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Cold & Powerless; Economy: Worst in 26 Years; Surviving Recession; Coach for Live's Lessons; Smoking Stimulus; Super Rip-offs
Aired January 30, 2009 - 12:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
TONY HARRIS, CNN ANCHOR: Hello again everyone, I'm Tony Harris in the CNN NEWSROOM. Here are the headlines from CNN for this Friday, the 30th day of January, 2009.
The president's new task force on the middle class, a plan to boost the average American family. The stimulus fight, will Republican senators back the president's bill after that GOP block vote in the house?
Crews from Arkansas to Kentucky working today to revive power lines that feed a million-plus homes. Kentucky's governor on the ice storm live this hour in the NEWSROOM.
Look, it has been a brutal week for the U.S. economy. More than 100,000 Americans lost their jobs. Today fresh evidence the economic engine slowed to a sputter in the last quarter of 2008. The commerce department says the gross domestic product slid 3.8 percent. That is the steepest fall since 1982. But hold on a second. Not everyone is stumbling. Despite the worst financial crisis since the great depression, oil giant Exxon Mobil posted a record profit for 2008 -- $45.2 billion. We will talk more about all this and get reaction on Wall Street when business correspondent Susan Lisovicz joins me live from the New York Stock Exchange.
President Obama says the economic slump is a continuing disaster for America's families and he is putting the focus on middle class working families. Following his daily economic briefing earlier today, the president announced the formation of a task force aimed at helping the middle class. White House correspondent Suzanne Malveaux joining us live now. Suzanne, great to see you. So the vice president is adding an important assignment to his portfolio.
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: You know what's happening, Tony? It is really all a part of this effort by the president to show the American people that, yes, he gets it, he realizes that people are suffering, that they're frustrated. He's trying to sell this huge economic stimulus package. He's saying he's going to task Joe Biden, the vice president, to form this middle class task force essentially to look at the jobs and look at the numbers here to see who is actually suffering and where they need the most help. We heard from the president making the case here, really kind of wrapping it in patriotism, if you will, talking about the American dream, the resilience of American people, and also the suffering, the dire consequences that people are really going through at this moment. Really stressing a sense of urgency in selling this package. Take a listen.
(BEGIN VIDEO CLIP)
OBAMA: Today we learned that our economy shrank in the last three months of 2008 by 3.8 percent. That's the worst contraction in close to three decades. This isn't just an economic concept. This is a continuing disaster for America's working families.
(END OF VIDEO CLIP)
MALVEAUX: So obviously the emphasis has been on just how badly things are and calling for bold action. It is far from certain, however Tony, and far from agreement in terms of what is the most important thing to do first and foremost. We heard from the president also before a group of labor leaders saying that he was going to try to strengthen the rights of employees. A couple of things through executive orders he did Tony. One, to prevent taxpayer dollars from reimbursing federal contractors who spend money trying to influence the formation of unions. Another one, which would require federal contractors to inform their employees of their rights, essentially. And a third one which would allow qualified employees to be able to keep their jobs, even when the contract changes hands. These are just some of the things that he believes will help with the employee rights and keeping labor support. Tony?
HARRIS: Our White House correspondent Suzanne Malveaux for us. Suzanne, thank you.
President Obama also pushing for quick passage of his economic stimulus plan to help families and the ailing economy. The house passed its version this week and the senate votes on the plan next week. Let's get you to the hill now. Congressional correspondent Brianna Keilar live on Capitol Hill. Brianna, if you would, look ahead for us. How will this all play out next week?
BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: Oh, don't we wish we knew! Tony! Tony.
HARRIS: That we knew the answer to that question.
KEILAR: That would be great. This goes to the senate. The senate's going to be taking this up starting Monday night and it's actually not guaranteed at this point, talking to senate democratic leadership and republican leadership aides if this is going to go to a vote next week. But definitely they're going to be working on it and it is really expected to take up the entirety of the whole week. Tony?
HARRIS: Not a single republican in the house supported the bill. I'm just curious, will it be any different in the senate, and what are the issues, the biggest issues, senate republicans have with this plan?
KEILAR: Some of the issues they have really seemed to be some of the issues that House republicans had. They think that there aren't enough tax cuts especially for businesses. They have some concerns about spending, as do a couple democrats as well, Tony. They think maybe some of these projects aren't stimulative, aren't going to create jobs. But while you hear republicans -- and we heard from republican leaders yesterday saying basically they really don't like the bill and there needs to be some major changes before they jump on- board, what we're seeing in the senate that's a little different from what we're seeing in the house is that -- there actually was a meeting today between Ben Nelson, a democrat, who I mentioned is one of those democrats who's not -- he's really not sure if he's on-board with this. And Susan Collins, Maine republican, both of them very moderate. There seems to be this discussion, this hashing out of maybe where can we find some common ground where we can get some votes on this. You're seeing, Tony, a handful of republicans really being targeted by democrats, also by some liberal groups to vote for the stimulus package. But as you know, President Obama said he wanted broad bipartisan support. Democrats, what we're hearing, is they expect that they can get the 60 votes they need for this. But can they get the 70 votes? Can they get the 80 votes? It's really questionable.
HARRIS: CNN's Brianna Keilar on Capitol Hill for us. Brianna, good to see you, thank you.
It is day three in the dark across a wide swath of the country after this week's deadly ice storm. More than a million homes and businesses are without power. In Arkansas some 300,000 power customers are in the dark in the northern section of the state. In Kentucky, more than a half a million still without electricity. Thousands of them are staying in shelters. CNN's Susan Candiotti is at a shelter in Louisville. I believe she may be joined shortly by the city's mayor. Susan, good to see you. I have to tell you we've just sort of -- this story is really now coming home for so many people across the country realizing that there are a lot of people really affected by this storm system.
SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT: Yeah, Tony, it is -- they are feeling the effects, certainly in the state of Kentucky, saying that, in terms of power outages, this is twice as bad as hurricane Ike just last summer. So try to wrap your arms around that. We are outside a shelter right now where they're housing -- taking care of about 400 people so far. One of three just in the city of Louisville. But throughout the state, we're talking about almost 115 shelters set up, about 650,000 customers without power, and what a hardship. Imagine in the heat of the summertime, you have one set of difficulties. But in the winter time when it is freezing cold, a whole set of other problems to put up with.
Joining us now is the mayor of Louisville, who has been mayor here for at least 20 years. Tell me what are some of the difficulties that people are having to deal with?
MAYOR JERRY ABRAMSON, LOUISVILLE, KENTUCKY: The difference this time as compared to the hurricane winds that came through here in September, we've got water mains that are breaking. We've got lots and lots of people in homes where the temperature is dropping so they have got to get together with friends or neighbors or move into our shelters. We've got a lot of individuals going through the difficulty of using their charcoal grills and grilling in their home, and then thinking that the carbon monoxide won't bother them. So we're picking them up with EMS ambulances and taking them to hospitals. All that is all because of this weather, because of the coldness.
When we had the hurricane that came through in September, the next day it was 70 degrees. So we're in a situation where this community has been battle tested. We took 4,000 people from Katrina. This community took over 1,500 people from Ike. We were focused with the windstorm. We now have this incredible ice storm. The non- profits, Red Cross, has been outstanding. The schools are closed so the kids will be going to school through July 4th, I'm afraid. So everybody's working to try to make sure that we get through this difficulty. It may get a little warmer this weekend is what they're telling us. That would be great. But now they're saying maybe another three to five inches of snow on Monday.
CANDIOTTI: It started off as a snow storm, then you had ice, then more snow and it's not over yet. One last question, this is the first test also for the Obama administration and how well FEMA will perform. What are you hearing so far, what do you hope to get from FEMA?
ABRAMSON: The governor made a request a day and a half ago and the Obama folks reacted immediately. The office of intergovernmental relations hand carried the documentation necessary and the president signed the declaration so that a lot of the federal resources will be coming not so much here in Louisville but certainly throughout the rest of the state in the rural areas. The rural areas, where they have no water, no electricity, no communication, telephones, at all. They're having significant problems, as you can imagine.
CANDIOTTI: Indeed. One last thing. We're hearing about Churchill Downs, you're setting up more help for people in the parking lot there?
ABRAMSON: You know what's happening is Louisville Gas and Electric is bringing in a lot of folks from the south to work the lines. So they're going to set up a staging area, set up tents for 600 people. More of the power company folks from down south that are coming up to help us through this very difficult ice storm.
CANDIOTTI: Thank you very much for joining us, mayor. We appreciate it. And so, as the mayor just said, they have to get through this weekend, but the forecast is calling for more snow next week. So talk about a double whammy. Right, Tony?
HARRIS: Yeah, absolutely. Boy, what a story there. The pipes bursting and everything else. We know that's what happens in these conditions. But it is tough for so many people there. Susan, good to see you. Susan Candiotti for us in Louisville, Kentucky.
Joining me on the phone now, Larry Holeman, Grayson County Emergency Management Services. Larry if you would, can you give me an assessment of how many people are in trouble in I guess one of your big cities now, which is Litchfield. Correct?
LARRY HOLEMAN, GRAYSON COUNTY EMERGENCY MANAGEMENT: That's correct. Litchfield and our rural areas, we have a whole lot of folks isolated. We're right now housing about 400 people in the shelter. We're expecting our shelter population to grow tonight as the temperature drops. Even though the power has been restored to some areas of the county, maybe about 20 percent of the area of the county, when the folks get back home, they're going to find out that their water pipes are frozen. They're going to be without water. We have feeding operations in place with shelters through the Salvation Army. The county has manned the shelters with volunteers. We have -- we've had good support from our state government. By the way, I just learned -- we haven't had any outside news, we're deprived, we have no television --
HARRIS: What?
HOLEMAN: No television, no cable service, internet service for the biggest part of the county's down. We've -- we feel pretty much isolated, have no idea what's going on in the outside world.
HARRIS: So wait a minute, you have no television, which means no cable, which means no CNN right now?
HOLEMAN: Yeah. Isn't that awful?
HARRIS: It's a national emergency. We're going to get on that right away. If you would, Larry, give me a sense of what are the -- we talked to someone last hour who suggested it may not be until Monday before some people in some of these areas get an opportunity to get back home. Is that correct?
HOLEMAN: That's probably correct. It could be longer. Our electric companies are telling us it could be up to six weeks before power's totally restored. We look like a war zone. We look like a whole lot of -- if you could imagine, hurricane damage with ice on top of it. That's what we're seeing a lot of. Our structures pretty well fared, but trees, vegetation, different things like that have been just devastated.
HARRIS: Boy. Larry, I hope you have all of the resources that you need. Maybe I should ask that as a question. Do you have everything you need?
HOLEMAN: Our resources are of course limited. We're surviving. We could use things like chainsaws, generators. We need medically trained volunteers. We have people in the shelters that have special needs. Those are the things we're short of. Food supplies are looking up. Due to the fact we've got electricity, we've been without refrigeration, which had a lot of fresh meats, dairy products and things like that, had to be destroyed.
HARRIS: Boy, sounds like you have a real emergency there. Maybe talking to you about this will help the mobilization effort, because it sounds like you have a real emergency on your hands. Larry thanks for your time. We appreciate it.
HOLEMAN: Have a good day.
HARRIS: You, too. Hang in there.
Let's get to Chad Myers now in the severe weather center. Chad, we knew that this had the potential to be really bad. But the scope of it is starting to catch up with me and again, this feels like a real emergency response in Kentucky right now.
CHAD MYERS, CNN METEOROLOGIST: It is. Now people are going to realize that their home has had no heat for now a week, and they're going to go home and their water pipes are going to be running, broken. Not only do we have ice on the outside, now you have homes that are flooding on the inside because people didn't shut the water off as they evacuated their house because they just wanted to get themselves out. It happened to me. I was -- I don't know, about six years or so ago, a water pipe broke in my house. I had 45,000 gallons of water in my basement and it wasn't pretty trying to clean all that up. I think that will be more than the case for a lot of people there because there's no heat in the house. The heat can't keep those water pipes warm. Nobody's moving that water around because obviously probably didn't think about turning it on a drip or so.
Twenty three right now in Cincinnati, so it's not even warming up that much, 42 in Atlanta. We do have the potential Tony for a storm that might even bring some snow into Mississippi, Alabama and northern Georgia and maybe up the east coast by the end of the week. Right now I'm wishy washy whether we get an awful lot of snow in the New York City metropolitan area as it runs up the east coast, it may run too far offshore but we will watch that for Tuesday and into Wednesday. In the meantime, I see no relief, not one day of relief for temperatures in the 40s and 50s and 60s for those people trying to melt that ice. It is going to be there still a long time.
HARRIS: Folks not being able to get back to their homes in Litchfield and maybe Sunday, maybe Monday, maybe later next week. Chad, appreciate it, thank you for the update.
The president says he is reaching out. Republicans say they're being left out. Both sides have very different ideas about stimulating the economy. Is this change or politics as usual?
(COMMERCIAL BREAK)
HARRIS: GOP resistance to the stimulus plan. What's behind it? Republicans say they're returning to their fiscally conservative roots and they think the stimulus bill goes against those principles. Details now from senior political analyst Bill Schneider.
(BEGIN VIDEOTAPE)
WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST (voice-over): With the departure of President Bush, republicans have a new rallying cry -- back to basics. Basic to republicans is smaller government. They believe they lost in '06 and '08 because they became a me-too party and the democrats can play that game better.
REP. ZACH WAMP, (R) TENNESSEE: Republicans blew it on spending but now democrats are like they're on steroids with spending.
SCHNEIDER: President Obama is making the strong pitch for republican support because we're all in this crisis together. OBAMA: What I think unifies this group is recognition that we are experiencing an unprecedented, perhaps, economic crisis that has to be dealt with and dealt with rapidly.
SCHNEIDER: Most republicans are balking.
WAMP: We're going to vote no.
SCHNEIDER: They appreciate the president's efforts to reach out to them, but say they don't see that spirit of bipartisanship in the democratic leadership of congress.
REP. MIKE PENCE, (R) INDIANA: As grateful as we are for the president's spirit, as I told him personally, house democrats have completely ignored the president's call for bipartisan cooperation.
SCHNEIDER: They argue the democratic bill is wrong in principle, and it won't work.
REP. MARSHA BLACKBURN, (R) TENNESSEE: The best economic stimulus there is, is a job. And this bill is short on the stimulus that is needed to create that.
SCHNEIDER: Republicans do have an alternative plan.
REP. TOM PRICE, (R) GEORGIA: If you allow American families to keep more of their hard-earned money, if you allow businesses the opportunity to create jobs, provide incentives to create jobs, and you decrease spending at the federal level, in fact what you'll do is grow the economy.
SCHNEIDER: But the republicans don't have the votes to pass their own plan.
(On camera): Some democrats can say republicans are irrelevant so they're being irresponsible. But republicans are not irrelevant. Sure, President Obama doesn't need republican votes, but he still wants them. He doesn't want his recovery plan to be seen as partisan. Meanwhile, republicans don't want to be seen as complicit in a policy that violates their basic principles. Bill Schneider, CNN, Washington.
(END OF VIDEOTAPE)
HARRIS: So is it principle or politics? What is the driving force behind the republican resistance to the stimulus? Let's dig a little deeper into that. Martin Kady is back with us. He is congressional correspondent for politico.com, he is with us from Arlington, Virginia. Good to see you again, thanks for your time. How big a deal was the blocked vote against the stimulus by house republicans, and was this strategic, we really do have a better idea here, or was this about republicans being obstructionists?
MARTIN KADY, POLITICO.COM: Well, let's start with how big a deal this was. Very big deal inside the Republican Party, inside the house republican conference. John Boehner, the republican leader, got an ovation at this retreat down in the Virginia Mountains last night when he showed the vote. Mind you, republicans lost the vote by 56 votes, but every republican stuck with it. So there is a political strategy here. Republicans have to unify their base and sort of rediscover their roots before they start winning any progress here. Substantively, a lot of republicans are very uncomfortable with this level of spending. But it's interesting that there are some moderate republicans who could probably be picked off if this goes back to the senate, then it will come back to the house in a conference report. That's where you're going to start probably seeing some more bipartisan compromise. That's where the rubber really hits the road on this.
HARRIS: So moving forward, the senate really gets down to work on this, they've been working on it but really get down to the nitty- gritty next week. Senator Kyl here, have a listen to this Martin, offering a preview of the fight ahead.
(BEGIN VIDEO CLIP)
SEN. JON KYL, (R) ARIZONA: Republicans have appreciated the president's outreach to present ideas, but we are too often met with this response -- we won, and therefore we're going to do it our way.
(END OF VIDEO CLIP)
HARRIS: Martin, is this a part of this idea that democrats are gloating a little bit and force-feeding this, "we won so you take it"?
KADY: Sure, there's a little bit of that. We all watched President Bush's press conference in 2004 shortly after he won.
HARRIS: A lot of political capital, yeah?
KADY: Yeah. He said I have political capital and I intend to spend it. Well, the democrats have even more political capital in 2009 and they're spending it. But I wouldn't be surprised to see Obama do a little bit more outreach here on the senate side, knock out a little bit of the spending, maybe add a few more small business tax cuts, a few sweeteners to draw a couple more republicans into this. By the time this actually gets back through a couple more steps, you'll probably see more republicans getting on-board. Because Obama does not want this to be his -- his first major initiative to be a straight-up partisan vote.
HARRIS: Let's broaden this discussion just a little bit here. Senate minority leader Mitch McConnell is speaking before the republican national committee meeting now in Washington, D.C., as you know. Described his party -- the state of his party in this way, then let's talk about it.
(BEGIN VIDEO CLIP)
SEN. MITCH MCCONNELL, (R) MINORITY LEADER: We're all concerned about the fact that the very wealthy and the very poor, the most and least educated and a majority of minority voters seem to have more or less stopped paying attention to us. (END OF VIDEO CLIP)
HARRIS: So Martin, how careful must the republicans be as they settle into this role as the loyal opposition, not to be obstructionists, or at least viewed that way, for fear that they may become or be viewed as irrelevant?
KADY: Yeah. I mean McConnell's outlook was pretty bleak, yet true. They realize this. They can't just sit there and be obstructionists. I mean -- but that's the push and the pull here that you're seeing. They either have to decide that they're just going to be the party of no on this particular economic stimulus unless there's massive changes, because then they'll continue to alienate the people who either are for this on either end of the spectrum, especially as some of the folks who are on the outside of the Republican Party that McConnell speaks of. They have a real dilemma here on whether or not they actually endorse it. Right now they think that the public is with them on too much spending on this and they're just going to vote no.
HARRIS: Martin Kady, of politico.com. Martin have a great weekend, thanks for your time.
Furloughing workers, slashing budgets, even selling the Cessna? How state governments are coping with the financial crisis.
(COMMERCIAL BREAK)
HARRIS: New York, like many American cities, faces a crisis from vastly reduced tax revenue. This hour Mayor Michael Bloomberg unveiling his plan to confront the city's growing budget deficit. Here's what he had to say just a short time ago.
(BEGIN VIDEO CLIP)
MAYOR MICHAEL BLOOMBERG, (I) NEW YORK: -- carry the city. The last time we adopted a budget, and then last November when we updated our estimates on expenses and revenues, I think we all know that the economy has worsened, and worsened significantly. In fact since November, it's continued its decline and the economic numbers that were released today do not give us any reason to smile. Unfortunately, they keep deteriorating, and with the deterioration in the economy, our tax revenues keep falling, and there's an extra $800 million gap for the current fiscal year and $2 billion for the gap in the fiscal year 2010, just from the November update to now.
(END OF VIDEO CLIP)
HARRIS: Boy, Mayor Bloomberg is expected to announce major layoffs. City unions will likely be asked to absorb more of the health care costs. The sign of the times.
Mississippi lawmakers vote to auction off the state's jet, perhaps on eBay. It is a $3.7 million Cessna citation, used to haul Governor Haley Barbour and other state officials around the country. The state owes half a million dollars on the jet and cites the country's economic tailspin as the reason to sell it.
California state workers are being forced to take two days off each month without pay. A judge ruled Thursday. Governor Arnold Schwarzenegger has the authority to furlough tens of thousands of government workers under the current fiscal emergency. Two employee unions had challenged Schwarzenegger's executive order, the order forcing those employees to take off two days a month without pay is scheduled to start February 6th and applies to 238,000 workers.
Pat Quinn is on the job today. He is the new governor of Illinois and he says it's time to repair the damage caused by his predecessor as Lieutenant Governor Quinn was sworn in shortly after the Illinois senate ousted Governor Rod Blagojevich at his impeachment trial. The flashiest allegation against Blagojevich, he tried to sell the senate seat held by President Obama. Here's Governor Quinn speaking last hour.
(BEGIN VIDEO CLIP)
GOV. PAT QUINN, (D) ILLINOIS: Paper clips there and that's about it. I think it's important to look and review any of the last few day's activities. If there's anything untoward, we'll certainly address that promptly. I don't know if there is anything. But if there is, we'll find out.
(END VIDEO CLIP)
HARRIS: Then Governor Blagojevich was arrested in early December. Federal prosecutors are drawing up an indictment now. Barring a plea, that will lead to a criminal trial.
More dismal economic numbers out today. We will check in with Susan Lisovicz to see how the markets are reacting.
(COMMERCIAL BREAK)
HARRIS: It's as bad as it gets in terms of winter storms. People from Texas to Maine struggling to cope with massive power outages and icy conditions. Kentucky is perhaps hardest hit. Our Susan Candiotti joins us live from an emergency shelter in Louisville.
And, Susan, as we have pointed out, so much of Kentucky has been impacted by this storm. Many may be wondering if real help is on the way. And I understand you have someone with you who may be able to offer some answers.
SUSAN CANDIOTTI, CNN CORRESPONDENT: I do have someone with me. And he had a chance to go inside the shelter, as we did a little while ago, to speak with some of the people who have -- are seeking refuge here, who have now found some heat and electricity and something to eat. This is Governor Steve Beshear, who is the governor of the great state of Kentucky.
What are the people telling you inside, governor?
GOV. STEVE BESHEAR, (D) KENTUCKY: Well, obviously this is a difficult time for us all in Kentucky. Over the state, we've got about 700,000 people without power, about 200,000 without drinking water. So it's a difficult situation for us.
Here in Louisville, they're working very hard, doing very well. Mayor Abramson and all of his team and the American Red Cross, they couldn't be doing a better job. But, obviously, it takes time and it takes effort to get the power back up and things moving.
Out across the state, we're having the same kind of effort from all the local officials and the EMS folks. But it's a tough situation because of the enormity of it.
CANDIOTTI: You put in a phone call straight to the White House -- well, to FEMA -- asking for help and heard back from the White House, what, on Wednesday, Thursday?
BESHEAR: Actually, the first wave of this weather came through Tuesday, Tuesday night. And so Wednesday morning very quickly we could tell we needed additional help. I called the White House directly at that time. I had my other folks talking to FEMA. But I went straight to the top because we need some really fast help. And talked to the director of intergovernmental regulations. She walk our paperwork through. And by that evening, the president called me personally and said he was signing that emergency declaration. And they really hit the ground running. They're working very hard to get all the equipment and supplies here that we need. Obviously nothing moves fast enough, but it's been a great help to us so far.
CANDIOTTI: What was that like getting probably the first phone call to a governor from the president dealing with an emergency?
BESHEAR: Well, I can't tell you how appreciative we were and he not only expressed his concern, but, you know, he obviously has the thoughts -- has the Kentuckians in his thoughts and prayers and he communicated that to us.
CANDIOTTI: But you are worried about what lies ahead. You know, you have more storms -- as we wrap this up, we're running out of time here -- but you have another storm front heading next week.
BESHEAR: We do. We could have another one Monday and Tuesday. And if we do, you know, we're putting out that word to the White House and to FEMA right now, we're going to need even more help.
So we're going to keep at it. We'll get through this. Kentuckians are a very resilient bunch.
CANDIOTTI: We are hearing that time and again.
Governor Beshear, thank you very much for joining us.
So, tough times ahead. But you heard him say it, they're going to try to get through it.
HARRIS: Susan, thanks to you and thank the governor for his time as well. All right. Let's turn to business news now. The economy is dealing with the storm of its own. A report out this morning shows the economy is shrinking at a pace we haven't seen in decades. But at the same time, Exxon Mobil managed to post record-breaking profits. Here to explain the disconnect, hello, is Susan Lisovicz. She's at the New York Stock Exchange.
I'm going to sit back and listen to this one, Susan.
SUSAN LISOVICZ, CNN CORRESPONDENT: Well, Tony, first let's start with GDP, because that is certainly a big number that we're looking at today. GDP is the big picture -- the jumbo screen, if you will -- look at the economy. And it shows that the final three months of the year dramatically worse than the previous quarter. The economy contracted in the fourth quarter of 2008 at an annual pace of 3.8 percent. That is the sharpest decline in 26 years. President Obama pointed out earlier this morning, it's more than just facts and figures, it's jobs.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: This isn't just an economic concept. This is a continuing disaster for America's working families. As worrying as these numbers are, it's what they mean for the American people that really matters. And that's so alarming. Families making fewer purchases, businesses making fewer investments, employers sustaining fewer jobs.
(END VIDEO CLIP)
LISOVICZ: And we're not expecting anything good on the first quarter either because we have mounting job losses. Caterpillar, today, says it will cut another 2,000 jobs on top of the 20,000 it announced on Monday.
But as you mentioned, Tony, Exxon Mobil posted record-breaking profits for 2008. More than $45 billion for the year. That's the profit. Not revenue. But even Exxon's growth slowed dramatically in the fourth quarter when the recession really hit hard and oil prices plunged to $30. So Exxon Mobil's earnings this year could be very, very different.
In any case, all of this information weighing on stocks, which right now are lower. The Dow Industrials off 91 points, or 1 percent. Ditto for the Nasdaq and the S&P.
But one important thing to note. You know, there are a lot of figures in the GDP. One thing to note is that Americans are drastically changing their lifestyles. The savings rate rose in the fourth quarter. It more than doubled what Americans were saving in the third quarter. Obviously the economy needs consumer spending. But one of the big problems contributing to the crisis, the housing crisis, the financial crisis, is that a lot of people were spending beyond their means. And we are saving more and that's not a bad thing.
HARRIS: Yes, you're absolutely right about that. Good Friday to you, Susan, and have a great weekend.
LISOVICZ: Thanks, Tony. You, too.
HARRIS: All right. Surviving the recession. You have questions? Gerri Willis has your answers.
(COMMERCIAL BREAK)
HARRIS: OK. A lot of you are struggling with the consequences of this recession. We've read your e-mail questions and time to get some answers from our personal finance editor Gerri Willis.
Gerri, welcome back.
GERRI WILLIS, CNN CORRESPONDENT: Thank you very much.
HARRIS: OK. Let's get to our first question.
WILLIS: Let's do those question, yes.
HARRIS: Yes, we've got them.
"My father just lost his job and now we are in foreclosure. Without any income, the mortgage company says there's nothing they can do. We want to keep our home. Any advice?"
WILLIS: Well, yes. You know, the best thing to do in this case, you have to redouble your efforts to get a job. Any job. It doesn't matter. Even if it doesn't pay as well as the one you had before, you have to have a job to get the new loan. OK.
In the meantime, though, here are some resources for your family. Hud.gov. The phone number there -- 800-225-5342. They have counselors, possibly in your city or your town, to help you out. Homeowner Preservation Foundation - 888-995-HOPE. Another great idea, the National Foundation for Credit Counseling. If you sort of have debt overall in addition to the housing debt, they have counselors that specialize in housing. That phone number, 866-845-2227.
HARRIS: Nice. Great advice.
Gerri, question number two comes from Robert who writes, "I have been looking at going back to school to work on an advanced degree. Are there any help or loans I should be looking into for graduate school?"
WILLIS: A lot of people are doing this because they can't find jobs. They're going back to school. Robert, you've got a lot of company. Graduate students are eligible for the Federal Stafford Loan and the Grads Plus Loan. And some schools may offer Perkins Loans. Those are low-interest government loans. There are also some private fellowship programs you should definitely check out. You can find them on -- there is a free online database at fastweb.com.
Now, if you're pursuing an MBA, some employers will give you some financial assistance in exchange for a commitment to work for their company after you graduate. That's typically a one-year commitment for each year of support. So lots of options out there if you're going back to school.
HARRIS: Got time for one more from Richard?
WILLIS: Yes, let's do it.
HARRIS: He writes, "I have a 401(k) from my previous employer and I am losing money. I am considering withdrawing the money. Is it safe," Gerri, "investing that money into an IRA?"
WILLIS: Well, Richard, no investment is completely safe. An IRA, which is an individual retirement account, is just an investment vehicle and it's just as vulnerable to the market turbulence as a 401(k) is. Look, your best bet is not to withdraw your money from your 401(k) since you would be simply locking in losses. You may want to consider doing a direct rollover from your 401(k) into an IRA if you don't like the investment options you have. But if you get out of the market now, it will be tougher to get into that recovery. You don't know when the stock market is going to recover. You can't predict it. If you sell off your stocks willie-nilly, you may be locking in losses.
HARRIS: Gerri, "Your Bottom Line" this weekend. I want to hear all about it.
WILLIS: 9:30 a.m. Eastern, Saturday morning, CNN, join us. Hey, we're talking about how to land your next job. Plus, what the stimulus package could mean to your wallet? "Your Bottom Line," 9:30 a.m. Eastern, right here on CNN.
HARRIS: Gerri, you have a great weekend. Thanks.
WILLIS: You too.
HARRIS: Up next, an inspiring mind who shaped lives on and off the basketball court. Remembering Coach Kay Yow.
(COMMERCIAL BREAK)
HARRIS: She was an inspiration to her players and others, both on and off the court. North Carolina State women's basketball coach Kay Yow is the focus of today's "Inspiring Minds." Yow died last weekend after two decade fight against breast cancer. She coached for 38 years, 34 of them with N.C. State. Rutgers women's basketball coach Vivian Stringer was a colleague and a close friend. We asked Stringer to share her thoughts about Coach Yow.
(BEGIN VIDEOTAPE)
VIVIAN STRINGER, RUTGERS WOMEN'S BASKETBALL COACH: She taught us how to handle adversity and how to get back up and how to have faith and how to continue to work. And she taught us what real coaching was all about. And that is, you know, for the love of the sport.
KAY YOW: It doesn't really have to do with wins and losses. It has more to do with my faith, character.
STRINGER: I just can't say enough about what she taught me. She gave me tremendous strength when I knew that I had breast cancer. She was the only coach that I told. I told her because I knew that she could understand the difficulty that I was having. And yet I admired so much that she was gunning with hers in a public light, allowing everyone -- she was such a giving person that she thought of everyone to share.
YOW: I hope that they see me as a part of something that made a small difference in their life.
STRINGER: You don't have to imagine you actually knew a person that was facing this dreaded disease and yet she didn't hide it. She was there, out, for everyone to see. And I think that she's given so much courage to so many people, and certainly to me, in how you handle the most difficult of situations.
YOW: Be thankful, grateful every day. Look for ways to serve people, meet other people's needs, and be ready to encourage those people who are down. Look for any way you can to give hope to people.
STRINGER: She'll always be my hero. She'll always be my shero (ph) because she's given to me what most people wouldn't get in a lifetime.
(END VIDEOTAPE)
HARRIS: A public viewing for Yow is being held today in Cary, North Carolina. She will be buried tomorrow in her hometown of Gibsonville, North Carolina. Kay Yow was 66.
(COMMERCIAL BREAK)
HARRIS: You know, just about every line of the huge stimulus bill contains millions for what most Democrats are calling job creation and many Republicans are calling waste. Arguments based on differing political philosophies perhaps. But who could argue that spending millions to help people quit smoking will create jobs? Iowa Senator Tom Harken, for one, is asking for $75 million for that in the stimulus bill. Our Drew Griffin asked him why.
Drew, what does this have to do with economic stimulus?
DREW GRIFFIN, CNN CORRESPONDENT: You know, maybe -- maybe not stimulus, Tony, but -- and certainly not jobs. But what Senator Harkin is trying to sell us on is the future investment benefits of this $75 million to snuff out cigarettes. And, by the way, he told me, the stimulus bill, Tony, it's not really just about stimulus.
(BEGIN VIDEOTAPE)
SEN. TOM HARKIN, (D) IOWA: This is the American Recovery and Reinvestment Act. So it's not -- it is stimulus. We do want to put people to work right away. But we also want to lay a solid foundation for strong economic growth in the future. That's a big part of this bill. GRIFFIN: Senator, it just seems like this is not the bill. We're trying to get the economy moving, we're trying to get people back to work, and I'm having a hard time understanding how $75 million to tell people to stop smoking is going to put anybody back to work.
HARKIN: Well, first of all, I would tell you, we've put over $5 billion in this bill on prevention so that we can get ahead of the curve and start cutting health care costs.
GRIFFIN: Senator, I've got to be skeptical, because what I think I'm hearing from you is, yes, we want to get people off of smoking, but here you go, Joe, you're out of work, but, by golly, at least you're not smoking.
HARKIN: Well, that's why we're doing two things with this bill. We're putting people back to work on infrastructure projects, building new schools, things like that, but we're also investing. We're investing in a sound recovery in the future.
GRIFFIN: At the end of this, you're going to get your $75 million. How many people are you going to stop from smoking?
HARKIN: Well, I don't know. The money goes to the secretary of Health and Human Services and that will go out to various programs that are effective, that have proven effective in the past. I can't give you a number right now, but I can tell you that for every -- I don't know the exact figure -- but for every $10 or so that we spend on smoking cessation programs, we can see the effect of people getting off of smoking.
(END VIDEOTAPE)
HARRIS: He actually got in front of a camera to answer your questions, huh?
GRIFFIN: Yes. You know, he's a nice guy.
HARRIS: Yes. Yes. Yes.
GRIFFIN: He's a nice guy.
HARRIS: But we're in an economic downturn here. So he -- and he's not saying that this is actually going to create jobs in any way, shape or form, is he?
GRIFFIN: No, not one job. Just healthier people when and if they can find a job.
HARRIS: OK, Drew. You're going to continue to follow this for us. I know there are a lot of people tracking their (ph) money, but you do a great job of it. We appreciate it. Thank you.
GRIFFIN: Thanks, Tony.
HARRIS: Fighting the fakes from Super Bowl knock-offs to dangerously fake prescription pills. We are tracking the billion dollar black market.
We're back in just a moment.
(COMMERCIAL BREAK)
HARRIS: You know, the recession is helping fuel a few fake plays ahead of Super Bowl XLIII this weekend. Here's CNN's Jeanne Meserve with the super rip-offs.
(BEGIN VIDEOTAPE)
JEANNE MESERVE, CNN CORRESPONDENT, (voice over): T-shirts and other Super Bowl memorabilia, all inscribed with the logos of the NFL or its teams, and all fake.
DAVE THOMPSON, DIRECTOR, ICE IRD CENTER: The shade of yellow is very different. It's much more bold and bright than the actual team color.
MESERVE: Just since Sunday, in Tampa, immigration and customs enforcement have seized pirated goods with a street value of more than $1 million. But the problem is much bigger than that, with implications for health and safety. There are counterfeit electrical items, like circuit breakers.
THOMPSON: They do cause fires.
MESERVE: And toiletries.
THOMPSON: Some of these items have actually been found to contain chemicals such as antifreeze.
MESERVE: And even pharmaceuticals.
THOMPSON: Oftentimes these items have actually been made with drywall dust and painted with road paint.
MESERVE: Imitations like these are often cheaper than the original, but they have caused injuries, reportedly even deaths.
THOMPSON: Money. It's strictly a greed motivation. Basically these individuals see a large profit margin and they'll counterfeit basically anything that's popular.
MESERVE: The value of counterfeit products seized last year was up 38 percent. And there's no way to know how much wasn't caught. The estimated cost to U.S. business, $250 billion in lost revenue. The estimated cost to U.S. workers, 750,000 jobs.
MARK ESPER, U.S. CHAMBER OF COMMERCE: China accounts for over 80 percent of the goods that were seized last year coming into the country with India a distant second.
MESERVE: Customs and border protection inspectors routinely find counterfeit goods, but this intellectual property coordination center, opened last summer, is trying a new approach -- fusing the enforcement efforts of many federal agencies. There have been 140 investigations since July.
Who's making money off of this? Criminals. And authorities suggest you think about that before you stop at a street vendors to pick up a Gucci bag, Rolex watch or a Cardinals or Steelers jersey.
Jeanne Meserve, CNN, Washington.
(END VIDEOTAPE)
HARRIS: Super Bowl weekend! Go, Arizona! I'm going to lose so much money on this.
FREDRICKA WHITFIELD, CNN ANCHOR: You're not supposed to say that.
HARRIS: I'm not? Amongst friends? Isn't it fair among friends?
WHITFIELD: If you're in Vegas, maybe.
HARRIS: Yes, I've done enough damage. CNN NEWSROOM continues right now with Fredricka Whitfield.
Have a great show.
WHITFIELD: All right. Well, have a good Super Bowl weekend party, as we know.
