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Obama to Hold Fiscal Responsibility Summit; Citigroup Stock Rallies Despite Talk of Government Ownership; College Students Struggling Financially; Biden, Obama Speak at Summit; Veterans Trouble Finding Jobs; Co-Sleeping Dangers; Scary Times in Lansing
Aired February 23, 2009 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, CNN ANCHOR: Well, we're pushing forward into the fiscal unknown. Above and beyond the recession, the looming disasters we've talked about for decades: Social Security and Medicare. President Obama says it's time to get serious.
Counting on your 401(k)? Better count it up, and you'd better be sitting down. We're pushing formulas for happy retirements this hour.
Hello, everyone. I'm Kyra Phillips live at the world CNN headquarters in Atlanta. You're live in the CNN NEWSROOM.
And this hour it's economics: macro and micro. We'll hear from President Obama in today's money meetings at the White House, but we'll also visit some Michigan auto workers from whom keeping their jobs is job one these days. Plus, our soldiers going above and beyond to do their jobs but not getting some money that they're due.
But first, the light at the end of the economic tunnel. It's another train long before the current economic collapse. We all knew Social Security, Medicare and Medicaid, the so-called entitlements, were headed for bankruptcy, as fewer of us paid in and more of us drew out.
So even before all the stimulus checks are printed, President Obama is holding a fiscal responsibility summit. It aims to avert disaster while cutting the deficit in half by 2013.
Suzanne Malveaux is there, and let's talk about what President Obama hopes to accomplish at this summit, Suzanne.
SUZANNE MALVEAUX, CNN CORRESPONDENT: Hi, Kyra.
Obviously, fiscal responsibility is the theme. There's more than 130 people who have been invited to join the president in the East Room. We're just watching them come in. Very shortly he'll be speaking.
He's going to talk about, first and foremost, how he's going to cut the federal deficit in half by the end of his first administration. There are a number of ways that he says he's going to do this. First and foremost, he's going to be pulling U.S. troops out of Iraq, that there will be some savings there. At least candidate Obama said about $90 billion worth. We'll see if that actually comes to fruition, if that's actually true.
Another thing that he's going to do he's going to allow the 250,000, that being the income that folks make, that -- he's going to allow a tax cut for those folks to expire, the Bush tax cuts, so there will be a tax hike.
And I understand that we're seeing this begin now, so we'll just go to Biden.
JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES: ... some of my old friends represented here in this room, the finest minds in the country, representing a wide range of views across the political, ideological and academic spectrum.
And today we're asking you to help us begin to tackle the challenges of our nation's long-term fiscal situation. We explore -- we are going to explore how we got where we are and begin to debate where we need to head. And we hope this summit will help generate a healthy debate, because we truly believe that the best course is - to arrive at the best answers -- is to have that debate.
It won't be easy, to state the obvious. I think we all know that we've inherited unprecedented budget deficits, and this has made all the more difficult the nearly unprecedented economic challenges the country is facing today.
So the problem will not be solved overnight. That's news to no one in this room.
But we want to be clear: As we take the steps that we must to get through the crisis we're in now, we will not lose sight of the long term. We will not lose sight of the need to tackle unmet needs for health care reform, to deal with the energy policy that we need, and so many others challenges that are going to determine what the 21 century looks like.
We must be direct with the American people about the budget difficulties and the choices we have to make, and we should be straightforward with them throughout this whole process.
I've always believed that in the toughest moments we are presented with the greatest opportunities as a nation. There is no question this is a very tough moment. But it's also a real opportunity to both put our economy back on track and restore fiscal responsibility. That's why we need all of you.
Our first speaker today will be Dr. Mark Zandi. Dr. Zandi is the chief economist and co-founder of Moody's Economic -- excuse me, Moody's Economy.com -- where he directs the company's research and consulting activities. He's one of the best big picture guys in the business. His most recent book, "Financial Shock," was widely praised or its lucid explanation of the housing bust.
What's less well known about Mark is that he donated the royalties from that book to a fund to invest in low-wealth neighborhoods. He's also an economic adviser to John McCain's campaign. And I'm glad he's -- he's here with us today.
Following Mark will be Robert Greenstein, founder and executive director of the invaluable Center on Budget and Policy Priorities.
Bob and the center are very well-known to us, as they have been the go-to resource for consistently reliable analysis on matters of budgets and fiscal policy at every level of government.
Bob was awarded the MacArthur Fellowship in 1996, and last year he received both the John W. Gardner Award for independence - from Independent Sector and Heinz Award for Public Policy in recognition of his work to improve the economic outlook for many Americans of - many of America's poor citizens.
PHILLIPS: The vice president there, kicking off the fiscal responsibility summit at the White House, planning on leading a frank discussion among all kinds of leaders, both on the Democrat and Republican side. When the president steps up to the mike, we will take it live.
And stay with CNN, the best political team on television, tomorrow night as President Obama speaks to a joint session of Congress. The state of the economy is sure to be issue No. 1. Anderson Cooper will have our post-game coverage, followed by a special edition of "LARRY KING LIVE." You can also watch along with your Facebook friends at CNN.com live. It all happens tomorrow night, beginning at 9 Eastern on CNN and CNN.com.
Well, stiffing the stimulus. Having read the fine print, a number of Republican governors say they don't want it, or at least don't like it: stimulus dollars that broaden eligibility for unemployment benefits. The states involved at last count were Mississippi, Louisiana, South Carolina, Alaska, Texas, Idaho and Georgia. Those governors point out that the looser rules will be permanent, but the federal help runs out after two years.
Now, the president hosted all the governors for a black-tie dinner last night, and also a business meeting this morning. He called the concerns over jobless aid legitimate, but relatively minor.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I just want us to not lose perspective of the fact that most of the things that have been the topic of argument over the last several days amount to a fraction of the overall stimulus package. This sometimes gets lost in the cable chatter.
(END VIDEO CLIP)
PHILLIPS: Well, Louisiana Governor Bobby Jindal is among those just saying no to expanded unemployment aid. And that's not his only difference with the stimulus. Take a listen.
(BEGIN VIDEO CLIP) GOV. BOBBY JINDAL (R), LOUISIANA: It is not just limited to those provisions we identified on Friday. For example, $1 billion for the census. For example, $300 million to buy cars for the federal government. For example, $50 million for the National Endowment for the Arts.
(END VIDEO CLIP)
PHILLIPS: Well, fresh off a fiscal crisis of his own, the Republican governor of California says that taking the federal dollars can't hurt. He also says that recovery should be a team effort.
(BEGIN VIDEO CLIP)
GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: If you have a team, where half of it splits off, if it's a basketball team or football team, you would never win the game.
(END VIDEO CLIP)
PHILLIPS: Also in the stimulus, $15 billion in Medicaid assistance is due to reach the states starting Wednesday. No one's objecting to that.
So how are things going in the country today? Twenty-one percent of us say -- well, in a new CNN/Opinion Research Corporation poll, 79 percent say badly.
But here's the twist. When we asked how folks are faring personally, the numbers almost flip-flop. Seventy-seven percent say well or fairly well; just 22 percent say badly.
Now one of the main concerns of Americans, the fear that major banks could go belly up. Citigroup, one of the most troubled banks, is said to be in talks with federal regulators about the government taking a larger share of ownership. You'll recall that the government invested $45 billion in Citi as part of the $700 billion bailout of the financial system. Now, in return, the government received preferred stock in the bank.
So how is Wall Street react being to the government's move to save Citicorp? Let's go ahead and check in with Susan Lisovicz. She's at the New York New Stock Exchange with the latest.
Hey, Susan.
SUSAN LISOVICZ, CNN CORRESPONDENT: Hey, Kyra.
Well, Citi is doing all right for a change. It's rallying about 8 percent, but still, it's just above $2 a share. Just to put it in perspective, this time last year, Citigroup was trading at $25 a share. It's come down about 90 percent over the past year.
In terms of the overall market, well, the big board tells the picture. The S&P 500 is down now six days in a row, and if the Dow closes where it's at right now, well, it's going to be the lowest close in 11 years, which is really just a mind-boggling concept when you think that it was only in October of '07 that the Dow closed at its all-time high, above 14,100.
It's a broad-based rally. Tech's taking it worse. You know, concerns about financials. We don't have a lot of details about what the government would do. The overall economy, meanwhile, is in tough shape and playing out in predictable fashion.
Kyra, back to you.
PHILLIPS: All right. We'll keep tracking it. Susan, thanks so much.
LISOVICZ: You're welcome.
PHILLIPS: And your 401(k), well, looking at it might be like watching a Steven King movie, only scarier. How do you keep your cool with the horror show now playing out on Wall Street? Well, we'll talk to Gerri Willis in a moment.
Also the live coverage we are following from the White House, the fiscal responsibility summit. We first heard from the vice president, kicking off the summit. We're going to hear from various leaders. When the president steps up to the mike, we will take it live.
(COMMERCIAL BREAK)
PHILLIPS: The beast that's the recession taking devastating aim at the nation's college students.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: I came back to school not knowing where and how I was going to pay for school.
UNIDENTIFIED FEMALE: I just thought, how am I going to get my bills paid. It permeates my thoughts, my daydreams, everything that I do every day.
(END VIDEO CLIP)
PHILLIPS: In these hard times, many college students find themselves at the edge of the recession's abyss, but help may be on the way.
(COMMERCIAL BREAK)
PHILLIPS: And live coverage once again from the White House. We are monitoring the fiscal responsibility summit there. And as soon as the president steps up to the mike, we will take it live.
Well, no pain, no gain. That would be a lousy exercise plan, wouldn't it? It's equally bad with your retirement money. And analysts say that a new low for the S&P 500 could be in sight.
Gerri Willis, CNN's personal finance editor, here to tell us straight up, are we going to lose our 401(k) money or what, Gerri?
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: No. Look, you have to have some perspective here. Of course, there have been losses, and let's look at those.
The average balance is just $50,000, which is really only enough to keep a couple going for a couple of years in retirement at best. The average 401(k) balance dropped 27 percent last year to $50,200. That's according to Fidelity.
But the short answer is, look, the stock market isn't going to zero. Let's put this in perspective. Compared to last fall, there are some reasons for optimism.
First, the focus of concern has really moved to the economy and away from whether the nation's banking infrastructure will collapse. That's a very big improvement. Recessions come and go, but we really can't do without a banking sector.
No. two, the fears that the financial rescue attempts are doomed to fail, well, it's overblown. Already, the federal government's efforts to stabilize money market mutual funds is a big success.
Remember last fall, there was a run on money market funds, a critical part of the nation's financial infrastructure. The government guaranteed those funds. And now the balance in those safe- as-cash funds is $4 trillion in those funds, more than before the run on the funds.
What's more, the government has checked $1 billion in fees for its efforts and has yet to pay any claims -- Kyra.
PHILLIPS: So Gerri, why should I even be invested in stocks when I could just as well put the money under a mattress?
WILLIS: Well, you know, Susan just reporting that the S&P 500, you know, 11-year lows here. You know, what are we looking at?
Well, we've seen some pretty tough returns, obviously, if you want to look at this chart of the S&P 500 over several years. Look at those last -- you know, 2008, very tough. 2009, down 15 percent, just year to date.
But look, you shouldn't just obsess over your 401(k)'s balance. Take a look, too, at the number of shares you've purchased. You've been adding to the total number of shares throughout the decade, and you're buying these shares now as lows. So when the market turns around, so will your 401(k).
What's more, your entire 401(k) doesn't need to be in stocks. You need an intelligent mix of investments to make sure your money grows over time. Devil's in the details. You've got to have some diversification, Kyra.
PHILLIPS: Yes, that is the key. Boy, I'll tell you what, though. When you get that paperwork and you see what a tremendous the numbers have taken, it makes your heart stop.
WILLIS: It makes your heart stop, but you've got to keep planning for the future. Absolutely.
PHILLIPS: Gerri, thanks.
Well, the recession is hitting just about everybody. One group especially feeling the sting, college students. For many of them, scraping together money for tuition and other costs is almost an impossible task. But for some, help might be on the way.
CNN's Jason Carroll reports.
(BEGIN VIDEOTAPE)
JASON CARROLL, CNN CORRESPONDENT (voice-over): If one wanted a case study in how the economy is hurting college students, Nikiva Coronaldi (ph) says look no further.
UNIDENTIFIED FEMALE: I came back to school, not knowing where and how I was going to pay for school.
CARROLL: Coronaldi (ph) is a sophomore at Syracuse University in New York.
UNIDENTIFIED FEMALE: Well, the untouchables were just completely out of the system.
CARROLL: In her short time here, she has taken two jobs and still struggles to pay bills.
UNIDENTIFIED FEMALE: I originally came to Syracuse on a loan and due to the recession that we're in, my school no longer accepts it.
CARROLL: Coronaldi (ph) applied for 12 loans and was rejected by all. To make matters worse, her mother lost her job.
According to the American Council on Education, an advocacy group, more and more students and families are hurting and facing new barriers in access to higher education.
JIM BOYLE, COLLEGE PARENTS OF AMERICA: Right now you have this kind of a perfect storm of costs of college continuing to rise, but the economy performing so poorly that parents are not able to rely on stable jobs.
CARROLL: Dozens of schools, such as Catholic University in Washington and Princeton University, are trying to help by making small tuition increases. Some universities -- Lincoln Memorial in Tennessee, and Sierra Nevada College -- are temporary freezing tuition.
UNIDENTIFIED FEMALE: The thought of how I'm going to get my bills paid permeates my thoughts, my daydreams, everything that I do every day.
CARROLL: Struggling students like Lorena Rose (ph) and Maxwell Brown (ph) hope the government's money reaches them in time.
MAXWELL BROWN JR., SYRACUSE UNIVERSITY: It's always in the back of my mind when I'm in class, taking a test or something like that, like, it's always like, if I don't do well, you know what I mean, and I lose money, like that's going to hurt her and that's going to hurt me, too. So where is that going to come from?
CARROLL: All the students we spoke to are working to make ends meet. Syracuse University is also raising money to assist financially-strapped students.
YOULONDA COPELAND-MORGAN, SYRACUSE UNIVERSITY: These students are going to be the students who solve breast cancer, who bring about solutions for poverty. So we've got to invest in our young people.
CARROLL: As for Coronaldi (Ph) all she can do is keep working and hoping.
UNIDENTIFIED FEMALE: Can I serve (ph) this semester? That's pretty much how I'm living.
CARROLL (on camera): More help may be on the way. Included in the president's stimulus bill is a little more than $30 billion to help students beat the cost of higher education, some of that assistance coming in the form of Pell grants.
Even so, many of the students we spoke to are not confident that money will reach them in time.
Jason Carroll, CNN, New York.
(END VIDEOTAPE)
PHILLIPS: Well, the recession is also taking a toll on those looking for a job who don't have a high-school diploma. In good times they could sign up for classes to earn general education development credentials, but in these hard times, they're running into closed doors and long waiting lists.
One community education director says that she's never before seen such long waiting lists for these classes. And another problem: the recession has forced some states to cut funding to adult education classes, as well.
Now, in all the gloom and doom about the economy, there is something to cheer about. U.S. Airways says that it made a big-time mistake when it started charging passengers for nonalcoholic drinks last year. Now they're free again. That means no longer having to shell out a buck for coffee or tea, or two bucks for bottled water or soft drinks. Bottom line, U.S. Airways says that the plan didn't pay off.
Well, could cold, blustery weather affect your plans this week? We're going to tell you where so you can get ready to face the freeze.
(COMMERCIAL BREAK) PHILLIPS: Blowing snow in the windy city. This video sent in by one of our iReporters, Thomas Nava. It was shot on Saturday. Nava describes the swirling white stuff as fluffy. He says that's why it's so easily carried by the breeze. Nava is a volunteer weather observer with the building (ph) meteorologist.
We're going to take you back to the White House now. President Obama is stepping up to the mike. As you know, kicking off his fiscal responsibility summit. Let's listen in.
OBAMA: Thank you to Mark and Bob and to Peter. It is wonderful to see the speaker here, and we've got our -- I don't see Harry, here, but we've got Dick Durbin in his stead.
Mitch, thank you for being here.
John Banner, to all the congressional leadership. Thank you.
My administration came into office one month ago in the depths of an economic crisis unlike any that we've seen in generations. And we recognize that we needed to act boldly and decisively and quickly and that's precisely what we did.
Within our first 30 days in office, we passed the most sweeping economic recovery package in history, to create or save 3.5 million new jobs, provide relief to struggling families, and lay the foundation for long-term growth and prosperity. And I have the opportunity to talk to the nation's governors today, both Republicans and Democrats had ideas about how they're going to use that money to make sure that people are put back to work and that we can stem some of the job loss that's taking place.
I also laid out my housing plan -- to break the cycle of falling home values and rising foreclosures that's devastated so many communities. And we put forth a financial stability plan to start shoring up our banks, so we can free up credit and jumpstart lending and restore confidence in our financial system.
These are all extraordinary, but necessary measures to address this economic emergency. And as has already been noted, they will come at a cost. This administration has inherited a $1.3 trillion deficit -- the largest in our nation's history and our investments to rescue our economy will add to that deficit in the short-term.
We also have long term challenges: healthcare, energy, education, and others, that we can no longer afford to ignore. But I want to be very clear if the message was not effectively delivered by the three previous speakers.
We cannot and will not sustain deficits like these without end.
Contrary to the prevailing wisdom in Washington these past few years, we cannot simply spend as we please and defer the consequences to the next budget, the next administration or the next generation. We are paying the price for these deficits right now. In 2008 alone, we paid $250 billion in interest on our debt: One in every 10 taxpayer dollars. That is more than three times what we spend on education that year; more than seven times what we spent on V.A. health care.
So if we confront this crisis without also confronting the deficits that helped cause it, we risk sinking into another crisis down the road. As our interest payments rise, our obligations come due, confidence in our economy erodes and our children and our grandchildren are unable to pursue their dreams because their saddled with our debts.
That's why today, I'm pledging to cut the deficit we inherited by half by the end of my first term in office. Now, this will not be easy. It will require us to make difficult decisions and face challenges we've long neglected. But I refuse to leave our children with a debt that they cannot repay, and that means taken responsibility right now, in this administration, for getting our spending under control.
We'll start by being honest with ourselves about the magnitude of our deficits. For too long, our budget process in Washington has been an exercise in deception; a series of accounting tricks to hide the expense of our spending and the shortfalls in our revenue and hope that the American people won't notice. Budgeting certain expenditures for just one year, when we know we'll incur them every year for five or 10; budgeting $0 for the Iraq war -- $0 -- for future years, even when we knew the war would continue; budgeting no money for natural disasters, as if we would ever go 12 months without a single flood, fire, hurricane or earthquake.
We do ourselves no favors by hiding the truth about what we spend. In order to address our fiscal crisis, we're going to have to be candid about its scope.
And that's why the budget I will introduce later this week will look ahead 10 years, and will include a full and honest accounting of the money we plan to spend and the deficits we will likely incur.
To start reducing these deficits, I have committed to going through our budget line by line to rout out waste and inefficiency, a process that Peter and our administration, our team, has already begun. And I'll soon be instructing each member of my Cabinet to go through every item in their budgets as well. And already we've seen how much money we can save, just in the last 30 days.
Take one example: The Department of Agriculture has moved some of its training programs online, saving an estimated $1.3 million a year. They're modernizing their financial management system, saving an estimated $17.5 million. They're saving tens of thousands of dollars by cutting back on conferences and travel and other small expenses that add up over time.
So we will replicate these efforts throughout the federal government, eliminating programs that don't work to make room for ones that do, and making the ones that we keep work better.
We'll end the payments to agribusiness (ph) that don't need them, and eliminate the no-bid contract that have wasted billions in Iraq. We'll end the tax breaks for companies shipping jobs overseas, and we'll stop the fraud and abuse in our Medicare program.
And we will reinstate the pay-as-you-go rule that we followed during the 1990s, the rules that helped us start this new century with a $236 billion surplus.
In recent years, we've strayed from this rule, and the results speak for themselves.
The PAYGO approach is based on a very simple concept: You don't spend what you don't have. So if we want to spend, we'll need to find somewhere else to cut.
This is the rule that families across this country follow every single day, and there's no reason why their government shouldn't do the same.
Now, I want to be very clear. While we are making important progress towards fiscal responsibility this year, in this budget, this is just the beginning. In the coming years, we'll be forced to make more tough choices, and do much more to address our long-term challenges. From the rising costs of health care, that Peter described, which is the single, most pressing fiscal challenge we face, by far, to the long-term solvency of Social Security. In the end, however, if we want to rebuild our economy, and restore discipline and honesty to our budget, we will need to change the way we do business here in Washington. We're not going to be able to fall back into the same old habits, and make the same inexcusable mistakes, the repeated failure to act as our economy spiraled deeper into crisis.
The casual dishonesty of hiding irresponsible spending with clever accounting tricks, the costly overruns, the fraud and abuse, the endless excuses -- this is exactly what the American people rejected when they went to the polls. They sent us here to usher in a new era of responsibility in Washington; to start living within our means again, and being straight with them about where their tax dollars are going, and empowering them with the information they need to hold all of us, their representatives, accountable.
So, that's why I've called this summit, today, and why I've invited leaders from both sides of the aisle, because we all have a role to play in this work. I believe it is time for a frank conversation about the fiscal challenges we face. They are challenges that concern every single one of us no matter where we are on the political spectrum. So, today, I want to -- I hope that all of you will start talking with each other and exchanging ideas.
I want you to question each other, challenge each other, question me and my time, challenge us. And work together not just to identify problems, but to identify solutions. That's the purpose of the break- out sessions that are starting right now. I know that each of you bring a wealth of experience and expertise on a broad range of topics. I appreciate your willingness to participate in these sessions. I expect that this process will be engaging and productive. And I look forward to hearing the results when you report back later on this afternoon.
So, thank you very much, all of you, for participating.
(APPLAUSE)
PHILLIPS: The president of the United States there at the White House, officially kicking off his Fiscal Responsibility Summit that will be taking place all day today. We'll be monitoring that and bringing you updates. It's interesting what the president said. Pledging that he wants to cut the deficit in half by the end of his first term.
What is he doing at this summit? Well, as he mentioned, he's breaking everybody off into little subgroups to discuss everything from social security to healthcare, tax reform, budget process. He has various secretaries and advisers that will all be meeting together, then they'll all come back and discuss everything that they went over in those various groups. A number of members from the Senate, the House there as well. We'll track it all afternoon and let you know exactly what they and the president discuss with regard to the summit.
Well, soldiers serving beyond the call of duty promised extra money for their extra service, promised it months ago. Well, here's the question. Why haven't they seen one thin dime?
(COMMERCIAL BREAK)
PHILLIPS: Too much buck, not enough bang. Weapons and hardware in that category probably won't survive the Pentagon's budget ax. The Lightning II fighter jet, is it really worth $950 billion? How about the $200 billion future combat system? Or the Virginia-class sub with an $81 billion price tag? Some tough decisions for Defense Secretary Robert Gates.
(BEGIN VIDEO CLIP)
ROBERT GATES, DEFENSE SECRETARY: This moment also presents an opportunity. One of those rare chances to match virtue to necessity. To critically and ruthlessly separate appetites from real requirement.
(END VIDEO CLIP)
PHILLIP: Well, one possible Gates idea, not to buy dozens of F- 22 fighter planes. Could trigger a real fight in Congress, though. Lawmakers say the program generates 12,000 jobs in 44 states.
Some soldiers should be getting bonuses right now. Congress allowed for it, the men and women have earned it; so why in the heck aren't they getting any of it? So-called stop-loss soldiers, about 13,000 serving beyond their enlistment period are currently supposed to get the bonuses. That's 500 extra bucks a month per person. The Pentagon admits it's about five months behind paying out that money, even though Congress budgeted $72 million for it at the budget year. Well, the Pentagon says it's working on a plan to begin paying that money to them.
Civilian life is no picnic either, especially for veterans entering the workforce. They're now at war with a hostile economy, but they've got a couple of champions giving them a voice in Washington.
Here's CNN Pentagon correspondent Barbara Starr.
(BEGIN VIDEOTAPE)
BARBARA STARR, CNN PENTAGON COORESPONDENT (voice-over): Tom Tarantino led patrols through the most dangerous neighborhoods through Baghdad. Steve Taylor flew Navy reconnaissance planes over Iraq. Both, now civilians, walking the halls of Capitol Hill to make sure Congress understands that veterans are struggling in the economic downturn. Tyler is unemployed; Tarantino, after ten months, found a job with a veterans' advocacy group.
TOM TARANTINO, IRAQ & AFGHANISTAN VETERANS OF AMERICA: I might have been about a month away from not being able to pay any of my bills.
STARR: Both men say the military isn't doing enough to get troops ready for tough times in the civilian market. Taylor is an Naval Academy Graduate. His final tour of duty was the White House Operations Center.
STEPHEN TAYLOR, IRAQI WAR VETERAN: I might not be actually taking the job that I actually think that I'm qualified to take because of the economy.
STARR: One estimate says unemployment amongst vets is more than eight percent.
TARANTINO: I think you're going to find ate lot of corporations are a bit more reticent to hire, because they're afraid of things like post-traumatic stress.
STARR: And on the street, veterans are falling between the cracks.
PAUL RIECKHOFF, IRAQ & AFGHANISTAN VETERANS OF AMERICA: There are 2,000 homeless Iraq and Afghanistan veterans on the streets right now.
STARR: To keep that from happening, these vets want more funding for programs to help veterans make the transition from the front line to the assembly line or even the boardroom.
TARANTINO: I got lucky. I can only imagine for the people that are really facing it, facing the end of the rope and figuring out what their options are.
STARR: Barbara Starr, CNN, Capitol Hill.
(END VIDEOTAPE)
PHILLIPS: You love your baby, you'd do anything to protect the child. We'll show you why that should include not keeping him near or her near when you're asleep.
(COMMERCIAL BREAK)
PHILLIPS: New parents like to keep their newborns close, many even cuddle next to them as they sleep. But pediatricians say that's a big no-no.
Our senior medical correspondent Elizabeth Cohen explains why.
(BEGIN VIDEOTAPE)
ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: Dayton West- Mullen's mom thought she was doing the right thing, letting him sleep with her in her bed. But then, when he was four months old...
LISA WEST, DAYTON WEST-MULLEN'S MOM: It was about ten till 8:00 and my mother-in-law came in and yelled - you're laying on top of the baby!
COHEN: Dayton suffocated to death, and Lisa says the feeling of guilt never goes away.
WEST: No matter how many times people tell me that it's not my fault, in my heart, like the heart of a mom from the moment Dayton was born, it was just like - I would give my life to protect this child. And I couldn't - I couldn't save him.
COHEN: According to a new CDC report, more than 300 babies suffocated during 2003 and 2004 when someone rolled over them in bed.
DR. RACHEL MOON, AMERICAN ACADEMY OF PERDIATRICS: If there's a safe way to share a bed with the baby, we don't know what it is yet.
COHEN: So then why are smart, educated parents, like Beverly Steiger, sleeping with their babies? Steiger says she's heard the warnings, but she's convinced there's no way she'd ever roll over on 4-month-old Simon.
BEVERLY STEIGER, CO-SLEEPING MOM: It's really hard to explain, but you have such a heightened awareness when you're exclusively breastfeeding your baby. I would never roll over on him. It would never, ever happen.
COHEN: In many cultures all around the world, sleeping with baby is the norm and is often done safely. That's why some pediatricians say the CDC study doesn't really prove co-sleeping is dangerous.
DR. BOB SEARS, PEDIATRICIAN: I absolutely do feel that co- sleeping can be a very safe thing to do, as long as you're doing it right. COHEN: But Lisa West says there's no way a parent should ever sleep in the same bed with their small child.
WEST: Those people who are advising parents to sleep with their infants, in some of those cases, they're signing those baby's death warrants.
(END VIDEOTAPE)
PHILLIPS: Wow. Makes your heart sink just listening to that story. I can't imagine waking up and you realize what you did. Wow.
COHEN: Just awful. Just awful.
PHILLIPS: All right. So give us some advice.
COHEN: All right. Well, the bottom line here is that the American Academy of Pediatricians says infants should not share a bed with their parents. But it's interesting the March of Dimes acknowledges that, but says, if you are going to share a bed with your infant, you should remember several rules. One of them is lay your baby on his back. And actually, that's true wherever your baby is sleeping because of SIDS. Also, keep the baby away from blankets and pillows, anything they could suffocate on. And also, don't take certain medications. You should not be taking sleeping medication and lying in the same bed as your child because you're just not aware of what you're doing.
PHILLIPS: (INAUDIBLE) as you were saying, a lot of moms, and as we were talking about this - bassinet. Bassinet. Bassinet.
COHEN: Yes. Bassinet next to the baby's bed. That's what pediatricians recommend. They can be right next to you, but in a separate bed.
PHILLIPS: Elizabeth, thanks.
Well, according to the bill, her husband spent more than $1,000 on phone sex. Just one problem. He's been dead nearly 20 years. What kind of sick identity theft is going on here?
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(BEGIN VIDEO CLIP)
STEVEN SPIELBERG, DIRECTOR: And the Oscar goes to - "Slumdog Millionaire."
(END VIDEO CLIP)
PHILLIPS: Well, it debuted in just ten theaters in November, now "Slumdog Millionaire" has almost that many academy awards. Eight Oscars last night, including best picture for a movie with subtitles and a Bollywood-style dance scenes. "Slumdog," definitely taking best in show. The rest of the show saw some veteran actors honored and a new host strut his stuff. Here's entertainment correspondent Kareen Wynter.
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KAREEN WYNTER, CNN ENTERTAINMENT CORRESPONDENT (voice-over): With tongue firmly in cheek, host Hugh Jackman kicked the big show with a low budget opening number that fit in a funny way these hard times.
In a new twist this year, groups of previous winners presented the major categories. First up, supporting actress where Penelope Cruz won for her feisty performance in Woody Allen's comedy, "Vicky Cristina Barcelona."
PENELOPE CRUZ, OSCAR WINNER BEST SUPPORTING ACTRESS: Has anybody ever fainted?
WYNTER: Yes, perhaps the evening's most poignant moment was the late Heath Ledger winning the Supporting Actor prize for his riveting turn as the Joker in "The Dark Knight." Ledger, whose family accepted the award, becomes only the second actor to win a posthumous Oscar.
SALLY BELL, HEATH LEDGER'S MOTHER: Tonight, we are choosing to celebrate and be happy for what he has achieved.
WYNTER: After five tries, Kate Winslet finally won that Oscar nabbing Best Actress for her role as the Nazi prison guard in the World War II drama "The Reader".
KATE WINSLET, OSCAR WINNER BEST ACTRESS: Thank you so much. My God.
SEAN PENN, OSCAR WINNER BEST ACTOR: You commie homo-loving sons of guns.
WYNTER: A good-humored Sean Penn accepted the second Oscar of his career, Best Actor for the biopic "Milk," about assassinated gay political leader, Harvey Milk.
SPIELBERG: "Slumdog Millionaire."
WYNTER: What a night for "Slumdog Millionaire." The rags to rupees tale of a young guy from Mumbai led the field with eight Oscar wins, including Best Picture and Best Director for Danny Boyle.
DANNY BOYLE, "SLUMDOG MILLIONAIRE" DIRECTOR: Most of all we had passion and we had belief. And our film shows that if you have those two things, truly anything is possible.
(END VIDEOTAPE)
PHILLIPS: And Kareen Wynter live with us from L.A.
Kareen, there was a lot of focus on raising the ratings this year. Any big news?
WYNTERS: Well, that was the huge buzz, Kyra, wasn't it? The fact that the show producers were going to try to reinvent the show to attract more viewers. One of the things that they did was they eliminated some presenters who usually walk the red carpet just to create that element of surprise. So, did it work? Well, the big news is they were up over the Oscars up six percent over last year, Kyra. But here's the catch - the telecast is still likely to be among the three least watched Oscars ever, which means it will be lumped right into last year's viewership, 32 million, the lowest watched in terms of Oscar history - Kyra.
PHILLIPS: Kareen Wynter, it was quite a night. I loved how they did so many things so differently. And how about the leading lady roles, when they brought out the four women from the past and gave their personal speeches.
WYNTERS: I loved it.
PHILLIPS: Yes.
WYNTERS: It was so touching. And to see Anne Hathaway tear up and some of the other nominees. It was really that personal touch. And Kyra, I'm surprised you didn't throw out the handsome Hugh Jackman. Come on, he could do no wrong. He was great.
PHILLIPS: He was funny, he was handsome, he was entertaining. You're right. He definitely - he hit it. He did. Kareen, great to see you.
WYNTERS: You, too.
PHILLIPS: Well, even death won't protect you from identity thieves. A Nebraska widow gets a bill addressed to her husband, for more than $1,000 in phone sex calls. Well, it's kind of tough to talk dirty that long when, well, you've been dead for nearly 20 years. The daughter called the billing company, straightened everything out, until a week later when another bill came forward for $71. Well, the company, Preferred Platinum Plan, has now promised never to bill the widow again.
Last week we told you about a Seattle guy who stole the getaway car while some crooks robbed his house. Remember that? Well, this time, it's a homeowner in South Carolina who fought back, when he walked in on a burglar and then after the chase, they had a scuffle, well, the crook finally realized he was sunk.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: We started wrestling down - you can see where we broke the fence down. We wrestled around there. And he went in the pool right about here. When he went in the pool, I got up, was standing right here, and he said he can't speak English but he said the water's cold and put his hands along here to get out. I said you're not getting out of the water and I just kicked him right there. I didn't care if I hurt him or not because I was mad. (END VIDEO CLIP)
PHILLIPS: And who can blame him? He actually kept the guy in the pool for half an hour until the police arrived. That suspect now charged with burglary and assault.
Michigan's auto workers looking down the line, worried their way of life's going to break down. John King takes a look at a state of despair.
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PHILLIPS: Some positive news on the big three for a change. The United Auto Workers Union says it reached a tentative deal with Ford on how the company will fund a healthcare trust for retirees. No details yet, but the deal is likely to be the template for Chrysler and GM. Both must change funding for their trusts under terms of the government bailout. Ford has not yet taken any federal loans.
Well, Michigan is known as the home of the American auto industry and more recently, perhaps, the state hardest hit by the recession. CNN's John King dropped in on some auto workers to check on their personal situations.
(BEGIN VIDEOTAPE)
JOHN KING, CNN CORRESPONDENT (voice-over): The Lancing Grand River assembly line - modern, clean and efficient. These Cadillacs among GM's best-selling models, and yet this plant is down from two shifts to one. New cars just aren't selling.
UNIDENTIFIED MALE: Scary times right now for a lot of people.
KING: Thousands already let go. Many on this line will be out of work in just a few weeks. Twelve years seniority protects Fred Efaw for now.
FRED EFAW, LANSING AUTOWORKER: I'm married. I have two daughters. They want to do things and you can't commit to those things not knowing if you're going to have a full income in the next months or weeks ahead. So it is hard. You got to explain to your kids it may not be the way it's always been for you.
KING: Just one shift here, and just one at another GM plant across town. Mike Huerta remembers when it ran around the clock. He'll be out of work in a few more weeks.
MIKE HUERTA, LANSING AUTOWORKER: We haven't gone to see movies, you know. We eat at home. I pack lunches, those type of things. You don't really spend anything you don't have to.
KING: Huerta says the taxpayer-funded GM bailout is his only hope of being called back some day. And he fumes at those in Washington who say the company should take its lumps.
HUERTA: We had some senators from down south in particular that have a lot of Nissan or Honda or Toyota plants, basically come out and say that we should go bankrupt and they're not talking about somebody that you can't see. That means me. That takes away my family's livelihood.
KING: The pain is shared beyond the factory floor. This is one of two Saturn dealerships owned by Sherrill Freeborough.
SHERRILL FREEBOROUGH, OWNER, SATURN DEALERSHIP: This is the biggest vehicle we've ever had.
KING: This SUV is made right here in Lansing, but GM is shedding the brand in three years as part of its restructuring and Saturn dealers like Freeborough who are determined to stay in business are now exploring partnerships with Indian and Chinese automakers.
(on camera): So, it's risky.
FREEBOROUGH: Very risky.
KING (voice-over): But a risk Freeborough says she has to take for her employees and for herself.
FREEBOROUGH: I'm a small business owner. Everything I have, I've put into the dealerships. My home, everything is in the company. My husband still can't breathe. I can't have a bad day and go home and tell him because everything we have is wrapped up in this company.
KING: To listen and to look around is to hear and see a way of life fading.
FREEBOROUGH: My dad was an electrician for Ford Motor Company when I was growing up. I mean, I don't think there are any people in Michigan who don't have some sort of automotive touch to their lives.
KING: GM's roots in Lansing go back more than 100 years. "Generous Motors" was the favorite nickname when Brad Fredline was growing up. Both grandfathers retired from GM. His father, too.
BRAD FREDLINE, PRESIDENT, UAW LOCAL 602: You graduated on a Friday, by Monday you were working at the factory. You knew you had a rock-solid job for 30 years, you buy a little place up north and retire. Those days are gone, I'm afraid.
There's no consumer confidence. There's no hope for the future. And that affects our communities, our homes and our families. There's a lot of despair out there in Michigan.
(END VIDEOTAPE)
PHILLIPS: Michigan is struggling with the highest rate of unemployment in the country, creeping now toward 11 percent.
