost twice the size of the Chinese economy. The Chinese need to sell stuff to us. Well, right now, the global recover\y is because of the U.S. It's not because of China.
(CROSSTALK)
MARBY: China has been driving global...
ACHUTHAN: Hang on. I would disagree with you, because -- let's keep -- let's keep this in perspective. U.S. economy twice the size of China. U.S., a bigger manufacturer than China. China needs to buy dollars. They need to have dollars. They don't have any other options, they can't have the euro because the Greece is falling apart, Spain is falling apart.
(CROSSTALK)
MARBY: China has a lot of money. They have a massive surplus. They have nothing else to do with that money other than to buy dollars.
ACHUTHAN: I think my point is...
MARBY: So, it's kind of mutually self-sustaining...
(CROSSTALK)
ACHUTHAN: There's a mutual interest here between China and the U.S. to make things work.
MARBY: Or mutual destruction.
CHETRY: The mutual interest is there -- I mean, it doesn't seem like it's balanced when you talk about, you know, we...
ACHUTHAN: Short term, it's mutual interest.
CHETRY: The other question that I have is you said this historical perspective. I mean, would you look 10 years down the road when Clinton left office and we had a several billion dollar surplus that 10 years down the road we'd be talking about this?
MARBY: Well, I think -- I think what's really scary, if you take the lines right now and take the size of our economy and size of China's economy, just a year ago, China was the third largest economy of the world.
ACHUTHAN: Right.
MARBY: This year likely to become the second largest economy, eclipsing Japan.
ACHUTHAN: Right.
MARBY: If you look at the lines of China's economic growth, the growth of its economy and the decline of the relative to our economy, they're going to cross. And it's going to cross probably within the next decade. By the time my kids were eight weeks old and we'll be back here.
CHETRY: Congratulations.
MARBY: Thank you.
Finish high school, China will probably be the largest economy in the world. That's extraordinary. That's going to change our world. All of us Americans who are alive today have never seen that world in our lifetime.
ACHUTHAN: But -- so while it is inevitable at some point, a lot of stuff is inevitable at some point, how fast that occurs, we have some influence over and that has to do with what we're doing with deficits in the out years. That's very, very critical. And when that matters will be when we have a new recession or when inflation surges, that's when these deficits are going to become a very clear and present danger.
MARBY: That's right. And whether we have the political will in Washington today for Democrats and Republicans to get together and actually say we care about reducing the deficit...
ACHUTHAN: We should plan a few years ahead.
MARBY: ... and we don't want to just win elections.
CHETRY: Exactly. Well, it's tough one.
Thanks to both of you, though, for helping us break it down. Lakshman Achuthan and Marcus Mabry -- congratulations on the new one. Boy or girl?
MARBY: Thank you very much. Two boys.
CHETRY: Oh! Well, double the fun.
MARBY: Absolutely.
CHETRY: Thirty-eight minutes after the hour.
(COMMERCIAL BREAK)
ROBERTS: Forty-one minutes after the hour. Welcome back to the Most News in the Morning.
Government pensions, as reliable as death and taxes and in some cases, extremely lucrative. They're also expensive to American taxpayers who are stuck footing the bill.
Our Carol Costello is live at our Washington bureau this morning. She's been digging deeper on this.
Good morning, Carol. What do you find?
CAROL COSTELLO, CNN CORRESPONDENT: Good morning, John.
I found that voters in California, they're taking matters into their own hands. As the government can't control spiraling pension costs, they will force the issue. It's not hard to understand why. Some retired city and state workers collect so much money in retirement benefits it's bankrupting cities across the country.
(BEGIN VIDEOTAPE)
COSTELLO (voice-over): Chris Becker works hard. He lives for the day he can retire and collect his pension, all of it.
CHRIS BECKER, NY CITY SANITATION WORKER: That was the whole reason I took the job, was the security and the benefits.
COSTELLO: About that pension, some say Mr. Becker ought to enjoy the dream while he can. There is now an all-out war on union- negotiated, taxpayer-funded government pensions from New York to California.
MARCIA FRITZ, CA FOUNDATION FOR FISCAL RESPONSIBILITY AND CHANGE: We have cities that are on the verge of bankruptcy. They cannot make that pension payment. We have to do something.
COSTELLO: In California, the two largest pension systems are $165 billion in the red. Here's why: you're looking at the 100K Club. It's a list of retired government workers compiled by the citizen activist group the California Foundation for Fiscal Responsibility and Change. Each person gets a pension of at least $100,000 a year. The group says there are 8,000-plus in the club.
FRITZ: You have that asset for the rest of your life. No matter if the market implodes and no matter if our pension funds lose every penny, you have it. No matter what you do.
COSTELLO: And that's true in most states. On Tuesday, this New York state prison bid adieu to Frank Tassone, a school superintendent who served three years for embezzling millions of dollars from the school district.
That's him in the white car, going home to collect $173,495.04 per year in pension benefits.
DAVID JOHN, HERITAGE FOUNDATION: Part of the problem is that because so many of these pensions are enshrined in contracts, it's very hard and very expensive to go through and pull some of them. So, it may be well, in some case, it will actually cost the city more to take away the pension than it would just paying it in the first place.
COSTELLO: It's why the California Foundation for Fiscal Responsibility and Change is collecting signatures to put pension reform on the November ballot. It would, among other things, allow public employers to adjust retirement contribution rates for new employees in future labor agreements.
Unions are against a voter initiative because in many states their members have already agreed to reduce or pay more into pension plans.
And let's face it -- Chris Becker won't collect anywhere near 100K a year when he retires. He worries that if government officials can adjust his retirement, will they go after the little guy first?
BECKER: You know, you cut our pensions, you know, no one got rich taking this job. So, you know, what else do we have? That's all really we have, is our pensions and our benefits.
(END VIDEOTAPE)
COSTELLO: Still, the problem is so severe in some states, like Illinois, let's say, some are suggesting Illinois borrow billions of dollars to cover pension plans in the future. Experts say there is no easy fix unless new state laws are enacted. There's not much anyone can do.
And even if new laws are enacted, John, they wouldn't cover existing plans because those plans are protected by contract.
ROBERTS: It's so tough, isn't it, Carol, that there are so many folks out there who were working, who have no pension, even people who had pensions and then they are taken away. And then you see these government workers, but then at the same time, they are working very hard. They can't really bank a lot. And so, you'd think that they've got some sort of safety net at the end of the line.
COSTELLO: It's a tough problem. And, you know, you look at workers, like Chris, he doesn't make much money picking up garbage. He took the job because of his pension plan because it's going to be there no matter what. He gets to retire after putting in 20 years on the job, and he gets half of his salary for life.
ROBERTS: You've got to wonder, Carol, where this is all heading and when people finally do reach retirement age, what's going to be left for them and how they going to make it. We are concerned.
Carol, great piece this morning. Thanks so much.
COSTELLO: Thank you.
ROBERTS: Let us know what you think of pension gap problems, comment on Carol's blog at cnn.com/amfix.
CHETRY: Meanwhile, it's 45 minutes past the hour. Rob is going to have the travel forecast right after the break.
ROBERTS: And in 10 minutes time, a lot of people use their work computers for shall we say recreational activities. Jeanne Moos shows us one guy who got caught on live TV.
(COMMERCIAL BREAK) CHETRY: Welcome back to the Most News in the Morning. It's 48 minutes past the hour that means it's time for your AM House Call, stories about your health.
Experts say nearly half of all types of deadly cancer could be prevented. The International Union Against Cancer says that 40 percent of the 12 million people around the world diagnosed with cancer could ward off the disease if they immunize themselves against major infections and also make lifestyle changes like quitting smoking, limiting alcohol, and reducing your exposure to the sun, and eating properly.
Speaking of eating properly, how about those pre-washed bags of leafy greens are very convenient, but are they really clean? Consumer reports tested more than 200 bags bought in New York, New Jersey, and Connecticut stores, and they found nearly 40 percent of them were contaminated with bacteria linked to unsanitary conditions during packaging. The magazine said that potentially deadly strains of E. Coli, Escherichia (ph), and salmonella were not found.
And finally, there could be a link between spending too much time surfing the internet and depression. British researchers say that while most people use the internet to occasionally surf, pay bills, or shop, they found a small group who spend the day surfing social networking sites, gaming, or using sexually explicit sites, and they say that that type of addictive surfing can have a serious impact on mental health and may also say that it could be a predictor about whether or not you have depression, so --
ROBERTS: You got to wonder it's a chicken and egg syndrome here. Is it that the surfing makes you depressed or the fact that you don't have a life and so you spend all day surfing as what's thinking you're depress. Not sure.
Ten minutes to the top hour. Let's get a quick check of this morning's weather headlines. Rob Marciano in the Extreme Weather Center. What do you think? Is it that you don't have a life or surfing the internet makes you depressed?
ROB MARCIANO, AMS METEOROLOGIST: I think -- what are you trying to say, John, that I don't have a life?
ROBERTS: No, I think you've got a fabulous life, Rob. I mean, who else gets to go to meteorological conferences in Steamboat Springs.
MARCIANO: Other meteorologists. You know, maybe one day we'll throw out an honorary invite for you, John.
ROBERTS: I love to, I love to.
CHETRY: And did you invite the groundhogs or no, they couldn't come?
MARCIANO: The groundhogs had their day yesterday. It's over. And Alaska, by the way, there is (INAUDIBLE), just fewer. I don't hold a lot of groundhogs up there.
All right, Boston seeing some snow right now. How much snow did this system bring? Generally speaking, anywhere from two to extreme cases six inches, around four or five from Philly to Baltimore, a little bit less than in D.C., and it's now coming to an end, but this is a first of a couple or another one that is going to come later in the week and towards the weekend that I think will bring even more to the Mid-Atlantic States.
So, that may cause some delays today as it winds itself up. The next item up for bid is another very El Nino like storm as it develops out of the Mexican, Texas quarter, tapping moisture from the Gulf of Mexico. San Antonio, Austin, and Houston, you're going to see rains increasing throughout the day today, and this will ride up the I-10 corridor and eventually gets it way into the mid-Atlantic where will once again meet some cold air Friday and Saturday for a wintry mix.
Today though, if you're doing some travel, Boston and New York metro will see morning snow and that will increase the delays. Philly and D.C. also, 43 expected in D.C., so the snow that did fall last night will slowly begin to melt. Thirty-nine degrees in New York, so you're half an inch to an inch of snow that fell in the Big Apple will also slowly melt later on this afternoon. John and Kiran, back up to you.
ROBERTS: Won't that be pretty when it does. Rob, thanks.
CHETRY: Nice, Rob.
This morning's top stories are just moments away including at the top of the hour, Dr. Conrad Murray could now be facing charges connected to Michael Jackson's death very soon. We're live in Los Angeles.
ROBERTS: At 7:10 Eastern, inside a small town Idaho church that landed in the middle of an international legal battle, missionaries from there are accused of trying to run off with more than 30 Haitian kids. Were they really qualified to care for all of them?
CHETRY: Also at 7:40 Eastern, rebels with a cause, Jim Acosta with an "A.M. Original." He looks inside the bailout hating tea party movement and what threatens to blow it up from the inside. Those stories and much more at the top of the hour.
(COMMERCIAL BREAK)
ROBERTS: Five minutes now to the top of the hour. Welcome back. It's time for the "Moost" News in the Morning, and an Australian banker caught ogling a racy e-mail at work who is now reportedly unemployed.
CHETRY: Yes, tough luck for this guy, but he's also a YouTube sensation. So, maybe new work is around the corner. The Australian TV clip has actually generated more than 200,000 views from around the world. Our Jeanne Moos took a peak at what's behind all the hub bub.
(BEGIN VIDEOTAPE)
JEANNE MOOS, CNN NATIONAL CORRESPONDENT (voice-over): If you're going to look at half naked pictures, better make sure you're not exposed. Channel 7 news in Australia got more of a rise than they bargained for. Note the guy in the background bringing up racy photos on his computer. The McClory (ph) Financial Expert was talking about interest rates. That's not what interested the guy in the background even when a colleague walked over. He kept right on looking.
Folks quickly recognized Miranda Kerr, a famous Victoria's Secret model.
UNKNOWN FEMALE: Which is what I have it now.
MOOS: Yes, actually, she had less than she usually does when cavorting on the beach shore or in a bed. In words of one admirer, I would totally drink her bath water, but fans put her image to songs like super model.
That's what he was supposed to be doing.
MOOS (on-camera): In the guy's defense, it wasn't really porn he was looking at, it was more as if he were opening photos that someone had e-mailed him, photos from GQ.
MOOS (voice-over): The current issue features a three photo spread. As he looked at the final photo.
UNKNOWN MALE: Six to nine months before they actually see that effect.
MOOS: He knew he was nabbed or so and so someone from this rated busted doing something most people do at work every day. As in this French commercial, the guy watching porn accidentally unplugs his head set or the wife surprises hubby at home and his computer freezes before he can hide the evidence.
UNKNOWN FEMALE: What are you doing?
MOOS: Get a laptop, maybe a lap dance. Online speculation about this guy's fate was rampant.
UNKNOWN FEMALE: Goodbye.
MOOS: In the words of Donald Trump...
UNKNOWN MALE: You're fired.
MOOS: But the McClory Group (ph) would say only that it takes matters such as the unacceptable use of technology extremely seriously and that the situation is being dealt with internally. This is what banker types are looking at, and we wonder why they didn't see the crash coming.
UNKNOWN MALE: Six to nine months before they actually see that effect. MOOS: Jeanne Moos...
UNKNOWN MALE: Before they actually see that effect.
MOOS: CNN.
UNKNOWN MALE: Before they actually see that effect.
MOOS: New York.
(END VIDEOTAPE)
ROBERTS: You got to wonder, though. You know, was it good for ratings? How many people will tune in next time to see what they look like?
CHETRY: I know, and the poor guy he was, and he's looking at that "GQ." Probably e-mailed to him and he opened, so we said he's reportedly unemployed. He lost his job over that? Poor thing.
ROBERTS: Be careful where the cameras are, because they everywhere these days.
CHETRY: Maybe he was trying to do some Valentine's day shopping for his wife.
ROBERTS: He wouldn't have been buying clothes, though. He just wasn't wearing
(CROSSTALK)
CHETRY: No, she had on some nice boy shorts in one of them. There you go. Anyway, poor thing. It's 90 seconds for your top stories. Fifty-eight minutes past the hour.
(COMMERCIAL BREAK)
