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113th Congress Sworn in Today; Back to School in Newtown; Unfinished Business for Congress; Analysts Say Market Surge Won't Last; Auto Sales on the Rise; Rape Case in Stubenville, Ohio

Aired January 03, 2013 - 11:00   ET

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

ASHLEIGH BANFIELD, CNN ANCHOR: Hello, everyone. Welcome. I'm Ashleigh Banfield.

Partisan paralysis, dysfunctional do-nothing Congress. Well, that may have been the 112th Congress but the 113th is going to take over Capitol Hill today. And I'm telling you, it will be different. Anyway, I think so.

A House roll call vote is scheduled to be happening right about now. House and Senate swearing-in ceremonies officially get under way at noon. The reality is this new congress has a whole lot of old problems still to tackle and a couple of old members still sticking around too.

Our senior Congressional correspondent, Dana Bash, knows them all. I'd like to say. She's spoken to them all, anyway.

I want to start with you, Dana, and I want to find out a little bit about the new freshman class and, essentially, what it tells us. We've got 97 news members total, 13 new senators, 84 new representatives and this freshman class is far more diverse than we've ever had.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Far more diverse. In fact when you're talking about the House Democratic caucus, for the first time, the majority is not white men.

The majority is made up of minorities, of women and, as the Democratic leader said just a short while ago, LGBT, so there certainly is a very different makeup of when it comes to the faces of members of Congress than there were just a few years ago. It definitely will be a new day when it comes to that.

When it comes to the actual balance of power, of course, nothing is changing. The House is in Senate -- is in Republican hands. Forgive me. The Senate is still in Democratic hands. However, there are more Democrats in the Senate and there are more Democrats in the House.

BANFIELD: And, actually, let's throw out those numbers and break it down for me. Since it's been two months since the election and so much has been going on since then, people might have forgotten just how many more seats the Democrats gained and what the Republicans lost in both Houses. Break it down for me. BASH: That's right in the Senate -- and forgive me. I was just looking to the side. I just want to tell you that I'm actually in the corridor where these new members are walking back and forth between the Capitol and offices back here, so that's why I'm looking to the side every so often.

But to answer your question, you see it right on the screen there. Fifty-five Democrats in the Senate. That is up a handful from what they had before, four from what they had before and, so, that is going to help because, as you well know, Ashleigh, every single vote in the Senate matters. Every senator's vote is absolutely critical because they can use the rules to stop things, to change things in a pretty remarkable way.

And when it comes to the House, 201 Democrats, which is a pretty significant gain. Not enough, it wasn't, to get them the majority, but it is a lot more than they had the last time around.

With regard to the House rules, it won't matter as much because there is a very iron fist that the majority gets to use in the House. Whether it is majority of Democrats or majority of Republicans, it's just the way the rules go, but it certainly will change the dynamic now that there are more Democrats.

BANFIELD: And then what about the tea party dynamic? There were certainly some losses suffered with some tea party favorites, but will there be much of an impact on the House?

BASH: You know, I'm not so sure the answer to that is yes. Yes, there were some of the most outspoken, some of the most visible, those who like to do a lot of television interviews were defeated, but there still are a number of Republicans who were elected in 2010.

I talked to several of them in the hallways and even this morning who are pretty active and determined to stick to their principles, to stick to their principles of cutting spending, of reducing the deficit and doing it at any cost.

And, so, you're definitely going to see that play out with regard to how the House Speaker, how John Boehner continues to process things in the House and it will keep the pressure on him to not negotiate with Democrats as much.

BANFIELD: Well, and Democrats may have gained members, but control is control, as you mentioned artfully right at the beginning of this segment.

Is there going to be more leverage for Democrats in the upcoming debt ceiling spending talks? The three more fiscal cliff-ish things we need to deal with?

BASH: Well, Republicans certainly feel they have the leverage in the debt ceiling talks because they -- many of them think that there is no problem of reaching the debt limit and putting the country in jeopardy like that in order to stick to principle, in order to say that, you know, we're just not going to do that until we cut spending because the only reason why we are reaching the debt limit and the debt ceiling is because there has been too much federal spending.

And, so, I don't think that there's going to be a lot of backtracking on that. But you also have on the other side Democrats who say that, you know, they're still going to push for what they believe is right and they're not going to let Republicans push them into something they don't want to do like we saw about a year and a half ago when we had the big debt ceiling fight and it led us to have those mandatory spending cuts that led us to the fiscal cliff.

So, it really is a cycle and it is anybody's guess at each step of the way who is going to really have the upper hand, politically.

BANFIELD: Well, keep your eyes out for those arriving new members, Dana. Thanks very much for your work today, as in every day.

Also, Dana let me in on something last night. That was a very special moment that's going to play out, in fact, in just about 30 minutes today on Capitol Hill. This man, Illinois Republican Mark Kirk, suffered a stroke last year and he was paralyzed. Half his body was paralyzed.

But today that ain't going to stop him. That senator has resolved to climb every one of those stairs on the Capitol, and that's how he wants to mark his dramatic return to the Senate.

We're very excited about this moment. I think a lot of people on Capitol Hill thrilled for the senator that he's going to be able to do this. And we're going to bring you that moment live when it happens at 11:30 and early congratulations to him.

I want to move on to what I suppose you could say is a routine drop- off at a school, but it wasn't. It just really wasn't.

For the first time since a gunman killed 20 of their friends and six adults, the little kids at Sandy Hook Elementary are going back to class. There is no question this will be heart-wrenching for the parents, for the teachers, for everyone in Newtown, in fact.

And for the kids, it's going to be an adjustment. They're in a new space. It's, in fact, a nearby middle school that's been transformed to look just like their familiar and beloved Sandy Hook Elementary. In fact, the movers took photos of the old school and then arranged everything in the new classrooms to look just like the old school in the new classrooms.

Our Deb Feyerick is not far away in Monroe, Connecticut. This is the old Chalk Hill Middle School, Deb, that they have now made into an elementary school. This must be a very tough day, but at the same time for the folks of Newtown, it must feel like they're returning to some kind of normalcy.

DEBORAH FEYERICK, CNN CORRESPONDENT: Yeah, there's no question about it. And it was a tough day, but you know what was almost the toughest thing about it was just the fear of going back, wondering what it was going to be like. Well, we spoke to one mom. She said that school started on time, 9:00 this morning. That it is, quote, "an amazing day," unquote. She describes volunteers and counselors and therapy dogs in the halls. If a child feels anxious, they can go up to the dogs and give them a big hug.

So, they're trying to create a supportive environment so the children know that they're safe, that they've got people watching them and that anyone who needs help getting to a new class that that help is there.

So, it's really just kind of an extraordinary thing that's happening in that school and the moms said, you know, that the teachers who were involved in this, not just those from Sandy Hook Elementary, but those here from Monroe, that all of them deserve so much credit because they worked through the holidays to try to put this class -- put the school together.

And they had to take a school what was for teenagers and turn it into a school for K-through-fourth-graders and that even included, you know, putting platforms in some of the urinals for the little boys and also putting guardrails on some the banisters because it's a two- flight school.

So, they were able to do that and the mom tells us that the kids and the parents, they are doing great. So in fact, the fear of going back was overrided by the experience, but remember, Ashleigh, you know, a lot of people during the day when they're busy and they've got all this stuff going on, they can -- you know, it doesn't seem as ominous.

Later at night when the kids are a bit tired and things quiet down, that's when they sort of begin to feel the anxiety and the fear. So, right now we can tell you that in that school, it is going really well.

BANFIELD: And, Deb, the inside baseball that you and I know about and most of the media that's covering this very significant day is that usually we set up your live shots with whatever the significant backdrop behind you. And today you're not near that school and there's a reason you're not near that school.

FEYERICK: That's exactly right and that's a great point.

You know, we are about two miles from the school and the reason for that is that one of the things, as you mentioned, they want to get back to what appears to be normal. They want to get back to the rhythm, the routine of their lives and, to have dozens of media trucks right outside the school, that would have been extremely disruptive.

As a matter of fact, they've set up a checkpoint and they're checking all the cars that are going in. It's not only a security measure, but it's also to make sure that anybody who gets near that school is a parent or a volunteer or somebody who belongs there.

You know, one little boy I spoke to, he said he's not afraid of monster anymore at night, What he's afraid of is somebody who is coming who shouldn't be there. So, they really want to make sure that the kids know you're OK.

BANFIELD: Well, thanks for bringing us the story, Deb, and gently, as well, because I know that town is still hurting and will be for a very long time. Deb Feyerick, reporting for us from Monroe, Connecticut, not far from Newtown, Connecticut.

Back in a moment.

(COMMERCIAL BREAK)

BANFIELD: When the new Congress is sworn-in in less than an hour, it is a brand-new start, but there's a lot of old baggage that comes with it.

The first piece of unfinished business is an aid package for Superstorm Sandy victims and the House vote is set for tomorrow on this mess.

Our CNN's contributors John Avlon and Margaret Hoover are with me today. Hello to both of you and I'm going to ask you about that vote tomorrow, but first, my question is -- and I want you both to weigh- in.

Margaret, I'll start with you. Is there any reason to think that this new batch is going to be any different than the old batch?

MARGARET HOOVER, REPUBLICAN CONSULTANT: Yes, there is.

BANFIELD: I'm so glad.

HOOVER: This is actually a historically diverse House of Representatives. There are unprecedented numbers of women. There are six openly gay members of the House of Representatives. There are two females vets who have actually been in battle, combat vets from the Iraq war and Afghanistan. There's just an extraordinary amount of diversity.

The problem from a Republican perspective is that all of that diversity is on the Democrat side.

BANFIELD: It's on the Democrats' side because there's a lot more Democrats who are going to seat.

HOOVER: So, the House looks different, but what you're also hearing is a lot of them came to Washington this time because they were told they want a Congress that can work together.

They were elected among historically low approval ratings in the House of representatives and they know that their job is to get something done.

So, hopefully, there's also a new coalition of new Democrats, maybe 55 of them, 14 blue dogs left, so hopefully, you'll get some Democrats who aren't super-liberal who also want to compromise. BANFIELD: John, I'm going to get you to weigh-in in a second, but first, I want breaking news out of the Capitol with Dana Bash, who was waiting, was watching, side to side, for some important people to walk by and a very important person walked and you asked a very important question. What was it?

BASH: That's right. The House Speaker just came out of the chamber after formally gaveling the last Congress closed and I asked if he thinks that he is going to be re-elected or, more specifically, I asked him if he thinks that he will lose some of his members.

And he said -- he shrugged his shoulders and he said, yeah, probably. It's possible, but he also said that he thinks he will be fine. He thinks he will be re-elected Speaker and that certainly is what we're hearing from others.

The other thing that I asked him about, Ashleigh, is whether or not it is true that he told his colleagues that he's done negotiating these deals, that he from now on is going to run the House in what's called regular order, meaning write legislation, bring it up, you know, put it through the committee process, have votes and then, when the Senate does the same thing, he'll put it into a conference committee, just the way it's supposed to be done.

And he said, yes. He said regular order is always best. He said I'm always happy to talk to the president, but that is certainly what he plans to do and it probably goes without saying, the reason for that, and that is because these negotiation that he has done with the president, both over the past weeks on the fiscal cliff deal, and then, of course a year and a half ago on the debt ceiling deal that got us to the fiscal cliff, those didn't go well. They ended up blowing up and not seeing any fruit.

So, that's the reason he said that. Very interesting conversation that was just between here and down there, which is where his office is.

BANFIELD: It's interesting. I mean, it sounds troubling to the layperson, I'm done negotiating, but let me get John Avlon to weigh in on that Dana and get some perspective.

Done negotiating, regular order is the new order. Give me your thoughts.

JOHN AVLON, SENIOR POLITICAL COLUMNIST, "NEWSWEEK" AND THE DAILY BEAST: Well, look, I think the question is what the learning curve is inside the Republican conference because, those negotiations -- and John Boehner's a deal-maker at the end of the day of the old school.

The negotiations he had with President Obama, whether it's the debt ceiling negotiations from August 2011 or the most recent round, they didn't come to any fruition in large part because John Boehner's negotiating position was undercut by the far right wing of his conference, around 50 members.

And, so, you know, the question is, now, when the dust clears, when those folks realize that they actually ended up getting a worse deal than they might have done if they'd either voted for Boehner's alleged, you know, so-called "Plan B" or backed the grand bargain in August 2011, whether that learning curve adjusts their strategy going forward.

You know, at the end of the day, we do need members of Congress and especially leadership to work together, but at the end of the day, this new Congress, the great hope is that they've learned the lessons from the last Congress that made it a "do-nothing Congress" of historic proportions and that they will be more willing to work together across the aisle to get things done for the American people.

BANFIELD: Margaret Hoover, your husband is a very smart man and he said some very smart things just there, but it made me wonder if -- he also wrote a very smart book about "wing nuts."

Does that mean that John Boehner is going to start ignoring the "wing nuts" and do things his way instead. Is that -- I'm not sure, John Avlon, if you're saying. I'm going to get your wife to respond.

HOOVER: Well, what we're getting towards is in March we're going to have the debt ceiling crisis. We're going to have another and taxes are now -- it's not that they're off the table, but the Republican House feels that they got rolled on spending.

There were absolutely no substantial spending cuts, spending deals made in this negotiation. That is what they're all -- I mean, Erskine Bowles and Allen Simpson said the House of Representatives and the Senate missed a historic opportunity to pass really meaningful legislation.

But what was missing from that legislation was spending. So, it is my hope that the next Congress can actually work together to get some meaningful spending and entitlement reforms passed through.

BANFIELD: Right.

HOOVER: And there are moderate Democrats who are back at the table. At least they say they're moderate and they say they're willing to negotiate.

And, frankly, it was Democrats who carried the Senate bill vote just the other night, so hopefully -- you know, there is -- it's not maybe that radical tea party caucus that we're going to depend on, although frankly they're the ones who are pulling the conversation towards spending reform.

So, they're not -- I wouldn't call them "wing nuts."

BANFIELD: Dana Bash has not left us. She's listening in on us. You have something to add to that, Dana?

BASH: Sorry. I'm back in here.

No, I just -- first of all, I think that she just made an excellent point, talking about "wing nuts." I mean, there are certainly people who are sticking to their guns and they are not going to vote for anything that defies their principles and that is a big part of what has made legislating and compromise so hard.

But the one thing I just wanted to make sure that our viewers know is that when I talked about the fact that he -- that the Speaker suggested he's done compromising, those were my words, not his words.

He was very specific in just answering my questions when I said, are you going to put things through regular order? And he said. yes, regular order is the best way to do here -- do things here.

He said he's always willing to talk to the president. That was a quote, but the "done negotiating," that was my term.

BANFIELD: Oh, OK. I am so glad you clarified that. Regular order, I would have assumed is just the way things normally work anyway.

Dana Bash, great work. Thank you for the update, as well, and thank you for keeping your eyes out. She never misses a beat.

And, Margaret Hoover and John Avlon, always good to see both of you, as well. Neither of you a "wing nut."

We are back right back after this.

(COMMERCIAL BREAK)

BANFIELD: So, yesterday, the market simply surged more than 300 points. Of course, all of this on the news of the fiscal cliff deal being reached.

But here's the bad news. According to the 30 investment strategists and money managers that CNN surveyed about all of this, don't expect it to last. That rally is supposed to be short-lived. Always the bad news with the good.

Christine Romans is here to talk a little bit more about it. What's the biggest problem? What's the biggest headwind?

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Because we have more -- Washington itself is the biggest headwind, quite frankly.

BANFIELD: All the hot air.

ROMANS: We have more little mini-cliffs ahead and some of them aren't so small, so that's what sits forward here and that's what could be a headwind for the market overall.

I want to tell you what one of these money managers said to CNNMoney. It was so interesting. He said Democrats and Republicans did the least they could possibly do to avoid the fiscal cliff and the question now is will they do the least amount again when it comes to raising the debt ceiling, and how will the rating agencies view that.

Moody's did the warn yesterday that it could lower America's credit rating again unless Washington reduces the deficit. And, you know, we've got these other deadlines ahead of us that are going to be just so confounding. Listen to Bill Gross, bond guru Bill Gross, quoting Homer Simpson. I'm not kidding.

(BEGIN VIDEO CLIP)

BILL GROSS, FOUNDER AND CO-CIO OF PIMCO: They have three data points in the next two months at which, you know, something has to be done. And we've seen what happens, you know, in this particular case over a long weekend.

So, it's a dangerous situation and, perhaps not like, Homer Simpson, you know, I don't want to say, doh! But, you know, it's fair to say that taxes on all Americans have gone up here over the past few days.

(END VIDEO CLIP)

ROMANS: So, you know, he's talking about the payroll tax holiday which we've been discussing, as well, but we've got some work ahead of us.

BANFIELD: Tell me a little bit about the income tax refunds that we all expect to be timely. Maybe not so much this year.

ROMANS: We're waiting for the IRS to tell us exactly when they're going to be able to start processing. Your income tax returns, you know, especially for people who file very early, for people who have simple returns who file early, I mean, maybe things are going to be delayed here. We're not just sure.

The IRS says it is currently reviewing the details of this week's tax legislation and assessing what impact it will have on this year's filing season. Tax attorneys and CPAs are telling us they're ready to rock-and-roll. They've got -- now, they know what they need to know, but they just need to wait for all the programs to be ready.

BANFIELD: I have to wrap it up, but there were some extraordinary auto sales. I can't let you go without hearing about that.

ROMANS: Strong. We had strong auto sales, the best for the three major U.S. car groups since 2007.

And if you put it all together, it looks like we're on track for 14.5 million auto sales, this year, 2012, which would be the best in since 2007.

And Chris Isidore over at CNNMoney, he crunched the numbers and he says the year-over-year rise in sales, 13 percent, biggest since 1984.

That's a sign of a strong consumer. It's the sign of a consumer -- if you're going to go out and buy a $35,000 car, it means you have confidence in your job. Maybe you were able to get financing. It shows things are looking up for the consumer, I think.

BANFIELD: And there's nothing more confident than a woman who brings her BlackBerry and her evening bag to the set. ROMANS: It's my wallet. Sorry.

BANFIELD: Christine Romans ...

ROMANS: I have my money with me at all times.

BANFIELD: Nice to see you. Thank you.

Back right after this.

(COMMERCIAL BREAK)

BANFIELD: We have a story that we want to bring you and it is not an easy story to report. It's about two football players allegedly raping an underage girl in a small town in Ohio. This has really gripped this town, by the way.

The police apparently piecing the case together mostly because of posts on social media. Again, we're talking about an alleged rape and social media.

Our national correspondent Susan Candiotti has been sifting through this evidence and some of the reports. It is just a remarkable story.

SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT: It's disturbing on so many different levels, Ashleigh. I mean, in this case, a 16-year-old -- the charges are absolutely horrific.

A 16-year-old girl was allegedly raped by two high school football players during end of the summer parties in the small eastern Ohio town of Steubenville.

There are reports the girl was drunk and possibly unconscious and, now, two special prosecutors appointed by Ohio's attorney general, Mike DeWine, are just over a month away from trying at least two teens on rape charges.

But what makes this case stand out even more is talk about the alleged attack last August that's been playing itself out through social media. Even Ohio's chief law enforcement officer says this case might never have come together a decade ago.

That's because police, in part, found out about the alleged rape by piecing together outrageous, a cell phone photo that claims to show the girl at the center of the alleged attack being carried, seemingly limp, by her arms and legs, and at least one online video that shows young people callously laughing about it.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: If that was your daughter ...

UNIDENTIFIED MALE: But it isn't.

UNIDENTIFIED MALE: But if it was?

UNIDENTIFIED MALE: If that was my daughter, I wouldn't care. I'd just let her be dead.

UNIDENTIFIED MALE: Listen to yourself.

UNIDENTIFIED MALE: I'm listening to myself fine.

UNIDENTIFIED MALE: In about 10 years, or whatever, I'm going to come back to this video.

UNIDENTIFIED MALE: Ten years, my daughter's going to be raped and dead in 10 years.

(END VIDEO CLIP)

CANDIOTTI: Now, that continues for about 12 minutes. He goes on to make offensive one-line comments about rape and talks about the girl as if she was dead, which she is not, Ashleigh.

BANFIELD: What -- there are so many levels that are troubling about this story. That video shows one young man who appears to be seated in a room, but you can hear a lot of other voices.

CANDIOTTI: They appear to be talking about what happened.

BANFIELD: Aware of what's going on, but there are only two charges right now? Are there going to be any more charges involved?

CANDIOTTI: Well, of course, it's possible. For now, two 16-year-old boys are charged with rape

One of the two is also charged with illegal use of a minor in nude material. The attorney general's office says they will be tried by a juvenile court judge. That's without a jury in open court next month.

These two have been publicly identified by authorities. However, CNN is not yet revealing their names at this time. And because CNN's policy is not to release the name of alleged rape victims, we are also not reporting the name of the girl in this matter.

Now, Ohio's attorney general tells me the investigation isn't over. He's still conducting interviews. And he also says he's well aware of the online video and all the various postings. They've been out there before and some of them have now gone back online.

Now, Ashleigh, I've got some new information just in, again from the attorney general's office and they are telling us some more about the pretrial hearings and a little notion of what evidence they might have.

Here's a direct quote. The prosecutors, let me just say, in the case, told the juvenile judge at that pre-trial hearing that the defendants had treated the girl, quote/unquote, "like a toy" and then added, quote, "The bottom line is we don't have to prove she said no. We just have to prove that when they're doing things to her, she's not moving; she's not responsive and the evidence is consistent and clear." That is the end of the quote from the prosecutor who spoke during this court hearing. BANFIELD: Wow, I don't know Ohio's statute as deeply as I should to be able to even react to that, but ...

CANDIOTTI: Well, we certainly don't know a lot about the evidence at this point, though.

BANFIELD: This is a juvenile system that they're in at this point.

CANDIOTTI: It's been decided to try this case in juvenile court. It will be an open proceeding. All the proceedings so far have been.

We're now, you know, following this very closely.