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Protests at G-20; President Obama in London; Taliban's New Threat to U.S.; What Do the Protestors Want?; President, First Lady Set to Visit Palace; Sin Taxes Skyrocket

Aired April 01, 2009 - 11:00   ET

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

TONY HARRIS, CNN ANCHOR: It is Wednesday, April 1st, and here are the top stories in the CNN NEWSROOM.

The president's whirlwind day in London. He meets the British leader at Number 10. Buckingham Palace is next. Mr. Obama's first face-to-face with the Russian president. He plans a trip to Moscow in July.

Take a look at this scene. Rowdy protesters jam London's financial district to show dissent at the system. The heart of British capitalism is targeted -- the Royal Bank of Scotland and the Bank of England.

Good morning, everyone. I'm Tony Harris, and you are in the CNN NEWSROOM.

What do we have? We have protesters, police, the president, and pageantry. Contrasting scenes, to be sure, surrounding the G-20 summit.

We are bringing you all the angles live on the streets of London, as crowds grow larger and rowdier. Police are deployed in force, dealing with the thousands of anti-capitalists, environmentalists, and antiwar groups.

Meanwhile, President Obama is meeting behind closed doors with other world leaders. He wrapped up his face-to-face talks with the presidents of Russia and China.

And First Lady Michelle Obama is spending her day with the wife of British Prime Minister Gordon Brown. Next hour, the Obamas head to Buckingham Palace to visit the queen.

Let's take you to the raucous streets now of London's financial district. Police and security forces trying to keep the upper hand against escalating protests.

Our Phil Black is in the thick of it, and he joins us now on the phone.

And Phil, we are going to roll in some of the latest pictures of these demonstrations. Give us a bit of a play by play, if you will, of what you've been watching today.

PHIL BLACK, CNN CORRESPONDENT: Hello, Tony. Yes, so it's interesting. For the last hour or so, the crowd has been very quiet, milling around, doing very little at all. But just in the last seconds, as you were coming to me, there was sudden scuffle between police and protesters, and the police line, in full protective gear, have surged forward. And there was something of a stampede of protesters.

And now the police have reclaimed a lot of the territory that they were happy to let the protesters occupy for pretty much first of the day. But as I say, that was a sudden flash point in an afternoon that has been, well, pretty quiet for the last few hours. That was the last major incident we saw, was a few hours ago, where protesters surged through police lines, managed to encircle the building next to the Bank of England, the Royal Bank of Scotland building, and, actually, some attacked the building and managed to break some of the glasses there -- some of the windows there, I should say -- Tony.

HARRIS: Yes. Phil, if you would, I'm just sort of curious -- we've been watching these scenes all morning -- what is being said? Give us an idea of some of the comments being made by these protesters. Who is the anger targeted at, or what groups, what institutions?

BLACK: Well, they say they're angry with the system, really. Anti-capitalism is the thing that binds them all together here. They blame things like -- in particular, they say the greedy ideas and systems that they believe are responsible for getting the world into the current financial mess that it finds itself in.

Essentially, they've been trying to test or show that anger, if you like. But they haven't really had too many opportunities, because the police have had them contained. They have had their lines, they've allowed them to occupy a certain amount of space, but not really allowed them to go beyond that.

And so every so often, as they grew frustrated, standing around, not doing too much, they would then test those police lines. And it was at those points that you would see the odd scuffle break out -- Tony.

HARRIS: And Phil, if you would, this is a very difficult day, it seems to me, for the police there in London. There is, on the one hand, trying to control the crowds at what's going to eventually be a number of different sites throughout the day. But there is also the added responsibility of getting all of these world leaders, in addition to their entourages, from location to location for the summit events. Correct?

BLACK: Yes, indeed. The police have been describing their workload this week as unprecedented. And as you say, it is twofold.

On one hand, that massive security operation to deal with all those world leaders who are in town at the moment. And on the other hand, it's very significant, what they describe as a public order operation. They always knew that today was going to be the big day in terms of testing their public order preparations. This was the day where they thought there could be violence or rioting on the streets. This would be the day.

And so, yes, there are thousands of police on duty across London today. All leaves (ph) have been canceled. But they say they can handle it -- Tony.

HARRIS: And am I right in suggesting the message from the prime minister has been, look, police will allow you to protest, but they're going to be very aggressive at keeping the peace and order?

BLACK: Absolutely. Protests are very well tolerated across Britain, generally. It's only when they turn violent that the police feel the need to move in.

HARRIS: Yes.

BLACK: But it has been preparing for that possibility as much as anything else that has been a drain on police resources -- Tony.

HARRIS: OK, Phil. Appreciate it. We wanted to have you talk us through that as we were bringing in the very latest pictures of the protesters, and get those pictures on the air.

Phil Black for us on the streets of London's financial district.

You know, away from the fray, President Obama is pushing ahead with his global economic agenda. He and the British prime minister, Gordon Brown, stressing the need for action at a joint news conference.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: All of us here in London have the responsibility to act with a sense of urgency, and every nation that will be participating has been affected by a crisis that has cost us so much in terms of jobs, savings and the economic security of our citizens. So make no mistake, we are facing the most severe economic crisis since World War II.

GORDON BROWN, BRITISH PRIME MINISTER: The truth is that today's global problems require global solutions. And at this week's summit, when leaders representing 85 percent of the world's economy are gathering together, this summit cannot simply agree to the lowest common denominator. We must stand united in our determination to do whatever is necessary.

(END VIDEO CLIP)

HARRIS: Well, following that session, President Obama held back- to-back meetings with the presidents of Russia and China.

Live now to our White House Correspondent Suzanne Malveaux, who is traveling with President Obama.

And Suzanne, first of all, good to see you.

We know that all presidents, particularly when they're taking these trips, but in their day-to-day, like to keep on message. So what is President Obama's message for the day?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Tony, you saw it. Right after his meeting with Prime Minister Gordon Brown, essentially, he was asked whether or not he sees this as the United States' fault, this economic and this global recession that we're all dealing with. And he really tried to show some empathy here, that he understood the frustration, the anger, the protests that are out on the streets.

He says that in some ways, the U.S. was to blame, that they didn't have the sufficient regulatory system in place, a look at these financial institutions. But he also said, hey, England is to share the blame. They share some similar problems.

And then he kind of put that aside. He said, I don't want to focus on the blame, I want to focus on looking forward to the solution.

He downplayed the differences between -- you know, you have U.S. and Britain on one side, France and Germany on the other, looking at different ways to deal with this, whether it's economic stimulus, throwing money at this, or regulating the financial institutions. He said we've got more consensus than you can imagine.

And then finally, Tony, I think this really kind of summed it up well. He said he wants to listen, he will listen, as well as lead. That really reflects a different tone in this administration, a change in the way he is doing business, but also a different position of the United States. This is a leader who has to listen at this point, very much in a weakened state when it comes to the economic crisis -- Tony.

HARRIS: Well, Suzanne, we also mentioned that the president went on to back-to-back meetings with the presidents of Russia and China. I'm really curious as to what came out of that meeting with the Russian president, Medvedev.

MALVEAUX: Well, you know, there has been a lot of tension, a lot of people have been talking about this, kind of a frosty relationship. We saw the body language between these two leaders, and Tony, you would not imagine that that was the case at all. Perhaps a little defrost here.

The two of them looking at each other, very warmly, patting each other on the back, eye to eye, making jokes, that kind of thing. The news coming out of this, however, is they are basically going to start renegotiating cutting down on nuclear arms, their arsenals, the arms treaty that is basically going to expire in December, going to take another look at that.

Obviously, meeting again in Moscow in July. So that is something that is concrete, that has come out of this meeting.

HARRIS: Yes.

MALVEAUX: Both of those leaders seem rather proud in making that announcement today. It's part of what the president talked about, pushing the reset button when it comes to relations with Russia -- Tony.

HARRIS: Yes, something solid, in pocket.

All right. Suzanne Malveaux, our White House correspondent, traveling with the president in London.

Suzanne, as always, great to talk to you. Thank you.

Ahead of the meeting of the G-20 leaders tomorrow, a meeting today of the first wives club. First Lady Michelle Obama visited with Sarah Brown, the wife of Prime Minister Gordon Brown. Mrs. Obama has wowed the crowds in London. One newspaper dubbed her "Mighty Michelle."

After their meeting at Number 10 Downing Street, Mrs. Obama and Mrs. Brown visited a cancer care center in London. They took part in the ceremony marking the center's first birthday and they visited there with patients.

A proven terrorist issues a chilling threat to the United States. He says his attack here will amaze the world.

Should we take his warning seriously?

(COMMERCIAL BREAK)

HARRIS: And happening right now in Washington, U.S. General David Petraeus briefing Congress on the new military strategy to fight the insurgency in Afghanistan. Here's a quick breakdown for you.

Petraeus says the additional forces being sent to the area will be responsible for, among other things, cracking down on opium production, supporting the development of government, and providing security for the elections coming in August.

Here is General Petraeus.

(BEGIN VIDEO CLIP)

GEN. DAVID PETRAEUS, U.S. CENTCOM COMMANDER: Although the additional resources will be applied in different ways on either side of the Durand Line, Afghanistan and Pakistan comprise a single theater that requires comprehensive whole (ph) of governments approaches that are closely coordinated. To achieve that level of coordination, Ambassador Holbrooke and I will work closely with our ambassadors and our counterparts from other countries and the host nations.

This morning, I'll briefly discuss the military aspects of the new strategy, noting, however, that while additional military forces clearly are necessary in Afghanistan, they will not by themselves be sufficient to achieve our objectives. It is important that the civilian requirements for Afghanistan and Pakistan be fully met, as well. To that end, it is essential that the respective departments, State and USAID, foremost among them, be provided the resources necessary to implement the strategy.

And I agree with you, Mr. Chairman, on the value of the Afghan national security program, as well.

(END VIDEO CLIP)

HARRIS: So we are monitoring the hearing, and we will keep you posted on any additional developments.

Just days after a deadly attack on a police academy in Pakistan, the Taliban's chief there vows to strike the United States. He says the attack will amaze the world.

So is it idle talk or legitimate concern?

CNN Homeland Security Correspondent Jeanne Meserve takes a look.

(BEGIN VIDEOTAPE)

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT (voice-over): A Pakistani tribal leader is claiming responsibility for the shootout at a police academy in Lahore, Pakistan, Monday, and is threatening further violence in the U.S.

In an interview with The Associated Press, Baitullah Mehsud says, "Soon we will launch an attack in Washington and the White House that will amaze everyone in the world."

FRANCES FRAGOS TOWNSEND, CNN NATIONAL SECURITY CONTRIBUTOR: He has access to al Qaeda and its strategic resources, including those that could be deployed against the United States. And so when Mehsud talks about a threat to Washington, D.C., I can't imagine anybody wouldn't take that seriously.

MESERVE: But current U.S. counterterrorism officials say it is unlikely Mehsud could carry out an attack in the U.S. One describes Mehsud "chiefly as a regional player... a dangerous one... who moves in the same circles of al Qaeda but not part of al Qaeda."

The U.S. has put a $5 million price tag on Mehsud's head, saying he poses a clear thread to American persons and interests in the region. He is also viewed as a serious threat to Pakistan. The assassination of former Pakistani president Benazir Bhutto was pinned on Mehsud by former CIA Director Michael Hayden. Though officials are skeptical that anyone serious about staging a terrorist attack in the U.S. would advertise it so specifically and publicly, some experts are not.

STEVE COLL, PRESIDENT, NEW AMERICA FOUNDATION: He sees the United States as his enemy. American drones are trying to kill him, frankly.

MESERVE (on camera): The FBI says it is not aware of any imminent or specific threats to the U.S. The agency points out that Mehsud has boasted before that he would hit the homeland, but no attacks have materialized.

Jeanne Meserve, CNN, Washington.

(END VIDEOTAPE)

HARRIS: You know, every little bit helps, doesn't it? And here comes that stimulus bonus you have been waiting for.

And, of course, the other story we're keeping a close eye on, the protests going on right now in London's financial district.

Remind me here, everyone, these are live pictures we've got up right now?

OK. Good. Live pictures right now.

We'll get another update in just a couple of minutes from our Phil Black, who is on the streets right now. That's coming up in just minutes, right here in the CNN NEWSROOM.

(COMMERCIAL BREAK)

HARRIS: The recession marks a milestone today. Certainly nothing to celebrate. Today, April 1st, the recession begins its 17th month. That makes the economic downturn the longest since the Great Depression.

The recessions that began in 1973 and 1981 lasted 16 months. For the record, the Great Depression officially lasted 43 months.

3M is cutting 1,200 jobs worldwide. Less than half of the positions are in the United States. The new cuts are on top of 2,400 announced at the end of 2008. 3M, in case you're not familiar with this, makes products as varied as surgical supplies, electronic displays, Scotch tape, and Post-it notes. It has operations in 60 countries.

You know, starting today, most workers will see a little something extra in their paychecks.

Personal Finance Editor Gerri Willis is here.

And Gerri, if you would -- first of all good, to see you.

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: It's good to see you, Tony, Tony, Tony.

HARRIS: Yes.

Spend some time with Gerri. That's always a treat.

Explain this Making Working Pay tax credit, if you would, please.

WILLIS: All right. Let's get started with how much this tax credit is.

Keep in mind that just how much extra cash you get will depend on your marital status, your salary, and how many allowances or exemptions you take. Now, normally, you take the tax credit, it's a dollar-per-dollar reduction in your taxes when you file. But the administration here really trying to goose the economy, and that means getting money out faster.

So a little less will be withheld from each paycheck for federal income tax. Here's what you can expect to see.

All right. Singles will see an extra 10 to 15 bucks per paycheck weekly. If you're married, you're filing jointly, you'll see $15 to $20 extra per paycheck.

Now, annually, that turns out to be about $400 a year for single filers, $800 a year for joint filers. And there is nothing you really have to do to claim this. When your employer adopts the new withholding tables, you will get it automatically.

HARRIS: Got you.

WILLIS: So people can get the credit by reducing their estimated tax payments or claiming it when they file their '09 return next year.

HARRIS: Will everyone qualify for the credit?

WILLIS: Well, no, frankly.

HARRIS: OK.

WILLIS: A lot of people will be left out -- those with high incomes. For married couples filing jointly, the credit phases out after $150,000 in annual income. For singles, it phases out after $75,000 in adjusted gross income.

If you're on social security, no, you can't be a part of this either. Remember, you have to be making an income to qualify.

Dependents -- let's say your teenager is working, they have a part-time job. They can't be a part of it either, because they're probably listed as a dependent on your tax return.

Tony, if you have any other questions, people watching you today, sent them to me at gerri@cnn.com. We love to hear from you.

HARRIS: Stand by. The questions are on their way, Gerri.

Good to see you. Thank you.

WILLIS: Great to see you.

HARRIS: And check out our special report, "America's Money Crisis." Again, that's at CNNMoney.com. And that guy, Ali Velshi, we're going to talk to him in just a couple of minutes.

President Obama's trip to England brings out thousands of protesters today. The protesters would be there even if the president wasn't there.

Take a look at this. What is all the fuss about? We are headed live back to London. A global outrage over the financial crisis is really converging on that city. (COMMERCIAL BREAK)

HARRIS: So we are all over today's action in London. The G-20 summit kicks off with a working dinner just a few hours from now.

Look at these pictures, live pictures. No, I don't think these are live pictures. These are pictures just into the CNN NEWSROOM from just a short time ago, from just out front of the Bank of England. This is that protest in front of the Bank of England in London.

We are live on the scene as more and more protesters jam the streets of the British capital.

And thank you -- these are live pictures now.

Police, as you can imagine, are out in force dealing with the thousands of anti-capitalists, environmentalists and antiwar groups.

President Obama, meanwhile, pushing ahead with his economic agenda. He has been meeting today with the leaders of Britain, Russia and China, ahead of the summit.

First Lady Michelle Obama is wowing the Brits and causing quite a stir, looking fetching there. She visited a cancer care center with Sarah Brown today, the wife of Prime Minister Gordon Brown. The Obamas head to Buckingham Palace shortly to see the queen. We will take you there live next hour for the royal welcome.

But let's get back to those protests.

Anger in the streets. Protests ahead of the G-20 summit in London have been building throughout the day, and more demonstrations are in the works.

Protesters have targeted the U.S. Embassy, the Bank of England. We showed you pictures from there just a short time ago. We'll do it again. And the Royal Bank of Scotland.

Live pictures now.

Other demonstrations are expected at the stock exchange and outside Buckingham Palace.

Phil Black has been covering the protests, and he joins me now on the phone.

And Phil, if we could, let's start by doing this -- give me a fix on your location, and then, if you would, give us the scene over the last 25, 30 minutes or so, because the activity at your location has certainly picked up.

BLACK: Yes, certainly, Tony.

I'm standing outside the Bank of England in London's financial district. This was always expected to be the biggest of all the protests planned for the day, and it certainly panned out that way. Police estimate around 4,000 people are now currently in the streets, immediately surrounding this building. And they have been hemmed in by police lines. Police are not letting any more people come or go, and they haven't been letting people do that for some hours now.

Now, people are reacting to that in different ways. Some people are just keen to mill around and -- it almost does resemble a party. In other areas, though, there are protesters continuously testing the police lines.

And every so often, they get -- the protesters, and particularly the more aggressive ones, seem to be quite frustrated by the police tactics, whereby the police just simply hem them in, stand there and don't do much else. So every so often, that frustration boils over, and they will test those lines.

And they broke through a couple of times earlier today. And that was when we saw some -- a major crowd surge, if you like, up the street, next to the Bank of England, surrounding an adjoining building, the Royal Bank of Scotland. And there was some reasonably serious vandalism carried out on that building there. Some of the more aggressive protesters attacked the windows, a number of windows broken.

At the moment, though, things are calming down. There is no obvious sign of just how long this is going to last for, though. Because police say they're not letting anyone come or go, as I say, and that's beginning to frustrate some people. But these people penned in here all night - certainly, some of the protesters are getting a little bored and they just want to go home - Tony.

HARRIS: Hey, Phil, just a quick question. You mentioned that this was always going to be probably the biggest of the protests. I'm wondering, and I guess it's understandable. I mentioned a short time ago in a quick tease to your upcoming visit with us here that a lot of the world reaction, it seems, to this financial crisis has converged on your location there in London.

Is this home-grown, or do you get a sense that there are people from all parts of the world who have, in fact, converged on that location there in London?

BLACK: Hard to say, Tony. Certain, London being a very international city means there are a lot of accents here, but that's not unusual.

HARRIS: Yes.

BLACK: Initially, police said they did fear this could attract veteran protesters from across the world. The sort that have caused fairly ugly scenes at economic summits over the last ten years or so. There's no one obviously that would seem to fit into that camp. But I'm spoken to a few people here today who say they have come from across Europe just to be here and to take part in this action - Tony.

HARRIS: Yes, good stuff. All right, Phil Black for us. Phil, appreciate it, thank you.

BLACK: So what do the protesters want? A group calling itself the "G-20 Meltdown" organized the event. They're calling for an end to capitalism, and to, quote, "fair distribution of wealth."

Here is the website. Let's put it up here for you in just a moment. And you'll see it looks pretty wild.

There some of the participants, obviously.

It's titled, "G-20 Meltdown in the City" and invites people to what they call, quote, "The Party."

The site reads, quote, "Lost your home, lost your job, lost your savings or pension? This party is for you."

The group's manifesto says it wants to outs the bankers from power, get rid of the, quote, "corrupt politicians," guarantee everyone a job, a home, a future. Establish a government by the people, abolish all borders, and demands sustainable living to "stop the climate chaos."

A lot of goals there.

All right. From protest to pageantry. Next hour, President Obama and the first lady are due to arrive at Buckingham Palace for a meeting with the queen.

CNN's Don Riddell joins us live from the palace with a preview.

And I, look, I got to tell you something tell you, Don, I'm looking forward to this. And I know the president has made comments recently suggesting he and the first lady are looking forward to meeting the queen and the duke.

DON RIDDELL, CNN CORRESPONDENT: Yes, very much so, Tony. And not the least because they have had an extremely busy day of diplomat meetings. President Obama has met the prime minister and the host of the G-20 summit, Gordon Brown. Also, very, very high-profile meeting with the Russian president, Dmitry Medvedev, and also the Chinese president, Hu Jintao.

So after all of that weighty stuff, I imagine, he is looking for toward to a break and a cup of tea and a chat with the queen. Very, very much looking forward to it.

It's very, very unusual, actually, that President Obama will be meeting with the queen today. Not that the queen hasn't met with U.S. presidents in the past, but she would normally only grant a private audience with a president who was here on a state visit. And Mr. Obama is not here on a state visit this week.

But perhaps his star power has insured him 25 or 30 minutes of private time with the queen. And after he has had that meeting, and the scones and the tea and biscuits, the rest of the G-20 summit leaders will meet the queen also for a brief meeting and, of course, the official photograph.

HARRIS: And Don, if you would, have you been checking Leek Street? What's the reaction to Michelle Obama in London?

RIDDELL: Lots of coverage of Michelle Obama. Not necessarily front-page material, because as you can imagine, Mr. Obama himself has gone at the front pages.

And actually, I have in my hand the "Evening Standard," which the top London newspaper here.

HARRIS: Nice. I happened to know that you would have that, by the way.

RIDDELL: And as you can see, the front page here is to violence.

We read each other's minds, I guess.

That is, a protester bloodied and on the ground having clearly had a bit of a run-in with the police.

But as you can see, at the bottom of the page, there is still the meeting at number 10.

And the British media really are playing up the fact that Gordon Brown had a very encouraging meeting with Mr. Obama. We used to talk about the special relationship between Britain and America, but in the last few months, it seemed that that had been slightly watered down and perhaps the relationship wasn't quite so special anymore. But it seems from the words coming out of their meeting this morning, that they are the best of friends again with Britain and America, once again, strong allies.

HARRIS: Can't wait for this meet and greet next hour and that key moment, the 25-minute private meeting with the queen and the duke. I can't wait for that to happen.

All right, Don, good to see you. Don Riddell for us. Thanks, Don.

Protecting the president on his trip abroad. A detailed look at the security precautions for President Obama and other leaders at the G-20 summit. That's ahead in our next hour.

For many people, one of the simple pleasure left in this recession is a smoke and a drink, but starting today, it is going to cost you more. In some cases, man, a lot more. Susan Lisovicz is at the New York Stock Exchange with details on why for many states this is actually something of a survival tactic.

Good to see you, Susan.

SUSAN LISOVICZ, CNN CORRESPONDENT: Hello, Tony.

And these are two of the most highly taxed products already. Today, federal tobacco tax is jumping from 39 cents to $1.01 a pack. The revenue is going to the State Children's Health Insurance program.

But many states are also increasing so-called sin taxes due to budget deficits from a decline in sales tax and income tax receipts, the recession. Kentucky today, for instance, is doubling its cigarette tax and its raising its sales tax on alcohol to six percent. Last month, protesters there poured bourbon, a very famous export from Kentucky, on the capitol's front steps. But Kentucky is faced with a $450 million revenue shortfall.

Tony, at least 12 other states are proposing raising alcohol taxes from New York to California.

Well, we're seeing here on Wall Street - well, I can't say we're smoking, but we do have a rally. Stocks reversed themselves after a better than expected housing report. The Dow is up 62 points, around one percent. The Nasdaq is up half a percent, Tony.

HARRIS: What was in the housing report? Can we summarize quickly? Or...

LISOVICZ: Pending home sales increased. The market expected it to be flat. So that's an improvement. Also, mortgage applications increased. A lot of that was refi, but signs of life in the housing market, good thing.

HARRIS: We'll take it. All right, Susan, thank you.

LISOVICZ: You're welcome.

HARRIS: Let's switch gears a bit here, literally. GM and Ford release March sales figures in a few hours. Analysts expect the numbers to remain pretty dismal. Chief business correspondent - when was the last time we spent time with Ali Velshi?

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Hey.

HARRIS: Hey, how are you?

VELSHI: It's good to see you, my friend.

HARRIS: Doggone it, you're doing your radio show today?

VELSHI: I'm doing the radio show. We're talking about cars. We're talking about G-20. We're talking about these markets, which have been doing OK. But, yes, lots to talk about this week, Tony.

HARRIS: Well, how about this, so auto sales. Sales were down - what? - 39 percent the first two months of the year.

VELSHI: Yes. Yes.

HARRIS: Any reason to think that March will be any better?

VELSHI: No. Because sales are down for a reason. And that reason is that we have a credit crunch, we have a recession, and we have jobs being lost. So these are three things preventing people from buying a car.

So if you are - let's say you're you or me. You're employed, you would like to buy a car, maybe you don't have perfect credit. Well, you'd be surprised at how high your credit score has to be to get financing to buy a car right now. You know, you think you've got really - you've got pretty good credit, but if it's not really good, you can't get financing. That's problem number one.

Problem number two, we're in a recession, Tony. People are having conversations with their husbands and wives and kids about the fact that, you know what? Let this clunker go longer. We don't actually have to have a brand-new car right now. It's not the top of people's priority to be buying a car in a recession.

And number three, you could be - even if you - you think it is your priority, you might be worried that you're losing your job. Now, Hyundai came out with an offer that if you lose your job and buy a car from them, you can take the car back. Ford came out with an offer that said if you buy a car from them and you lose your job and you qualify for unemployment, they'll pay 12 months up to $700 a month. GM said it will pay nine months up to $500 a month. So they're trying to get people doing that.

But that's only - you know, there are lots of reasons why people aren't buying cars right now. And until the economy changes, I don't see that changing.

HARRIS: After the president's announcement yesterday, is bankruptcy more or less likely for GM?

VELSHI: I think it's probably more likely. And part of that problem is that there are a lot of people who thought bankruptcy for GM - and when I say bankruptcy, I don't mean the company shutting down, but some sort of reorganization.

HARRIS: A rinse. Have you heard this term of art, the rinse?

VELSHI: Yes. I mean, look. We have got to figure out a way to - Ford figured this out in 2005. They said the market is never going to be what it was. And that's got nothing to do with the recession. That's got to do with the fact that we have a mature market.

In India and Brazil and China, there are people who are aspiring to their first car. There are millions and millions of people who will get into their first car.

In America, we've all got a lot of cars. We're not going to be a growth market. Ford recognized this, they downsized their company, and that's why they're nimble and haven't been able to - haven't had to take money from the government this time around.

The new GM might be a substantially smaller, more targeted, more efficient car - more efficient car company. But they've got to make that decision now. And I think they're going to make it.

The danger, of course, is that these companies have said bankruptcy means the end of the company. Not downsizing. Apparently there's some...

HARRIS: Isn't that the reason Rick Wagoner is gone? And there are probably a whole bunch of other reasons. But is it he would not even entertain a conversation about bankruptcy for GM, and now he is out. Does that also signal that this administration almost at all costs will do whatever is necessary to save GM?

VELSHI: Well, you know, you make an interesting point. Because a number of us have spoken to Rick Wagoner one-on-one. And I remember months ago having done this before the height of this crisis. I met with him at a plant in Ohio, and I said, let's talk about the bankruptcy. And he said, we're not - that's not an active consideration of ours. Well, it's an active consideration for everybody else, so I think Rick Wagoner was a good guy at a bad time.

But I think the new signal is, look, whoever is in the top job has got to at least entertain the conversation and have the right meetings with the right people about the possibility of bankruptcy. And if you're not going to do that, the government can't continue to throw taxpayer money at this.

So I think you might be on to something there, Tony. I think the government is saying, we're going to help you out, try to keep you out of trouble, but we need you to carry your own water for a while.

HARRIS: You got it.

Hey, I'll let you get back to your calls. It was good to see you.

VELSHI: My pleasure to talk to you again. It's been too long, my friend.

HARRIS: yes, it really has. Thanks, Ali.

VELSHI: Tony Harris.

HARRIS: We just heard about the sin tax from Susan Lisovicz, and we're going to hear from you about the extra pay for smoking in just a couple of minutes.

Let's get those live pictures up again. A protest going on as we've been mentioning throughout the morning. This looks more like the start of a rally that's actually going to take place. We're going to keep an eye on the protests, this rally that seems to be taking shape, throughout the day, obviously, here in the CNN NEWSROOM.

Pictures from a little earlier when things were getting a little chippy.

We're back in a moment.

(COMMERCIAL BREAK)

HARRIS: When you think of spring break, Palm Beach certainly comes to mind. But I don't think this is the picture you want to see. (COMMERCIAL BREAK)

HARRIS: Florida left to pick up the pieces after a powerful storm. Torrential rain, flooding and a tornado that touched down in Palm Beach Gardens. Take a look at some of these pictures here. No major damage has been reported, but the storm knocked out power to thousands.

And folks living along the Red River - we'll show you these pictures now - are breathing a bit of a sigh of relief, at least right now. The water level, while still high, has fallen behind the sandbag height. Shops that have been closed for the last week or so are open this morning, but officials are still monitoring the river as yesterday's blizzard melts.

(WEATHER REPORT)

HARRIS: If you were ready to go out for your midday smoking break, be warned. The tax man is right there over your shoulder. Let's take a trip now to CNN.com's iReport Desk and check in with one of the fine folks helping us run things down there at our iReport - oh, look at Katie, Katie, Katie. Katie Garr with us today.

Katie, good to see you, Tony.

KATIE HAWKINS-GAAR, CNN.COM PRODUCER: Good to see you, Tony.

HARRIS: Hey, you know, we're talking about the sin tax just a moment ago with Susan Lisovicz. I would imagine there are people who are smoking hot - ha-ha, sorry about the pun - over this. You want to smoke some cigarettes, you've got to take out a loan.

HAWKINS-GAAR: Right, exactly. It's the single-largest federal tobacco increase from 39 cents to $1.01. And we decided to ask iReporters whether they thought this as was fair or not. We got impassioned responses.

HARRIS: Oh, good, good, good.

HAWKINS-GAAR: Yes. So let's look at the first one from David Seaman and he thinks it's totally fair. Let's take a look.

(BEGIN VIDEO CLIP)

DAVID SEAMAN, CNN IREPORTER: The cost to society of someone 20 or 30 years from now getting lung cancer, coughing and wheezing all over the place, and needing to be hospitalized, possibly for a long period of time, possibly even dying, that cost to society is so much higher than these taxes.

You know what? Tax the hell out of cigarettes, just get people to quit, and let's use that tax revenue for good things, which is what is happening. It's being used for children's health care, which you can't really argue with. You can't argue with helping sick kids.

(END VIDEO CLIP) HAWKINS-GAAR: So if you think that was a strong argument, just wait. Gerald Dimmitt has smoked for more than five decades, and he's not happy about the tobacco tax.

Let's listen to his commentary.

(BEGIN VIDEO CLIP)

GERALD DIMMITT, CNN IREPORTER: I'm 66-years-old and I smoke. I've smoked for 53 of those years. Look at me. I'm healthy. Hear my lungs, they are clear. I don't urge for other people to smoke.

I work two-and-a-half jobs. I have to, to pay all of the taxes. Is there anything that you don't tax? From birth through life? Even to death, you tax us.

This is a tax on tobacco that's unfair to us that are poor, or old. I want to stay away from you, and I want you to stay out of my life.

(END VIDEO CLIP)

HARRIS: Wow. Geez!

HAWKINS-GAAR: Yes, so there's one of those smoking-hot iReporters. He is not happy.

HARRIS: He looks pretty intense.

HAWKINS-GAAR: Yes, definitely. So he echoes what a lot of people are saying, that the tax is unfair to the poor. And others think that maybe the higher prices will convince people to quit. So, the debate continues.

HARRIS: We'll see. Katie, appreciate it. Good to see you. Thank you, lady.

HAWKINS-GAAR: Thank you.

HARRIS: All right, live pictures now. Let's take you back to London, the site of the G-20 summit that gets under way tomorrow.

There is the man who is threatening to walk out on tomorrow's summit if something big doesn't happen. If there isn't some major agreement really on regulating the financial sector. That is the French president, Sarkozy, and at the side is the German chancellor - no in the shot right now - Angela Merkel.

We'll monitor this news conference. Maybe we'll turn it around - turn it around a little bit a little later in the newscast. You're in the CNN NEWSROOM. A quick break and we're right back.

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HARRIS: Got a quick update for you on the Bernie Madoff story. Of course Bernie Madoff is in prison now for his elaborate Ponzi scheme bilking people out of hard-earned money in to the toll of billions of dollars really. U.S. Marshals, as you can see here, in the process of seizing what is a custom made boat that was owned by Bernie Madoff. It's a 55-foot boat named "Bull."

The boat apparently was built in 1969. Its estimated worth is $800,000. We're told the boat is in great, great shape. It is an antique that has been well-taken care of, according to the marshals. And we fully expect - look at that! Right there on the side of the boat there, more property of Madoff's is expected to be seized later today.

An update on our big stories ahead in the next hour of CNN NEWSROOM. Take a look here. Venting their anger on the streets of London's financial district, protestors from environmentalists to anti-capitalists are out in force. We will have a live update on the demonstrations ahead of the G-20 summit.

A brush with royalty. Can't wait for this. President and Mrs. Obama meet with Queen Elizabeth. Live coverage of their arrival at Buckingham Palace. And we will talk royal protocol with our Richard Quest. You won't want to miss that.

And President Obama on the world stage. An update on his meeting with the British prime minister and other leaders and the efforts to end the global financial crisis.

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HARRIS: The Obama Justice Department is dropping its case against former Alaska Senator Ted Stevens. A decision by the attorney general, Eric Holder, means Stevens' conviction would be voided. A jury convicted the republican of corruption last fall, but there have been persistent claims of prosecutorial misconduct. Stevens' age, 85, and his election defeat were also factors.

We asked what you think about this. Josh Levs has been tracking your responses.

What have you been getting, Josh.

JOSH LEVS, CNN CORRESPONDENT: You know, Tony, when I read you the responses I try to give you the balance of what people are writing us, right? People are hating this decision. I mean, the initial reaction is overwhelmingly against it.

Let's zoom in, just see some of the e-mails here.

Luis writes, "This is what we the citizens have come to expect from the Justice Department. This senator does not deserve special treatment. Why not let him appeal his conviction by a jury of his peers?"

And look at the one below this from Kenneth, "So much for the integrity of Eric Holder. He should be immediately be replaced with someone who has a sense of justice," Tony.

Here's Lisa, "This is just another situation that the privileged get away with crimes that I would never get away with."

And one more, from Norman, "There's only one term that can be used in such a situation: A miscarriage of justice."

Now, Tony, I did find this amid the pile. I'll read it to you. From Judith, "Senator Stevens was targeted by those who wanted to remove a senior Senate force before he could successfully push a positive vote to allow drilling in Anwar. The representatives of the oil drilling nations get my vote for the guilty party."

So, I tell you, Tony, that's the balance that they're saying on my Facebook page - JoshLevsCNN. Overall, people are opposed to this thing big time.

HARRIS: Man, OK, Josh. And let's see if we can get more on the air next hour.

LEVS: You got it. Sure.

HARRIS: Thank you.