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Fiscal Cliff Inaction; Violent Protests in Egypt

Aired December 05, 2012 - 15:00   ET

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

BROOKE BALDWIN, CNN ANCHOR: Top of the hour here. I'm Brooke Baldwin.

An urgent situation unfolding right now in Egypt. We're getting word here that masked men have attacked the office headquarters of the Muslim Brotherhood as these protests grow increasingly violent. At the center of all of this, the Egyptian president, Mohammed Morsi. We will take you live to Cairo here in just a matter of minutes.

But, first, the fiscal cliff. The fiscal cliff sound bites, they are flying, even if the actual negotiations are at a standstill. President Obama says, Republicans, they're the ones that need to take the next step here. Republicans say, no way, ball's in your court, Mr. President.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We can probably solve this in about a week. It is not that tough.

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: Now we need a response from the White House. We can't sit here and negotiate with ourselves. Now, the revenues we're put on the table are going to come from, guess who, the rich.

OBAMA: If we can get the leadership on the Republican side to take that framework, take knowledge of that reality, then the numbers actually aren't that far apart.

REP. ERIC CANTOR (R-VA), HOUSE MAJORITY LEADER: Where are the specifics? Where are the discussions? Nothing is going on.

REP. NANCY PELOSI (D-CA), HOUSE MINORITY LEADER: Passing a middle- income tax cut means the end of holding them hostage from tax cuts for the middle -- for the rich.

REP. KEVIN MCCARTHY (R-CA), MAJORITY WHIP: I think the next 72 hours are critical. If he sits back and continues to play politics, that will give your answer of where we're going. This is an opportunity for this country to lead. This is an opportunity for the president to lead.

(END VIDEO CLIP)

BALDWIN: President Obama flatly rejected another idea that's been floated at least by some of the Republicans to just really kick the can on parts of the fiscal cliff debate and wait for the next round of debt ceiling talks, yes, debt ceiling.

Let's go to the White House, to our chief White House correspondent, Jessica Yellin.

Hang on, Jessica, why are we talking debt ceiling limit again? Please tell me not so.

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Right. Sounds a little confusing, huh, Brooke?

BALDWIN: Yes.

YELLIN: The White House thinks of the debt ceiling as part three of a three-step solution to the fiscal cliff. They are asking that any deal that they cut with the Republicans include some mechanism that is a permanent solution to avoid a debt ceiling nightmare, like we had last year.

Here's what President Obama said when he spoke to business CEOs about this earlier today.

(BEGIN VIDEO CLIP)

OBAMA: I want to send a very clear message to people here. We are not going to play that game next year. If Congress in any way suggests that they're going to tie negotiations to debt ceiling votes, and take us to the brink of default once again as part of a budget negotiation, which, by the way, we have never done in our history, until we did it last year, I will not play that game, because we have got to break that habit before it starts.

(END VIDEO CLIP)

YELLIN: So, just to be very clear, the White House sees this as three steps. A fiscal deal would include, one, some measure that would raise revenue, tax raising, two, a sequester, that's all those budget cuts that are going to kick in, some way to save money through spending cuts, probably on Medicare changes, and then, three, some solution for the debt ceiling, both in the short-term and then some permanent solution to avoid that kind of nightmare repeating itself over and over, Brooke.

BALDWIN: OK. So we just played a bunch of the sound bites here today from the president, from Capitol Hill. We know the White House gave their plan last week. Republicans responded with their plan on Monday. It has been two days. Any indication there will be any movement, any response from the White House?

YELLIN: They are waiting, essentially, for the Republicans to change their position on tax rates. That's the bottom line.

I'm saying it more clearly than they will, but that is their bottom line, Brooke.

(CROSSTALK)

BALDWIN: We appreciate that. Jessica Yellin for us at the White House, Jessica, thank you very much.

I want to get past all this politics here, to just really how this affects you. We will start with one of the most popular parts of the tax code that helps so many homeowners.

Christine Romans has that -- Christine.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CORRESPONDENT: The middle class's most cherished tax break could be in the crosshairs of the fiscal cliff negotiations. We're talking about the mortgage interest deduction. Government spending on this will reach $100 billion by 2014, making it the third largest tax break on the books.

Who does it help? Forty-one million people. The most recent IRS data showed that 41 million people claimed this deduction on their 2010 tax returns. The Tax Policy Center says it tends to benefit upper middle- class families the most. These bars show income and it circles the average savings. For those with annual incomes of less than $40,000 a year, their savings is about $91. But look at the people who make $250,000 and more. Their average savings is about $5,500.

Of course, this benefits people most on both coasts and cities like Chicago, with higher property prices. We will be watching the fiscal cliff negotiations very closely for what could happen next to this tax goody next year.

(END VIDEOTAPE)

BALDWIN: Here's the question I'm hearing people ask, if we go off the cliff here, how big a hit will we take on taxes? Stand by, because I'm about to give you the closest answer I possibly can.

To help me with that is Lori Montgomery. She is the fiscal policy reporter for "The Washington Post."

So, Lori, welcome to you here.

In your paper this morning, you ran through a couple of tax scenarios which were pretty palatable, so we wanted to be able to show our viewers what you guys ran through with, of course, the help from the Tax Policy Center. Let me run through two.

We will look at this first one. So everybody take a look at this graphic. This is scenario number one, married couple, two kids, one in college, combined income of $137,000. You see the numbers here. First under the Democrats' plan, passed by the Senate, not by the House, they would see their taxes rise just about 2,500 bucks a year. Just below that, the Republican plan, passed by the House in August, would raise the couple's taxes by $4,000.

And if we go off the cliff, this is this third scenario here, the middle-class couple sees their taxes go up by $8,000.

Lori, the viewers see that the couple, this couple here, this middle- class couple gets its best deal from the Democrats' plan, correct?

LORI MONTGOMERY, "THE WASHINGTON POST": That's right.

Most people are going to get a better deal from the Democratic plan if you're under $250,000 because the two Republican and Democrat -- the Republican and Democratic plans are essentially the same on income, but the Democrats also want to extend some of the tax cuts that were enacted as part of Obama's 2009 stimulus plan.

That's where you get that little bump up for like college tuition and extra child credits and that sort of thing.

BALDWIN: We have another graphic I want to throw up. This is pretty much your upper middle-class couple, combined yearly income, 940,000 bucks. Under the Democrats' plan, you see the numbers, taxes going up about $37,000, much less when you see the Republican plan numbers, about $17,000.

And then if we go off the cliff, this couple gets hammered because their taxes go up close to $50,000. Their best deal, Lori Montgomery, coming from the Republicans.

MONTGOMERY: Right. Exactly, because the Republicans don't want to raise their rates, whereas if we go over the cliff, they lose everything. Everyone loses everything if we go over the cliff. And the Democrats want those folks to lose their income tax rates anyhow, so they get a better deal from the Republicans because the Republicans are saying, no, no, we want to extend the tax cuts for you too.

BALDWIN: Lori Montgomery from "The Washington Post," thank you.

Coming up next, chaos in Cairo, protesters charging the presidential palace, throwing Molotov cocktails into the crowd. You will see how the guards there reacted.

Plus, a little girl in the middle of this nasty custody fight that today goes to the nation's highest court. Hear what happened inside coming up.

(COMMERCIAL BREAK)

BALDWIN: A tense face-off in Cairo today between opponents and supporters of Egypt's President Mohammed Morsi.

Two protesters were killed and four injured as the two sides threw rocks and fireworks and Molotov cocktails just outside of the presidential palace. You see just the sheer volume of these crowds. Opponents, they are livid over Morsi's power grab and the rush to draft a new constitution.

On the flip side, Morsi supporters called into action by the Muslim Brotherhood whose headquarters was attacked today by masked men.

Reza Sayah, he is live for us in Cairo.

Reza, I want to start with this masked men attacking. In fact, now we're looking at the video. I can see the fire. Tell me what you know.

REZA SAYAH, CNN CORRESPONDENT: Yes, that's a city north of Cairo.

The political wing of the Muslim Brotherhood, the Freedom and Justice Party, they claim that masked men stormed their offices and destroyed it, torched it. That happened to another one of their offices in another city outside of Cairo, just a sign of this conflict escalating.

Earlier tonight, outside of the presidential palace, just an intense stretch that turned into some ugly violence. That's where you had supporters of President Morsi, opponents of President Morsi gathered in front of the palace.

Initially, during the day, there were pockets of clashes. But then what you had around 7:00, 8:00 p.m. was this remarkable stare-down. The main road that goes right through the palace is divided by some old railroad tracks. On one side of the track, you had supporters of President Morsi. On the other side of the tracks, you had the opponents, and they were exchanging insults and chants.

You knew the tension was escalating and you knew that all someone had to do was throw a piece of debris, a rock or something, and that's exactly what happened. Somebody threw a piece of rock, it seemed like, where we were, and then things really escalated, lots of commotion, chaos, debris, rocks, Molotov cocktails flying around. Police were there. But they were simply outnumbered. They couldn't do much.

And then what you had were clashes on the side streets going back and forth. According to state media, more than 200 people were injured. The health minister is telling us two people were killed, but state media within the past few minutes saying that that's not the case. No one has died. So we're getting some conflicting reports. We're going to check that out and see exactly how many people died -- Brooke.

BALDWIN: So, Reza, the president, President Morsi, he can't be in the palace right now, correct?

SAYAH: No, he's not. And these protests over the past 24 hours, they have taken place after 5:00 p.m. And that's a time where he leaves his office in the presidential palace anyway.

There is no indications that he was in any kind of danger, no indications that any of these protesters tried to breach the walls and get into the palace. Most of these demonstrations, most of these clashes taking place outside the palace in the side streets.

BALDWIN: OK.

SAYAH: Things have calmed down there right now, but certainly some intense and dramatic moments earlier tonight, Brooke.

BALDWIN: Reza Sayah in Cairo -- Reza, thank you.

An update now to the story we have been following. This mother sneaks her sick 11-year-old daughter out of the hospital with a recently amputated arm, still has a heart catheter in her, leaves. The little girl's father explains why they did this next.

(COMMERCIAL BREAK)

BALDWIN: The father of that 11-year-old cancer patient who was removed from a Phoenix hospital says she's better off in Mexico. The young girl was last seen walking out of a hospital with her mother. There they go on hospital surveillance tape.

So a frantic search was launched because of fears that the girl's heart catheter could become infected. Speaking on Mexican TV, her father says they took her back to Mexico because she was being given -- quote -- "bad medical treatment."

Hospital officials say the girl needs treatment and police say the parents could face negligence charges.

Getting through security around the British royal family, it's like trying to penetrate Fort Knox. So, exactly how did these two deejays get through with a prank call, full the hospital staff where the duchess of Cambridge is being treated and actually speak with her private nurse? We have the prank call. That's next.

Later this hour, the life, the legend, the sounds of jazz great Dave Brubeck.

(COMMERCIAL BREAK)

BALDWIN: Want to show you a picture here. You're about to see this, this 5-year-old girl. Look at her, 5-year-old girl caught in the middle of a messy custody battle. But, you see, this isn't your usual custody case. This one involves an international treaty and it is being argued in front of the U.S. Supreme Court.

There is a lot to this. Let me let our justice correspondent, Joe Johns, explain. Take a listen.

(BEGIN VIDEOTAPE)

JOE JOHNS, CNN CRIME AND JUSTICE CORRESPONDENT (voice-over): Eris Chafin is a beautiful 5-year-old in the middle of a bitter custody battle between two parents at the end of a rocky marriage.

JEFF CHAFIN, ERIS CHAFIN'S FATHER: My daughter, she's my -- she's my sparkle. She's everything for me.

LYNNE CHAFIN, ERIS CHAFIN'S MOTHER: If my daughter comes to the United States, I believe I will never see her again.

JOHNS: It's a complicated legal fight, dealing with international borders and treaties and important enough that the U.S. Supreme Court has taken the case.

The last time Eris was in the U.S., her father shot this video of her. But now she lives in Scotland where her mother Lynne is from. A federal judge ruled that Lynne could legally take Eris back to Scotland, despite her father's objections.

Jeff is a U.S. Army sergeant who served in Afghanistan. He says Eris shouldn't be with her mother because Lynne has a drinking problem.

J. CHAFIN: Personally, I don't think that somebody with an issue, an alcohol issue like that, can take care of a child. You know, definitely on their own.

JOHNS: As evidence, Jeff points to this 2010 police video where Lynne was charged with disorderly conduct. But Lynne says it was an isolated incident after a night out. L. CHAFIN: You know, I had too much to drink and I apologized to the court. You know, when I was taken to court, that's just no reflection on me as a mother. I wasn't drunk in charge of my child.

JOHNS: It's a classic he said, she said.

L. CHAFIN: I believe he set me up.

JOHNS: Lynne accuses Jeff of unwanted controlling behavior including a plot to get her deported.

L. CHAFIN: He called the police on me on the 24th of -- Christmas eve and I was removed from the house. I was taken to jail.

JOHNS: Something Jeff denies.

J. CHAFIN: How could I get her deported? How is that even possible?

JOHNS: Telling a totally different story.

J. CHAFIN: I woke up with her standing over me with a knife.

JOHNS: So why would the Supreme Court get involved?

There's a treaty called "The Hague Convention" that says a child in the middle of an international custody battle goes to the country of her habitual residence.

Here's Lynne's lawyer.

STEPHEN CULLEN, ATTORNEY FOR LYNNE CHAFIN: The whole treaty turns on these two words. Habitual residence. What is the ordinary, regular home of this little girl?

JOHNS (on camera): And what is it?

CULLEN: Scotland.

JOHNS (voice-over): The federal court agreed that's where Eris belonged. But Jeff's lawyer argues the judge got it wrong.

The question is whether Lynne intended to stay in the U.S. with her family.

MICHAEL MANELY, ATTORNEY FOR JEFF CHAFIN: The phrase miscarriage of justice comes to mind.

JOHNS: But the main issue for the Supreme Court is if Jeff can appeal the decision now that Eris is out of the country.

MANELY: You've got to have that next level of review.

JOHNS: And it could have broader implications.

MANELY: This is a case that has immediate significant long- lasting impact for every parent in America.

JOHNS: Though most likely for military families and families who travel overseas. Ultimately, Lynne's lawyer says, it all comes down to this.

CULLEN: The welfare of the child is not good for a child to be like a ping-pong ball going backwards and forwards between different countries.

(END VIDEOTAPE)

BALDWIN: Wow. Joe Johns, what a mess.

JOHNS: Yes.

BALDWIN: How was the case argued before the Supreme Court this morning?

JOHNS: Well, you know, the question is, which direction are they going to go? The court never really tells you, but you try to divine things from their questions.

The main issue here is whether the treaty we were talking about cuts off all appeals, that a child can be whisked out of the country immediately after one parent gets a judgment by a court, which is exactly what happened in Eris' case. She was on a plane like two hours after a judge's ruling in Alabama.

So, today, it looked as though most of the justices who expressed at least some level of skepticism about cutting off all appeals had the potential to sort of mold and shape this. Even Chief Justice John Roberts suggested, Brooke, it might be better to hold things up temporarily in a case like this, if there is going to be a rush to judgment by the party that wants to take the child out of the country.

BALDWIN: If they then hold things up temporarily, then what happens next for the child?

JOHNS: Well, I mean, I think what they were talking about or at least some were talking about is, like, a stand-down period, or something like 48 hours between when a court makes a ruling and the child has to leave, so there is sufficient time to try to get an appeal, not necessarily to just throw out the treaty, but just let's have a little bit of down time to think about this.

That's the kind of thing they're talking about today. But that's just sort of problem-solving. It doesn't address all the legal issues. That's another thing entirely for the court.

BALDWIN: Thanks, Joe.

Have you heard about this? A prank phone call actually got through to the hospital where the duchess of Cambridge is being treated for severe morning sickness. Here's what we know. Two Australian radio hosts called up. They're pretending to be both the queen and Prince Charles and they get transferred to the nurse who is treating Catherine.

(BEGIN AUDIO CLIP)

UNIDENTIFIED FEMALE: Hello, good morning. (INAUDIBLE)

UNIDENTIFIED MALE: Oh, hello there. Could I please speak to Kate, please, my granddaughter?

UNIDENTIFIED FEMALE: Yes, just hold on, ma'am.

UNIDENTIFIED MALE: Thank you.

UNIDENTIFIED MALE: Are they putting us through?

(END AUDIO CLIP)

BALDWIN: Our senior medical correspondent, Elizabeth Cohen, here. I know it is crazy when you some of hear the audio, the accent is horrible, and not only do they get through to the nurse, the nurse gave up confidential information, right?

ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: She said that she -- that Catherine was dehydrated when she came in, and they were giving fluids to rehydrate her and then the nurse mentioned since she had been on duty, that Catherine hasn't been retching, that's the word she used, retching.

And, yes, all of this to the deejays who were pretending to be royal family. It is pretty amazing.

BALDWIN: Just in England in and of itself, can just anyone call up the hospital room and get through to someone like this?

COHEN: We asked one of our London-based correspondents this question and he said, no, absolutely not. This is not supposed to happen. This verges on the illegal. It was a disaster.

So apparently this was not supposed to happen, but it did happen. So it tells you something that maybe the rules weren't being followed.

BALDWIN: Here she is, Catherine, just about 12 weeks along. For the next six months, this is the baby bump the world will be watching. How much information do you think the palace will really give the world?

COHEN: From talking to our folks in London, not much. They revealed she was in the hospital because they kind of had to. Right? People follow.

(CROSSTALK)

COHEN: Right. They're watching. So, when they walk into the hospital and her husband is going in and out, they had to say that. I don't think we will hear about the first kick. I don't think we will hear about the results of her diabetes test.

(CROSSTALK)

BALDWIN: Keep that private for her sake.

COHEN: Exactly. Exactly. I think they will say things when they have to say things, like what happened here.

BALDWIN: OK, Elizabeth Cohen, thank you.

Now you're about to hear how a serial killer is describing how to lure a victim. The killer's name is Israel Keyes. Keyes killed himself in an Alaskan jail after being arrested in the murder of an 18-year-old female barista whose abduction was caught on this surveillance video. Here it is. Before he died, the FBI says Keyes confessed to killing at least seven other people.

That confession has led to a coast-to-coast search for clues and for help from the public to find Keyes' victims.

George Howell is working on this for us today.

And so we know that the FBI says Keyes didn't know any of his alleged victims, so how did he lure them?

GEORGE HOWELL, CNN CORRESPONDENT: Right. This was all random, but he had a very methodical plan, Brooke, of how he went about this. First of all, we know he had these murder kits stored, stashed around the country, kits that had weapons.

BALDWIN: Murder kits.

HOWELL: Murder kits with weapons, with cash that he got from robberies, all of this just, you know, to use when he got to the city, with his plan to attack people.

And we also know he would fly into cities. We know he would drive hundreds of miles to find unsuspecting victims, just to randomly kill people.

BALDWIN: So you talk about these murder kits. These were clues then presumably that he left behind. You mentioned across country.

HOWELL: Yes.

And investigators, they were able to find them at the Blake Falls Reservoir in New York and Eagle River in Alaska. Want to walk you through sort of the timeline of events.

BALDWIN: OK.

HOWELL: We know, first of all, he was caught for this most recent murder, his last murder. And you had that video just a minute ago of...

BALDWIN: The surveillance tape.

HOWELL: Yes, of Samantha Koenig. That was his final victim.

And what we know, she was a barista in Alaska. We know that he was in Anchorage, Alaska. He abducted her, he killed her, stored her body in a shed, and then, Brooke, he went to New Orleans. He took a two-week cruise.

Then he went back to Alaska, he took a picture of Koenig. She's dead, of course, but he took a picture, pretending that she was alive, used that picture, sent it to the family to try to extort money from them.

So, investigators, they kept track of that. They tracked him down in Texas. That's where he was using her debit card.

BALDWIN: We have some sound, George. Let me -- let's roll the sound and we'll talk on the other side.

HOWELL: Absolutely.

(BEGIN VIDEO CLIP)

ISRAEL KEYES, SUSPECTED SERIAL KILLER: I thought I was smart. I would do it -- I would let them come to me in just a remote area. Come to a remote area that is not anywhere near where you live, but that other people go to, as well.

You might not get exactly what you're -- not as much to choose from in a manner of speaking, but there's also no witnesses really. There's nobody else around.

(END VIDEO CLIP)

BALDWIN: What is he talking about?

HOWELL: There he is, explaining it very calmly, very ...

BALDWIN: Back in July.

HOWELL: ,,, thoroughly.

Yeah, he takes people out to places where there aren't a lot of witnesses and that's where he kills them.

So, through the course of many conversations, like that, Brooke, investigators were able to determine he was connected to another murder in Vermont, Bill and Lorraine Currier.

This was a similar case where he flew into Vermont, went to their neighborhood, and specifically went looking for homes that would be easy to break into. He decided to choose theirs.

BALDWIN: And he will never face a trial because, as we mentioned, he killed himself. Was it just this past weekend?

HOWELL: And that's the thing, you know, so investigators got a lot of information from him.

They believe that he's connected to at least eight murders. You know, we're talking four in Washington, one New York, Vermont and Alaska and they want any help they can get to make sure that, you know, they have information about other cases.

BALDWIN: OK. George Howell, thank you so much.