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High Anxiety: Job Losses, Fed's Money Pump; Southwest CEO Denies Unsafe Planes Flown; Democratic Presidential Candidates Woo Wyoming; Bill Clinton Address Audience at Penn State

Aired March 07, 2008 - 14:00   ET


DON LEMON, CNN ANCHOR: An already anemic economy hemorrhages jobs. The Fed orders up an emergency transfusion of cash.
BRIANNA KEILAR, CNN ANCHOR: From Wall Street to the White House, all eyes are on a new batch of grim evidence that recession may well have arrived.

Hi, there. I'm Brianna Keilar at CNN world headquarters in Atlanta.

Kyra Phillips is on assignment in Iraq.

LEMON: And I'm Don Lemon.

You're in the CNN NEWSROOM.

Just moments ago in Washington the president spoke out about the economy, coming out of the gate saying it is clear that the economy has slowed, but he also said that growth package that he signed will help to put what he calls a booster shot into the economy.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I know this is a difficult time for our economy, but we recognized the problem early and provided the economy with a booster shot. We will begin to see the impact over the coming months. And in the long run, we can have confidence that so long as we pursue pro-growth, low-tax policies that put faith in the American people, our economy will prosper.


LEMON: Well, Democrats are saying that President Bush took too long to try to put some aid on the ailing economy. Senate Majority Leader Harry Reid spoke out just moments ago.


SEN. HARRY REID (D-NV), MAJORITY LEADER: During the Bush administration nine million jobs have been created. Mr. President, that's nothing to brag about.

During the Clinton eight years -- this president's been in the job seven years and going on three months -- President Clinton created 23 million jobs. By every indication, things are getting worse. President Bush said this week that he doesn't think our economy's headed for a recession. This morning all signs say the president's wrong. But regardless of what label we use, there's no doubt whatsoever the people in America are suffering.


LEMON: Senior Business Correspondent Ali Velshi standing by listening to the president.

You heard Harry Reid there as well. Ali, your assessment of this?

ALI VELSHI, CNN SR. BUSINESS CORRESPONDENT: Well, listen, this job loss business is very, very serious. President Bush made a speech today because we saw the jobs report for February showing that the economy has lost 63,000 jobs in February. That's the biggest drop in one month in five years. It lost 22,000 jobs in January.

Now, I spoke to an economist earlier today who shared a view I've heard many times before, and that is that the U.S. economy has to add over 100,000 jobs a month just to keep pace with the growth in the workforce. So, losing jobs is very bad. And when it comes to the possibility of a recession, it's more serious than interest rates and it's more serious than energy prices.

Now, earlier today, the president's economic adviser said that it's entirely possible we could be in a recession right now, but the president's economic adviser said this quarter will be our weakest quarter. In other words, this three-month period, and then we'll start to see an upswing.

And it's statements like that are sort of creating a disconnect between a number of economists and the White House to say they had been predicting for a long time that we'd be in this problem. Now for the president to come out and say we've got some weakness, it's a bit of an issue. It's sort of this delayed reaction that both the administration and the Federal Reserve have been providing.

And that's why you see on the screen next to me, the Dow down 175 points. It's the sense that the government, the administration, the Federal Reserve, the regulators, might not be on top of this thing because their reaction seemed to be a little late and a little short.

Whether or not President Bush is right about the economic stimulus package, Don, remains to be seen. There are many people who say once those job numbers start accelerating, once the job losses start accelerating, you're well our way.

In fact, we just spoke to one organization called TrimTabs which says it's expecting that the job losses in March could top 100,000. This is the danger point, when the economic -- when the economy turns down. When we start to see these -- these job losses -- Don.

LEMON: And Ali, I'm glad you pointed out the Big Board, because as you were speaking there, he's talking about job loss and then we're looking at the Big Board, and the Dow down now 192 points.


LEMON: Can't remember the last time we saw a rally, and if we did, it was not a big one.

VELSHI: It's been a while.

LEMON: Yes. OK. Ali Velshi, thank you very much for that.

CNN's personal finance editor, Gerri Willis, takes a closer look and analyzes today's jobs report from the Labor Department. That's just ahead right here in the CNN NEWSROOM.

KEILAR: The head of Southwest Airlines says claims that his company flew unsafe airplanes are based on what he calls a "gap in documentation." Now, whatever you call it, it could cost southwest $10 million in fines. And CNN's Special Investigations Unit correspondent Drew Griffin is here with me.

You've been following this story from the beginning. Gap in documentation, what do you think?

DREW GRIFFIN, CNN INVESTIGATIVE CORRESPONDENT: The biggest fine ever for the FAA on to an airline. I doubt they are thinking at the FAA this is a gap in documentation. And, in fact, the FAA today said no way.

But Gary Kelly did go on the "AMERICAN MORNING" show this morning trying to defend his airline's safety record, which, by the way, is a good airline as far as safety. Just two mishaps, both blamed on pilot area, no major or catastrophic crashes.

But what Gary Kelly is trying to say is, look, we self-reported this. We told the FAA. And we were above board the whole time this incident was going on.

Here's what he said to our John Roberts.


GARY KELLY, CEO, SOUTHWEST AIRLINES: So, in this particular case, there was not a safety issue because the problem was found. It was voluntarily disclosed. The fix was agreed upon with the FAA, and it was executed properly.


GRIFFIN: In a phone conference today, the FAA said flatly that is just not the case, that the airline knew these planes, 46 planes in particular, should have been grounded and then inspected. Instead, the airline kept flying them for about 10 days or so. Some 1,400 flights, with passengers on board. That's why the airline was labeled with this huge fine, and they said the failure of this airline to comply with this airworthiness directive is a serious failure. Now, remember, Brianna, I told you yesterday that this was going to get bigger than just the fine. Well, it is. Congressman Oberstar held a news conference today. He's concerned about the whole environment at the FAA, whether or not the managers are too cozy with the airlines themselves.

Today he held a news conference announcing a hearing next month. But he also brought up the point that he's not talking about 46 airplanes at Southwest. He's talking about 117, and an environment that has left a gap in safety.

Here's what he had to say.


REP. JAMES OBERSTAR (D), TRANSPORTATION CHAIRMAN: What our investigation uncovered is a pattern of regulatory abuse and widespread regulatory lapses that allowed 117 aircraft to be operated in commercial service, despite being out of compliance with airworthiness directives and other mandatory inspections, so that Southwest could conveniently schedule them for inspection without disrupting their commercial schedule. That is not acceptable.


GRIFFIN: Oberstar thinks this is going on at other airlines and thinks that there is a problem at the FAA that he wants to get down to.

KEILAR: That is such an alarming thought, but a great story. Thanks for bringing it to us. CNN's Special Investigations Unit correspondent, Drew Griffin. Thank you.

LEMON: Time now for politics. The nation's least populous state gets a rare chance to shine in the political spotlight. Hillary Clinton and Barack Obama are battling over 12 delegates at stake tomorrow in Wyoming's Democratic caucuses. After campaigning in Mississippi this morning, Clinton is headed to Wyoming for town hall meetings in Cheyenne and Casper. Obama holds a town hall meeting in Casper and a rally in Laramie.

CNN's Jessica Yellin is covering the Democratic dustup, and she joins us now from Cheyenne.

I like that word, dustup. Can we call it a dustup, Jessica?

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: I like that also because it's perfect for Wyoming, where there's all sorts of dust and snowing blowing everywhere. But it's a gorgeous state. Both Barack Obama and Senator Clinton are planning to be here later today, as you've said.

You know, Senator Clinton has been criticized in the past for failing to devote adequate resources to states that hold caucuses, sort of not investing in them, while Barack Obama has invested heavily and he has won those caucus states handily, which has hurt Clinton in the delegate count. So she is determined not to make that mistake this time.

As you say, the state holds its caucus tomorrow. Well, we saw Bill and Chelsea Clinton here yesterday. As I said, Senator Clinton making multiple stops here today. The message is, even if she doesn't expect to win here, she wants to pick up as many delegates as possible.

Now, they head here with new intensity in their sort of battling back and forth between the campaigns. We're not just hearing talk of NAFTA and Iraq, as we have before, but now we're just hearing a lot of sort of personal attacks being traded by one campaign and the other.

The latest dustup, Don, is a member of Barack Obama's -- one of his former policy advisers was talking to a former paper and used the word "monster" describing Senator Hillary Clinton. And she has since resigned. Barack Obama's campaign saying that's just not the kind of language or personal attack that they support.

Meantime, Obama's campaign is calling Senator Clinton out yet again for failing to release tax returns, and especially her papers from all those years she was in the White House, which she uses as a basis of her claim of superior experience.

Bottom line, we're hearing the candidates, of course, talk about the issues, but back and forth behind the scenes. It's getting even nastier between the two campaigns -- Don.

LEMON: Jessica, hey, I think "dustup" is putting it mild there.


LEMON: All right. Thank you very much for that report. We'll watch for you later on, on prime time.

YELLIN: Thanks.

LEMON: Leading our Political Ticker today, the still unfinished vote count from Tuesday's Democratic caucuses in Texas. With 41 percent of the precincts reporting, Barack Obama leads Hillary Clinton 56 percent to 44 percent. Sixty-seven delegates are at stake.

Clinton won the Texas Democratic primary with 126 delegates at stake. We may not hear much more about the caucus, well, until the county conventions take place, and that will happen later this month.

In the scheme of things, it doesn't affect the Republican race for president, but a spokesman for Ron Paul says the Texas congressman is dropping out of the race. These comments from Paul on his Web site...


REP. RON PAUL (R), FMR. PRESIDENTIAL CANDIDATE: Victory in the conventional political sense is not available in the presidential race. Many victories have been achieved due to your hard work and enthusiasm. For that, I am deeply grateful and encouraged. We must remember, elections are short-term efforts, revolutions are long-term projects.


LEMON: Ron Paul's decision comes three days after John McCain sowed up the nomination.

All the latest campaign news is available at your fingertips. Just go to Plus, analysis from the best political team on television. That, and more, at

KEILAR: Police in Alabama chase down leads in the killing of a freshman at Auburn University. We've got an update on the shooting death of Lauren Burk and what investigators are saying about it.


KEILAR: The family of Auburn University freshman Lauren Burk has set up a fund to help catch her killer. They're also asking for privacy as police in Alabama track down leads.

Burk, just 18-years-old, was shot and left to die on a roadside in Auburn. Police found her car on fire a few miles away in a parking lot on campus, where students are scared.


UNIDENTIFIED MALE: Everybody's worried about it. You know, I've even had a friend ask me to drop him off at the baseball game, you know, so they don't have to walk there at night.


KEILAR: The school is telling students there's no reason to believe the campus is unsafe. We'll have a complete update when we're live from Auburn. That's coming up in the next hour of NEWSROOM.

Meanwhile, police two states away have another college student killing to solve. The victim here, Eve Carson, 22-years-old, and the student body president at the University of North Carolina, Chapel Hill.

She was shot and killed before dawn Wednesday in a neighborhood near campus. Police just a short time ago released the discovery that Eve Carson was shot in the head with a handgun. And at this point they still do not have any suspects. An estimated 5,000 fellow students gathered last night on the campus to share their shock and their disbelief.


BUDDY SIMS, EVE CARSON'S TEACHER: There's not that many good human beings around anymore, and she was really one of them. And just a person who was going to do good things for other people.


KEILAR: Carson's SUV was found yesterday about a mile from where she was killed.

LEMON: Two North Carolina firefighters are dead and three others are hurt after a huge blaze at a wood millworks. Now, as you can see, there they were up against choking smoke and towering flames. The fire broke out this morning in Salisbury, about 30 miles northeast of Charlotte. Right now there's no word on the cause of the blaze. It's still burning hours after it started.

KEILAR: Keep your eye on the circle here in this video we're showing you. It follows a hooded bicyclist seen just before yesterday's explosion at that military recruiting station in New York's Times Square.

A senior government official tells us that he doubts there is a connection with an incident last month on the Canadian border, a connection between that and this happening in New York. Some suspicious material and photos of Times Square were found in a car there.

Authorities also downplaying any link to letters sent to some members of Congress yesterday. Those included photos of a man standing in front of this recruiting center you see on the right side of your screen with the statement, "We did it."

LEMON: Congress grills some of the leaders involved in the mortgage meltdown today, and CNN's personal finance editor, Gerri Willis, joins us from New York.

Gerri, the big question, what happened?


Yes, the House Oversight Committee looking into excessive CEO pay. So what area do they focus in on? Mortgage companies. Amid the mortgage crisis, they heard testimony from three CEOs -- Countrywide Financial, the founder and CEO, Angelo Mozilo; Merrill Lynch's former CEO, Stanley O'Neal; and Citigroup's former CEO, Charles Prince.

Now, they wrote a memo before today's meeting, and they said, this committee, "The financial benefits realized by the CEOs as the subprime mortgage crisis unfolded do not appear to have been aligned with the interests of shareholders."

I guess all of us sort of had a feeling that might be true, but the reality is these CEOs were making lots of money at the time the companies themselves were losing money. And, of course, as we know, two million folks went into foreclosure last year, a very sad state there.

Here's what Mozilo had to say in defense of his contract.


ANGELO MOZILO, CEO, COUNTRYWIDE FINANCIAL: I would like to address your specific questions related to both my compensation and the exaggerated reports concerning my severance. I am receiving no severance or change of control payments whatsoever. I waived any and all severance. In addition, canceled the consulting agreement included in my contract.


WILLIS: Now, Mozilo actually gave back $37.5 million in severance pay, fees and benefits after he was first asked to testify before this committee in January.

LEMON: So, Gerri, Countrywide, obviously that was huge losses for a lot of folks. What were the committee's concerns with Mozilo's pay?

WILLIS: Well, let's take a look at the memo, what they had to say about Countrywide.

It says, "Countrywide appears to have little, if any, authority to reduce the size of Mozilo's separation package for poor performance."

What that means is that Mozilo's contract was so strong, they couldn't cut his pay. And, in fact, he did walk away with a lot of money. He's still working as CEO.

Mozilo sold stock worth $150 million in 2007. In addition to that, Mozilo received $10 million in a pension replacement award, basically since he didn't retire and hadn't started receiving his pension. They gave him $10 million to make up for what he would have gotten from a pension had he retired. And, of course, the committee calls this unusual.

There were also conflicts of interests with consultants hired to advise on CEO pay who were simultaneously working for Mozilo. I've got to say, there's a big outrage factor here.

While all of this was playing out in the boardroom and with the CEOs, folks were losing -- losing their homes because of some of these bad loans that were out in the marketplace. I think, you know, that watching this -- these CEOs today testify and defend what they did leaves a bad taste in a lot of people's mouths.

LEMON: I can only imagine. OK. Thank you very much for that -- Gerri Willis.

Of course we saw Gerri today on "FINANCIAL SECURITY WATCH." But make sure you catch Gerri this Saturday on "OPEN HOUSE." She'll tell you how to up your credit score.

Did you hear that? How to up your credit score. How to survive a layoff, and renovating your home at a budget that you can afford.

That's at 9:30 a.m. Saturday, right here on CNN. I think I'll be watching. All interesting subjects.

KEILAR: Yes. Sounds very good.

Parents slipping their kids pills to help them sleep? Dr. Gupta weighs the pros and cons to giving melatonin to kids -- to teens.



LEMON: It is 2:30 here in the east. More and more Americans are house poor. That's when the bank owns more of your house than you do.

CNN's Christine Romans looks at the troubling trend.


CHRISTINE ROMANS, CNN CORRESPONDENT: Americans own less of their homes than ever before. Not even half of the house is paid for. It's the latest sign of declining middle-class wealth since the home is most Americans largest asset.

DEAN BAKER, CENTER FOR ECONOMIC POLICY: A lot of people are in really bad trouble right now.

ROMANS: He's referring to new data from the Federal Reserve that shows for the first time American's debt on their home exceeds their equity. What we actually own has tumbled over the past four years, from almost 54 percent to less than 48 percent by the end of last year.

BAKER: That's not that big a deal, maybe, if we're talking about a family in their 20s or early 30s. But we know we have this huge baby boom cohort at the edge of retirement -- they, for the most part, don't have traditional defined benefit pensions; they don't have a lot of money in 401(k)s. What they had was equity in their home and in many case that has just dissappeared.

ROMANS: Some people use their homes as piggy banks for years; paying for cars, tuition, basic living expenses. Some used new kinds of mortgages that allowed them to put so little money down, they essentially own nothing -- a disaster when home prices fall.

UNIDENTIFIED FEMALE: We're in a vicious downward spiral of declining home prices, increasing foreclosures, increasing foreclosures causing increasing asset pressure in the financial institutions, financial institutions cutting back on all sorts of credit, and that, in turn, leading to declining housing prices.

ROMANS: A record 900,000 homes are in foreclosure, according to the Mortgage Bankers Association, and more people are at least 30 days late with their mortgage payment, the highest rate since 1985.

(on-camera): The Fed has cut interest rates aggressively and billions of dollars in stimulus is on the way. But some economists and congressional Democrats say it's simply not enough. The housing situation is worsening by the day.

Christine Romans, CNN, New York.

(END VIDEOTAPE) KEILAR: We could all use more sleep and on Sunday daylight savings, well, it's going to cost us all another hour of shuteye. Turns out some parents are turning to melatonin to help their sleep- deprived teens. But the question is, is it a good idea?

CNN chief medical correspondent, Dr. Sanjay Gupta, takes a look.


DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Well, the truth is you're going to be hard pressed to find a doctor who is going to recommend melatonin, especially to a teenager. Having said that, the chief experts (ph) we've talked to tell us that they've actually seen a huge upsurge in number of teenagers taking melatonin to try to help them with their sleep patterns.

Now, melatonin, first of all, is not a prescription medication; it's a dietary supplement and the synthetic version is actually based on a hormone that is made by the pineal gland. That's the gland in the brain that actually produces this hormone melatonin and that helps regulate someone's sleep/wake cycles. In fact, as darkness falls, your body typically makes more melatonin.

Now, there's not a lot of science there, especially for teenagers, in terms of its safety. But we do know that teenagers need a lot of sleep. In fact, get this, teenagers on average need one to two hours more sleep than their nine or 10-year-old siblings. That's something to keep in mind.

And if they are not getting enough sleep, several things can happen. They may have poor test scores, more disciplinary problems. Long term, it can lead to depression, ADHD.

The day after we spring forward, there's actually an uptick in automobile accidents and actually an increase in suicide, a serious problem obviously in the long term as well. Again, not a lot of science about melatonin specifically in teenagers. If you're going to take it anyways, don't take any more than three milligrams. Don't give it to a child less than 10.

There are some more natural ways, if you will, to try and improve your sleep this weekend. Take a look. Go to bed an hour earlier. That's an easy one; do that on Saturday. Maximize your exposure to natural light on Sunday. And keep a light schedule for a few days. You may feel the ill effects of this even into Monday.

So good luck and back to you for now.


KEILAR: And as we get ready to spring forward -- sorry, Don.

LEMON: Time changes, maybe we should do a camera change.

KEILAR: Yes we should.


LEMON: Maybe you do a camera change.

Chad Myers, spring forward, fall back. So we spring forward and we're going to do it, what -- are we doing it a couple weeks early, right?

CHAD MYERS, AMS METEOROLOGIST: It is. It's the whole thing that Congress thinks that you can actually save a little bit of energy by moving the clocks sooner, or later depending if it's spring or fall, and so getting that time, that daylight time into the afternoon and taking it away from your morning. Guess they don't realize that people have to wake up in the morning.

But anyway, we have rain showers and thunderstorms across parts of Florida. These showers and storms are on the severe side for many people today. We're going to watch that.

We're also going to watch for snow across the Ohio valley. And -- it said try to get as much natural daylight on Sunday as you can. At least there will be daylight on Sunday. Because right now the northeast is socked in in a snowstorm, all the way from Buffalo to Cleveland and Cincinnati. A foot of snow or more in that general vicinity. More on that at 3:00 -- Don.

LEMON: All right, Chad, wish we could play around with you for a little bit. We have to get to something serious though.

There's a press conference going on now in Auburn, Alabama. It's for an 18-year-old university student there, Lauren Burk -- Lauren Burk -- the shooting death of that student.

Let's take a listen in.


ASST. CHIEF THOMAS DAWSON, AUBURN, ALABAMA POLICE: ... first of all, I want to quell a couple of rumors. First of all, the Alabama Department of Forensic Sciences have told us that she was not sexually assaulted. I know there's some rumors that have been out there and I want to make that clear; I've already made it clear to the family. She was not sexually assaulted.

Secondly, we have located a gas can in the downtown city of Auburn. We are sending that to the lab to get it tested to see what was actually in the gas can and to -- for any DNA that might be on the can. I know that's one thing that has come up.

Also, finally today, I have some pictures prepared for you that we'll give you at the end of this conference of a vehicle, 2001 Honda Civic, that is similar, or just about exactly like, Ms. Burk's car. What I'd like for you to do is to distribute that out. And anyone that has seen this car, in the Auburn area, on Tuesday night, please give us a call. No matter how important you think it is or is not, please call us and make us aware of it. Once again, I'd like to address the families of students here at Auburn University. Their safety is our utmost concern. We continue to have extra patrols on Auburn University campus and will continue to do so until this case is brought to a conclusion.

The Chief deGraffenreid has allocated a lot of manpower to making sure the campus stays safe. And we feel that it will do so. At this time I'll open it up to questions. I would like to ask you also to keep your questions brief, please.

QUESTION: Chief, the gas can here --

DAWSON: Hold on one second, please.

Yes, ma'am.

QUESTION: Elaborate on the gas can, maybe where it was found, what significance it could have.

DAWSON: All I really want to say about where it was found -- and as it was found in the downtown area of Auburn. And obviously you can tell by looking at the gas can that the vehicle probably was used some type of accelerant -- petroleum-based accelerant -- was used to start the fire. So as I say, any witness -- we're trying to leave any stone unturned in this case, anything we think could remotely possibly be connected to the case, we are researching it and moving forward from there.


DAWSON: One -- let's try to do it one at a time -- Brian.

QUESTION: Chief, can you tell us at this point whether it appears she knew the attacker or --

DAWSON: Again, Brian, I don't want to speculate to that. I will tell you that we have some strong leads, some promising leads and I hope to be standing before you soon with some good news.

Yes, sir.

QUESTION: Could you say anything about the scene where she was originally found -- in the road. Do you believe she got out of the car herself or was she thrown out of the car? Can you elaborate at all?

DAWSON: She was found on North College Street or Alabama Highway 147, between Farmwood church and U.S. Highway 280. And due to our investigation and the hard work that's being done right now, that's all I really want to say at this point.

And I -- again, I know you get tired of hearing me say that, but please respect that. And I know you guys have a tough job. We have a tough job. But our goal right now is to bring this case to a conclusion with an arrest so the Burk family can have some type of rest from this case. That's my ultimate goal. The minute we get more that we can release to you, you'll be the second group of people to know. But the first group will be the Burk family, who we owe it to. And then we'll notify all of you. We do not intend to have another press conference over the weekend, until Monday, unless developments require otherwise and we'll notify you immediately and give you ample time to be ready for the press conference.

LEMON: Investigators in Auburn, Alabama, holding a press conference there.

Do we have the picture of the student? There she is. We want to put it up for you, to tell you about her. Eighteen-year-old Auburn University student; her name is Lauren Burk.

The investigator there talking about -- she was not sexually assaulted. Said he wanted to clear up some rumors. Also saying that they have located a gas can, downtown Auburn, Alabama, that is being sent for DNA testing. And they're going to release some photos. We'll try to get those to you in a just little bit -- photos of a 2001 Honda Civic, which is like her car. And they are looking for that car because they believe it might lead them to who killed her.

They've also said obviously extra patrols are on campus. They have some strong leads, they say, promising leads. And I just want to tell you this real quickly because I think it's important as we're talking about this. The family of Auburn University freshman, Lauren Burk, they have set up a fund to help catch her killer. They are also asking for privacy, privacy, as the police try to track down those leads.

A little bit more background. She was just 18-years-old. She was found shot and left to die on a roadside in Auburn, Alabama. And police say they want -- they have some new information about the type of car that she was driving. Our Rusty Dornin will join us live in the 3:00 hour with new information on this case.


LEMON: OK. Imagine this; imagine turning on almost two million garden hoses all at once, Brianna. That's the effect of what's happening near the Grand Canyon in Page, Arizona. Scientists are near the end of a 60-hour experiment to save endangered species in the Colorado River.

But CNN's chief technology and environmental correspondent, Mr. Miles O'Brien -- that's a great gig, right?

KEILAR: Oh, it is.

LEMON: Miles tells us not everyone is happy about it, though.


MILES O'BRIEN, CNN CHIEF TECHNOLOGY AND ENVIRONMENTAL CORRESPONDENT: They opened the floodgates at the Glen Canyon Dam with fanfare and a lot of talk about saving the Colorado River.

DIRK KEMPTHORNE, INTERIOR SECRETARY: We're the stewards. It is our turn.

O'BRIEN: But environmentalists aren't buying their rhetoric.

NIKOLAI LASH, GRAND CANYON TRUST: It doesn't go far enough.

O'BRIEN (on-camera): Here's the problem. When they dammed this river 45 years ago, it ended the natural ebb and flow downstream, and it took much of the sediment out of this water, which flows right into the Grand Canyon National Park.

UNIDENTIFIED MALE: The Colorado River means red. It used to run as thick as mud.

O'BRIEN: Scientist, John Hamill, studies the river for the U.S. Geological Survey. He says the increased water flow will kick up some mud and spread it around the river, nourishing beaches and sandbars, rejuvenating lost habitat for now some endangered fish and offering rafters a nice place to stop and savor the view.

UNIDENTIFIED MALE: What we're trying to do with a fairly small amount of water over a short period of time what mother nature used to do over an extended period of time.

O'BRIEN (voice-over): They've done this twice before, mandated by Congress in 1992 to operate the dam while avoiding adverse impacts to the Grand Canyon National Park. The manmade floods worked, but because the experiments were short lived, the sandbars quickly washed away.

STEVE MARTIN, NATIONAL PARK SERVICE: It's very important that we listen to the science and take some actions.

O'BRIEN: Steve Martin is the superintendent of the Grand Canyon National Park. He's speaking out because this single experiment will be followed by five more years of study. And he says that could lead to irreversible damage.

(on-camera): Do the experiments provide an opportunity to delay taking action?

MARTIN: Yes. And that's one of our concerns.

O'BRIEN: Is reclamation stalling?


O'BRIEN (voice-over): Kerry McCalman is with the Bureau of Reclamation, which runs the Glen Canyon Dam, generating power for nearly six million customers. Here's the rub (ph). Increasing the flow like this means less water to turn the big turbines, less power produced, less money made.

(on-camera): I guess the big question is, how much water can you afford to give up?

MCCALMAN: That is the big question.

O'BRIEN (voice-over): But while we wait for an answer, environmentalists worry the federal government may be studying this precious river to death.

Miles O'Brien, CNN, Page, Arizona.


LEMON: Beautiful there.

Over the next year, scientists will track the results of their experiment at 100 monitoring stations along a 250-mile stretch of the Colorado river.

KEILAR: Let's get you now to Pennsylvania. Bill Clinton campaigning, of course, on behalf of his wife, Hillary Clinton. He's at Penn State University.

Let's listen in.


BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: ... in this decade, most of our economic growth was fueled first by housing and then by second mortgages on homes and maxed-out credit cards. And the reason that happened is that we went back to a failed economic theory; the trickle-down economic theory that the Republicans have been pedaling on us since 1981.

Now look at the consequences. Ninety percent of the economic growth in this decade has gone to the top 10 percent of American earners; about half of that to the top one percent. A big percent of that to the top one-tenth of one percent. You cannot build a country of shared prosperity and shared opportunities and shared responsibilities on that kind of a pyramid. It won't work.

So, what are the consequences? What are the consequences? Well, compared to the 1990s, when I had the privilege of serving, we had 22.9 million jobs then, five million now. Almost eight million people working their way from poverty into the middle-class then, five million people falling from the middle-class into poverty now. Family income after inflation rising $7,500 then, family income after inflation falling $1,000 now.

Meanwhile, the cost of health care has doubled. The cost of a college education up 75 percent. Gasoline was over $4 a gallon at a -- in a big city in northern California this last week. The cost of food is now going up at more than twice the rate of inflation, mostly because the cost of energy's going up.

We are growing more unequal. Our prosperity is not shared, and neither are our responsibilities. While those of us who have benefited most from this decade were reaping those benefits, the current government kept throwing tax cuts at the wealthiest of Americans. While we had soldiers in the field in Afghanistan and Iraq, unmet health and education needs at home -- and we wound up borrowing the money from China to buy oil from the Saudis, borrowing the money from Japan and Korea to pay for our soldiers.

It's a very interesting thing. We have gone from having four years of paying down the national debt, which we did in my last four budgets, first time in 70 years -- to adding $4 trillion to the national debt, imposing a $30,000 birth tax on every young baby born in America. And, among other things, it means we can't enforce our trade laws anymore.

You probably noticed in Ohio, if you followed the debate, there was this big debate about Hillary's position on trade, Senator Obama's position on trade, and did he say something else to Canada and all that. Let me just tell you what the fundamental problem is. Nobody wants to repeal trade altogether because we are four percent of the world's population with 22 percent of its wealth.

We have to sell something to somebody else, right? The problem is, you would not make a contract with someone in this county you could not enforce, would you? You wouldn't, would you? If you bought a car from the local car dealer, and the car had a warranty and the warranty wasn't honored, you would never buy a car there again, would you? So, all trade arrangements are contracts. And --

KEILAR: All right, just want to give you -- a quick correction actually. I said that former president Bill Clinton was at Penn State. He's actually at the Penn State Brandywine campus, this is in Media, Pennsylvania, just outside of Philadelphia.

But he's talking the economy, especially in the wake of slumping economic indicators. He's taking aim at President Bush's performance on economy, basically saying that he did a better job when he was president. And also taking aim at Barack Obama's economic policies. Here in Pennsylvania, going to be a big deal, perhaps, with its April 22nd primary.

LEMON: As a rule, cow patties, well, we called them cow paddies, it says cow pies --

KEILAR: Cow pies.

LEMON: Yes, we called them cow paddies -- don't get much respect, but that could be -- all be about to change. We'll tell you about cow pie power, or cow patty power, in the CNN NEWSROOM.


LEMON: Well, he was, was, one of the most powerful men in the music industry, and now he's heading to prison. CNN entertainment correspondent, Kareen Wynter is here to tell us about the rise and fall of Lou Perlman.

And, Kareen, this is certainly a fall from grace.

KAREEN WYNTER, CNN ENTERTAINMENT CORRESPONDENT: Oh, my goodness, a reversal of fortune here definitely, Don.

Lou Perlman used to -- he was actually the creator of the Backstreet Boys and N'Sync. He used to be on top of the world, the king of the boy bands, right? Well today, he's facing up to 25 years in prison after pleading guilty to a very long list of federal charges. It's really an incredible story here.

As his bands were climbing the charts, well, Perlman ripped off investors and banks to the tune of $300 million. He wasn't just stealing from the rich and famous. No, Perlman was also taking the money of regular people who invested in his companies.

This is one of his victims, reacting to Perlman's guilty plea.

Listen in --


UNIDENTIFIED MALE: His voice -- it was like he was proud to do that. Even when he said to the judge, yes, I did that. There was no remorse, nothing. I don't understand people like that.


WYNTER: Perlman, by the way, spent most of the money on a lavish lifestyle; you know the drill here, the mansion, the parties, private jets. So even though he's been found guilty of -- from his victims, they don't expect to get any of their money back here. Perlman was convicted of conspiracy, money laundering and making false statements during bankruptcy proceedings. And by the way, he'll be sentenced, Don, in a few months on May 21st.

LEMON: All right. Bad news there, bad news all the way around.

So now let's move on to some good news and hope the ladies in the newsroom and in the control room are listening. They are always talking about this show. I hear there is some good news --

WYNTER: It's some fascinating news.

LEMON: Good news for fans of Fox's "24." What's the good news, Kareen?

WYNTER: We have great, great news for you. OK, remember that pesky writers' strike? How can we forget it, right? It forced the cancellation of this season for "24." But there are some new reports, Don, that Fox is getting a two-hour movie ready for -- to at least partially fill some of the void that has been happening here.

The movie would air sometime this fall and it would serve as a prequel for the next season which would start in July. The usual format, by the way, for the show, as you all know, is to unfold in real time. And if this movie is set up like a typical TV show where time is compressed, well, it would be a drastic departure from the usual setup. The show's format was the main reason that was affected by the strike. There just was really no way to create and broadcast 24 episodes this season after a delay, but I think fans are going to be thrilled that -- there's some news here being salvaged.

LEMON: Explain it I --

WYNTER: And by the way, Don, in January, not July.

LEMON: January, OK. I didn't really get it. Because I don't watch "24" so I didn't under why they couldn't just -- so --

WYNTER: And now?

LEMON: Yes, you explained it and I still don't get it. Anyway, I'm not that smart.

WYNTER: Brianna does, though.

LEMON: She's smarter than me.

OK, so what do you have coming up tonight?

WYNTER: A lot -- a lot in store for "SHOWBIZ TONIGHT." A major singing star's startling confession about why she got breast implants. And do stars who get surgery like this send a terrible message to other women? A heated debate on TV's most provocative entertainment news show. You know the time, 11:00 p.m. Eastern and Pacific -- "SHOWBIZ TONIGHT."

LEMON: The most --

WYNTER: There you have it.

LEMON: -- Provocative, what is it, entertainment --

WYNTER: The most provocative entertainment news show, the best out there.

LEMON: There you go. Couldn't let you get away without that. Thank you, Kareen.

WYNTER: You welcome.

LEMON: Have a good weekend.

WYNTER: Thanks.

KEILAR: As a rule, cow pies, cow patties as Don likes to call them, they don't get much respect. Well we're going to tell you about cow pie power, oh yes, in the NEWSROOM.