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President Obama Outlines His Budget; Jobless Claims Hit Record High; A Look at Obama's Budget Man; Edge Out of Education

Aired February 26, 2009 - 09:00   ET

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

HEIDI COLLINS, CNN ANCHOR: His plan to spend your money. Live this hour, President Obama outlines a $3 trillion plus budget.

Who might pay for more prescription drugs? Well, what tax breaks could come and which could go. Orders for the military.

Plus, a rainy day fund. We'll explain at all.

It is Thursday, February 26th. I'm Heidi Collins. And you are in the CNN NEWSROOM.

Creating a budget in the middle of an economic crisis. Minutes from now, President Obama talks about the plan he is submitting to Congress. Among the headlines, a jaw-dropping deficit and hundreds of billions of dollars of new spending.

It is your money and we'll show you how it's being spent. CNN crews are here to help us figure at all out.

Suzanne Malveaux has the big picture and Ed Henry has the big question what's in it for you. Dana Bash looks at the political battles ahead and Barbara Starr is at the Pentagon with the bottom line of peace and war.

Let's go ahead and begin with Suzanne this morning.

Good morning to you.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Hey, good morning.

Well, we're expecting to hear from President Obama in about 30 minutes or so. He is going to be outlining the highlights of this budget. He's essentially going to be talking about the sacrifice that Americans need to make, specifically wealthy Americans. The top 5 percent of breadwinners, if you will.

He's also going to be talking about the tax cuts for those who don't make $250,000 or above. But generally speaking, he's going to talk about the priorities of his administration. You're talking about health care reform, as well as education and energy efficient, renewable energy sources.

He is going to be talking about the tax cuts that he is going to be giving breaks. Ways to actually save money. So there will be cuts in, say, agriculture, farm subsidies. There are going to be savings which he says will come from withdrawing U.S. troops out of Iraq but, obviously, some costs in putting those troops in Afghanistan.

But these are some of the broad-brush strokes that the -- the themes that you're going to hear and he's going to talk about the fact that yes, you know, this is eight years of irresponsibility, a lack of transparency, influence from lobbyists on the government, on policy itself that this is going to be a new era of transparency and accountability.

And I have to tell you, that is going to be a very important theme for this president because, obviously, as you had mentioned, he is looking at really another fund here, perhaps $750 billion more to be set aside to be used for bailing out those financial industries, those banks and that is something that a lot of Americans are looking at and saying, hey, where is my money going, how much money is required here to fix the economy, is this our fault, should this money be going to those institutions in the first place?

So he is going to be stressing really the transparency, the responsibility and actually tracking those dollars -- Heidi.

COLLINS: And not to mention we had a little screen on the side of you, Suzanne, that I know you can't see from there, about the $636 billion for health care, as well, that you mentioned. We're going to talk about that a little bit more right here in the CNN NEWSROOM.

Sure do appreciate it, Suzanne Malveaux. Thank you.

And now the big question on the budget. What exactly is in it for you? Who will get those tax cuts and who will face tax hikes? And where is all that money in promised savings?

CNN senior White House correspondent Ed Henry has some answers.

Yes, those are a lot of big questions for you, Ed.

ED HENRY, CNN SR. WHITE HOUSE CORRESPONDENT: ... hour today we're going to be going through and giving our viewers an inside view of the budget. Not just talk about the big picture numbers but give you an idea on the issues that matter to you most.

How is this going to affect you? In New York has the CNN money, we get the CNN budget team here. They're literally pouring through the budget right now line-by-line. With me, you can see -- pardon me, behind me on CNN.com, I've got a story up there already that gives you some of these details.

You can see Recovery.gov there as well where they're going to be tracking the stimulus money. But for the budget, we're going through it line-by-line right now.

Let's break down health care first then we'll come back and do more throughout the hour.

COLLINS: OK.

HENRY: $634 billion is a reserve fund that's being set up by the president. How is he going to pay for that? That's going to be the first big question. First of all, he's going to ask 1.5 million wealthy senior citizens to pay more for their prescription drugs. This is going to raise about $8.1 billion.

So if you're a senior and you're making over $170,000 a year you're already paying more higher premiums for your doctor's visits under Medicare. Now the president will also be asking you to pay more for your prescription drugs under the Medicare prescription drug benefit.

That's one way that he'll pay for it. The second way is that he is going to essentially have a tax hike for wealthy Americans. If you're making at least $250,000 a year, all of a sudden, under this plan, you'll have a cap on how much you can itemize in your deductions.

So for example, someone making over $250,000 a year, if they have $10,000 in mortgage interest that they deduct, normally, at a 35 percent tax rate, they would get back $3,500 as a deduction.

Now all of a sudden it's going to be capped at 28 percent so you would only get $2,800 on that mortgage deduction. So right there, you can see for an average person that would be $700 more of a tax liability.

What we need to stress, though, is that's just 5 percent approximately of Americans, those wealthy Americans in that sort of income range. What the White House is trying to stress as they sell this is that 95 percent of Americans actually got a tax cut in the recent stimulus package.

This is where the battle is going to be joined. This is going to be the clash of ideas with Republicans on the Hill. They believe that those 95 percent of Americans are going to end up feeling, it's going to end up trickling down some of these tax hikes on the wealthy Americans if some of these small businessmen and women start laying people off because they can't write as much off their taxes or if they've got to dig deeper into their pockets to pay more for prescription drugs. There could be a spillover.

What the president is essentially trying to make the case here as he did Tuesday night to the nation is to say look, we're in a crisis and we can't just worry about the session short term. We need to invest in health care, education, energy, all those subjects Suzanne talked about, to rebuild the economy for the long haul.

And he's going to try to do it on the backs of about 5 percent of Americans -- Heidi?

COLLINS: Now hang on just one minute because I have a question, I think, a lot of people may be thinking. Depending on where they live and depending on their cost of living, this $250,000 when we're talking about the wealthiest of Americans, obviously, means a whole different thing when you live in, for example, New York City versus, I don't know, Fargo, North Dakota. HENRY: Absolutely. Of course it does. Because of your cost of living in that individual area. But this is going to be $250,000 across the board, whether you live in North Dakota, Iowa, California and New York. This is where it's going to be. That's the cutoff point, because people making at least $250,000 you're going to be affected in at least two ways.

They're going to all of a sudden have their itemized deductions capped, as I mentioned, so they'll have a higher tax liability. But also this budget lays out that at the end of 2010, anyone making at least $250,000 a year would no longer get those Bush tax cuts. This president wants to let those tax cuts expire. So all of a sudden, their tax rates will be going up. Those making at least $250,000.

Again, this is where -- the real clash is going to be between the two parties because you're going to have Republicans saying, the old argument we've heard many times before, that it's tax and spend. Taxes are being spent so that the president can spend more money on health care, education, all these other priorities.

You heard the president responds to that Tuesday night that in a time of crisis, you've really got to lay it on the line and you can't let this pass and just put a Band-aid on the economy. Deal with the short term. You've got to invest in the future. This is going to be interesting clash ahead.

COLLINS: Yes. Yes. Interesting indeed. All right, Ed Henry, sure do appreciate that. Thank you.

Countdown on Capitol Hill now. Just over an hour from now, the administration's top budget man will deliver the outline to Congress and that's when the political battle begins.

CNN senior congressional correspondent Dana Bash is waiting for that budget blueprint to get there on Capitol Hill.

Good morning to you, Dana.

DANA BASH, CNN SR. CONGRESSIONAL CORRESPONDENT: Good morning, Heidi. That's right. You know, it's actually just going to be about 140 pages which is rather small and it's not -- this is just the outline. The White House is going to send more details later, actually in April, to Congress.

But big picture, you know, historically, and this is year is going to be no different, the president can send an outline, can send his priorities, but it is here in the United States Congress that they actually write these bills and they actually decide what gets funded and what gets cut.

And that is what's going to be so interesting to watch. You and Ed touching on probably the biggest political and philosophical battle and that is over those tax cuts. I was in the House Chamber when the president was speaking to the joint session the other night and he -- his line where he talked about the fact that some people are going to say, I'm just raising taxes on the wealthy. One Republican congressman screamed out, "They're right!" So there's no question that it's going to be a big battle on this issue of tax cuts. But there's something else that we're going to definitely be watching for and that is what is going to happen with the president's fellow Democrats who run Congress on the issue of cuts?

Making those tough cuts that the president talked about in spending in order to reduce the deficit as he wants to do. Yesterday, the Senate majority leader Harry Reid had a press conference. And you know, I asked him about the fact that they're currently working on a spending bill that has an increase in spending. And his answer was, you know what, I understand President Obama wants to save money where he can but he said I, as a Democrat, believe that we also need to use the tools of a federal government to spend.

And that is where it is going to be very interesting to see how, when you're talking about farm subsidies or you're talking about other issues that many people up here think is very critical for the government to spend, how you're going to convince members of Congress to trim that spending in order to get to President Obama's goal of reducing the deficit, at least cutting it in half, by the time he leaves -- by the time -- by the end of his first term. I'll leave it there.

COLLINS: All right. Very good. Congressional correspondent Dana Bash. Dana, thank you.

Stay with us. Just a few minutes from now, President Obama will be talking about his budget blueprint. It's set to happen at 9:30 Eastern. Of course, we will bring that to you live when it happens.

Another developing story that we are following this morning. The nation's economic crisis measured in more grim ways this morning. Just a few minutes ago, we learned new jobless claims have taken an unexpected jump. 667,000 Americans are now filing for unemployment claims for the first time. That's an increase of 36,000.

Experts had expected a decline here with this number. The number of people receiving continuing claims has now passed 5.1 million and that is a new record.

In other news, more big losses for the nation's largest carmaker. Last hour, General Motors announced a $9.6 billion net loss in the fourth quarter of last year. That was also worse than expected. And in the last three months of the year, it burned through $5.2 billion of its cash reserves.

This comes as GM executives are in Washington to talk about restructuring and future loans.

Slicing up the pie. Health care concerns and the new budget. Can the White House meet its goals? We'll take a look with a little help from Anderson Cooper.

(COMMERCIAL BREAK) COLLINS: The president has promised more money for health care. We'll see some of that when he unveils the new budget a little bit later this hour. And those health care changes could have a ripple effect throughout the economy.

Our Anderson Cooper got into the particulars with CNN chief business correspondent, Ali Velshi.

(BEGIN VIDEOTAPE)

ANDERSON COOPER, CNN ANCHOR: Between this, the stimulus and the bank bailout, there's a lot of wonkish details floating around these days, not to mention a lot of money floating around.

But this is important stuff, vital actually, so let's talk about it with chief business correspondent Ali Velshi.

Ali, the president basically is saying that this is essential for the health, the fiscal health of this country. How is health care essential for fiscal health?

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: First of all, I'll pretend you didn't call me a wonk. But I'm going to tell you about this. There are two basic issues here, Anderson. The first one is, with all of these people who are unemployed, before we started getting into all these layoffs, we had some, almost 50 million people in the United States without health care, without access to health care.

Now that number is bigger. There are more and more people falling off their federal health care. And that's just dangerous for society.

The second problem that we have is that the health care that the government does pay for, particularly that part that is entitlement spending, is not necessarily done all that efficiently. So it's one of those areas that the government has to spend trillions of dollars on and there are places where it can be made more efficient.

So on one side there's the -- the President Obama's promise that he made as candidate Obama to extend health care to a greater number of Americans and on the other side there's the struggle that they're having with the budget deficit and -- that can be met, in some cases, by dealing with health care.

But it's an expenditure that is going to be making things hopefully cheaper in the long run but the problem is right now we're out of money to spend things.

(END VIDEOTAPE)

COLLINS: The new budget could mean big defense cuts for defense as well. In Tuesday's speech, President Obama said he wants to eliminate cold war era weapons systems.

CNN Pentagon correspondent Barbara Starr joining us now. Good morning to you, Barbara.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Heidi, good morning to you. A lot of talk here at the Pentagon about budget cuts, about saving money by getting out of Iraq but all of it remains to be seen because before they save money, they're going to be spending a lot more.

The budget, as we understand it, will ask Congress to approve another $200 billion to carry out the wars in Iraq and Afghanistan for about the next year and a half. So that's first up. There will also be a request for about 534 billion additional dollars just to run the Pentagon, the Defense Department and the military for fiscal 2010.

Defense Secretary Robert Gates, however, has been warning that he's got to save money and that a lot of big spending programs are going to be potentially on the chopping block. There's no decisions yet but here are some of the programs that people are looking at for potential cuts.

Perhaps trimming back the F-22 fighter jet. That's a program already under way, already flying but they may cut back and not build as many planes. The F-35 joint strike fighter, all of the services are building that plane and the number of foreign countries. But it's a lot of money. They may trim that as well.

New submarines, new warships, new armored vehicles, even the plan to build a new presidential helicopter, a new Marine One could be trimmed back in this budget.

It's going to be weeks before we really know. The budget is all very closely held here at the Pentagon. Defense Secretary Gates each made the Joint Chiefs of Staff sign a piece of paper saying they wouldn't disclose any details about the budget cut until it's all decided -- Heidi.

COLLINS: Yes, it's kind of weird. I mean, I remember, Barbara, the YF-22 when it was a protocol. I mean it seems like that particular program and that particular aircraft -- the controversy surrounding it has been for years and so now they're actually going to try and do something about it.

The other side of that is what about the people working on the F- 22 and the jobs for them?

STARR: Well, you know, all of these programs potentially do employ tens of thousands, if not more, American defense workers. For these people, the paycheck, of course, is absolutely vital. But what Gates is talking about probably is more of a paradigm shift, getting away from some of these cold war weapons.

For example, the F-22, there's really not a country out there that's considered an enemy force that would be able to challenge the U.S. Air Force in the skies in dog fights that the F-22 might be involved in. So people are asking why do we need so many? Is it better to eventually shift some of that money away from these cold war weapons and to weapons that are more practical in the kind of fights that U.S. troops are in, these counterinsurgency fights on the ground.

But the bottom line is, it is jobs for so many American workers, Heidi.

COLLINS: All right, we'll be watching closely. Barbara Starr from the Pentagon, thanks so much, Barbara.

STARR: Sure.

COLLINS: And we are waiting for the president's appearance at the Eisenhower Executive office building at the bottom of the hour. We will hear from him live about his spending priorities right now and the 2010 budget. As soon as he walks out, we, of course, will take you there live.

How can you hold on to more of your money? We'll have some tips for you coming up.

(COMMERCIAL BREAK)

COLLINS: Education as a priority. Promises from the president but tough times are making for tough decisions. We're going to talk with students and parents making those hard choices about their future because of the money crunch. It's a "snapshot Across America."

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

NATHAN DAVENPORT, JOB SEEKER: That's the way life is right now. It's a -- it's a struggle but, you know, keep the hope, keep the faith and pray hard.

RAMONA CAMPOS, JOB SEEKER: I'm 62 years old and it's very, very hard. A lot of it, I think, is my age. But I have good qualifications.

(END VIDEO CLIP)

COLLINS: Resume in hand. Nathan Davenport and Ramona Campos joined about 450 other people at a job fair in Des Moines, Iowa yesterday. They came searching for work in a state with an unemployment rate nearing 5 percent. For one job seeker, it was the first time she's been out of work in 25 years. Parts of the state sponsored job fair were shown live on CNN affiliate KCCI.

Home prices going down. Stock investments, too. One key to staying afloat may be how much we save.

Personal finance editor Gerri Willis is here with tips on how to save at every age.

And Gerri, good morning to you. This is not...

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Good morning, Heidi.

COLLINS: ... an easy thing to do right now. Saving money.

WILLIS: No. No, it's not and it's essential. Look, when you're in your 20s you have big demands on a very small paycheck. Now, more than ever, you need to get started saving. Start by putting together emergency money. You can find rates of interest on these products at Bankrate.com.

By setting aside a month's worth of saving you weather almost any storm. Consider this, if you invest just $100 a month for 10 years, assuming a return of only -- you'll end up with $32,000. Don't forget saving for the long term. At this age in your 20s you're going to take on lots of risk in your 401(k) or IRA, putting as much as 80 percent in stocks and just 20 percent in bonds and other investments.

As you start to save for big ticket items like a house check out the savings goal calculator at Bankrate.com where you can figure out how long it will take you to meet savings goals given investment returns.

In your 30s your obligations are growing. You may have a house. You may have children. Now is the time to start (INAUDIBLE) away money for your child's education. A 529 college saving plan is a great vehicle for doing just that. Go to SavingforCollege.com for details. But count on putting aside 4 to 5 percent of your monthly gross income to get started.

Now that your income is growing, you can afford to put away some savings and not touch it. Certificates of deposits will offer you a higher yield than a passbook savings account, and you can ladder their maturities so they don't come due and when you don't suffer from fluctuating rates of interest.

Now is the time to ratchet back your stock investment in your 401(k) or IRA. A better level might be 70 percent stocks, 30 percent bonds. Heidi?

COLLINS: All right, so fast forward a little bit more now. What do you do if you're in your 40s?

WILLIS: Now's the time to take advantage of the progress you've already made. If you haven't been contributing to the max in your 401(k) now is the time. You may even want to set up an additional investing brokerage account to supplement your savings. Also now that your income is rising you probably hit a higher tax bracket, seek out tax advantage investments like municipal bonds to make the most of your savings.

Mini bonds are IOUs issued by state and local governments to raise money for public projects. Their interest is typically tax free. You may opt to invest in a mini bond mutual fund to get your money working right away. Drop your 401(k) stock allocation to 60 percent, raise bonds to 40 percent. Heidi? COLLINS: All right, CNN's personal finance editor Gerri Willis with some advice today. Thank you, Gerri.

President Obama getting ready to spend. He's about to talk about his new budget plan. We'll take you there live just as soon as it starts.

(COMMERCIAL BREAK)

ANNOUNCER: Live in the CNN NEWSROOM, Heidi Collins.

COLLINS: We are waiting for the arrival of President Barack Obama this morning. He is expected to talk about his priorities in the upcoming budget and some of his plans as he goes for - we're showing you the way up to the Eisenhower Executive office building where all of this is going to take place today.

These ideas include changes to health care and some program cuts and we'll take you there live just as soon as he gets started.

On Wall Street we are expecting a higher open today but it comes as the nation's largest automaker posts another huge loss.

Susan Lisovicz at New York Stock Exchange now with details.

Hi there, Susan. Talking about GM this morning.

SUSAN LISOVICZ, CNN CORRESPONDENT: No question about it. GM's troubles continue. But you know, Wall street, of course, is waiting and very much interested in what the president has to say in his budget proposal because there may be more, even more aid for the troubled financial sector and hopes for the banking sector sent stocks futures higher this morning.

There's talks that Citigroup is closing in on a deal that would give the government as much as a 40 percent stake in the bank. An announcement could come today or tomorrow. Meanwhile, Bank of America considering a sale of its First Republic Bank which B of A inherited when it bought Merrill Lynch.

Across the Atlantic, Royal Bank of Scotland posting the biggest annual lost in UK history. More than $34 billion, but it wasn't nearly as bad as expected.

Citigroup and Bank of America shares have been higher. Citi shares right now up 7.5 percent. General Motor shares, however, moving in the opposite direction. The automaker posted $9.6 billion loss. Remember, that's just from three months -- the last three months of the year. During that period, GM sales plunged and it received the first installment of government aid. GM executives are in Washington today meeting with government officials about additional loans for all of last year. GM lost nearly $31 billion.

On the economic front, new jobless claims unexpectedly jumped to 667,000 last week. Continuing claim surged to another record high, topping the 5 million mark for the first time ever. Separately orders for big ticket items like computers and cars plunged more than 5 percent last month. The sixth straight month of declines. And about half an hour, we're expecting to learn new home sales fell last month to a new record low.

But Wall Street is walking on the sunny side of the street at least in the first 90 seconds of trading, Heidi. The Dow right now is up 66 points or one percent. Ditto for the Nasdaq and the S&P 500.

Heidi?

HEIDI COLLINS, CNN ANCHOR: OK, we'll be watching. Thanks so much. Susan Lisovicz, appreciate it.

LISOVICZ: You're welcome.

COLLINS: President Obama about to unveil some of the details of his new budget. Among them, billions of dollars for a health care reserve fund which would be partially paid for with higher Medicare premiums. We are waiting his arrival at the Eisenhower Executive Office Building right now.

So in the meantime, here are some of the proposed cuts in the new budget. Sources telling CNN, the president will look to end some outdated farm subsidy programs. He'll also target expensive cold war era weapons system. We were just talking about that with Barbara Starr on the F-22. And also on track for possible elimination is the federal mentoring program established under the previous administration.

He may be one of the most important number crunchers in the country. Today, Peter Orszag will present the president's first budget plan, and while his job maybe big, his ego most certainly is not. CNN's national political correspondent Jessica Yellin takes a look.

(BEGIN VIDEOTAPE)

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT (voice-over): He's the youngest member of the president's Cabinet, an increasingly public face of the Obama economic team...

PETER ORSZAG, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET: Barack Obama.

(APPLAUSE)

YELLIN: ...and a cooperative target of White House jokes. In a meeting with congressional leadership, the president teased Peter Orszag for this photo, which ran in "The New York Times."

ORSZAG: And I said, yes, I'm a super nerd. And the whole room cracked up. But I try to -- I don't think I was self-described.

YELLIN (on camera): As a nerd?

ORSZAG: Yes. YELLIN (voice-over): Neither would "People" magazine. Its Web site called him one of the Obama team's hunks.

Tomorrow, Peter Orszag will present the president's blueprint, which for the first time will account for the cost of the wars in Iraq and Afghanistan.

ORSZAG: We're not going to play the games that have been played in the past.

YELLIN: A marathon runner, he lives off Diet Coke, and he will need it. President Obama has tasked Orszag with cutting the budget deficit in half and helping to get health care done this year.

A professional economist, Orszag has long argued that large-scale health care reform is essential to fixing the deficit.

ORSZAG: And we will have to see where that legislative process goes, but I -- I think the goal should be universal coverage.

YELLIN: He was one of the key negotiators in the final hours for the stimulus deal, which prompted Senator Harry Reid to declare:

SEN. HARRY REID (D-NV), MAJORITY LEADER: He's a natural. He's a brilliant man.

YELLIN: And he won the trust of fiscal conservatives when he ran the Congressional Budget Office.

UNIDENTIFIED MALE: I think Peter's one of the best things that President Obama has going for him when it comes to bipartisanship.

YELLIN: Recently, Orszag got some unexpected attention. He accidentally forced an evacuation of a White House building when he lit some logs that were left by his fireplace. He didn't know the building's chimneys had been covered over.

ORSZAG: And, so, while everything was venting down here, two or three floors up, there was smoke filling a room.

YELLIN: But he quickly came up with a joke to make light of it.

ORSZAG: Rahm wanted me to send some smoke signals to the Hill, or, I'm the budget director. Come on. I was just trying to save a little money on the heating costs.

YELLIN (on camera): Orszag is not without his critics. Some on the left worry that he'll cut too much. Some on the right are unhappy that he is phasing out President Bush's tax cuts. But Orszag is hopeful he will be able to build a broad consensus in the middle.

Jessica Yellin, CNN, Washington.

(END VIDEOTAPE)

COLLINS: Our White House correspondent Suzanne Malveaux is waiting to get all of the details as well on this announcement today. She's joining us now live on the telephone.

All right. Suzanne, tell us what are we likely to hear today straight off the top from the president?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Sure, Heidi. Well, I'm next in the Room 350 of the Eisenhower Executive Office Building right across from the White House. And we are just waiting for the president to arrive.

And what we expect is very much similar to the message that he delivered to Congress. That this is really going to be a new era of responsibility, of transparency, that he is going to talk about the fact that this is an economic crisis that he inherited from eight years of bad policy, as well as perhaps cooperation with lobbyists who had too much influence and access to the previous administration. And he's going to talk about the fact that many Americans need to make sacrifices in order to deal with this crisis.

And, specifically, those who are making more money, wealthy Americans making $250,000 plus in their income. Not only are they going to see their tax cuts be allowed to expire under the previous Bush administration, but they are also going to elder seniors who make $170,000 are going to be asked to contribute more to the prescription drug coverage under Medicare. These are the kinds of things that he is going to be reaching out to Americans. And he is going to say that this is really just the beginning. This is going to be a lot of hard work, and that they are looking ahead at the next ten years in a very realistic way for possible cuts, and restoring a sense of fairness to the tax code. And that is why you're going to see a lot of those cuts in the responsibility directed towards wealthier Americans - Heidi.

COLLINS: Yes. When we talk about the fairness in the tax code, I think there's probably a lot of people who are looking for, you know, obviously how this will affect them directly in their own personal situations. We were talking earlier with Ed Henry about -- specifically now this thing you mention with the 170,000 cutoff for Medicare.

You know, depending on what part of the country you live in, that's a very different number for different people. So when we're talking about our seniors, you know, how does everybody get sort of a fair shake when you have that uniform number?

MALVEAUX: Sure. And I think one of the things that you're going to hear the president have to deal with, as well as Peter Orszag of OMB are questions about those who do make that kind of money. They are -- they are the ones who hire the workers, they spend money, they get charitable contributions. We've seen a dramatic decrease in the moneys that come to these charities, that they are really suffering.

So the question being in targeting that group, how healthy will they be in restoring fiscal responsibility or could it backfire. And could you have those people who are supporting major sectors of the economy holding on to their dollars, not hiring, and not giving to charities. Could this be the opposite effect of what the president is intending to do? I think that's one of the concerns that the critics bring up, that Republicans bring up, and that wealthy Americans are taking a second look, a closer look at the plan.

COLLINS: All right. Well, we will certainly be doing that here. And once again, another live look for you there as we await the president arriving where Suzanne is, the Eisenhower Executive Office Building, and we are waiting to hear more about that fiscal year budget for 2010 coming up any minute. It was supposed to be at 9:30 so we're running a little bit later here, but we will of course keep our eye on it for you, and bring it to you just as soon as it happens.

At the head of her class, but behind in her payments. A student making As may not make it through college. And in this economy, she is not alone.

(COMMERCIAL BREAK)

COLLINS: Quickly now, a reminder, something that we are following very closely this morning. We are going to be hearing from President Barack Obama, supposed to be happening at 9:30 this morning so we are running behind, but we are watching those stairs -- the stairs of the Eisenhower Executive Office Building, where he is going to unveil and give some brief comments, we're told, about the budget for fiscal year 2010.

A lot of different things that people have questions about here, specifically regarding $634 billion health care reserve fund that we've been talking about this morning and how exactly that will be used and where the money will come from. Of course, a lot of other priorities that he will address as well. So again, we're watching that very closely. We have correspondents there as well. We'll bring it to you just as soon as it happens.

And update now on the Turkish airlines crash in Amsterdam. Investigators are on the scene going through the wreckage. They are also examining the flight data recorder. Nine people died in the crash and dozens more were injured. This morning, six people remain in critical condition. Investigators don't know yet what caused the crash.

(WEATHER REPORT)

COLLINS: The First Lady bears arms. The essence of her style.

(COMMERCIAL BREAK)

COLLINS: In his address to Congress Tuesday night, President Obama called on all Americans to commit to at least one year of higher education, but many kids who have the grades don't have the money. And are being edged out of that education.

Here now CNN's Christine Romans.

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CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT (voice-over): Freshman Nicole Suissa, an aspiring lawyer, a 3.73 GPA at the University of Hartford. She may not make it to sophomore year. Balance due, almost $5,000.

NICOLE SUISSA, COLLEGE FRESHMAN: If I can't stay for next year, I'm pretty much in the water. I'm done.

ROMANS: She's on her own paying for college. After her father abandoned them, Suissa says she and her mother spent time homeless and on welfare. She wants a first class education. But university grants, subsidized student loans, and a part-time job aren't enough.

SUISSA: It's become so expensive and it feels like it's so out of reach.

ROMANS: Especially for lower-income students. Education experts say every year there are 600,000 qualified students who don't get a two or four-year degree within eight years of high school graduation. The reason, money.

ANTHONY P. CARNEVALE, GEORGETOWN UNIVERSITY: These kids are qualified. They're in the top half of their class, but they never do get the degrees that they're quite ready to get if we funded them and supported them properly.

ROMANS: Suissa's classmate Gary Pelkey dropped out. His family's credit wasn't good enough for private loans. He wants to be a civil engineer. The first in his family to go to college.

GARY PELKEY, FORMER STUDENT: I don't want to suffer like my family has. Through the years, I don't want to live from paycheck to paycheck.

ROMANS: Suisa's options are limited because she owes the school money, her student accounts and transcripts are frozen, meaning she can't even transfer to a less expensive school.

SUISSA: Why should I have to? All the kids who can afford it don't have to and their grades aren't as good. That's not fair.

ROMANS: She's still hoping for more aid. Because of the recession her school has budgeted an extra $1.5 million for financial aid.

WALTER HARRISON, PRESIDENT, UNIV. OF HARTFORD: We're committed to helping our students. We want them to succeed here.

ROMANS: But her success is not without struggle.

SUISSA: There are other things at my age I should be thinking about and that shouldn't involve how I'm going to stay in college.

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COLLINS: Christine tells us Nicole is going to figure out how to come up with the extra few $1,000 she needs for each semester. Gary who dropped out plans to take a year off and make money, then apply that to a less expensive state school. We have a special encore presentation of CNN's "BLACK IN AMERICA," documentary airing at 8:00 p.m. Eastern. Tonight's focus, the "Black Man." I mean, this excerpt we've profiled one man's journey. Here now CNN's Soledad O'Brien.

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UNIDENTIFIED MALE: Over here.

UNIDENTIFIED MALE: Hello.

UNIDENTIFIED MALE: How are you doing today? You too, you take care of yourself.

SOLEDAD O'BRIEN, CNN SPECIAL CORRESPONDENT: James "Butch" Warren is making his daily rounds.

UNIDENTIFIED MALE: What happened here? Got a brand new school here.

O'BRIEN: As an executive for the Pulaski County School District, he oversees 40 schools in Little Rock. Since Little Rock Central High School was integrated 50 years ago, countless black --

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COLLINS: All right. Quickly showing you now -- I had to interrupt that story to let you know that President Barack Obama is going up the stairs of the Eisenhower Executive Office Building. He was supposed to begin his remarks regarding fiscal year 2010 budget at 9:30. So we're about 20 minutes late right now, making his way into the building.

Going to be hearing a little bit more about how this money will be spent. And one of the big things we have been talking about already this morning is the $634 billion health care sort of reserve fund that is going to be designed to overhaul health care. Something that people have a lot of questions about, as to who will be affected and who will not. So, again, we continue to watch for President Obama as he makes his way inside and to the podium so we can all learn a little bit more about the budget.

Meanwhile, you can see the rest of that story, the one we were just telling you, and the full "BLACK IN AMERICA" documentary at 8:00 p.m. Eastern. Tonight's focus, "The Black Man." Then catch Anderson Cooper and Soledad O'Brien for a special preview edition of "BLACK IN AMERICA II." That's tonight at 11:00 p.m. Eastern right here on CNN.

Real people feeling the effects. There is much more on the balancing act in education. We're going to be talking to parents, a student and teacher about the tough choices they are making. It's a snapshot across America.