Return to Transcripts main page
CNN Newsroom
President Bush to Lay Out Guiding Principles on Economic Stimulus Package; News Conference on Crash Landing of British Airways Flight
Aired January 18, 2008 - 11:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
TONY HARRIS, CNN ANCHOR: All right. Let's get going.
You're with CNN. You're informed.
I'm Tony Harris.
HEIDI COLLINS, CNN ANCHOR: Hi there, everybody.
I'm Heidi Collins.
Developments keep coming in to the CNN NEWSROOM on Friday, the 18th day of January.
Here's what's on the rundown.
President Bush live this hour on plans to pep up the economy. Is it a plan you can take to the bank?
HARRIS: Mortgage rates are down. How much will it cost to refinance? Personal finance editor Gerri Willis is here answering your questions.
COLLINS: An accident at London's Heathrow airport leads to more canceled flights today.
The plane that missed the runway, in the NEWSROOM.
Your check could soon be in the mail. A tax rebate part of plans to put some pep in the economy. We're going to be hearing from President Bush this hour.
Meanwhile, Brianna Keilar is at the White House this morning.
So, Brianna, what is the president expected to propose?
BRIANNA KEILAR, CNN CORRESPONDENT: Heidi, the White House tells us he's going to lay out what he's calling guiding principles. So not necessarily specifics on what he thinks a good economic stimulus package would be. This is going to be happening shortly before noon Eastern Time.
Now, one thing we know the president is not expected to push for, and that is a major White House priority, extending his tax cuts, making them permanent. He's not going to push, we understand, to make this part of the economic stimulus package. Here is the counselor to the president, Ed Gillespie, on that.
(BEGIN VIDEO CLIP)
ED GILLESPIE, WHITE HOUSE COUNSELOR: We also want to make the permanent -- make permanent the tax cuts and the tax relief that the president has put in place. We're going to push for that, but we're going to do that separately because that is an important thing, to remove any uncertainty about the tax relief that Americans currently enjoy.
(END VIDEO CLIP)
KEILAR: Meanwhile, President Bush is going to make another statement about the economy this afternoon. The White House really trying to show that they understand Americans are feeling the pinch and that the White House is coming up with a quick solution, along with people on the Hill.
Also something else that we've learned, there's been discussion of the timeline for this. We understand from White House spokesman Tony Fratto that the State of the Union, around that time is a possibility, but if an agreement -- if there is agreement before that time, he said there's really no need to wait until the State of the Union to announce it -- Heidi.
COLLINS: All right. Well, that was one of the things that we were hearing, fast and then temporary, some of this sort of rescue package, if you will.
All right. Brianna Keilar outside of the White House today.
Thank you, Brianna.
HARRIS: You know, a check in the mail won't solve all of your money problems. Financial experts offered advice on what you should do on CNN's "LARRY KING LIVE" last night. Here's a bit of the discussion.
(BEGIN VIDEO CLIP)
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: What are we going to do? Well, we're very likely to go in a recession, if we aren't already there. And it looks like Ben Bernanke is saying that the federal government has to come in and spend some very big bucks, as much as $100 million, to get the economy going.
But the bad news here is, you may get 600 bucks in the mail, but what's that going to do for your budget long term? You're going to have to be thinking more broadly about how you're going to save yourself.
LARRY KING, HOST, "LARRY KING LIVE": What caused this, Kim?
KIM KIYOSAKI, AUTHOR, "RICH WOMAN": Well, I think Gerri's right and there is going to be a recession coming. I don't think the government has any way to bail us out of this.
I really think it's a perfect storm of oil prices, energy prices going up, the whole subprime mess, the weakening dollar, unemployment going up, the retail sales are dropping. So I think it's a perfect storm that's really causing it all. And it's a global problem, not just a U.S. problem.
KING: Jean, are we in a recession, or do you feel as though it doesn't matter?
JEAN CHATZKY, AUTHOR, "MAKE MONEY, NOT EXCUSES": It really doesn't matter as long as you feel it. And I personally do think that we happen to be in one right now.
The question is, what can you do to shore up your personal balance sheet?
KING: Correct.
CHATZKY: And when we hit these times of low interest rates before -- and the Fed has indicated that it will be cutting interest rates again -- half of America took the opportunity to really shore up their finances. They refinanced their mortgages down to lower interest rates, they consolidated their credit card debt, they focused their student loans, and they really put themselves in a better situation.
The other half of America sat there and spent money. And the question that you have to ask yourself right now, again, as Gerri said, if you get that $600 tax rebate check in the mail, what are you going to do for you to make this right ride a little bit easier?
KING: Dave Ramsey, the average person when he gets something, he doesn't say, I wonder what my neighbor's doing, does he? He does what he thinks is best for him or her.
DAVE RAMSEY, AUTHOR, "THE TOTAL MONEY MAKEOVER": Well, absolutely. And Jean is exactly right.
I think if you sit around and wait on Washington to come up with a program to solve your problems, you've got a long wait. "I'm from the government and I'm here to help," that's a scary thought.
And I think we do need to stop just a second though. When I was in economics class, the definition of a recession is six consecutive months, two consecutive quarters, of a shrinking gross domestic product. We have not had one month yet of a shrinking gross domestic product.
We have a slowed growth rate. Bernanke was talking about that today.
As a matter of fact, a quote from him is, is that the U.S. economy is not facing a recession, but will suffer from slower growth for at least a year. We had a growth rate of running about 3 percent. We're running about 1.5 percent right now. By definition, that's not a recession.
KING: OK.
RAMSEY: Is it as good as it was? No.
KING: Gerri, but if you're losing your house or your job, you're in a recession.
WILLIS: Two million Americans have faced foreclosure in the last year and more are expected to.
KING: They're in a recession.
WILLIS: They're in a recession and they're feeling the pain. And if you live near those people, your home value is going down, too.
This is, you know, a domino effect that's going on across the country. People out there, they have to take advantage where they can right now because of what's going on in the market.
Interest rates are down to 5.2 percent. That's the good news. The bad news is, you're going to have to be careful about your job, protect your job to the degree you can, to make sure your income is rolling in. And make sure that you're doing the right thing with your house, that you have a great mortgage.
(END VIDEO CLIP)
HARRIS: How about that? Gerri Willis last night, "LARRY KING LIVE."
Gerri coming up in just minutes right here in the NEWSROOM.
We want to give you a quick look at what's happening with the market this morning. We just need to keep an eye on this.
Oh, about an hour or so, last hour, an hour into the trading day, we were up at, oh, about 145 to the good. And now we are clearly off the highs of the morning session so far. But we're going to continue to follow the markets and, again, bring you President Bush's remarks, his thoughts on boosting the economy, live in the NEWSROOM.
We expect to hear from the president, again, this hour, 11:50 a.m. Eastern Time, 8:50 a.m. for our friends in the West.
COLLINS: South Carolina, the sun comes up and Republican candidates count down. Tomorrow, the state hosts its GOP presidential contest. The three front-runners scrambling for votes.
John McCain has rallies throughout the morning. Mike Huckabee also hit the campaign trail. He is pumping up conservative crowds by denouncing gay marriage and calling for the feds to stay out of the state debate over the confederate flag.
Mitt Romney has raised a few eyebrows with a testy exchange with an Associated Press reporter. Romney was saying that his campaign is not being run by Washington lobbyists, when the reporter interrupted.
(BEGIN VIDEO CLIP)
MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: Did you hear what I said? Did you hear what I said, Glenn (ph)?
UNIDENTIFIED MALE: You said you don't have lobbyists running your campaign.
ROMNEY: I said I don't have lobbyists running my campaign. And he's not running my campaign.
(END VIDEO CLIP)
COLLINS: The journalist pointed out that one D.C. lobbyist is among Romney's top advisers.
Monday night, South Carolina. The Democrats take part in the Congressional Black Caucus debate. You can see that live only on CNN Monday night, 8:00 Eastern.
CNN, home for your politics.
HARRIS: Democrats and the high stakes of Nevada. Just ahead of tomorrow's caucuses there, John Edwards is sharpening his jabs against the two rivals he's trailing. He says Hillary Clinton and Barack Obama are selling out the party to special interests.
Clinton is dealing with her own possible setback. A judge has rejected a lawsuit that would have blocked caucuses inside Las Vegas casinos. That could underline, underscore, could benefit Barack Obama. He has been endorsed by the union representing many of the casino workers.
And again, for more of the presidential candidates and their stops, go to cnnpolitics.com. It is your one-stop shop for all things political.
(WEATHER REPORT)
COLLINS: We quickly want to get to -- this is the British Airways pilot. His name is Captain Peter Burkill. Let's go ahead and listen in to him about the incident that happened at Heathrow airport.
CAPT. PETER BURKILL, PILOT OF FLIGHT THAT CRASH-LANDED: Flying is about teamwork, and we had an outstanding team on board yesterday. As captain of the aircraft, I'm proud to say that every member of my team played their part expertly yesterday, displaying the highest standards of skill and professionalism.
No one more so than my senior first officer, John Cowid (ph), who was the handling pilot on the final approach and did the most remarkable job. My first officer, Colin McGuinness (ph), also continually assisted.
I want to pay tribute to the cabin crew and the cabin service director, Sharon Eaton-Mercer (ph), who carried out the evacuation of the passengers with speed, efficiency, and care, some incurring minor injuries in the process. It was typical of Sharon's (ph) selflessness that she took time to check that we on the flight deck were all right before going down the shoot herself.
Thank you.
I want to thank the passengers, too, for their calmness and good sense in extremely unfamiliar circumstances. I wish those who suffered injury a speedy and complete recovery.
I also want to mention the fire crews, the ambulance service, and the police for the huge part they played in dealing with this incident.
As you know, an investigation is being carried out by the air accident investigation branch, so it is not possible for me to make any public comment on the circumstances of what happened.
Thank you very much.
COLLINS: There you have the captain. You see some of his crew members there taking some time from this British Airways incident that happened the other day, where 17 people were injured in that Boeing 777.
Very emotional, as you can see.
It is obviously, as we look at that picture, a very traumatic thing to have get out on those slides when something happens. This was the incident in particular when they were traveling in that Boeing 777 from Beijing to London.
It landed short of the runway and then hit a grassy area and sort of skidded, you know, several hundred yards. You can only imagine what that would feel like inside.
So, the captain there thanking his crew and also the passengers for doing what they were told and for acting as professionally as possible. Of course, not commenting on anything that happened inside the cockpit or mechanically or otherwise. But obviously, that investigation is still going on. So more information will likely be available sometime from now.
Right now, Heathrow has canceled about 50 flights. So, still sort of a backlash, if you will, from this incident that happened on Thursday afternoon.
I believe -- we are going to get to Phil Black shortly, who is our correspondent standing by on this story at Heathrow airport. We will talk with him in just a couple of minutes.
So stick around.
(COMMERCIAL BREAK)
COLLINS: Crash investigators trying to figure out why a British Airways jumbo jet landed short of the runway.
CNN's Phil Black is at Heathrow airport now in London this morning.
So, Phil, we just heard some words from the captain of that 777. Tell us the latest, if you could, on the investigation.
PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT: On the investigation itself, well, that investigation is ongoing. That stricken aircraft, the Boeing 777, is resting still at that end of the southern runway where it came to a rest after that crash landing.
There's been a lot of activity around that aircraft today. And in fact, just the last couple of hours they've moved a couple of very large cranes up along either side of the aircraft. And we're told by the investigators that they want to get a good look of the underside of the body there, the surface that actually slid along the grass there after the wheels buckled beneath it.
The airport tells us that that aircraft is going to remain in place there for as long as the investigators want it to be. And the airport itself just has to do its best to continue operating with that aircraft sitting there at the bottom of the runway.
This is obviously having some impact. Conditions, operations are a little better than they were yesterday. And so far, there have been more than 100 cancellations. And it is a growing number here at Heathrow airport today.
(BEGIN VIDEO CLIP)
BURKILL: As captain of the aircraft, I am proud to say that every member of my team played their part expertly yesterday, displaying the highest standards of skill and professionalism.
(END VIDEO CLIP)
BLACK: That was Captain Peter Burkill there. He was the man who was at the controls of the aircraft, the Flight 38, as it came in and crash-landed at Heathrow airport yesterday.
He spoke to the media here in London just a few minutes ago. He spoke about the professionalism, his pride and his colleagues, the training that they go through to handle these situations.
But he made the point that he was unable to say too much because there is now an official investigation under way. So he didn't give away any of what he thought went wrong as he tried to land his plane here at London yesterday.
Back to you.
COLLINS: Yes, probably not all that unusual, being that the investigation is ongoing.
All right. We appreciate that. And we'll continue to follow this one very closely.
CNN's Phil Black from Heathrow airport.
Thank you, Phil.
HARRIS: The economy sputters, you have questions. Our financial expert, Gerri Willis, has answers. Your e-mails, just ahead.
(COMMERCIAL BREAK)
HARRIS: OK. We're going to check -- look, we have to just keep checking these numbers because we started off so well.
COLLINS: Yes.
HARRIS: Out of the gate -- Sarah (ph), what was that again, the Nasdaq up four?
All right. The Nasdaq up four.
It was about, oh -- up 28 in the first hour of the trading day. The Dow was up over 140 points. And now a bit of a sell-off, obviously. The Dow up 14.
Maybe the president can say something here about this economic stimulus package that will give markets some encouragement here. Who knows? Who knows?
Wow. All right. Let's move away here, because the more -- the longer I talk, the worse it seems to get.
All right. We're following the market. Susan Lisovicz in just minutes in the NEWSROOM.
COLLINS: So many questions out there about what to do with your money at this time. Should you consolidate your loans, refinance your home? What about your credit score?
You do have questions, and Gerri Willis has answers. Our personal finance editor is joining us now to answer some of your e- mails.
This is an important Friday because there are so many questions out there, Gerri. Nice to see you.
WILLIS: Good to see you.
COLLINS: Let's get to the first one so we can get as many in as we possibly can.
Actually, I want to ask you first what you are generally hearing, because I know you are taking the brunt of these questions from people in America.
WILLIS: Tough questions. Questions about bankruptcy, foreclosure, debt. And I want to tell you one statistic here, Heidi. One out of four households report being delinquent on at least one bill right now. That's according to a recent survey.
Three out of four Americans think we're in the a recession. That's according to "Fortune" magazine.
So, folks are -- folks are feeling it out there. No doubt about it.
COLLINS: Four, is that what you said? Yikes. That's a lot.
WILLIS: Yes.
COLLINS: All right. Let's go ahead and get to this first e-mail now. It's coming in from Steven.
He wants to know: "I'm a recent graduate from college and I would like to consolidate my loans. Who is a good lender to consolidate with? When should I consolidate? I still have up to six months to start paying them back."
WILLIS: Well, first, let's talk about consolidation. That's when you basically lump all of your student loans together under one loan and write a single check every months.
If you have a variable rate Stafford loan, wait until after July 1st to consolidate. That's because interest rates will be lower thanks to the Fed's rate cutting.
Now, if you have a high interest rate on a private student loan, and your credit score has improved since you first took out that loan, you should shop around for a consolidation loan. Check out what lenders are offering.
A grace plate to go, finaid.org. These products are getting harder to find and benefits from consolidation are going away, so act fast.
COLLINS: All right. How about this second one then?
"There are three different major credit reporting agencies and I have three different scores. How do I know what score companies use to actually grant credit, interest rates and, et cetera, or is it averaged?"
It's from Julia in Missouri.
WILLIS: Julia, they're not averaged. In fact, your scores are usually different. That's because the data that each credit bureau uses is different.
Bottom line, you won't know which credit report your lender is looking at unless you ask. And a lender should tell you. A mortgage is the only kind of loan where the lender looks at all your credit reports. And while there's no hard and fast rule about which credit reports they do look at, sometimes where you live, believe it or not, can make a difference.
COLLINS: All right.
Well, our last one here now from Michael. He wants to know, "I am in the process of a refinance and have found the industry to be very elusive about giving a 'good faith estimate'. What can I do?"
WILLIS: Wow.
COLLINS: That's a really good question.
WILLIS: Wow. You know what? Getting a good faith estimate on your closing costs, that's your legal right.
COLLINS: Yes.
WILLIS: Your legal right. You should get this document up front before you sign with a lender or a broker, and demand it. If they're not giving you one, you should go find another lender or broker.
If you don't get the document, go elsewhere. A good faith estimate is a statement of your closing costs.
You should get this document three days after you apply for a mortgage. Remember, a good faith estimate will not lock you into a rate, it's not a commitment. If the original estimate is 500 bucks off what you get at closing, ask the bank what happened. If you're not satisfied, find another lender.
COLLINS: Wow, I'd be so curious to know, do people really do that even if it's over -- I mean, I bet a lot of them think, well, it's just $500, it was close.
WILLIS: You know, you have a lot of leverage even at the closing table, believe it or not. People think, oh, gosh, no, I don't. But the reality is, everybody wants that deal done that day.
COLLINS: Yes.
WILLIS: And if they have to waive 500 bucks, so be it.
COLLINS: Yes. That usually seems to be what happens.
All right. Well, we appreciate that.
Gerri's top tips and answering all those e-mail questions for us that we have a lot of these days.
We appreciate it.
CNN's personal finance editor, Gerri Willis.
WILLIS: My pleasure.
HARRIS: Carolina clash, Nevada gamble. Voters decide on a presidential candidate Saturday. Will the nomination picture be any clearer come Sunday?
(COMMERCIAL BREAK)
COLLINS: Good Friday morning one more time, everybody -- 11:30 Eastern time. We are waiting for the president to come to the microphone.
HARRIS: Any moment now. We initially were getting word that his comment, his statement on guiding principles on the economic stimulus package, would be at about 11:50 a.m. Eastern time. But we're hearing inside the next minute or so. Let's get you live to the White House now and Brianna Keilar.
Brianna, what can we expect in this statement from the president this morning?
KEILAR: Tony, just what you said. The White House is using the phrase "guiding principles," not exactly specifics. But the president is expected to talk about what he would like to see in an economic stimulus package. That's coming up here just in a few seconds, in fact. What we know the president won't be talking about is pushing making his tax cuts permanent. That's a big priority for the White House.
But it was made clear this morning that they're going to pursue that separately and not as part of this economic stimulus package. But President Bush all about the economy today, this statement here and another statement this afternoon. The White House really trying to show that they are on top of this issue, that they understand Americans are feeling the pinch. And that they're trying to do something about it and quickly, Tony.
HARRIS: And Brianna, let's be clear about this, some of your reporting from yesterday. There is a real effort, now, agreement from the White House, from congressional leaders and from the Fed chair that it's time to do something.
KEILAR: Yes, certainly the White House really acknowledging that yesterday for the first time. Now, it's really kind of an unusual show of bipartisanship here from Democrats and Republicans and the White House. They're all talking about doing this quickly. You haven't really heard them come out publicly and talk about the daylight that is between them.
At this point we're hearing that really tax rebates is one of the main things on the table. Not sure if we're going to hear President Bush get that specific, but we're certainly going to be listening. And Democrats and Republicans on the hill listening closely. I should also mention that Charles Schumer, Democratic senator, is preparing to give reaction remarks at 1:00 p.m. So, everyone paying very close attention, Tony.
HARRIS: And, so much so that, well, the president is in the room now. Let's listen in.
(JOINED IN PROGRESS) GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: ...last several months I've held a series of meetings with my economic team on the outlook of -- for the U.S. economy. And before I left for the Middle East I directed them to conduct a thorough assessment of our economic condition, consult with members of Congress and provide me with their recommendations about any actions we might need to take.
Economic team reports that our economy has a solid foundation, but that there are areas of real concern. Economy is still creating jobs, though at a reduced pace. Consumer spending is still growing, but the housing market is declining. Business investments in exports are still rising, but the cost of imported oil has increased. My administration has been watching our economy carefully. My advisers and many outside experts expect that our economy will continue to grow over the coming year, but at a slower rate than we have enjoyed for the past few years.
And there is a risk of a downturn. Continued instability in the housing and financial markets could cause additional harm to our overall economy and put our growth and job creation in jeopardy. In recent months we've taken steps to shore up the housing market, including measures to help struggling homeowners avoid foreclosure and to keep their homes. I have also asked Congress to pass legislation to modernize the Federal Housing Administration and enable it to provide additional assistance to struggling homeowners.
The House passed a bill and the Senate passed a bill and now they need to get together and get a bill to my desk as quickly as possible. After careful consideration, and after discussions with members of the Congress, I've concluded that additional action is needed. To keep our economy growing and creating jobs, Congress and the administration need to work to enact an economic growth package as soon as possible.
As Congress considers such a plan, there are certain principles that must guide its deliberations. This growth package must be big enough to make a difference in an economy as large and dynamic as ours, which means it should be about one percent of GDP.
This growth package must be built on broad base tax relief that will directly affect economic growth and not the kind of spending projects that would have little immediate impact on our economy. This growth package must be temporary and take effect right away so we can get help to our economy when it needs it most. And this growth package must not include any tax increases.
Specifically, this growth package should bolster both business investment and consumer spending, which are critical to economic growth. And this would require two key provisions. To be effective a growth package must include tax incentive for American businesses, including small businesses to make major investments in their enterprises this year. Giving them an incentive to invest now will encourage business owners to expand their operations, create new jobs and inject new energy into our economy in the process. To be effective, a growth package must also include direct and rapid income tax relief for the American people. Americans could use this money as they see fit, to help meet their monthly bills, cover higher costs at the gas pump, or pay for other basic necessities. Letting Americans keep more of their own money should increase consumer spending and lift our economy at a time when people otherwise might spend less.
Yesterday, I spoke to members of the Congressional leadership from both political parties. They shared with me their thoughts on the best way forward. And I was encouraged by those discussions and I believe there is enough broad consensus that we could come up with a package that can be approved with bipartisan support.
I've asked Treasury Secretary, Henry Paulson, to lead my administration's efforts to forge an agreement with Congress so that we can deliver this needed boost to our economy as quickly as possible. Passing new growth packages is our most pressing economic priority. When that is done, Congress must turn to the most important economic priority for our country, and that's making sure the tax relief that is now in place is not taken away.
A source of uncertainty in our economy is that this tax relief is set to expire at the end of 2010. Unless Congress enacts, the American people will face massive tax increases in less than three years. The marriage penalty will make a comeback, the child tax credit will be cut in half, the death tax will come back to life and tax rates will go up on regular income, capital gains and dividends. This tax increase will put jobs and economic growth at risk. Congress has the responsibility to keep that from happening. So it's critical that Congress make this tax relief permanent.
We're in the midst of a challenging period. And I know that Americans are concerned about their economic future. But our economy has seen challenging times before, and it is resilient. In a vibrant economy, markets rise and decline. We cannot change that fundamental dynamic.
As a matter of fact, eliminating risk all together would also eliminate the innovation and productivity that drives the creations of jobs and wealth in America. If they're also times when swift and temporary actions can help ensure that inevitable market adjustments do not undermine the health of the broader economy, this is such a moment.
By passing an effective growth package quickly we can provide a shot in the arm to keep a fundamentally strong economy healthy. And it will help keep economic sectors that are going through adjustments, such as the housing market, from adversely affecting other parts of our economy. I'm optimistic about our economic future because Americans have shown time and again that they are the most industrious, creative and enterprising people in the world. That's what has made our economy strong and that is what will make it stronger in the challenging times ahead.
Thank you.
COLLINS: President Bush from the Roosevelt room there, said obviously very many things. I want to bring in Brianna Keilar from the White House now to talk a little bit more about this with us, too.
Brianna, when we were talking before the president came to the microphones, we mentioned that he would be handling this economic stimulus package separately from his permanent tax cut. So we heard a lot about both here. Any surprises?
KEILAR: Well, no. You did hear him talk about the tax cuts but he was emphasizing them as important for long-term growth. He wasn't necessarily saying that they need to be part of the economic stimulus package. Let me talk to you about some of the things that it seems like Democrats and Republicans in the White House can find common ground on that President Bush talked about.
He talked about broad based tax reliefs. He talked about temporary and immediate. Obviously temporary being the big thing that Democrats are pushing, so no disagreement there. And he said he doesn't want to see a tax increase. The concern here is that Democrats agreed when they came into power in Congress that they would pay as they went. But they are open, at this point on the Hill, to treating this as emergency spending and not creating a tax increase to offset the cost of this.
Now, the thing that really caught my eye was when he emphasized we don't need new spending projects. One of the things that Democrats have talked about, spending projects. This is one of their priorities. For instance, increasing unemployment benefits, increasing access to food stamps. So the concern with Democrats, specifically we heard some disappointment from Senate majority leader, Harry Reid, that President Bush was even speaking today -- was that he was kind of coming out, laying out his plan instead of coming with a unified approach.
And word from the Hill is that Democrats were afraid he would kind of get ahead of the process, maybe paint them into a box in some regards. So certainly on this spending project issue, that's going to be a concern. It's going to be interesting to see how Democrats respond to that -- Heidi?
COLLINS: Yes, we will be waiting to see that very shortly, I imagine there will be some type of statement. We appreciate that. CNN's Brianna Keilar coming from outside the White House for us today.
HARRIS: We have kept Gerri Willis pretty busy today, haven't we? She's back, CNN personal finance editor, Gerri Willis.
Hey Gerri, what did you hear in the president's comments?
WILLIS: Well, this is critical. He is talking about tax rebates of $145 billion. He says it needs to be one percent of the Gross Domestic Product. That's the economic might of the country, basically. He also wants tax incentives for businesses, he says.
Now, we were expecting something about tax rebates for consumers. But this is really at the high end of the range, that the Federal Reserve chairman, Ben Bernanke, was talking about yesterday. He was talking between $100 and $150 billion. So this is the high end of the range. The other thing the president says he wants, is he wants his tax cuts extended.
HARRIS: I heard that, too.
WILLIS: They sound set in 2010 (ph), he says if you don't to do that, you're effectively giving the American public a tax increase. But he did talk about a short-term stimulus. That's what we were waiting to hear about. He called it a shot in the arm of the economy. He says he's optimistic about the prospects.
HARRIS: You know I -- did you hear real linkage there? I don't want to imagine things here. But did you hear real linkage between the economic stimulus package and he has called that the tax cut should be made permanent? I don't want to get ahead of the story here. But did you hear linkage?
WILLIS: I didn't.
HARRIS: OK. OK.
WILLIS: I think, you know, I think all eyes are on the short in the arm that he -- that's what he is describing the short-term stimulus for the economy, to turn it around. Here's what the administration wants to see. They send tax rebates to consumers and consumers turn right around and go to the mall, they go to the auto lot, they go spend that money. And it gives -- it gooses the economy. It gives it a little jolt. And it keeps it from spiraling into recession.
Now, that's an optimistic thought. And there's no guarantee it will actually happen. But a lot of economists out there are saying that's exactly what we need right now.
HARRIS: And as we follow the markets, we've got the Dow up and the Dow is down. Certainly off the early highs when we were up 140, 145 points. You can see a big reversal of fortune here. The Dow is down 34.
WILLIS: Right.
HARRIS: What do you make of the roller coaster ride as it continues here, Gerri?
WILLIS: I think the markets -- look big-time investors are worried, they're nervous about what's going on in credit markets. They don't know what's going to set it straight. You have heard, just as I have, about how so many very large national banks and brokers are taking massive losses right now. They don't see the end of the housing crisis. They're waiting for good news.
There's a lot of confusion out there. It's going to take a while to shake it all out in the markets. But just one more point before I go. I saw some interesting numbers yesterday. Remember the stock market looks ahead, right?
HARRIS: Right. WILLIS: So, it looked ahead and it's seen recession. At some point, the market will start looking for the turn around. And when that happens, the market will start picking back up again. That's the natural thing that happens. Numbers show that, if you hold on through all of this, the stock market will eventually turn around. Because I know people out there, they're nervous and they're worried.
HARRIS: Gerri, thanks for your help this morning in telling this story. We appreciate it.
WILLIS: My pleasure.
COLLINS: Wall Street is unsure how to react to those comments from President Bush about the economy. Susan Lisovicz is on the floor of the New York Stock Exchange as we talk more about this and what it could mean for the economy.
Susan, we are watching those numbers on the heels of the president talking about this economic stimulus package. Dow Jones Industrial averages now down about 40 points.
SUSAN LISOVICZ, CNN CORRESPONDENT: Heidi, first of all, a couple of things. One is that when you have the kind of vicious sell-off that we had yesterday, the Dow is down more than 300 points, and, again, when you've had it steady series of vicious sell-offs, what you want to see is a really positive recovery. We didn't get that. The best we got was about 145 points to the upside. Couldn't hold it. And as the president was speaking, the Dow was pretty much at neutral. It was where, basically, it ended yesterday. So it had given up all its gains.
But the sell-off now has increased. Why? Well, I've been talking to traders about it and they just said the (INAUDIBLE) is horrible right now because a lot of people, frankly, think that we are going into a recession or some people, some very bright minds, think that we are already in a recession. You can't fight the tape.
What we've been seeing in this new year is that investors are nervous, they don't think that the economy is in good shape. And it's not only what the president says, because he's talking right now. We don't have that stimulus plan in shape. We don't have any signs of stability in the economy. The news that we've been getting, a steady drum beat, is negative, Heidi.
COLLINS: Well I do wonder -- and again, it might be fast forwarding a bit too quickly here. But, if this economic stimulus package is passed, which of course the president is urging Congress to do -- we didn't see a lot of disagreement from some of the reporting we've already done today that that could happen, very likely -- then what do we see with the Dow? Then what do we see in consumer spending? How long does it take?
LISOVICZ: OK. Well, no two recessions are alike. And I'm not saying we are in a recession. And by the way, let me just tell you what the common definition of a recession is...
COLLINS: Yes.
LISOVICZ: ...and that is two quarters where the GDP actually declines. We have not had that yet. In fact, the last read that we got on the GDP was growth of nearly five percent. Fourth quarter, a totally different story. We have seen all the tell tale signs that the economy stalled out. And we don't get that until the day that the Federal Reserve announces its decision on interest rates.
When we had our last recession, which was in 2001, it was basically two quarters of an economic contraction. We did have a stimulus plan. And it certainly did help. But these are different times and we have our financial system -- has been staying afloat by massive injections of cash from overseas. That is not something that you want. That's not something that Wall Street wants to see. And by the way, the financial sector is the biggest part of the S&P 500, which is the broadest of the three major averages. So folks are still worried.
COLLINS: Yes, yes. We always seem to forget about the S&P 500. It's really a much better barometer, if we're being honest about how all of the companies and stocks are doing out there.
All right. CNN's Susan Lisovicz from the floor of the New York Stock Exchange as we continue to watch the Dow Jones Industrial averages. Appreciate that, Susan.
LISOVICZ: Thank you.
HARRIS: Look at the numbers. If they send it, you will spend. That is the idea behind the tax rebate checks to jump start the economy. But will it work?
The story from CNN's Kate Bolduan.
(BEGIN VIDEOTAPE)
KATE BOLDUAN, CNN CORRESPONDENT: John and Doreen O'Brien say they're like millions of people.
DOREEN O'BRIEN, CONSUMER: Well, we cut back on Christmas. We didn't spend a fraction, maybe a quarter, of what we did last year.
BOLDUAN: Struggling to make ends meet for their family of five. And some help would go a long way.
JOHN O'BRIEN, CONSUMER: With the way the economy is, absolutely. Huge.
D. O'BRIEN: Big boost.
M. O'BRIEN: Big boost.
BOLDUAN: Consumer spending is key to rescuing the weak economy. Federal Reserve chairman, Ben Bernanke, said Thursday, giving a little extra to families like the O'Briens is a good idea. BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: Getting money to people quickly is good and getting money to low and moderate-income people is good in the sense of getting bang for buck.
BOLDUAN: Tax rebates are a leading proposal to do just that. But will they work? The Nonpartisan Congressional Budget office says, yes.
PETER ORSZAG, DIR., CONG. BUDGET OFFICE: Rebates are a relatively effective way of boosting spending.
BOLDUAN: In the 2001 recession, $38 billion in rebate checks went out. Most people received between $300 and $600. No dollar amount has yet been set this time around.
ORSZAG: Something like one-third of the money was spent within three months and about two-thirds of the money was spent within six months, which is pretty good for -- as these things go.
BOLDUAN: But some economists say the evidence isn't so clear.
PROF. JOEL SLEMROD, ECONOMIST, UNIV. OF MICHIGAN: One-third spending is a lot lower than, I think, most people had expected.
BOLDUAN: Professor Joel Slemrod found a majority of people in 2001 decided to save the money, or use it to pay off debt, rather than spend it.
SLEMROD: We really shouldn't expect miracles from a tax package or stimulus package of this magnitude.
BOLDUAN: But like the O'Briens, who said they would spent a rebate, most everyone agrees, something needs to be done and soon.
(on-camera): Now while the details of a stimulus package still haven't come out, there does seem to be consensus emerging among Congressional leaders that rebates will likely be part of the final plan.
Kate Bolduan, CNN, Washington.
(END VIDEOTAPE)
COLLINS: So much to talk about on this day regarding the economy. In fact, we want to let you know that we just learned there will be an on-camera briefing by Treasury Secretary, Henry Paulson. He will be speaking at 12:15 Eastern time today. So we will keep our eye on that for you as well.
HARRIS: Wow. And "YOUR WORLD TODAY" coming up at the top of the hour and "YOUR WORLD TODAY" will be focusing ...
COLLINS: Yes.
HARRIS: ...in on the economy as well. Jim Clancy here now with a preview. Jim, good morning.
JIM CLANCY, CNN INTERNATIONAL ANCHOR: Well you know, we've -- Tony, Heidi, -- we've already heard now from President Bush. We're expecting to hear from Treasury Secretary Henry Paulson coming up. We're going to bring that to you live. We'll check in, see what the market reaction is. Get some analysis as well. Can President Bush and the economists turn it around? We'll see.
Also, vowing to end rocket attacks on its territory, Israel cut off shipments of food and fuel to Gaza, launching air strikes. Civilians were hit. We're going to get a live report from Ben Wedeman.
Plus, Sundance, so far from Hollywood, it still got a red carpet. Colin Ferrell is walking on it to spotlight his role as an Irish hit man whose conscience is in conflict with his career. We'll be there and we hope you join us.
Tony, Heidi, back to you.
HARRIS: All right, Jim, appreciate it. Thank you.
COLLINS: A shoplifter comes clean.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I kind of made a mistake one day. I didn't have enough money to do something. No excuse really. (INAUDIBLE) I'm here because of myself.
UNIDENTIFIED MALE: Would you rather do this than go to jail for a week?
UNIDENTIFIED MALE: Yes.
(END VIDEO CLIP)
COLLINS: Punishment, public humiliation, except we can't really see his face, in the NEWSROOM.
(COMMERCIAL BREAK)
(BEGIN VIDEOTAPE)
ROB MARCIANO, AMS METEOROLOGIST: Hi, I'm Rob Marciano at the CNN weather center. Time now for your Cold and Flu Report.
Check it out on the map here. This is not political. The greens, that's basically where people are feeling all right. Blues and the purples, the purples like California, Montana, Michigan. Localized activity of flu there and the cold virus. And Texas and New York, regional. So, people are not feeling so well in those states. Colorado and New Mexico, too.
Hope you're feeling well today. The CNN NEWSROOM will be right back.
(END VIDEOTAPE)
HARRIS: Just like that, slight of hand, we're back!
A New York man will be out in the cold this afternoon parading around, humiliating himself, all to stay out of jail. Here's George Richert of affiliate WIBV.
(BEGIN VIDEOTAPE)
GEORGE RICHERT, WIBV REPORTER (voice-over): This is Charlie Smith's punishment, spending two hours for four days straight in front of the Batavia Pet Mart, admitting he stole from them. He was caught by this surveillance cameras removing an $18 flea medication from its box.
KEN MISTLER, STORE OWNER: I did recognize him, I didn't know his name. I printed it off the counter system and asked individuals in the neighborhood if anybody knew him and somebody identified him.
CHARLIE SMITH, ADMITTED THIEF: I just kind of made a mistake one day. And I didn't have enough money to do something. No excuse really. I can't blame (INAUDIBLE). I'm here because of myself.
RICHERT (on camera): Would you rather do this than go to jail for a week?
SMITH: Yes.
RICHERT (voice-over): So, when it came time to press charges, store owner Ken Mistler thought of a better idea.
MISTLER: About five or six years ago, I saw it in -- on California.
RICHERT: A sentence of public humiliation. The two agreed that Charlie would walk this beat for four afternoons and then, Ken would drop the charges.
MISTLER: It's over, it's done. He's OK with it. He can shop in the store. Everything's good.
RICHERT (on camera): So, what do the passersby think of this and do they even notice Charlie here?
SMITH: Oh, they'll honk at me, you know, heckling.
UNIDENTIFIED FEMALE: It just -- it caught our eye because of the big yellow sign and then we saw the "I Stole."
UNIDENTIFIED FEMALE: I think it's better than locking him up. And i -- I'm hoping that he'll learn a lesson. I -- you know, it's kind of out there, but I think he'll get the point.
RICHERT: Do you think this is a good way to solve it? UNIDENTFIED FEMALE: I do. I think every person that got -- gets caught stealing should do this.
RICHERT: Is this embarrassing for him?
SMITH: Of course it's embarrassing.
MISTLER: I mean, look at him. He's paid his price.
UNIDENTIFIED FEMALE: Hopefully, he'll learn something from this.
(END VIDEOTAPE)
HARRIS: So, your gripe is you can't see his face, so ...
COLLINS: Yes, it's not humiliating enough.
HARRIS: ...it's not humiliating unless you can see his face?
COLLINS: Yes, no one knows who he is.
HARRIS: Well, sure, well ...
COLLINS: If I had an opinion.
HARRIS: Charles Smith, you know, it's pretty cold out there for him, in the 20s this afternoon. But with the wind chill, you factor that in, it's a lot colder. It's a big old parka that he's wearing though, isn't he?
COLLINS: Yes.
HARRIS: Oh, we have to go, don't we?
COLLINS: Nobody in, nobody out, vital supplies blocked at the Gaza border. "YOUR WORLD TODAY" is covering that story and the U.S. economy. Starts in just minutes.
(COMMERCIAL BREAK)
COLLINS: CNN NEWSROOM continues one hour from now.
HARRIS: "YOUR WORLD TODAY" is next with news happening across the globe and here at home.
I'm Tony Harris.
COLLINS: Have a great weekend, everybody. We'll see you Monday.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.voxant.com
