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White House Reacts to S&P's Downgrading America's Credit Rating; Timothy Geithner to Remain Treasury Secretary; Navy SEALs Killed in Helicopter Crash in Afghanistan; Economic Woes Because of Poverty?; Where Are The Jobs?; Giving the Poor a Voice; Keep Sack Lunches Cold

Aired August 8, 2011 - 07:00   ET


CHRISTINE ROMANS, CNN ANCHOR: America's credit downgrade testing world markets, a sell-off under way as we speak. And this morning, ratings agency Moody's warning it, too, may downgrade America's credit. We're live with what all of this means for your bottom line.

CAROL COSTELLO, CNN ANCHOR: And they fought as a team and they died together. This morning, new details on some emotional words from a Navy SEAL widow after the single deadliest incident to the U.S. military of the 10-year Afghanistan war.

ALI VELSHI, CNN ANCHOR: You packed your kids' lunch for, school but is it safe? A medical study shows 98 percent of brown bag lunches could make your children sick. Senior Medical Correspondent Elizabeth Cohen joins us later to explain exactly how and why.

ROMANS: Good Monday morning. It is August 8th. Welcome to AMERICAN MORNING. And we've been up all night watching futures and markets around the world because it's a big day to see how the downgrade will pan out.

COSTELLO: Yes, we're all anxiously awaiting the opening of the market, and we have to talk about it first off this morning. We are watching the markets because today your bottom line could take a hit after the S&P decided to yank America's stellar AAA credit rating. The unprecedented move after the markets closed on Friday, so this is the first day the markets can react.

Felicia Taylor, you've been talking to your high -- your high- powered sources. I didn't mean to say hifalutin.


But your money people, those people in the financial markets.

ROMANS: Who have money.

COSTELLO: Who have lots of money and who influence the markets. And what are they saying?

FELICIA TAYLOR, CNN BUSINESS CORRESPONDENT: Well, there is a lot of fear out there. This is unprecedented territory. This is unchartered waters that we're in right now. We've never seen something like this in the United States. So there's definitely selling pressure and I think it's accelerating as we go into the open.

We thought on Friday because that was a moment after the bell that would be priced in, but frankly the reaction has been global, and we saw it in Asia, we've seen it in Europe, and it's about to take place in the United States as well.

ROMANS: The Dow futures down more than 240 points. That would suggest --

TAYLOR: Abut two percent.

ROMANS: Which would suggest if things hold like this into the opening bell, we saw in Europe kind of wild reaction in stocks and Asia, stocks down big. But they're watching Europe and there's just a lot of -- it could be -- I think we should warn people it could be volatile today and in the weeks to come.

TAYLOR: Well, what they're looking at now, if you're going to downgrade the United States to a AA+ rating, that means you have to look at the other European countries. And people are calling for France to be downgraded and -- I know. Exactly right. That's -- that's a very serious situation, because if you're going to put us on par with certain European countries and ask for that kind of a waiting, that's, obviously, going to have a ripple effect down the road as well.

ROMANS: But doesn't that call into question S&P's decision if France should be downgraded, that it isn't yet but we are?

TAYLOR: Think about S&P's decisions going back maybe two years ago, when they took a look at some of the, you know --

VELSHI: AIG, Lehman Brothers, companies like that, which were all very highly rated.

ROMANS: Yes, why?

TAYLOR: So the credibility is at stake here for S&P as well and whether or not that rating agency can actually pinpoint something and use it effectively.

COSTELLO: The rating agencies like everyone else were involved in a massive bubble and they just -- their eyes were closed. Some say they made it worse. Maybe they're being overly careful. That's definitely being discussed.

ROMANS: There are those who are saying now they're the only honest broker in Europe. On Europe's debt crisis they're starting to regain their credibility again. So whatever it means it was a downgrade and the world markets are reacting. We'll talk to you again.

All right, Tim Geithner is staying on the job. He's of course the treasury secretary. There have been reports that the treasury secretary might leave when the debt ceiling crisis was over. But the White House says President Obama asked Geithner to stay on, and he agreed this weekend.

Brianna Keilar joining us live from the White House this morning. Brianna, this would not have been a good time for the president to lose one of his most trusted economic advisors. And quite frankly, Tim Geithner is a face of this administration's recovery from the crisis over the past two-plus years.

BRIANNA KEILAR, CNN WHITE HOUSE CORRESPONDENT: That's right. And Christine, there really just are not that many folks left from the president's economic team having gone through this whole financial crisis. You saw Christina Romer leave, Larry Summers is long gone, Friday was the last day for Austin Goolsbee, the chair of the president's council on economic advisors.

And so there has been speculation that perhaps Secretary Geithner would leave. And quite frankly the answer that he gave when asked about whether he was staying on, that he would be here for the foreseeable future, I think was basically his response didn't really make people think he was in here for the long haul.

But yes, the president asked the secretary, we are told by White House Press Secretary Jay Carney, and he welcomed the news that the secretary was staying, Christine.

ROMANS: You know, this treasure secretary, apparently we're told there is a treasury secretary who lasted 11 years during the FDR administration, an equally treacherous time in the economy. But this treasury secretary has lived more than a few years -- I mean he's some more than a few years work in that time. And we've had an unprecedented time. We thought maybe he would make it through the midterm elections and try to step back, but he just keeps staying.

Let me ask you about the White House pushing back, Tim Geithner and others, pushing back, striking back at the S&P downgrade, saying that it was a mistake, it was wrong, and then a couple surrogates saying it's a downgrade because of the Tea Party anyway.

KEILAR: That's right. This big blanket pushback we saw this on the Sunday shows yesterday. I noticed a couple things. The talking points are pretty clear. They're taking aim at S&P. You heard some surrogates call this "amateurish," call it "political." And they're really taking issue, you'll hear, with the math, because there was a, it appears, miscalculation in the way deficits were calculated.

However, in the end, even though the treasure department took issue with that, S&P said that it stood by its decision to downgrade the U.S. because of the whole process.

And Christine, you brought up that point, the Tea Party downgrade, this is what we heard from the president's top political adviser, David Axelrod, even though they're taking issue with S&P they're also latching on to that justification S&P is giving for the downgrade and pointing a finger at the Tea Party and at Republicans for this whole debt ceiling battle, saying that process is the fault of House Republicans. Of course, you know the story, is basically the same if you listen to what Republicans say. ROMANS: Proving exactly what S&P said that people are in their ideological bunkers and unwilling to come together. All right, Brianna Keilar, thanks so much in Washington.

COSTELLO: They were on a rescue mission when the chopper went down. We have new details this morning on the single deadliest incident in the decade long Afghan war. We're now learning the 30 Americans who died in that crash most were elite Navy SEALs. They were on their way to help fellow troops on the ground.

This morning family members are mourning their loss, praising their courage, and giving some of our anonymous heroes a name. Brian Todd is live in Virginia Beach, home of many of the Navy SEALs team. And Brian, I can't imagine what it felt like to interview the widows of these men.

BRIAN TODD, CNN CORRESPONDENT: It was tough, Carol. You know, the military tradition here is very, very strong, the realities of war never far from the minds of these folks. But even with that, the real devastation of Saturday's incident in Afghanistan just beginning to sink in.


TODD: Kimberly (ph) Vaughn describes that moment when uniformed officers came to her door and told her about her husband.

UNIDENTIFIED FEMALE: I just fell to my knees.

TODD: Aaron Carson Vaughn was one of 22 Navy SEALs killed in the helicopter crash in Afghanistan. Kimberly is now left to care for two-month-old daughter Chamberlain and son Reagan, who turns two years old next month.

UNIDENTIFIED FEMALE: I want to tell the world he was an amazing man, he was a wonderful husband, and a fabulous father to two wonderful children. He was a warrior for our country, and he wouldn't want to leave this earth any other way than how he did.

TODD: On the boardwalk, in the diners of the Vaughn's newly adopted hometown of Virginia Beach, a community grieves for two dozen young men who are their midst but never really got to know. Mary's restaurant is a hangout for some of the SEALs based near Virginia Beach.

UNIDENTIFIED FEMALE: You feel like you're at rock bottom again. You just feel like you're not succeeding at what needs to be done. And you have to ask, is it worth it? Is another life worth it?

UNIDENTIFIED MALE: It's a great loss. It's very sad, very sad.

TODD: These were secretive, elite commandos who could never reveal what they did to these neighbors.

(on camera) Still, people here feel a close bond with the SEALs. And in only about 13 weeks this community's gone from the triumph of the killing of usama bin Laden to what now appears to be the biggest single loss of life in SEAL history.

(voice-over) We're told none of the SEALs killed in this operation were on the bin Laden raid. Virginia Beach Mayor Will Sessoms wanted to throw a parade for the SEALs after the bin Laden operation, but knew he couldn't. Now he has got to help an entire city grieve for a group of young men whose names they may be hearing for the first time.

UNIDENTIFIED MALE: It hurts. And, you know, but it's a shared pain, which means that everyone thinks so highly of them.


TODD: And now the mayor, the SEALs, the former SEALs, and their commanders are going to be focusing on trying to help the families out, trying to raise money for the Navy SEAL Foundation. That is a group dedicated to giving financial support to the families left behind. Carol?

COSTELLO: I can't think of a better way to spend your money. Brian Todd, live in Virginia Beach this morning, thank you.

VELSHI: Coming up next, a downgrade that rattled the world. We'll talk live to a managing director at Standard & Poor's. We'll ask him why the decision was to made to downgrade America's credit rating, how he responds to the criticism of S&P that's being leveled, and whether there is really a chance that the U.S. will be downgraded again.

ROMANS: OK, and where are the jobs? And where's the jobs plan? With a mountain of debt and a fresh downgrade, how can America get 14 million people back to work? Oh, yes, are we talking about jobs? Are we talking about jobs, anyone in Washington? We're going to ask the experts, where are the jobs?


VELSHI: OK, back to the credit downgrade that infuriated the White House, sent shock waves through the markets around the world. It made the White House mad, Republicans mad, Tea Partiers mad. Everybody is pointing fingers at everybody else. Standard & Poor's lowering America's credit rating from AAA since we were first rated in 1917 to AA+ on Friday.

ROMANS: The agency is defending its decision, saying it's based on $14 trillion in American debt and a political inability to get it under control. David Beers is global head of sovereign rating from Standard & Poor's and joins us live this morning from the S&P headquarters in New York.

And welcome to the program. We know you and your colleague John Chambers have been really open with us all weekend, talking about the decisions behind your downgrade. And as the weekend has gone on, I'll be honest with you, the attacks against your decision have mounted. From the White House, Gene Sperling, top adviser to the president. I want to get your reaction to what he said. He said "The magnitude of their error," and he's talking about how you accounted for America's deficits going forward, "and the amateurism it displayed combined with their willingness to simply change on the spot their lead rationale and their press release once the error was pointed out was breathtaking. It smacked of an institution starting with the conclusion and shaping any arguments to fit it."

And then I heard George Will on "ABC" this week with Christian Amanpour, and he was equally scathing about S&P's credibility and why so many are putting stock into your rating. I want you to listen to what he said.


GEORGE WILL: Standard & Poor would have forfeited its good reputation if it had a good reputation to forfeit these days, having missed the mortgage-backed securities problem under its nose.

If you read what they actually said, it's a kind of half-baked political analysis criticizing the American system of government and how it works now. Now, they're entitled to their opinion on our politics, but their opinion isn't entitled to any particular respect.


ROMANS: Can you respond to the mounting criticism about your decision? Did you expect that so many people would be so upset about a downgrade?

DAVID BEERS, GLOBAL HEAD OF SOVEREIGN RATINGS, STANDARD & POORS: Well, no, I can't say that we're overly surprised. Any time we lower a government's rating there is criticism from the government that we rate. I haven't yet encountered a government that's agreed with the downgrade of their rating.

Can I respond to what George Will -

ROMANS: Please.

BEERS: -- that clip you just played back to me?

ROMANS: Please.

BEERS: You know, lost in this discussion is what - is the fact that we're talking about our government ratings here and George Will and everybody else who has an issue with our ratings should take some time to actually look at the track record of our government ratings, particularly our ratings on national governments, the group that I had. And what they'll find, is - is that the track record is very strong in terms of what these ratings are designed to do, which is to provide forward-looking opinions about credit risks, the risk of default. And on that basis, you know, we stand by our decisions.

Now, I want to talk about this - this criticism coming from the White House and - and the Treasury. This idea that we made a $2 trillion error is simply a smoke screen for the unhappiness, in our view, about our decision. Because the issues that the Treasury was talking about are talking about projections far into the future.

For example, the way we measure the overall indebtedness of the United States, you know, federal, state and local governments, excluding assets, this year, the - that indebtedness should be around $11 trillion. We expect by 2015 it will be about $14.5 trillion. And we expect that by 2021, it should exceed $20 trillion. These are very large numbers, right?

The difference between the original projections we discussed with the Treasury and our final projections going out to 2015, which is kind of the time horizon that we usually focus around ratings is about $200 or $300 billion. You know, the difference between $14.5 and $14.7 trillion, and anybody who's in the business of - of financial projections, will look at this and shrug their shoulders.

The final comment I want to make about is, the comments of the Treasury Secretary himself last night in his criticism of us. He acknowledged after the criticism, two important points. One was the harm that was done to the reputation of the United States around the debt ceiling debate and the fact that this dragged on until August 2nd, the very day that the Treasury said it was going to have cash flow problems and difficulty paying its debt on time in the fall.

And then he pointed to, in his opinion, the fact that the underlying public finances of the U.S. remain on an unsustainable path. And these are the very points that S&P highlighted in its one notch downgrade of the rating from AAA to AA Plus.

So it seems that the Treasury isn't challenging the analysis both on the political side and on the - and on the fiscal side. They're just unhappy with the downgrade, but we stand by our decision.

And my final point on this is, just for the benefit of your viewers, you know, we've got a very broad scale -- AAA is our top rating. The second highest rating, which is where the U.S. government is right now, is AA Plus. So what we're actually talking about in reality, you know, in the way we view things, is a very small diminution, if you like, in the credit standing of the U.S. So this is not a catastrophic decline in the U.S. credit worthiness, but we have a negative outlook on this rating. So the ratings -

VELSHI: So let me just get in on that point, David, your negative outlook, in fact, you have said that you could downgrade the United States further, so I guess as a two-part question, how do we avoid -


VELSHI: -- the U.S. being downgraded again and what would it take and how long would it take to get back to AAA?

BEERS: Well, on the first - on the first point, what would it take to avoid the downgrade? In Friday's statement, we mentioned that there could be two or three possibilities in which the rating would go lower. The first, of course, is the implementation of last week's agreement. Any, you know, deviation around implementing the - the cuts that Congress agreed and have yet to be determined by the Congressional Committee, that could be an issue.

Also, of course, we have the faltering economic recovery in the U.S. So if the growth of the U.S. economy continues to disappoint, that's going to put pressure on public finances again. So, and then we'll have to also look at the path of interest rates. If interest rates were higher than we're presently assuming that, too, would put pressure on the - on deficits and potentially on the ratings.

Then you asked what it would take to get the U.S. back to AAA, from AA Plus. And our answer is clear based upon our analysis on Friday. If we see that the climate in Washington is calming (ph) and it becomes easier for the parties to come together on a consensus around fiscal policy choices in the country, and, therefore, we see that a more - a more robust and a bigger fiscal stabilization program emerges in the future, which is going to stabilize the U.S.'s debt burden, then the two together could get the U.S. back to AAA.

ROMANS: All right.

VELSHI: David Beers, thanks for a very thorough answer to those questions. David Beers is the Global Head of Sovereign Ratings at Standard & Poor's.

BEERS: Thanks a lot.

VELSHI: After the quick break, we'll be covering the effect of this downgrade on markets your investments when we come back. Stay with us.


COSTELLO: Are you awake and ready to argue? Because now is your chance to talk back on one of the big stories of the day. Our question this morning, do the poor share responsibility for our economic woes? So let's talk about it.

Deficit, stocks, tax cuts, jobs, those are today's political keywords, but what about poverty? You don't hear the word poverty that much in Washington these days, but it's out there. Boy, is it ever.

According to the census data, 44 million Americans live in homes with income below the poverty level. The Department of Agriculture says 15 percent of Americans are on food stamps. Some like talk show host Tavis Smiley think it's time to put poverty back on the national agenda and he's currently on a national tour bus to do that.


TAVIS SMILEY, CO-HOST, SMILEY AND WEST RADIO SHOW: In this presidential race that you're about to embark upon, somebody has to stand up and defend and fight for and not be afraid to talk about the plight of the poor in this country.

(END VIDEO CLIP) COSTELLO: Talk about a fighter, one Democratic congressman called the recent debt ceiling bill a Satan sandwich for cutting aid to the poor. Yet what exactly does poor mean in America?

The Conservative Heritage Foundation says the overwhelming majority of the poor live in decent homes, most with two TVs, a DVD player and a VCR, a kitchen with a fridge, microwave and stove. Their point - that statistics can be misleading.

Republican Senator Orrin Hatch says Democrats don't get it.


SEN. ORRIN HATCH (R), UTAH: And I hear how they're so caring for the poor and so forth. The poor need jobs. And they also need to share some of the responsibility.


COSTELLO: So, our talk back question today, do the poor share responsibility for our economic woes? We will read some of your comments a little later this hour. We'll be back.


ROMANS: All right. Top stories the downgrading of the U.S. credit, not just one for the history books, but also for your pocketbook. Overseas, the markets are down in Asia, they were off by about two percent and in Europe, stocks are also trading lower.

Back here at home, stock futures are in negative territory, Dow futures are down by about two percent, that's about 240 points or so.

VELSHI: Yes. And we're waiting to see how that S&P downgrade of America's credit is going to have an impact on the market when it opens in the next - well, two hours from now exactly. The White House is blasting the move as unwarranted. Some are calling it politically motivated.

We just finished a conversation with S&P's Global Head of Sovereign Ratings, David Beers. He said the agency, S&P, has simply lost confidence in the United States after the debt ceiling debacle. He calls the White House criticism of S&P a smoke screen. S&P also has a negative outlook on the U.S. for the next 6 to 24 months. The agency says there's a one in three chance that the U.S. credit rating could be downgraded again within that time frame. Although, Christine will tell you that means there's a two in three chance they wouldn't.

COSTELLO: Set (ph) the optimist in me.

Well, one man is staying put through all of that. Treasure Secretary Timothy Geithner has agreed to stay on the job for at least another year. There had been reports Geithner was considering leaving and moving back to New York once the debt ceiling crisis was over. But the White House says the president asked him to remain on the job and he did agree.

ROMANS: OK. You've been hearing about credit ratings and what debt rating agencies do and debt ceilings in recent days, but, hey, for 14 million Americans out of work it's really all about jobs. And right now, no one seems to know how to get all these people back to work.

Joining us this morning to talk about jobs, how to create them, who has a plan for it, if you can even get a real plan in this political environment, Mark Zandi, chief economist from Moody's Analytics live in Orlando; and from Washington, Christian Weller, Senior Fellow at the Center for American Progress and Associate Professor of Public Policy at the University of Massachusetts. Welcome to both of you.

Mark, let me start with you first, the president has talked about trying to create jobs. Recently he started talking about maybe extending the payroll tax holiday, maybe trying to get more incentives, hiring incentives for small business, doing some other things to try to get job creation through. Is that a credible plan, will it work?

MARK ZANDI, CHIEF ECONOMIST, MOODY'S ANALYTICS: Yes. I think those are good ideas. I think there's a plethora of things we can do, but if we want to create jobs quickly the next 12, 18 months, I think most people do, the most obvious thing would be to extend the current payroll tax holiday. It expires at the end of the year. We should extend that another year.

Emergency unemployment insurance benefits, they also expire at the end of the year. They should be extended. I think we may also want to think about helping state governments. We know they've been laying off quite aggressively.

And if we can give them a little bit of relief particularly under the unemployed insurance funds that would go a long way to helping the job market. Other things we can do longer run, but those are important in the near term.

ROMANS: Something the president wants that means there's a bunch of people in Washington who are against it.

ZANDI: Yes. That may change. You know, if the job market continues to struggle, continue to get tough job reports over the next month, two or three, I think sentiment in Washington will likely change and these things will become more likely.

ROMANS: Christian, we're in this period talking about cutting more than Washington has agreed to, cutting more services, more programs, not less.

And there's a real fear that the kinds of things that people feel first in the discretionary spending, you know, the services that people use, are what's going to go. What's that going to mean for the middle class and what's that going to mean for jobs? DR. CHRISTIAN E. WELLER, SENIOR FELLOW, CENTER FOR AMERICAN PROGRESS: Let me say here, that the Super Committee that is now in place and that has to come up with its recommendation before November -- before Thanksgiving, there is no clear line here that they have to cut spending any time soon. They can do a number of things.

What I would like to see and what I think a lot of people would like to see is a real discussion of how we can set tax and spending priorities to create jobs, do the things the Mark raised as the same time while talking about long-term deficit reduction.

You don't have to cut $1.2 trillion this year. The idea is to cut 1.2 to 1.5 on net over the next 10 years. But at the same time there has to be a recognition that the labor market right now is too weak to substantially reduce the unemployment rate that we need to do things to boost the job creation at this point.

I think that's ultimately the discussion. I think we need to move off this viewpoint that the Super Committee can only cut, it can do a number of things. The important thing here is to protect a weak labor market, to strengthen the weak labor market and protect the recovery and then pivot over to deficit reduction over the long term.

ROMANS: Christian, there's a lot of fear among people, frankly people who work with the poor or people who work with the middle class, who are worried that they're worried that Congress doesn't have the shall we say finesse to be able to make sure that you are helping jobs in the near term, but also helping the deficit in the longer term. You can do both of those things?

WELLER: Well, I mean, the alternative is you simply slash programs for the poor and middle class and as Mark said if we get more weak labor market reports, I think there is going to be a real political pressure point for Congress to consider what to do in the short run for the labor market.

As Mark pointed out, the payroll tax holiday is going to expire as are the unemployment insurance extension at the end of the year. So there are a number of points that are coming together towards the end of the year that will put pressure on Congress to rethink its stance on what to do in terms of spending and taxes.

And to really balance between protecting the weak, strengthening the weak labor market, right now, and the long-term deficit reduction.

ROMANS: So Mark, let me ask you to wrap it up a little bit, I mean, is there a credible jobs plan out there or all this talk about debt ceiling and debt ratings all I hear these people talk about when my friends and our viewers keep asking me about jobs, jobs, jobs?

ZANDI: Yes. Well, we got to solve our debt problem. I mean, without a good fiscal situation, we're not going to have a good economy, have a business create enough jobs. So that's a necessary condition and there is no magic bullet here. We've tried a lot of different things. It's going to take time. But there are things we can do and I think policymakers will step up and do them if the job market doesn't kick in to a more significant degree in the next few months.

ROMANS: All right, Mark Zandi, chief economist in Moody's Analytics, thanks so much and Christian Weller from the Center for American Progress. Thanks both of you.

You know, someone we interview all the time and interviewed recently, it's a difficult period. We've tried everything. Why don't they do more? We've tried everything.

VELSHI: If it were a magic bullet, it would have been fired by now.

ROMANS: Right, I mean, we tried everything.

COSTELLO: I think people forget how deep the recession was.

VELSHI: You're right.

COSTELLO: And what precipitated all this. We forget what happened in 2008.

VELSHI: It was bad.

ROMANS: Really bad.

COSTELLO: And it is still playing out. Unfortunately, the people who feel it are us, not the people who are arguing in Washington.

VELSHI: Very little influence over it but you feel it.

COSTELLO: Coming up next, poor people of all races across the United States say they've been forgotten and ignored and specifically, some black Americans are starting to wonder out loud if support for President Obama is going against their own interests.

So two radio hosts traveling across the country putting the spotlight on those hit hardest by the recession, it's being called the poverty tour. It's no coincidence. It started in President Obama's hometown. Tavis Smiley, Cornell West, after the break.


COSTELLO: Good morning, fellow Detroit Tiger fans. Yes, they are in first place in the central division. It's cloudy right now, 70 degrees later today, partly cloudy, with a high of 83.

As the nation's middle class disappears the number of poor in this country is growing. If you listen to Tavis Smiley and Cornell West, nobody cares. The poor have become invisible.

To combat that, Smiley and West are traveling across the country to give the poor a voice. They call its poverty tour. Today, they are in the city of Detroit and they join us now.

Tavis Smiley and Cornell West host of "The Smiley and West Radio Show," thank you for coming on.



COSTELLO: So we do this thing called talk back every morning on AMERICAN MORNING. This is the question we asked our viewers this morning. Do the poor share responsibility for our economic woes? I got to tell you, I'm going to read you a response and then Tavis, maybe you can respond to this.

This is from Stacy, she says welfare in theory was a good thing, but it -- but it is now -- but it's become a way of life for generations. The poor actually have it better than the middle class. Tavis, do you think there's any real understanding about who the poor are in this country?

TAVIS SMILEY, CO-HOST, SMILEY AND WEST RADIO SHOW: I think first of all, with respect to the person who wrote that, that's complete lunacy number one and that's as charitable and kind I can be about a comment like that and that's really the problem, Carol, right now in America.

When you talk about poverty, there's always been a connection, a link between poverty and crime, but now, it's become a crime in this country to be poor and that's the problem. The poor get dumped on, the poor get piled on, the poor get demonized.

We cast aspersion on them and somehow blame them for their lot in life. Here's the bottom line, I heard your earlier segment talking about this debt ceiling deal. I think this debt ceiling deal, Carol, was really a declaration of war on the poor.

The Congress, the president, respectfully, have declared war on the poor. You can't sign into law legislation that raises the debt ceiling, but opens up a crater in the floor. Put another way, no unemployment extensions for poor people.

No closing of a single corporate loophole, not one new tax, not one cent of new tax on the rich and the lucky, so once again, the corporations get off scot free. Wall Street and the banks get off scot free and all these cuts aimed at the poor. How do you blame the poor for that?

COSTELLO: But, Cornell, put it this way, Cornell, the Heritage Foundation, this is conservative organization. They did this study. They say the poor in America today, are unlike the poor in America years ago. In fact, most of the poor in America live in a decent house. They have TVs. They have microwave ovens and they even have a refrigerator. What are they complaining about?

CORNELL WEST, CO-HOST, SMILEY AND WEST RADIO SHOW: Yes. I think that's a lie. I think what we've seen and most poor people recognize the lack of food, the lack of housing, the lack of quality education, which is for white, black, red, and yellow, across colors across cultures is very real.

But look at it this way, when you have the top 400 americans have more wealth than the bottom 150 million, that 1 percent of the population have more wealth than the bottom 90 percent --

COSTELLO: Yes, but the argument --

WEST: -- Heritage Foundation --

COSTELLO: Those people pay the taxes in America and the poor don't pay any.

WEST: No, but that's a lie too. Most of the taxes are paid by middle class. One out of four corporations don't pay a penny of taxes. They got offshore havens. They got offshore subsidiaries.

The very head of President Obama's job commission, of GE, hasn't paid a penny of taxes in the last two years. So all these misconceptions is what brother Tavis and myself came up with the idea of the poverty tour.

The legacy of Martin King, keep track of the dignity and humanity of poor and working people shatter all these lies being told about them.

COSTELLO: Tavis, what is President Obama, what would you like President Obama to do because you have several bones to pick with him?

SMILEY: Well, we don't have enough time to give you a list of things I think he ought to do respectfully. Number one, the president ought to start using the word poor, p-o-or, don't be afraid to talk about the poor to say the word poverty.

In three presidential debates the last time around, between Obama and McCain, the word poverty, poor never came up one time. Last year in his state of the union address the president became the first president since 1948 in that speech to not say the word poor or poverty.

We have to call it what it is. Number two, they ought to be a White House conference on poverty. We have conferences on everything else in the White House, why not a White House conference on poverty. Why not a plan, just like we had a plan to raise the debt ceiling, why not a plan over 10, 15, 20 years to eradicate poverty.

COSTELLO: The president represents everybody in America, not just the poor and not just the middle class and the wealthy.

SMILEY: Precisely.

COSTELLO: Dealing with a lot of stuff right now so why concentrate on one segment of the population?

WEST: When the banks had a national emergency, they bailed out and found $700 billion. When we go to war, we find $1.3 trillion for the poor and working classes living in a state of emergency, a matter of national security, especially the children.

We got 21 percent of our precious children of all colors living in poverty and that's morally job seen in the richest nation in the history of world.

COSTELLO: I wish we could continue this conversation, but we have to wrap it up here. Thank you both for joining us this morning. You're in Detroit, you're stopping to talk to the poor across the city of Detroit and then on to other places.

Tavis Smiley, Cornell West host of "Smiley and West radio show." You can check out their web site, povertytour.smily and Thanks to both of you.

VELSHI: A very compelling argument they make.

COSTELLO: Those close to the White House who have tried to make this argument you have to focus on the poor and you have to focus on race-based employment programs to alleviate poverty for different segments of society.

VELSHI: Because there's -- disparity between these groups.

ROMANS: There is. I'm telling you, there's been real push back to that because this White House wants exactly as you said, about everybody, not about isolating people. It's about everybody.

COSTELLO: And frankly, I think to an extent, the poor have been demonized because many people in America think they're leeches on society. They're just, you know, sucking everything out of us.

VELSHI: Three million or 2 million job openings and you have 14 million looking for jobs. Doesn't matter how good you are. Whole bunch of people aren't getting them. It's a very interesting discussion. Your morning headlines are coming up next including amazing videos of riots and looting across London.

ROMANS: Also ahead, what's the secret for a safe kids lunch, how to skip the stomach ache. It's 44 minutes after the hour.


VELSHI: Forty-six minutes after the hour. Here are your morning headlines:

Right now, U.S. stock futures trading sharply lower ahead of the opening bell. Each down about 2 percent so far. Standard & Poor's decision on Friday night to downgrade America's debt rating has been pushing stocks down worldwide.

The two hero officers who took down the accused Ft. Hood shooter Nidal Hassan are reportedly losing their jobs. "The American Statesmen" newspaper in Austin -- reports the civilian officers are being replaced at military -- I'm going to take a break. I'll be back with more of thse news when I can actually speak.


ROMANS: Good morning, Atlanta. It is mostly cloudy, 75 right now. Partly cloudy and a cool and quite seasonable 96 later on.

VELSHI: Well said.

COSTELLO: What a great day it's going to be.

Here's a question for you this morning. Is your kid's lunch making him sick?

New research shows 98 percent of lunches brought from home are not cold enough by the time your child eats the food.

VELSHI: But all that bacteria makes them strong and equips them for stuff later in life.

Joining us with tips on how to pack the safest lunch is senior medical correspondent Elizabeth Cohen.

Come on, really?

ROMANS: Doing the right and wrong thing.

COSTELLO: I initially heard this, I thought -- oh, my God, this is like news for the dumb.

ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: It does seem like news for dopes, doesn't it?


COHEN: Like make sure your kid's lunch doesn't get too warm. But these researchers looked at 700 school lunches, but like real lunches.

VELSHI: Right.

COHEN: They went into schools and got them. And most of them were to warm. I mean, they checked them right around lunch time and like 97 to 99 percent of them, they were too warm to keep meat and the dairy cool enough. Which means --

VELSHI: Which means, what, stuff grows on it?

COHEN: Right. Bacteria can grow.

And for most kids, this isn't necessarily going to be a big deal, especially if your kid is healthy. But if your kid -- you know, your kid comes home with a stomach ache, maybe it's because that lunch has bacteria.

ROMANS: Moms try to pack a healthy lunch and in the end, she's just making them sick.

COHEN: But it's so easy to do it right.

ROMANS: Just an ice pack in the cooler?

COHEN: A lot of ice packs.

ROMANS: A lot of ice packs. OK.

COHEN: Well, first of all, people think -- you know, most bags these days are insulated. Like this bag is insulated. This bag is insulated. And so that's not enough. That's what they found.

So, pack a couple of ice packs. If they look like a frog, that's an extra added plus, and it matches your outfit. So, you get that one.

ROMANS: OK. Thank you.

COHEN: Nobody is wearing blue.


COHEN: A couple of those.

Now, here is a great trick. I just love this.

All right. Let's pass this around.

ROMANS: Is that the yogurt?

COHEN: It's frozen. So, freeze the actual food items.

So, here, Ali. This is for you.

VELSHI: Freeze a cheese stick?

COHEN: You can freeze anything. Freeze a turkey sandwich. There you go.


ROMANS: Freeze a turkey sandwich? That's a really good idea.

COHEN: Isn't this clever?

VELSHI: I have to assume that you're making lunch for them the night before.

COHEN: My mother froze all of our -- right -- my mother, at the beginning of every summer, there were four of us, she would freeze more than 100 turkey sandwiches and everyone thought she was crazy. But I'm here to say, mom, thank you.


COHEN: There's four of us.

VELSHI: You had 100 turkey sandwiches?

COHEN: Over the course of a summer, yes. Five days a week, eight weeks of camp.

COSTELLO: My mom gave me lunch money and I went and had that horrible pizza in the school cafeteria. I bet it was fresh.

ROMANS: My mom said there's a whole bunch of ladies spending an awful lot of time getting a paycheck for making lunch so can you eat that.


VELSHI: All I ever went was with my lunch in a paper bag or lunch box. I'm relatively robust.


VELSHI: I mean, I'm relatively robust. How much damage are we doing with this? I mean, is there -- I'm joking in the meeting. But is there some argument that we're toughening our kids up by letting him have a little bacteria?

COHEN: I mean, look, your kid is not going to live in a completely hygienic world. That's just the case. And if your -- if that lunch gets a little warm, chances are that your kid will probably is going to be fine. But it could be anything from a minor stomach ache to serious food poisoning.

VELSHI: That you don't want. Yes.

COHEN: Right. So why take that risk?

VELSHI: It's easy enough to do this.

COHEN: Throw everything in the freezer.

COSTELLO: They like Christine. She actually has a lead-testing thing at home.


ROMANS: I tested lunch bag, it was made out of vinyl. And I keep reading all this stuff about how you got to be careful about vinyl products with your kids and sure enough the lead test show that vinyl on the insulator lunch bag came up. So, I'll do that segment tomorrow.

COHEN: I don't know about that.

VELSHI: If I don't behave well in this life, I'm going to come back as Christine's kid.

ROMANS: You'll be wearing a rubber suit.


VELSHI: Seriously.

Elizabeth, so great to see you.

COHEN: Great to be here.

VELSHI: Thanks for the cheese.

COHEN: You can keep these, too. They're yours.

COSTELLO: Oh, thank you.

VELSHI: Crunchiest piece of cheese I've ever eaten.

COHEN: It will thaw out. That's the whole point. By the time your kid eats it, that's regular cheese. OK.

VELSHI: As you know, I don't have much discipline with food. I'm hoping it thaws out in the next eight minutes.


VELSHI: That's perfect for me. I should just freeze all my food.

All right. In movies, super heroes are trying to wipe out crime. Gotham City has Batman, Spiderman protects Manhattan. Harrisburg, Pennsylvania, has a keystone crusaders.

ROMANS: Oh, yes. The "Do-Good" duo goes around, feeding the homeless, picking up trash, handing out water on hot days, anything they can do, to make Harrisburg a better place.


UNIDENTIFIED MALE: I've seen the city go downhill. I have two kids who I want to see them grow up in a city that's a lot better than this where, you know, I'm not necessarily afraid of them going outside.

UNIDENTIFIED MALE: This sounded like a good thing to do, something worthwhile. And I am enough of a geek that I love the idea to be like a superhero.


VELSHI: All right. That's pretty cool.

ROMANS: You know, the guys say Harrisburg needs to realize it can be its own hero.

VELSHI: That's a neat thing. A lot of you get a kick out of dressing up and helping people, why not?

ROMANS: Those guys, they love to wear tights.

VELSHI: That's the other thing, if you get a kick out of wearing tights.

ROMANS: I'm just teasing.

VELSHI: That's good stuff.

COSTELLO: I'm skipping over that part.

Here's your chance to talk back on one of the big stories of the day. We asked you this question this morning: Are the poor partially responsible for our economic woes?

Here are some of your responses. This From Bo: "It's the exact opposite. The top 1 percent run the country. They do a heck of a job keeping their foot on our heads as we fight for air. If anyone is to blame, it's all the big wigs keeping their profits."

This from Stacey, "The reality is that the poor in our society are a drain on the entire system and have been for 40 years. The current issues didn't just happen in the past couple of years. Welfare in theory was a good thing, but now, it's become a way of life for generations. The poor have it better than the middle class."


COSTELLO: I just want to read on more, Craig, because it's just interesting how people perceive the poor in America.

This is from Craig. He says, "First off, there are no poor people in the United States. Our poverty is equivalent to 1 percent in most other places in the world. Next, many of the so-called poor choose to stay that way because they are addicted to government assistance. Are they responsible for our country's economic woes? No. But the assistance we give them definitely is not helping."

Please keep the conversation going because people are starting to argue on our Facebook page and I always enjoy that. Thank you as always for your comments.

VELSHI: Top stories right after the break.

Fifty-five minutes after the hour.