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Speaker Boehner and President Obama Spar Publicly over the Deficit Reduction Deal; Fiscal Cliff and Travel Costs; School Lunch Regulatios Change Again

Aired December 12, 2012 - 15:30   ET

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

BROOKE BALDWIN, CNN ANCHOR: As President Obama and John Boehner trade barbs over the fiscal cliff, if there is no deal, it will impact your flight at the airport. We're going to tell you how.

Plus, we are now just hearing that John McAfee, Internet pioneer who police want to question in this murder case, is right now heading back to the U.S. Those details coming in next.

(COMMERCIAL BREAK)

BALDWIN: Bottom of the hour, thanks for being with me. I'm Brooke Baldwin.

Back to the fiscal cliff. We are less than three weeks now from the one-two punch of tax increases and government spending cuts.

President Obama, House Speaker John Boehner, they held another phone call last night. Here is Speaker Boehner on that.

(BEGIN VIDEO CLIP)

REPRESENTATIVE JOHN BOEHNER (R), HOUSE SPEAKER: There were some offers that were exchanged back and forth yesterday and, you know, the president and I had a pretty frank conversation about just how far apart we are.

(END VIDEO CLIP)

BALDWIN: As we mentioned just last hour, take a look at the graph. These two sides have actually moved closer on taxes over the last couple of weeks.

Speaker Boehner has offered up $800 billion in new tax revenues after insisting on none. You have the president just this week, he's come down a little bit to $1.4 trillion, but still no dice, no deal.

CNN's Sandra Endo is standing by for us at Reagan National Airport just across the Potomac from Washington.

So, Sandra, if we hit this fiscal cliff and all those spending cuts kick in, what effect will that have on air travel?

SANDRA ENDO, CNN CORRESPONDENT: Well, the big unknown is still how it will affect the everyday traveler and that is certainly something a lot of people here are wanting to figure out.

As for the air traffic controllers union, they released a statement this afternoon, Brooke, saying that it would be a major blow to the airline industry as well as the economy if these cuts are in effect.

Now, overall, we're talking about a nearly $2.2 billion projected cut to the Department of Transportation. Half of that would come from the FAA. And the TSA would suffer a $643 million spending cut.

So, according to the head of the TSA, John Pistole, they do have a plan B. They have a plan in place ready to go if these cuts are in place.

Now, he says that the overall front line operations would not be affected, but, of course, this would be a major severe budget cut and a lot of travelers here we spoke to, Brooke, say they are paying close attention to the negotiations.

(BEGIN VIDEO CLIP)

BARBARA SMITH, TRAVELER: It does concern me because, yes, I do travel not extensively, but enough on my job and personally. So, yes, it does have some concern.

I don't want to have to drive everywhere I have to go, but, you know, hopefully again we won't see too much of it and increase or an inconvenience.

(END VIDEO CLIP)

ENDO: Now, according to airline industry experts, the worst case scenario, Brooke, would mean that thousands of TSA screeners as well as air traffic controllers would be furloughed or get the pink slip as well as some smaller airports may see closures, as well.

So, we could be seeing delays and longer security lines if these budget cuts are in effect. Of course, it will take several weeks to see if they do get put in place.

Brooke?

BALDWIN: Oh, longer lines at the airport. Sandra Endo, thank you so much for us at Reagan National.

Coming up next, Ali Velshi giving his take on Ben Bernanke's announcement a short time ago. "Your Money," next.

(COMMERCIAL BREAK)

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: From the CNN Money Newsroom in New York, I'm Ali Velshi. This is "Your Money."

Business leaders relent on higher taxes for the rich; banks, too big to jail. America's energy boom and prices at the pump; and the fastest Internet speed out there, all that coming up. But first, your money is getting cheaper every day. Here's why. The Federal Reserve is like a car with no steering wheel. It has a gas pedal and it's got brakes. Now, to apply the gas to the economy, the Fed lowers interest rates, making it cheaper for companies and individuals to borrow money that they can then spend or invest, hopefully in ways that stimulate the economy.

Four years ago, the Fed lowered its rates to near zero. That puts the prime rate which is always 3 percentage points higher at about 3 percent.

But still, the economy didn't move at a good enough clip, so the Fed turned to other options. The latest was what was come to know -- what we came to know as QE3 or the third installment of quantitative easing.

Now, that's just a fancy way of saying they're printing more money to get into the system, a lot more money, rather than just swapping existing money for bonds with major banks.

Today, the Fed says it'll pump even more money into the economy in 2013.

(BEGIN VIDEO CLIP)

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: The committee took several steps. First, it decided to continue with purchases of agency mortgage-backed securities initiated at the September meeting at a pace of $40 billion per month.

Second, the committee decided to purchase longer-term treasury securities initially at a pace of $45 billion per month after its current program to extend the average maturity of its holdings is completed at the end of the year.

(END VIDEO CLIP)

VELSHI: Do you understand what he said? All right, what effect does the Fed dropping all sorts of money in the economy actually do?

The most noticeable effect for most people will be felt if you're buying a house or refinancing one. Mortgage rates will continue to be at historically low levels.

Generally speaking, the Fed's actions mean that it is easier and cheaper to borrow money. The aim is that money will be borrowed for large investments, both personal and private, that create value for the economy, especially jobs.

The Fed has tied its unusual and aggressive action to the unemployment rate, by the way, saying it'll do what needs to be done until employment is below 6.5 percent.

Now, the Fed does its own projections about the economy and it is not as bullish as I am. Now, cheap and easy money sounds good, but remember that it is what got us into this financial pickle in the first place.

There's also a practical problem associated with printing lots of money. It has a tendency to devalue the money that's already out there. That's inflation, when the same amount of the same thing costs more money.

The Fed says it's going to keep a close eye on inflation, but says it has it under control for now. We'll have to watch closely for that.

OK, now on to the money menu, the list of opponents to raising taxes on the rich is getting smaller. An Obama administration official tells CNN that the Business Roundtable, the lobby group of CEOs and business leaders, pressing Washington to avert the fiscal cliff, has dropped its opposition to hiking tax rates on the top 2 percent of earners. That's after discussions with the White House.

That's a key demand of the president for any deal. Meanwhile, both Democrats and Republicans insist that negotiations on a deal are stalled. Except that both sides have traded proposals with each other over the past few days.

The British bank HSBC says it's going to spend $700 billion to tighten up its procedures on vetting its customers. That's after agreeing to pay a record $1.92 billion fine to U.S. regulators over allegations of money laundering from Mexican drug cartels among others.

Now, some have said the Justice Department wouldn't go after HSBC with criminal charges, because it might push the bank to collapse and that could collapse the entire global financial system.

I sat down with Lanny Breuer. He's the assistant U.S. attorney general for the criminal division. I asked him if HSBC is a bank that is simply too big to jail.

(BEGIN VIDEO CLIP)

LANNY BREUER, ASSISTANT ATTORNEY GENERAL: There is no question that if you look at the guiding principles that the Department of Justice looks at, we look at a lot of factors. Of course the main factor is what is the conduct that you engaged in.

But surely one factor that we have to consider is the collateral consequences and I'm not going to say that was the dispositive factor. But if you do something and you think that by doing it you really risk that there is going to be great -- people will lose jobs or counterparties are going to be worried.

(END VIDEO CLIP)

VELSHI: Now, if you're wondering what America's energy boom will do to the price that you pay at pump, don't expect it to be much lower than where it is today.

Analysts at Bank of America/Merrill Lynch predict that the price of domestic oil could sink to as low as $50 a barrel in the next two years as a glut of oil comes online. But they say oil prices will still average 90 bucks a barrel over the next two years, around where it is today. That's as OPEC announced today it will not raise the ceiling that it puts on oil exports of 30 million barrels a day and gas prices are still determined by global oil markets.

Now, I maintain that America will see another economic renaissance, in part due to the domestic energy boom. Just don't expect prices at the pump to fall anytime soon.

All right, if you're sick of slow Internet connections at home, then listen up. Netflix, the on-demand home movie provider, depends on those high-speed connections for its customers to watch their movies.

Now, Netflix is starting a new series of monthly ratings of Internet providers and the service -- the services with the fastest connection? Well, it's Google Fiber. It's rated number one by Netflix. The speeds, it says, are 16 percent faster than number two, Verizon Fios. Comcast came in at number three on the list.

Here's the problem with Google Fiber. Right now, it's only available in Kansas city, Kansas. Too bad, virtually nobody lives there. I guess folks across the river in Kansas City, Missouri are out of luck for now.

All right, from the CNN Money Newsroom in New York, I'm Ali Velshi. I'm out. Same time tomorrow.

(COMMERCIAL BREAK)

BALDWIN: This just in to us here at CNN. Internet pioneer John McAfee is reportedly ready to fly to Miami. His attorney says McAfee went to Guatemala City's airport to catch the flight.

Authorities in Belize, they want to talk to him still. They want to question McAfee about that murder of his neighbor in Belize, American businessman Greg Faull. McAfee has said he had nothing to do with the neighbor's killing and he fled Belize to escape police persecution.

A TV meteorologist says she was fired from her Shreveport, Louisiana, TV station after she responded to this Facebook comment. It was critical of her short hair. The critic said she looked like -- here she is, beautiful young woman -- the critic says she looked like a cancer patient.

Rhonda Lee responded by saying she's comfortable with the skin and hair that God gave her and she was fired for responding back.

(BEGIN VIDEO CLIP)

RHONDA LEE, METEOROLOGIST FIRED FOR RESPONDING TO VIEWER: I pled for my job again, just this past Friday and asked to see the policy and was told that there isn't anything written down.

So, if I was in violation of something, I would also assume it would be in my employee file. There's nothing there. (END VIDEO CLIP)

BALDWIN: But station management said they had sent out an all-staff e-mail, this is it here -- here is pieces of it, highlighted for you -- stating that, quote, "The only proper response to Facebook comments is to pass on the contact details to a supervisor."

Criminal defense attorney Drew Findling joins me. Welcome.

She says she didn't know about this policy, the handbook policy she was talking about. If you respond -- in her case, by responding via Facebook -- is that grounds for termination?

DREW FINDLING, CRIMINAL DEFENSE ATTORNEY: Well, I don't think it is and I think this is yet another example of how the law, whether it be employment, criminal, civil, contracts, domestic, has not caught up with social media.

Clearly, this wasn't in the handbook and she is going to be told she needed to react to a memo that came her way.

BALDWIN: An e-mail.

FINDLING: Some e-mail that came from somebody from the marketing division. And clearly she disregarded it and dealt with an issue of -- and when all is said and done, this is what lawyers look for -- racism.

I mean, this wasn't a comment on maybe some position she took about whether being weather being misleading. This was a racist Facebook message.

And I'll tell you, if I'm this station and I'm their lawyers ...

BALDWIN: About her looking like a cancer patient?

FINDLING: Exactly. I mean, well, I read the whole Facebook message and it was beyond her looking like a cancer patient. I mean, it was just a -- it was aimed at an African-American woman and it was clearly racist against her because she was an African-American woman.

BALDWIN: Wow. So, if and when she decides to sue -- that was her talking to Soledad this morning -- if and when she decides to sue then, do you think she'll have a strong case?

FINDLING: Oh, I think she'll definitely have a strong case because what's going to happen is the lawyers are going to come to her right now. And they're going to come to her because of the wrongful termination. They're going to try to see a way to bring this into federal court.

So, they're not just getting people from Shreveport, but getting an array of people from northern Louisiana to try to get them to hear this case and you're going to get some people on there that are going to say, really? You terminated her because she responded to a racist statement? And some folks on that jury are not going to be happy about that.

BALDWIN: So many people are getting in trouble for what they are tweeting and instagraming and posting on Facebook and, to your point, the law just apparently not catching up.

Drew Findling, thank you very much for coming in.

FINDLING: Absolutely, Brooke.

BALDWIN: We appreciate it.

School lunches are in for a makeover. Parents, heads up. Why, you ask? Because the Obama administration just pulled an about-face after students made this viral video on YouTube.

Apparently, the White House was listening. Wait till you hear this.

(COMMERCIAL BREAK)

BALDWIN: Your kids' school lunches will be getting a makeover. You see, there was this group of teenagers in Kansas and they were frustrated with their school lunches. They said they were too skimpy.

They uploaded this video to YouTube. They called it "We Are Hungry" and, apparently, the White House was listening.

I want to bring in our senior medical correspondent, Elizabeth Cohen, to talk to me about this rule reversal and you have props, so what are the changes with the lunches?

ELIZABETH COHEN: Well, let's talk about, under these rules that started in August ...

BALDWIN: OK.

COHEN: ... what was forbidden. Because it's pretty amazing what was forbidden.

BALDWIN: Like what?

COHEN: OK, you couldn't serve this and here's why. The chicken has protein. The peanut butter which is used for dipping celery sticks also has protein. You couldn't serve it. That was considered too much protein.

BALDWIN: Too much protein.

COHEN: Too much protein.

BALDWIN: OK.

COHEN: And so the big reversal now says, yeah, go ahead. Give the kids peanut butter. It's OK. And, so, they're thrilled, as you can imagine.

You also couldn't serve this and the reason for this is that the ... BALDWIN: Let me guess. Too much carbs?

COHEN: Too much grain. Right. Exactly. The garlic bread plus the spaghetti was too much grains and, so, now the Obama administration is saying, go ahead. Have your garlic bread. They are giving the garlic bread back to the kids.

BALDWIN: Kids getting garlic bread, will this help fight obesity or not?

COHEN: It still is supposed to fight obesity because you still have to limit the calories. The calorie limits, how many calories in a meal, are still the same and you still have to do fruit and vegetables and you still have to do lots of whole grains.

BALDWIN: Are the "We Are Hungry" YouTube kids -- are they happy with the changes?

COHEN: Well, I've been talking to the teachers and whatnot who talk to them and they say, yes.

Because the kids weren't feeling that there wasn't enough food. It was really that they were missing their favorite foods. They wanted to know, where's the garlic bread? They wanted to know, where's the peanut butter? And, so, now those foods are back.

BALDWIN: There you go. Bon appetit.

Elizabeth Cohen, thank you.

COHEN: Thanks.

(COMMERCIAL BREAK)

BALDWIN: Quick reminder, you can always check out our interviews. Go to the Brooke Blog, CNN.com/Brooke.

And that is it for me. Thanks so much for being with me here on this Wednesday. I'm Brooke Baldwin.

Let's send to you Washington next to my colleague, Wolf Blitzer. "THE SITUATION ROOM" begins right now.

Hey, Wolf.

WOLF BLITZER, CNN ANCHOR: Hey, Brooke, thanks very much.