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Michigan Governor: Detroit in Financial Emergency; Interview with Steve LaTourette: White House to SCOTUS: Overturn Prop 8
Aired March 1, 2013 - 10:28 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: CNN's Poppy Harlow has followed the sad story of Detroit. She joins us live now. Good morning Poppy.
POPPY HARLOW, CNNMONEY.COM: Good morning Carol this announcement expected in about an hour and a half that Michigan's Republican Governor Rick Snyder will say that he agrees that Detroit is in a financial emergency. It's critical because I am told by a source close to the Governor that means he will install an emergency manager in Detroit. That person will have sweeping powers within the city to override the Mayor of Detroit, to override the city council, to break union contracts, throw them out if needed, to lay off more government workers if needed. Whatever it needed to get this city back on sound financial footing.
Now, the City of Detroit has ten days from today to appeal the Governor's decision, but unless something significant changes his mind, I'm told, he will go ahead and install this emergency manager.
So we went to Detroit this week, Carol, to see for ourselves what the people there think.
(BEGIN VIDEO CLIP)
HARLOW (voice over): Just two years ago, Forbes called Detroit "The City of Hope". Today it tops the Forbes "List of Most Miserable cities in America."
TINESHA FLOWERS, DETROIT RESIDENT: When you call the police now, you wonder if they're coming.
HARLOW: It's a tale of two Detroit. A city on the hook for more than $14 billion in unfunded pensions and health care costs for retired government workers.
JACK MARTIN, DETROIT'S CHIEF FINANCIAL OFFICER: Most of us are facing legacy costs that we can't afford. They were cut in the good old days when you could you know the tax revenues were up. We didn't have overseas competition. We could sell all the cars we could make. That day is gone.
HARLOW: And get this. The Detroit News found nearly half of Detroit homeowners didn't even pay their property taxes last year. There have been hundreds of millions in spending cuts and thousands of government layoffs in recent years. But it's not enough.
Now it's in the hands of Michigan's Governor. Any day he could install an emergency manager in Detroit with sweeping powers.
MAYOR DAVE BING (D), DETROIT: He could void all of their contracts. He or she could fire everybody quite frankly.
HARLOW: Joe Harris was Detroit's auditor for ten years.
(on camera): An emergency manager has the right to basically throw out or rewrite union contracts, we'd likely see government job cuts? Wouldn't real people feel this?
JOE HARRIS, FORMER DETROIT AUDITOR GENERAL: It simply doesn't affect the -- the average person, it affects the government workers, it affects the politicians, but it does not --
HARLOW: Union workers?
HARRIS: -- the union workers.
HARLOW: Those are real people.
HARRIS: You're absolutely correct.
HARLOW: Real people like Tinesha Flowers, a mother of eight and a government worker. She fears losing her job if more cuts come, but knows something has to change.
FLOWERS: At what point do someone does something that's going to make a difference. If doesn't matter if it's the emergency manager or God.
HARLOW: The rescue could also come from the private sector.
JOSH LINKNER, CEO EPRIZE: What will ultimately be looked back at I believe for decades will be the story of the greatest American turnaround story in our country's history.
HARLOW: You think so.
HARLOW: Josh Linkner's company has invested $15 million in tech start up here.
LINKNER: People will think you're smart.
HARLOW: And he's part of a group that recently bought 15 entire buildings downtown.
LINKNER: We're sort of like the Rocky Balboa of cities we're fighting with the underdogs, fighting for life and glory.
Harlow: So what are Detroit's other options? There is bankruptcy which would shed debt but also cost the city millions in legal fees and bring that dreaded stigma --
MARTIN: I don't even like mentioning the "b" word. HARLOW: Or what about even a federal bailout like New York City got in the '70s? But that was then.
MARTIN: I think it's pretty radical. I think it's nonsensical.
KIMME REED, DETROIT RESIDENT: I believe if anybody need to be bailed out, it would be the city of Detroit.
(END VIDEO CLIP)
HARLOW: And Carol, you've been talking about this on your show for weeks, a bailout? I mean, good luck getting that through Congress in this political environment. As for a bankruptcy, if that happens, it would be the single largest bankruptcy for municipality in American history.
The Governor has said recently he does not want to see a bankruptcy. Of course the state would first try to have some sort of settlement with creditors. The mayor doesn't want a bankruptcy. But I think that at this point down the road, that's in the cards unless things really change for Detroit.
COSTELLO: Yes if this -- if you know bankruptcy is declared, it's just hard to wrap your mind around what that might mean.
COSTELLO: Does it mean Detroit just crumbles and dies? What does it mean?
HARLOW: No it does, I mean, it happened in Vallejo, California recently because of the housing crisis. It happened in cities. What it means is that a lot of that debt is wiped is forgiven just like a bankruptcy for General Motors, for example, and then you -- and they you rebuild. But it makes it extremely hard for the city to borrow money in the future. It makes it very expensive for the city to borrow money.
And frankly Carol, what does it do to the reputation of Detroit? What you need in Detroit is people to come back and people to pay taxes.
COSTELLO: That's right you declare bankruptcy, more residents will flee. They don't have a tax base already.
HARLOW: Right, right. And that's why they don't want to do it.
COSTELLO: It's just mind boggling.
HARLOW: That's why they don't want to do it. So we'll see what happens. But I think this emergency manager is -- is almost definitely happening and we'll know for sure I'd say in about 11 days.
COSTELLO: All right. Thank you, Poppy.
HARLOW: Sure. COSTELLO: A major step for marriage equality. The Obama administration files brief supporting same-sex marriage in California. We'll look at the case the Supreme Court has taken up.
COSTELLO: In a move that could have major repercussions beyond the courts, the Obama administration has filed a brief with the U.S. Supreme Court supporting same-sex marriage in California.
Now later this month justices are scheduled to hear the appeal of Proposition 8, Prop 8 which revoke the right of same sex couples to marry in California.
Also two NFL players who support marriage equality also filed a brief with the U.S. Supreme Court they are Chris Kluwe of the Minnesota Vikings and the Baltimore Ravens Brandon Ayanbadejo.
CNN's Joe Johns is following this case.
(BEGIN VIDEO CLIP)
JOE JOHNS, CNN CRIME AND JUSTICE CORRESPONDENT (voice over): The administration waited until the last minute to say whether it was taking a stand on California's Proposition 8 which bans same-sex marriage. Even while prominent Republicans of all strife were jumping on the bandwagon calling on the court to rule the state's law unconstitutional.
Hollywood producer and actor Clint Eastwood, former Republican National Committee Chairman Ken Melman, Florida Congresswoman Ileana Ross-Latinen and Beth Myers who ran Mitt Romney's campaign in 2008 and served as senior adviser to him in the last campaign. Former Arizona Congressman Jim Colby who is gay said his position on gay marriage has changed over time.
JIM KOLBE, FORMER ARIZONA CONGRESSMAN: Like others, I've evolved on it, too. There was time as I mentioned there was a time when I didn't believe that gay marriage was a possibility. And so I thought well you if we could have civil union or something, that would be great. But I no longer believe that. I no longer am willing to settle for that.
JOHNS: It's an important moment in the law and also in politics because the administration's position on same-sex marriage could go a long way toward defining the Obama legacy. He's already made history on the issue becoming the first American president to mention it in an inaugural address.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Our journey is not complete until our gay brothers and sisters are treated like anyone else under the law. For if we are truly created equal, then surely the love we commit to one another must be equal, as well.
JOHNS: The President's views have evolved and he himself has said he struggled with the gay marriage issue. This is what he said in 2004. OBAMA: I believe that marriage is between a man and a woman. But I also detest the sort of bashing and vilifying of gays and lesbians because I think it's unduly divisive.
JOHNS: In 2008 running for president, he refined his view.
OBAMA: I do not support gay marriage, but I support a very strong version of civil unions.
JOHNS: May of last year was the first time he took the step of supporting it.
OBAMA: For me personally, it is important for me to go ahead and affirm that I think same-sex couples should be able to get married.
(END VIDEO CLIP)
COSTELLO: Joe Johns joins us now from Washington. So, Joe, what would the court's ruling mean for the rest of the country?
JOHNS: Well, the court can say whatever it wants, but the speculation is that since we have an argument here that California is one of eight states that gives gay couples all the benefits of marriage and civil unions and domestic partnerships, that sort of thing that they're all in the same boat. We're talking about Delaware, Hawaii, Illinois, Nevada, New Jersey, Oregon and Rhode Island. The administration is basically saying that if a state confers all the rights of marriage, it's already agreeing that gay relationships and straight relationships deserve the same treatment -- Carol.
COSTELLO: Joe Johns is reporting live from Washington this morning.
Our "Talk Back" question for you today, what will you be doing at 11:59:59? Facebook.com/carolCNN or tweet me @carolCNN.
COSTELLO: Right now the President is meeting with top congressional leaders about those forced spending cuts, you know, $85 billion in dramatic, draconian cuts that will impact almost everything from the military to education to food inspection to homeland security. Congress, well, they peaced out yesterday after failing to come up with a Plan B.
Now, if there is no alternative, president Obama will sign the order for the cuts to start at 11:59:59 tonight. And that is our "Talk Back" question. "What will you be doing at 11:59:59?"
joining us to talk about today's "Talk Back" is Steven LaTourette, a Republican and former Congressman from Ohio and CNN's chief congressional correspondent Dana Bash. Welcome to both of you.
STEVEN LATOURETTE, FORMER CONGRESSMAN FROM OHIO: Good to see you.
DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: Thank you.
COSTELLO: Before we get to talking, I just wanted to read a few comments from our viewers because I enjoyed them so much.
So I asked what will you be going at 11:59:59?
This from Gail and she says, "I'm sick of hearing the political BS. We get what we deserve when we elect these nut jobs and then do nothing. As citizens, we need to correct the situation and this is my favorite from jay. I will be trying to decide if the world actually did end 12/21/12 and all this is just a huge cover up.
Steve aren't you glad you're not in Congress now.
LATOURETTE: Well, as a retired nut job, yes, I'm very happy to be watching it from the outside.
COSTELLO: I mean Dana did this great story -- let's start with you Dana. You interviewed these lawmakers as they fled Washington. They were literally running down the steps hopping in their cars and taking off to avoid you.
BASH: Well, they were taking off to get to the airport. I was just in the way of that, which is a very dangerous place to be in Washington as the former congressman knows very, very well.
But look, I mean what's going on here today is actually very interesting because the answer is nothing. This is one of those days -- and the Congressman remembers them well -- that everybody shows up in jeans, they're wearing jeans, they're wearing sweat shirts, maybe sweaters, because they don't have dress up because the Senate is literally not in session. The House is literally not in session. Carol, they're not even pretending to be here.
There is a meeting, of course, as we speak at the White House, but I have to share this with you, I got an e-mail from a Democratic source here late yesterday when I asked is there any chance anything can happen at that meeting. And it was ha-ha-ha and about three or four lines down the e-mail. I mean, it was just not a chance. Not a chance.
COSTELLO: Steve it's mind boggling that this sequestration idea was meant to force congress to do something. You were present during that time. Why didn't it work?
LATOURETTE: Because the two sides won't give up their sacred cows and reach some conclusion. The Republicans have to get serious on revenue and quite frankly, the President has to begin talking about significant entitlement reform. These packages that have been put out that people said maybe this will save the day at the 11th hour. All it did was delay the pain for another month, another two months.
And I think as your e-mail demonstrated, people are sick of this. And you really -- hopefully at the White House right now some leadership is going to bubble up. Maybe like with the election of the new pope, white smoke will come out of top of the White House and we'll have a deal. But they have to make the deal.
COSTELLO: You know, it would be nice Dana if they could like at the Vatican to choose a new pope, they lock all the cardinals in a room and they don't let them out, they don't let them communicate with the outside world until they come to some sort of conclusion. Maybe that's what needs to happen on Capitol Hill.
BASH: You know, you joke about it, but there is actually a lot of truth to that. I mean that is a major part of the reason that things don't get done is because they don't know each other, they don't sit in rooms. There's outrage and there should be, it's legitimate that this meeting that they're having as we speak is today. Why didn't they have it on Monday, Tuesday, Wednesday, never mind the week before that or the week before that. The reason is because everybody knows that the philosophical differences on this particular issue, they're not going to be bridged. And the reason is because the political pluses on both sides outweigh the desire to bridge the philosophical differences that is, of course, tax increases versus spending cuts.
C1; So, Steve, maybe this meeting at the White House is just making it worse, and I'm saying making it worse as we voters are looking at this photo-op essentially at the White House and we're all thinking do they think we're stupid?
LATOURETT: Well, I don't think that they think we're stupid. I think they're hoping we don't pay attention and this is going to like a Y2k thing and just sort of go away for today. But until again -- this thing is crying out for leadership. The President, the Speaker, Harry Reid, somebody has to say we can fight like cats and dogs tomorrow, but let's get this thing done, whether its eye Simpson Bowls, we have to put this thing in place. So we can go about fighting without hurting our people.
COSTELLO: So leave us with some hope, Steve. You were a long time member of our government. Leave us with hope. Will this be fixed somehow and when?
LATOURETTE: No, probably not. But I will tell you that march the 27th, TR is the next battle. And I would hope that your viewers would now communicate with their elected official and say enough of this nonsense, just work this thing out.
And I'm hopeful. I know John Boehner really well. He'll make the deal if the President is a willing dance partner. But the President really has to challenge his party on the entitlements. And until that happens, this is going to be a logjam that's not going to be broken and people are going to continue to run from Dana Bash.
BASH: You never did, congressman. You never did. But if I could just add to that quickly, that really is a key point. March 27th. 27 days from now, that is the date that we should be looking at and that likely is the date that they're discussing inside the White House right now. That is when funding for the government shuts down entirely, never mind $85 billion. Or I should say most of the government funding shuts down. So that is likely where any deal will be focused on. And perhaps they can deal with what's going on now and then wrap it all into one big package.
COSTELLO: We'll be waiting. Steve LaTourette, Dana Bash -- Thank you so much for taking part in the conversation today. We'll be right back.
COSTELLO: Taking a look at our top stories at 53 minutes past the hour. Right now Republican and Democratic leaders in congress are behind closed doors at the White House. President Obama summoning the leaders for an 11th hour meeting just before those much talked about forced spending cuts kick in.
"Girls Gone Wild" has gone bankrupt. The controversial video empire says it has less than $50,000 in assets with more than $16 million in debt. Most of that is owed to Winn Las Vegas whose owner Steve Wynn is also suing "Girls Gone Wild" CEO Joe Francis.
And take a look at this. Surfers off the coast of Canada got stuck between a pod of killer whales and the sea lions they were hunting. And while killer whales aren't known for attacking humans, it's probably wise that the surfers got out of the way quickly because the whales were very, very hungry.
CNN is getting answers to your questions about those forced spending cuts. Questions like this one. One viewer asks whether anyone will be in the unemployment office to take his call on Monday. Tom Foreman will have the answer next.
COSTELLO: We are rapidly approaching the deadline for those forced spending cuts to begin. And chances are you've got as many questions about what's going to happen as we do. So today we want to get your questions answered. You can send us questions by using Tom Foreman's Twitter page or by using the #asktomcnn. Tom Foreman joins us now.
Good morning Tom. You've taken on a big task.
TOM FOREMAN, CNN CORRESPONDENTS: Well, there are a lot of questions out there, Carol. And I don't blame people. It's a very confusing issue. We've been sorting through it for days and it's still confusing.
Our first question is from a very practical one from Ron Daley on Facebook especially with some people expected to lose work because of the budget cut. He asked "If I try to apply found employment benefits on Monday, will anyone be there to take my call?" The short answer is yes. Depending on how your state handles it, probably nothing will change for at least a few weeks.
But since the feds help pay for the administration of many state unemployment funds, as this moves forward, you could see the staffs reduced in your state, longer wait times and one state office told me this morning they may urge more people to use automated computer filing to move forward. So again, nothing really changes right now, but as this moves forward, changes may come.
On a related note, there is this question about people who are long term unemployed. Todd Yancy shot me a note where he said "I got my letter saying unemployment may go down. How can this happen even before the cut." Part of it is this.
Your initial claims are filled by the state, but long term unemployment that we've talked about is paid by the federal government. About 2 million people are among the long term unemployed and they will see their checks reduced by about 11 percent.
The national employment law project says that will probably hit in around April. That's how long it will take to get through the computers to make this happen. By September, there could be close to 4 million people in that category with an average total loss between now and then of about $400 to each of them between now and the fall.
And the labor department also says it may stop producing sum reports tracking mass layoffs, green job and how the U.S. job market compares with other countries. We're waiting on confirmation of whether or not that's going to happen.
Next question also from Facebook from Nick Sapporo. He says "These are spending cut, but are they really spending cuts. They aren't actually cutting anything, right? This is only curbing a fraction of spending growth, nothing more."
This is a very strong point out there particularly among some Republicans and more conservative viewers. They feel very strongly about making sure this is clear. And it is correct. In Washington, when an agency expects an increase next year of 10 percent and they only get 8 percent or 6 percent, it is typically called a cut. Although many people in common language would not call that a cut, they would say if your budget is $100 and you get $90 next year, that's a cut.
Now, that said, we're trying to go through agency by agency to figure out who is actually getting cut and who is just having their increase cut. That's a long process, we'll keep trying to go through it. But nonetheless, as Carol mentioned at the beginning, if you have any more questions, send it my way. Tweet AskTomCNN or go to cnn.com/AskTom and we will do the best we can.
It's going to be a long day Carol.
COSTELLO: You'll do a terrific job. Thank you so much Tom Foreman, We appreciate it.
I'm Carol Costello, thank you so much for joining me today. I do appreciate it. CNN NEWSROOM continues right now with Ashleigh Banfield.