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Obama Presents Budget Plan; Tips on Saving Money; Food Banks Overextended; Good Samaritan Gets Ticket
Aired February 26, 2009 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, CNN ANCHOR: Thank you, Tony.
Well, we're pushing forward to a decade of new priorities and a few months of very tough policies. President Obama hands in his budget plan. Love it or hate it, he says, it's an honest accounting.
And is your local food bank the new grocery store? Pushing forward on hunger in America. Safety nets stretched to the breaking point.
Hello, everyone. I'm Kyra Phillips, live at the CNN world headquarters in Atlanta. You're live in the CNN NEWSROOM.
We want to get straight to breaking news this hour. It's a major break from the Bush administration. The Pentagon actually now allowing media coverage of flag draped caskets returning home from the war. We're just finding that out now. That's if the families of the fallen troops actually agree to do this.
Defense Secretary Robert Gates made that decision. The details still have to be worked out.
And just a little added CNN/Opinion Research poll, actually conducted just last week: 67 percent of Americans support a more open policy; 31 percent don't.
Secretary Gates is due to hold a news conference at the top of the next hour. You will see it live right here in the CNN NEWSROOM.
Now back to our top story. How do you balance a near-term economic crisis with long-term demands on health care, energy, education and deficit reduction? Well, here's a hint: not with a balanced budget. President Obama's long-term, broad-stroked spending plan is a must-read on Capitol Hill. He says it's full of hard choices and, unlike budgets of the recent past, doesn't try to hide them.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Just as a family has to make hard choices about where to spend and where to save, so do we, as a government. You know, there are times when you can afford to redecorate your house, and there are times where you need to focus on rebuilding its foundation.
(END VIDEO CLIP) PHILLIPS: Well, a budget says that the president is more than simply numbers on a page. We've got a whole lot more of the numbers on a screen. We get the stories, dare I say, the drama from our senior White House correspondent, Ed Henry, and also from Wall Street with our Susan Lisovicz.
Now, we could call the budget plan a page turner, but that's so 2008. Ed Henry has actually commandeered the magic wall in our D.C. studios. And I heard that...
ED HENRY, CNN CORRESPONDENT: Wait a second.
PHILLIPS: Are you trying to steal John King's thunder?
HENRY: Hold on a second. Commandeered. Back off. I didn't take anything from John King. It's on loan for a day. He charged me a big licensing fee, by the way, so I have a personal deficit myself, Kyra.
A big part of this is health care. President said he wanted to make that a priority Tuesday evening when he spoke to Congress at joint session. He is setting aside $634 billion for this health-care reserve fund. How does he pay for it? That's a key part.
So we go inside the budget right here. You can see, as we try to make it come alive. And here's one page that lays out exactly how he wants to pay for it. In part, by reducing itemized deduction rate for families with incomes over $250,000.
What does that mean in real terms? What it means is that, right now, if you're a couple making at least $250,000 a year, and you have $10,000 in mortgage interest to deduct or $10,000 in charitable contributions, right now you would do that at a 35 percent rate. So you get $3,500 back on your taxes. Right now the president is moving forward, wants to cap it at 28 percent. So you would only get $2,800 on that $10,000 in mortgage interest or charitable contribution contributions. So all of a sudden your tax liability increases about $700.
Go across the board; that brings in hundreds of billions of dollars across the board. So that's one big way how he wants to pay for it.
But it's not enough to pay for, in addition to health care, the education money he wants to pay for, the money he wants for energy, et cetera. So look at what is going to happen to the budget deficit.
When you get inside here, it's fascinating. We can see the deficit right here. Let me just start that one more time so you can see it. And, doesn't seem to be wanting to come up. But anyway, the deficit is right here: $1.7 trillion in 2009; $1.1 trillion in 2010, $912 billion in 2011. You get the idea. Five eighty-one -- these are billions, 533, 570, 583, 637, on and on. All the way.
Look at this, 2019 we still, under this projection, just a projection, have a budget deficit annually of $712 billion, even though the president is laying out some spending cuts, even though he has these tax increases.
And that's why we're already starting to hear from Republicans, how are you going to pay for all this? How are you going to add on health care and education and energy and also have the annual deficit as the president promised on Tuesday night?
The reaction from the White House is they're basically saying, "Look, this is not a six-month crisis. You don't put a Band-Aid on the recession." Instead, what the president is trying to do is to invest in all of these initiatives over the long term and rebuild the economy from the ground up. It is going to be a big fight to get there, Kyra.
PHILLIPS: All right. We'll keep tracking all the numbers with you. Thanks, Ed.
Well, the early reviews are in. And you won't be shocked to see a major thumbs-up from White House -- Speaker Nancy Pelosi.
(BEGIN VIDEO CLIP)
REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: At long last, a budget that is a statement of our national values, as a federal budget should be. A big budget is consistent with the president's message of accountability, fiscal responsibility, transparency from a standpoint of how we approach it.
(END VIDEO CLIP)
PHILLIPS: Well, the leader of House Republicans says taxes and spending and says that he's seen enough.
(BEGIN VIDEO CLIP)
REP. JOHN BOEHNER (R-OH), MINORITY LEADER: I think we just ought admit it: we're broke. We can't continue to pile debt on the backs of our kids and grandkids. The president campaigned against wasteful spending, and he ought to veto this bill.
(END VIDEO CLIP)
PHILLIPS: Well, don't be confused. What's circulating isn't really a bill or even technically a budget. It's just a preview of a detailed plan to come in April, plus a projection for the decade to come.
And don't forget: the White House media briefing is set for 1:30 p.m. Eastern Time today. You'll see it live right here in the CNN NEWSROOM.
Now, other stories that we don't want you to miss this hour: how much more can we take? While the politicians debate, more and more ordinary Americans are asking that question. Americans like Pamela Rinchich. She lost her job, lost her insurance. Now she may lose even more. She's one of the faces of this recession, a face and a story that you won't forget. And some numbers that we'd like to forget, which hound us almost daily: 667,000 Americans filed first-time jobless claims last week. The Labor Department says that's the highest figure since 1982.
The number of people continuing to get unemployment insurance has now topped 5.1 million, setting a record for the fifth straight week and starkly reminding us how tough to the find work these days.
And over at the nation's largest automaker, job cuts seem to have become the norm. But General Motors just can't cut costs fast enough. Earlier today, GM posted another huge loss.
Susan Lisovicz at the New York Stock Exchange tallying up all the damage for us.
Hi, Susan.
SUSAN LISOVICZ, CNN CORRESPONDENT: Hi, Kyra. Well, it's not only the federal deficit that has a lot of zeros. The balance sheet at GM is just hemorrhaging.
Fourth-quarter losses for the nation's biggest automaker amounted to $9.6 billion, or $100 million a day. Now, remind you that this was a period in which GM got its first installment, its first loan from Uncle Sam, that $4 billion loan. It burned through, GM, $6 billion in cash in three months. And that's important. If you guys have been through, been to, been past a GM showroom, you'll see how quiet they are.
Cash is something that, in healthier times, GM would have no problems with. It's nearing the minimum threshold needed to just keep its operations going. And the CFO for GM says he's not forecasting any heroic recovery in industry conditions this year.
GM is asking Uncle Sam for another $16 billion today. Representatives from the company are in Washington again. And the company, meanwhile, is currently offering buyouts, wanting to slash up to 50,000 jobs.
As far as the stock reaction, well, GM shares right now are down 5 1/2 percent. Sounds like a big move, right? Fourteen cents, Kyra, 14 cents because its share price is so low, below $2.50.
Overall, the Dow is hanging onto its gains. It's certainly, you know, paired most of its gains for the session. But the banking sector is higher because the Obama budget is proposing even more upon money for the ailing financial sector. And Bank of America and JPMorgan shares each up about 8 percent -- Kyra.
PHILLIPS: I was just trying to think, what can you get for 14 cents nowadays? You can't even get a gumball for 14 cents.
LISOVICZ: Didn't we go...
PHILLIPS: Talk about this yesterday? Exactly.
LISOVICZ: A slice of gum maybe.
PHILLIPS: OK. All right. We'll think about that one. Thanks, Susan.
LISOVICZ: You're welcome.
PHILLIPS: Well, pushing forward now, past the numbers, past the politics, straight to the people's tables, empty tables. Here's the bottom line.
More and more Americans are turning to food banks and other charities just to feed their families. They never thought that their cupboards would be this bare. They never dreamed of taking a handout. But they need one now.
And the people helping them are trying to keep up. Demand is running high. And supplies are running low. But today, we're going to make sure there's no shortage of awareness.
Here's what we want to know. Just how bad, how painful is the hunger problem in America? And what can you do to help? If you think you can't feed a hungry family, well, think again. It's easy, and we're going to tell you how.
Plus, we're going to keep on pushing forward straight to the front lines of the battle against hunger. We're live at the Atlanta Community Food Bank, a lifeline for charities trying to put food on America's table.
Uncle Sam's cash might be out of your hands but your own Benjamins? Different story. There's a healthy, wealthy and wise way to save money. Are you a smart saver? We're going to find out.
(COMMERCIAL BREAK)
PHILLIPS: From hero to example in an instant.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Jim saw him coming, pushed the three people out of the way, and caught the truck head-on.
(END VIDEO CLIP)
PHILLIPS: He was still in intensive care when he found out about his jaywalking ticket.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
ROBIN SAVAGE, IREPORTER: The American dream is really at stake here. And for people to be losing their homes, their jobs, and see communities being torn apart, and just -- you just feel that people have no hope in their eyes. You just -- you see it everywhere you go now. (END VIDEO CLIP)
PHILLIPS: Well, another concerned iReporter weighs in for us. And here's a bit of good news, Robin, for Americans that are saving money these days, that's a good thing. And if that applies to you, let's make sure that you're saving the smart and responsible way. Our personal finance editor, Gerri Willis, is here with some advice.
Hey, Gerri.
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Hey there, Kyra.
Yes, this is tough times, no doubt. But if you're saving, there is a right way to do it. When you're in your 20s, you have big demands on a very small paycheck. Now more than ever you need to start saving.
The first step: put together emergency savings by having money directed to a direct deposit account with savings or a money market mutual fund. You can find rates of interest on these products at BankRate.com or HFH.com.
By setting aside three to six months' worth of savings, you'll set yourself up to weather almost any storm.
Consider this: if you invest just 100 bucks a month for ten years, assuming a return of 4 percent, you will have saved over $32,000 over 20 years.
And don't forget about saving for the long term. At this age you can afford to have a lot of risk in your retirement savings. Your asset allocation in a 401(k), IRA, as a 20-year-old, should be 70 to 80 percent in stocks, remainder in bonds.
If 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 and how much money you can put down -- Kyra.
PHILLIPS: Well, how does your savings strategy change when you're in your 30s?
WILLIS: Well, your obligations are growing as a 30-year-old. You may have a house. You may have children. Now is the time to start salting away money for your child's education.
A 529 college savings 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 some savings away and not touch it. Certificates of deposit will offer you higher yields than passbook savings account. And you can ladder their maturity so that they come due over time and you don't suffer from fluctuating interest rates. Now is the time to ratchet back your stock investment and your 401(k) and IRA. Your stock contribution should be 70 percent, 30 percent for bonds -- Kyra.
PHILLIPS: OK. Now, this is something that my little group and I should have been talking with you about yesterday, all of us in our 40s. We were actually rearranging our portfolios, getting a little depressed. It's probably something we shouldn't have done as we began the newscast yesterday. But hey, it's a reality check for all of us.
WILLIS: It sure is.
PHILLIPS: So I'm going ask you your advice now, and I'm going to see how well we did after we took a lot of various bankers' advice yesterday on what to do.
WILLIS: Well, look, if you're in your 40s, look, you probably made some progress already. I know it doesn't look like a lot right now as you look at those 401(k) levels, right? But now is the time to step it up a notch.
If you haven't been contributing the max to your 401(k), for goodness sake, do it now. You may even want to set up an additional investing brokerage account to supplement your savings. That's right.
Also, now that your income is rising, you probably hit a higher tax bracket. Seek out tax-advantaged investments. Municipal bonds are a good one. They make the most of your savings.
Muni bonds are IOUs that are issued by state and local governments to raise money for public projects. And good news here: their interest is typically tax free.
Now, you may opt to invest in the muni bond mutual fund to get your money working right away. Drop your 401(k) stock allocation to 60 percent, raise bonds to 40 percent, and you are on the right track.
Was that close, Kyra.
PHILLIPS: OK. I'm just going to turn around and shot -- shoot for Sonya (ph) over there. And telling her -- you said 60/40. We actually did 50/50 yesterday, so yay.
WILLIS: Wow. You're very, very conservative.
PHILLIPS: Gerri Willis. I know, well...
WILLIS: It works.
PHILLIPS: And we've never been that way, and we really tanked in the numbers. And so now we're sort of changing things around. And I love it. I had no idea you were going to give us that advice. And now I feel good.
WILLIS: Well, you know, the good news is you're continuing to contribute. A lot of people are saying, "I'm not going to contribute at all."
PHILLIPS: No, you have to.
WILLIS: That's a big mistake.
PHILLIPS: Sure.
WILLIS: You've got to save the money.
PHILLIPS: Totally agree. Absolutely. Gerri, thank you so much.
WILLIS: My pleasure.
PHILLIPS: All right. Here's another bit of advice. Move to Fargo. You could go far. The North Dakota city is an oasis of prosperity in a desert of recession right now.
Unemployment, 3.4 percent, more than four points below the national average. In fact, there are more jobs than people to actually fill them. No housing crisis, a robust economy, and a state budget surplus of more than a billion dollars.
So Fargo, please, share your secrets.
(BEGIN VIDEOTAPE)
MAYOR DENNIS WALAKER, FARGO, NORTH DAKOTA: We didn't get caught up in the subprime mortgages. And I think our bankers need to be significantly applauded for that.
GARY TUCHMAN, CNN CORRESPONDENT: So there's a lot of projects?
UNIDENTIFIED MALE: Absolutely.
TUCHMAN: You can always find work?
UNIDENTIFIED MALE: Absolutely. You can quit your job today and go find another job easy.
UNIDENTIFIED MALE: People in the upper Midwest are very conservative. They don't tend to of extend themselves and stuff.
UNIDENTIFIED MALE: There's just a work ethic up here that you don't see everywhere.
(END VIDEOTAPE)
PHILLIPS: Well, North Dakotans seem to believe that conservative bankers and savers helped them keep their economy steady over the years. Just remember: if you go, take long johns. The high there today: five degrees.
Well, for too many Americans, actually, finding jobs isn't issue No. 1. It's finding food. And our Brooke Baldwin found that out at the Atlanta Community Food Bank -- Brooke.
BROOKE BALDWIN, CNN CORRESPONDENT: Hi, Kyra.
Because of the economy, more and more families are holding onto their cash, which means more and more people are turning to their local food bank. But what happens when the local food bank can't keep the shelves stocked? Coming up, we will take a look inside the current food bank crisis, right here on CNN.
(COMMERCIAL BREAK)
PHILLIPS: Empty tables, empty stomachs. Hungry in America, it's a growing reality for a growing number of Americans. And we want to push this story forward today, beyond the numbers and the political rhetoric, and straight to the heart of the battle against hunger. To places like the Atlanta Community Food Bank, facing demand like it's seldom seen before. Our Brooke Baldwin is there.
Brooke, tell us more.
BALDWIN: Kyra, you said it. The problem is so simple. The demand for food these days -- food like yogurt, Jell-O, meat, especially -- far outweighs the supply. In fact, the food bank director here in Atlanta told me yesterday that a lot of people are having to make a very tough phone call. Folks who used to volunteer at places like this now having to say, "Hey, I need help, too."
Quick overview of how this place works. This, as you said, this is the Atlanta Community Food Bank. Take a look inside. Looks can be deceiving. You are looking at a lot of food. But it starts to disappear.
If you walk with me, this place serves as a hub. Walk through these doors. And what happens is that each and every day as you're about to see, there's a truck moving in here. More than 800 different partner agencies come into this loading dock and you can imagine they fill up their trucks as full as they can with different types of food.
But the problem is, the need is growing. Because of the recession, more and more people need the food to feed themselves, to feed their children. And so we've talked to a lot of different of these smaller agencies, and they're essentially telling us they're faced with a very difficult reality of either giving out less food in their baskets or some people, one woman you're about to hear from, she might have to close her doors more often than she'd like.
(BEGIN VIDEO CLIP)
ERNESTA INGRAM, SW ECUMENICAL EMERGENCY ASSISTANCE CENTER: I may have to cut down on the number of days that we are actually open. We are open Mondays and Thursdays of every week. And I may have to cut down and make it one day out of the week. So we can accommodate the people who actually come in. And the food will stretch.
(END VIDEO CLIP)
BALDWIN: Here you go, looking live at one of these truck that just pulled up. More than 800 agencies, like I said, coming here, trying to get food. The problem is, these smaller agencies can't seem to keep their soup kitchens, their food pantries, their food banks full of food.
In fact, one interesting statistic. You've been mentioning different numbers through your show, Kyra. And Feeding America, that's a nationwide group, fighting hunger. They surveyed about 160 different food banks nationwide back in December, and they found that 30 percent of them reported an increase in demand for emergency food assistance. So compared to one year ago, this problem not going anywhere if the economy continues in this downward spiral.
PHILLIPS: I'm curious about volunteerism. Is it up, because things have gotten so tough?
BALDWIN: you know, as I answer, I want to just spin around so you can see. You mentioned volunteer. These are all volunteers, folks who are driving these trucks, coming in to get the food. That perhaps, Kyra, is the silver lining to this story, the fact that people are definitely still volunteering.
The supply is bare. But like I said, because the demand is up, they're not able to meet the needs of as many people, not able to give out perhaps as much meat as they would like to. So one great example someone gave me yesterday. You know, Kyra, when you and I go to the grocery store and we pick up maybe a can of beans and it's buy-one- get-one-free, you hang onto one can, so simple, give the other can to your food bank.
PHILLIPS: Great advice. Brooke Baldwin, we'll be talking more. Appreciate it so much.
Well, feeding a hungry family is actually easier than you think. Here's how you can help battle hunger in America. Next time you go shopping, pass on the cookies, the chips. Buy a can or two to donate to a local food bank. Take Brooke's advice. It's a great idea. If you buy two -- or buy one and get another one free, there you go. Keep one, give another one up.
And if you have a garden or a fruit tree, you can actually donate fruits and veggies from your own trees. Pass on that second or third cup of morning coffee for a week and donate the money to save for your food bank.
You can also go to our Web site, Impact Your World. Just go to CNN.com/ImpactYourWorld. You will see all the ways you can help people right here in the United States.
When it comes to hunger in America, the youngest Americans are among those suffering the most. We're going to keep pushing ahead with this story in the next hour. Joining us, Larry Jones, president and founder of Feed the Children. He says he's facing a crisis in his own country.
And it's kind of cynical, that old saying, "No good deed goes unpunished," but in this case, it fits. Listen to this. He's a Denver bus driver who got out to help two elderly passengers cross the street. But the good deed doesn't stop there. He actually ends up saving them from a speeding truck and then winds up in the ICU.
So guess what the cops do. They slap him with a jaywalking ticket. KUSA's Cheryl Preheim with our "what the...?" story from Denver.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: It's a miracle that he's alive.
CHERYL PREHEIM, KUSA REPORTER (voice-over): The intensive care unit at St. Anthony Central only sees the most serious cases. Still, some cases, some people, stand out to the nurses.
UNIDENTIFIED MALE: When she heard the story she started to tear up. And she was like, your dad is a hero.
PREHEIM: The patient in Room 209 is here so someone else wouldn't have to be.
UNIDENTIFIED MALE: He was just helping out, just being a good citizen, being a man of faith and just helping out the elderly.
UNIDENTIFIED MALE: He caught a full-sized truck at 40 miles an hour head-on.
PREHEIM: For 23 years the driver's seat of an RTD bus has been Jim Moffett's office. On Friday night he was driving on Federal near 63rd. It was dark, snowing. There were a lot of cars.
UNIDENTIFIED MALE: He had two elderly passengers get off of his bus. They were going to cross Federal right then and there, with or without him. Being a gentleman, he stopped the bus, got out of the driver's seat, and he was helping these two ladies across the street.
PREHEIM: Another passenger got off to help. The accident report says a driver in the turn lane didn't see the group until it was too late.
UNIDENTIFIED MALE: Jim saw him coming, pushed the three people out of the way, and caught the truck head-on. He was knocked clean out of his shoes. His hearings aids were knocked out of his head, and his glasses were knocked off of his face.
PREHEIM: Jim Moffett's decision to help cost him bruising on the brain, a broken nose, cheek bones, rib, knee, and a lot of internal injuries. It is also costing him $22.
UNIDENTIFIED MALE: I'm disappointed that he got a jaywalking ticket.
PREHEIM: Yes, a ticket for jaywalking. But this good Samaritan even has a good attitude about that.
UNIDENTIFIED MALE: He laughed. He thought it was funny. "If that's what it takes for me to help little old ladies cross the street," he goes, "I'll take -- I'll take a truck head-on and a $22 ticket and do it again."
(END VIDEOTAPE)
PHILLIPS: Well, as for the Colorado state patrol trooper who gave the ticket, he says while these were great intentions, roads are dangerous, and so people need to use crosswalks.
Well, another good deed outrage for you, this time in Little Rock. McDonald's employee Nigel Haskett sees a guy beating up on a female customer. You can actually see it on the surveillance tape here. So what does he do? Well, he jumps the dude, forces him outside. And then the guy shoots him.
Well, Nigel racks up three surgeries and $300,000 in medical bills. Now, here's the outrage. His workers' comp claim is denied. What does his adjuster say? "I'm sorry, Nigel. Your injuries weren't directly related to your work."
(BEGIN VIDEO CLIP)
PHILIP WILSON, NIGEL HASKETT'S ATTORNEY: Breaking up a fight on the premises, you know. McDonald's want to argue that that's not advancing their interests, directly or indirect, let them do it, because I don't think they're going to win.
(END VIDEO CLIP)
PHILLIPS: Well, if Nigel loses his upcoming appeal, the owner of that Mickey D's says that he will cover the medical bills. Unbelievable that nowadays you've got to be a hero on your own time.
And what the heck is wrong with this picture? A college freshman making great grades, the whole world in front of her, right? Well, maybe not.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: It's become so expensive, and it feels like it's so out of reach.
(END VIDEO CLIP)
PHILLIPS: Is the bill trumping the bachelor's degree? Why being smart enough just isn't good enough.
(COMMERCIAL BREAK)
PHILLIPS: Well, we're peeking into the White House briefing room, where any minute now Robert Gibbs will take reporters' questions on just about anything. We expect to hear a lot about the budget today. We'll take it live as soon as it starts.
Three and a half trillion dollars in spending, $1.75 trillion in borrowing. As a budget plan for fiscal 2010, it's wildly out of balance. But President Obama says it's the first budget in years that's in line with America's biggest needs and priorities. It looks ahead all the way to 2019, and while it's front-loaded with anti- recession spending and heavy on health care, education and energy investments, it aims to cut $2 trillion elsewhere over the decade.
(BEGIN VIDEO CLIP)
OBAMA: What I won't do, as I mentioned at the joint-session speech a couple of days ago, what I won't do is sacrifice investments that will make America stronger and more competitive and more prosperous in the 21st century, investments that have been neglected for too long. These investments must be America's priorities, and that's what they will be when I sign this budget into law.
(END VIDEO CLIP)
PHILLIPS: So, do you have any questions? The White House wants to hear them, and so do we. The revamped White House Web site welcomes your input. But you can also e-mail us, mailtothechief@CNN.com. We're going to pass your questions on to the Oval Office and read the responses right to you on the air.
If a college degree is the first step to success, hundreds of thousands of students -- America's future -- aren't able to take that step, not because of grades or desire, but money. CNN's Christine Romans reports.
(BEGIN VIDEOTAPE)
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.
(END VIDEOTAPE)
PHILLIPS: Once again, that was our Christine Romans reporting. Nicole says that she's determined to stay in school. She's waiting to find out if she can get more federal loans next year. And Gary says he'll work for a year to save money, then start over again at a state school.
Once again, we're waiting for the White House briefing. Robert Gibbs should be stepping up to the mike any second now. We will take it live when it happens.
Well, first, she lost her job, then the news got even worse.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: I offered to go and do whatever I could, you know, to work in her office to cover it.
(END VIDEO CLIP)
PHILLIPS: Well, meet a woman who is doing everything she can to pay her bills while facing challenges she never imagined.
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PHILLIPS: All right. Still waiting for the White House briefing. Robert Gibbs is expected to step out any moment now. We will take that live as soon as it happens.
As we wait for him, we're going to talk about wealthy Americans having to cough up some more cash for their health care. Under proposals in President Obama's new budget, he's calling for a new $634 billion reserve fund to launch reforms to the nation's health care system. How would he pay for it? We'll talk about those details in just a minute.
But first, let's go to Robert Gibbs.
ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: Good afternoon, guys. One quick announcement before we get started. President Obama welcomed Taoiseach Brian Cowen of Ireland to the White House on Tuesday, March 17th. The United States and Ireland have strong bilateral relations, deep cultural ties and a commitment for positive change in the world.
The president is committed to strengthening our partnership with Ireland to address global challenges. The president also looks forward to commemorating with Taoiseach his first U.S. -- I'm sorry, his first St. Patrick's Day in the White House, a celebration which serves as a reminder of the rich history and friendship that our two countries share. And with that, we will begin.
We probably still have those T-shirts that say, O comma Bama.
QUESTION: I was interested in the language that he used this morning when he talked about the budget. He said there are times when you can afford to redecorate your house, and there are times when you need to focus on rebuilding its foundation. Just quickly, is there any -- should there be any pause taken in those words? The Obamas have hired a decorator to redecorate the White House. Do you think that's appropriate?
GIBBS: Let's understand that each administration is afforded an appropriation from Congress to ensure that the family that moves in, the needs of that family can be met. Well, I don't remember the last occupant of the White House having a 7-year-old, and I don't remember the last occupant having a 10-year-old. So I would say, yes.
QUESTION: And more broadly, there's a lot of talk already on the Hill with the arrival of this budget and with the speech the other night about sort of a reorganizing of priorities, you know, removing tax cuts on the wealthy to pay for a lot of the priorities that the president has laid out. Are you all worried about all that that kind of argument, that "class warfare" argument, could sink the ability to get some of these big priorities through?
GIBBS: No. And I think it's important to understand that what the president has enumerated in his budget today is precisely the blueprint and series of promises that he made over the course of two years in a campaign and that the American people voted for. I also think it's important for people that are listening to commentary on the budget or reading about it to understand that there is a -- not only as part of the stimulus package, but contained in the budget, tax cuts for 95 percent of working families in the United States of America, tax cuts for college tuition, tax cuts for savings and retirement security.
What the budget does do, sort of some of the things that the budget does in terms of changing tax rates, it's important for people to understand, affect people that are -- if they're single, they make $200,000 a year or more or a family that makes $250,000 a year or more. That doesn't even affect -- there's not a member of Congress that makes $200,000 a year or more.
The budget contains a provision that closes the loophole that provides tax benefits for companies that ship jobs overseas. The president campaigned extensively on that and the budget makes real his promise to close that loophole. And there's obviously other things, including changing the way carried interest is done for hedge funds.
The president believes that these priorities lay out his promises and institute tax fairness where we are giving tax cuts to the people and the families that need it most in our country and asking those that have, for quite some time, shared in the benefits of previous tax cuts to pay a little bit more. So, I think the president and his team have struck the right balance, and it's a budget that I think Americans can be proud of and we hope Congress passes quickly.
QUESTION: Robert, how realistic, also on the budget, are your expectations of a dramatic drop in funding for the war, or wars, by 2011, I think from $130 billion to $50 billion, given the increase in troops in Afghanistan and the cost of taking personnel out of Iraq? And I have a follow-up budget question after that.
GIBBS: Sure. I think the president -- I know the president will lay out a strategy tomorrow that will begin to draw down -- enumerate the decision to draw down our forces in Iraq as he has promised in his campaign. And the president and the national security team feel the budget projections are very much in line with their priorities in each of these two countries.
So, we feel confident that the projections that are in this budget -- again, some of these are the first time these projections are in the budget, which I think is a change in the way it's been done most recently, and the president feels good about that.
QUESTION: And my follow-up is on the money that's set aside for the situation in which you would ask Congress for additional funds for the financial sector. How likely is it that you're going to use that backup plan, and when would you know (ph)?
GIBBS: Well, I think the answer to both of your scenarios is contained to some degree in the banking health assessments that Treasury talked about yesterday and are beginning to conduct on some of the largest banks now to accurately diagnose what might ail and what might be needed to fix those particular banks. Again, the president believes strongly that as we were putting into the budget costs going forward in Iraq, costs going forward in Afghanistan, costs going forward in terms of things like Medicare or AMT tax payments that, to be truly honest, the budget need to have the idea that some additional money, as he talked about in his speech to Congress on Tuesday, might well be needed and should be accounted for.
PHILLIPS: Bottom line, when you talk about the budget, it's all front-loaded with anti-recession spending, as Robert Gibbs is explaining to reporter there in the White House briefing. Very heavy on health care, education, energy investments. It also aims to cut $2 trillion elsewhere over the decade.
We are following this, everything about the budget today. Our Ed Henry is right there inside that briefing. We'll follow it and bring you the update as we get more information and Robert Gibbs lays out the overall plan there.
Well, President Obama says that health care reform is critical to repairing the nation's economy. Robert Gibbs is going to talk about that while he's during doing the briefing. But doing nothing, the argument goes, will cost even more money in the long run. The struggling economy and the health care crisis, well, it can pack a devastating one-two punch. And our senior medical correspondent, Elizabeth Cohen, has one woman's story for us to make that point.
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ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT (voice-over): In early 2008, life was going great for Pamela Rinchich. She had a good job and was about to get married. Then, in March, the plant where she had worked for more than 20 years in Sarasota, Florida, shut down and she lost her job. And with it, her employer-paid health insurance.
PAMELA RINCHICH, UNEMPLOYED CANCER PATIENT: I was upset, but I thought I would be all right.
COHEN: But two months later, an even bigger bombshell.
RINCHICH: I found out I had breast cancer.
COHEN: Rinchich does have insurance, but she's paying through the nose for it. Her unemployment check is $900 a month, and she pays $368 of that just for insurance. And the insurance has high co-pays and deductibles, so now she's $20,000 in debt because of her medical expenses. One doctor has even refused to see her until she pays her bill.
RINCHICH: I offered to go and do whatever I could, even to work this their office to cover it.
COHEN: According to the Department of Labor, more than 1.7 million jobs were slashed in the past three months. Analysts believe about half of the people who lost jobs also lost their employer-paid insurance.
(on camera): When people don't have health insurance, they often end up here in the emergency room, and that costs all of us. It's one of the major reasons why insurance premiums have skyrocketed.
UNIDENTIFIED FEMALE: In many respects, we all are paying for the uninsured. Those who don't have health insurance are actually impacting those who don't have health insurance.
COHEN (voice-over): And despite efforts from the president, Congress and others...
UNIDENTIFIED MALE: I think there's no question that it is likely to get worse before it gets better.
COHEN: As for Pamela Rinchich, she's done with her chemotherapy, and for now, she's cancer-free. But more surgeries lie ahead.
RINCHICH: I'm just trying to keep a positive attitude.
(END VIDEOTAPE)
COLLINS: So, what do you do if you're uninsured -- because she will soon be -- and you need medical care?
COHEN: You know what? There are some things you can do. It is not a completely hopeless situation. Let's take a look at some tips here. First of all, what you can do is look for a group, a charity group for your specific disease. You're much more likely to get financial help.
Also, look for prescription assistance programs. Just Google "prescription assistance programs." There are many out there to help folks pay for prescription drugs. And negotiate with doctors and hospitals. A lot of people don't know you can go to a doctor and say, look, I don't have insurance. Can you see me for $40 an office visit or something like that.
And Kyra, as a footnote, when Pamela does lose her health insurance, we checked with some experts in Florida, they said she's going to have one heck of a time getting new insurance. She has cancer. When you go to an insurance company and say, please insure me, oh, by the way, I have cancer, usually you get a big fat no.
PHILLIPS: And on top of that, it is so incredibly expensive.
COHEN: Right. Exactly.
PHILLIPS: Your "Empowered Patient" column. What are you going to be writing about this weekend?
COHEN: Yes, this week on CNNhealth.com, you can find a column that I wrote about an amazing doctor named Dr. Doreen Kossove. As she lay dying in her deathbed from a rare cancer, she helped hundreds of people online. She's the woman in the black jacket there. So, you've got to go to CNN health.com, "The Life and Death of an Empowered Patient." And empowered doctor, I should add.
PHILLIPS: There you go. Thank you so much, Elizabeth.
COHEN: Thanks.
PHILLIPS: Well, a big storm dumping heavy snow from the Northern Plains to the upper Great Lakes. And severe weather threatens other parts of the country. We're going to check in with Chad Myers for the latest.
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(WEATHER REPORT) PHILLIPS: By the way, check this out, will you? It's the awesome power of nature. These pictures actually coming to us from Chile. It's an ancient volcano actually threatening a nearby town with what authorities are calling imminent disaster.
It actually erupted last year for the first time in 9,000 years. It's been mostly quiet since then until last week, when it started rumbling. All those who returned to the town after last year's spectacular eruption have now been evacuated.
It's almost a dirty word these days in the wake of so many bank bailouts. But we'll look at the one big step Wall Street doesn't want to see Uncle Sam take.
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NATHAN DAVENPORT (ph), JOB FAIR ATTENDEE: It's a struggle. But, you know, keep the hope, keep the faith and pray hard.
RAMONA CAMPOS (ph), JOB FAIR ATTENDEE: 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.
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PHILLIPS: 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. Parts of the state-sponsored job fair were shown live on CNN affiliate KCCI.
All sides continue to deny rumors about a potential government takeover of the nation's biggest banks. But there's word today that the government is preparing to raise its stake in Citigroup to as much as 40 percent. The government currently holds about an 8 percent stake in the mega-bank. "The Wall Street Journal" reports the deal could be announced as soon as today.
The Citibank report comes as the government conducted so-called stress tests on some of the nation's biggest banks. Regulators are trying to determine if the banks can take a battering, should the recession get worse. Here's our Allan Chernoff.
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ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: The nation's chief banker, the Federal Reserve chairman, Ben Bernanke, says he does not intend to simply take control of troubled banks.
BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: I don't see any reason to destroy the franchise value or to create the huge legal uncertainties of trying to formally nationalize a bank when it just isn't necessary. CHERNOFF: Beginning today, the nation's 19 biggest banks, those with assets over $100 billion, are going to get a financial stress test to see if they can withstand a deep and severe recession.
BERNANKE: The outcome of this test is not going to say, you pass, you fail. That's not the outcome. The outcome is going to be, here is how much capital this institution needs.
CHERNOFF: Any major bank that appears vulnerable, Bernanke says, will be able to get additional financing from the U.S. treasury. In return, the government will receive preferred stock.
PROF. LARRY WHITE, NEW YORK UNIVERSITY: It's going to take government money. There's no avoiding that. I wish it were so that we could avoid it. We can't. And so, it just has to happen.
CHERNOFF: Washington has already invested $50 billion into Citigroup and is considering converting its shares into common stocks, which would make the U.S. government by far the biggest stakeholder in Citi. Some analysts argue that is de facto nationalization, which could mean Uncle Sam decides who gets a loan.
BRIAN GARDNER, KEEFE, BRUYETTE & WOODS: I think those implications are a political influence over the banks' decisions. And I think it makes it tough for the banks to operate in a normal environment.
(END VIDEOTAPE)
PHILLIPS: Well, Bernanke says that Uncle Sam doesn't want to be placed in the position of deciding who is creditworthy. But the government also doesn't want banks investing in risky loans which got us into the economic mess.
The next hour of CNN NEWSROOM starts right now.
