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Aired April 14, 2009 - 09:00   ET

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

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KYRA PHILLIPS, CNN ANCHOR: Short-term pain, long-term gain. The bottom-line economic outlook from President Obama, glimmers of hope, as you heard Drew just say, mixed with low expectations for the year ahead, in a progress report that the White House billed as a major address. The president told an audience at Georgetown University the economy will emerge from this recession stronger and sounder than ever.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Most of all, I want every American to know that each action we take and each action we pursue is driven by a larger vision of America's future, a future where sustained economic growth creates good jobs and rising incomes, a future where prosperity is fueled not by excessive debt or reckless speculation or fleeting profits, but is instead built by skilled, productive workers, by sound investments that will spread opportunity at home and allow this nation to lead the world in the technologies and the innovation and discoveries that will shape the 21st century.

(END VIDEO CLIP)

PHILLIPS: Well, we want to bring back two of the people with big stakes in the president's plans. Kim Thomas, highly educated, but unemployed, living here in Atlanta. John Eller is an underemployed executive living in Kansas City. You've met them throughout the past hour or so. We're going to continue talking to them through the next 60 minutes.

John, let's go ahead and start with you. You listened to the president's speech. Did you hear anything at all that gave you hope considering the situation that you're in right now?

JOHN ELLER, FORMER. MANAGER FOR TELECOMMUNICATIONS COMPANY: I see signs of hope. You know, I see that, you know, that they're trying to attack this recession on all fronts. And what I really liked most about it is that they are going -- the president is going to ensure that there are controls in place that this kind of thing does not happen again. So, I see -- you know, I see what the ideas that he's put forth to the nation that it will eventually trickle down and, you know, help the Americans out of this.

PHILLIPS: And Americans like you and Kim. And I want to point out to our viewers that you're supporting eight children. You used to make six figures. You're now making about $34,000 a year. It's been extremely tough on your family.

Kim, extremely tough for you, too. You lost your husband and you lost your job. You're supporting two girls. One's in college. You're living with your mom to save some money.

Was there anything that the president said that you felt will directly impact you in the next day, week, month?

KIM THOMAS, JOB SEEKER: Well, first of all, I feel that the president's speech will be very helpful to Americans. He is trying his best to, you know, work very hard to make us get out of this recession.

And he increased unemployment benefits. It's been extended. I'm getting an extra $25 a month -- excuse me -- $25 extra a week, which is very, very helpful to my family. And I'm just being very positive and optimistic. I feel that what he's trying to do is stimulate the economy by providing employers with the necessary money to hire employees and not lay off employees, because we have to spend in order to make the economy grow.

PHILLIPS: You know, that's amazing and so humbling, that you appreciate an extra $25 a week. You know, something so many of us spend easily in one day.

Kim, John, we're going to stalk some more throughout the next hour. We're also going to show your e-mails once again, hoping to help you get in contact with possible employers. We hope that that can be the end game here, that we can score something for you as we continue to monitor what the president is saying, as well, on an overall effort to help stimulate this economy.

Stay with me. OK?

ELLER: Thank you.

THOMAS: Thank you.

PHILLIPS: Thanks, guys.

Well, in just a few minutes, our T.J. Holmes will check in from the atrium here in the CNN Center with more feedback from the president's speech.

Also right here in Atlanta, Fed chief Ben Bernanke talking to students at Morehouse University. He agrees with the president that "the sharp decline in economic activity may be slowing," but says the key to sustainable recovery is a stabilized banking system and credit market.

April 14th, the tax man is licking his chops. Maybe you're worried. Maybe you think he's going to be all over your case this year.

Well, let's find out who needs to be worried for sure.

Just a short time ago, I talked with the tax man. Not a tax man. The tax man, IRS Commissioner Doug Shulman.

(BEGIN VIDEOTAPE)

DOUGLAS SHULMAN, IRS COMMISSIONER: We're very focused on high net worth individuals. We're very focused on international tax evasion. And so, we run both robust enforcement programs, as well as world-class service programs.

PHILLIPS: So, are you going after the richer people, the bigger companies? Is that more of a priority than just average Joe taxpayer when it comes to audits right now?

SHULMAN: It is, absolutely. Over the past five years, we doubled the percentage of millionaires that we audit every year. We've increased our coverage of large corporations, and that will continue to be a focus.

PHILLIPS: What triggers an audit now, Commissioner?

SHULMAN: Well, it's a pretty complex formula and one that we don't give out, but I will tell you that there's a number of factors.

PHILLIPS: For good reason.

SHULMAN: We look for different indicators of noncompliance. We look for numbers that don't seem to add up or don't make a lot of sense. So, there's a number of things that can trigger an audit.

What I will tell you is your average American worker who gets a paycheck and a W-2 at the end of the year is usually very compliant. For those people, we actually see their information at the end of the year because their employer sends it to us, and we can quickly match with our computers and know if there's a problem. We have higher audit rates with more complicated returns where we don't get as much clear information.

(END VIDEOTAPE)

PHILLIPS: Hey, and if you want to know more, you can always hop on to IRS.gov. It's actually got a section of last-minute tips, scams to avoid, and all kinds of help for information, even special tax breaks that may include you. Once again, IRS.gov.

No one totally escapes the tax man. So who's paying the most taxes, who's paying the least, and how heavy is our burden?

Christine Romans breaks it down for us.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Kyra, don't blame the IRS. They just collect the taxes. It's Congress that writes the laws making up 16,000 pages of tax code in this country. But we thought you'd like to know who pays what. The answers might surprise you.

(BEGIN VIDEOTAPE) ROMANS (voice-over): Think of all you spend on food, clothing, and housing. Americans on average spend more on taxes than all of that combined. And it's not just the dreaded federal income tax.

UNIDENTIFIED FEMALE: There's different pockets of state income tax. There's city income tax. There's sales tax. And states, as we know, and localities get really creative with sales tax. And then real estate property taxes.

ROMANS: Americans love to hate the tax man, but consider this: America's tax burden compared with the rest of the world. Your taxes are low relative to most other developed nations. Less than in Japan, Australia, Canada, Germany, the U.K., France, and Sweden, where taxes pay for socialized medicines and other benefits.

In the United States, it varies depending on where you live. Alaska leads the states with the lowest tax burden. These states, including New Jersey, Connecticut, and California, have the highest.

Rich investment bankers aren't so popular these days, but...

LEN BURMAN, TAX POLICY CENTER: The richest one in five Americans pays 97 percent of their overall individual income tax.

ROMANS: And tax experts note the share paid by companies has been declining.

Who doesn't pay? Seniors living solely on Social Security and many low-income families with children thanks to refundable tax credits. But that's income tax.

BURMAN: There's nobody who escapes tax entirely unless they're a hermit living far, far away where they don't have any cash transactions.

(END VIDEOTAPE)

ROMANS: The tax code is front and center. And current efforts to stimulate the ailing economy, your jobless benefits this year will be tax free on next year's return. And the IRS wants you to know you can claim a credit for buying a new car or a new house thanks to the economic stimulus passed by Congress -- Kyra.

PHILLIPS: Christine Romans, thanks so much.

And we're going to push forward, "The Real Deal" on your taxes, in just a few minutes. Personal Finance Editor Gerri Willis will run down some tax blunder that you don't want to make. They're common, costly, and avoidable.

This may be a dismal year for the economy, but it's a banner year for pork. So claims the watchdog group Citizens Against Government Waste. Today, the group unveiled its pig book, a list of so-called pork-barrel projects and spending bills for fiscal 2009. They include $1.8 million for swine odor and manure management research in Iowa; $1.9 million for a water taxi service in Connecticut. All told, the group cites 10,160 projects worth $19.6 billion.

Well, nothing says recovery like a healthy profit, and one or two-thirds billion dollars is a pretty good quarter in anybody's book. That's what Goldman Sachs booked in the first quarter of this year, easily beating expectations and spurring plans to quickly pay back the $10 billion taxpayer dollars it took last fall.

Goldman is the second major bank in less than a week reporting a major bottom-line rebound. Wells Fargo was the first.

Let's take a look at the Dow Industrials right now, down 145 points there on the Big Board. We'll follow all the economic numbers, of course.

Powerful storms take aim at Florida. Forecasters say so far at least two tornadoes have touched down in the Tampa Bay area. We're going to find out from Chad Myers which areas are still in the danger zone.

(COMMERCIAL BREAK)

(WEATHER REPORT)

(COMMERCIAL BREAK)

PHILLIPS: Well, there's some common tax blunders out there, and you don't want to trip over them, especially with the deadline tomorrow night.

Personal Finance Editor Gerri Willis here to help us out -- Gerri.

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Hi there, Kyra.

Yes, time is running out. If you're rushing to get your taxes done, you want to avoid the most common errors. You'd be surprised what they see.

Here's what the IRS commissioner had to say.

(BEGIN VIDEO CLIP)

SHULMAN: The biggest errors that happen every year are math errors, simple miscalculations and not adding properly; not transcribing your Social Security number correctly; not signing your tax return or a check, if you send us one.

(END VIDEO CLIP)

WILLIS: All right, so you can avoid those. But you do need to be careful. Remember, errors may delay the processing of your return -- Kyra.

PHILLIPS: All right. Well, what are some of the most costly errors? WILLIS: Well, overlooking tax deductions that you're owed. It can be expensive. Make sure you're getting everything you're due -- charitable contributions. Make sure you remember the big things, that you drove your car for charity last year, for example, or you made flyers for a local fund-raiser. All of that can be deducted.

Refinancing points, when you refinance your mortgage loan, you can deduct the points you pay over the life of the loan. It may not add up to a whole lot, but it's something.

And the child care credit, you don't want to miss out on this one, especially since it's not a deduction, it's a credit. And that reduces your tax bill dollar for dollar. This is based on your income and your expenses. The maximum you can get is up to $1,000 -- $1,050 for one child and $2,100 for two children or more. That's a lot of money.

Moving expenses -- if you took a new job that required you to move more than 50 miles, you can deduct the cost of the move.

The IRS has a checklist of common errors that you may want to refer to before you send in those taxes. Go to the Web site, IRS.gov. Check it out. They've got great information to help you get ready for Tax Day, tomorrow, about 33 hours from now -- Kyra.

PHILLIPS: All right, Gerri. Thanks.

WILLIS: My pleasure.

PHILLIPS: Well, a vacation should be a great -- well, it would be great to take one about right now, wouldn't it? But with some state refund checks not in the mail yet, some families are going nowhere.

Julia Bagg from CNN affiliate WFMY in Greensboro, North Carolina, reports.

(BEGIN VIDEOTAPE)

JENNIFER LUNDRIGAN, STAYING HOME: Wait, two sets of three?

JULIA BAGG, REPORTER, WFMY (voice-over): They were supposed to be petting dolphins this week, but instead, they're staying occupied in other ways.

LUNDIGRAN: We've waited on this vacation for five years, and we can't go.

BAGG: The Lundrigans didn't go to Sea World because their state tax refund still hasn't arrived. They're expecting nearly $2,000, enough to cover a Florida vacation. They broke the news to their kids just before Easter.

LUNDRIGAN: What a horrible thing for a mom to tell your child. You know, I'm sorry, I told you something and mommy lied. But mommy didn't lie. The state of North Carolina did. UNIDENTIFIED MALE: I would think the credit's going to be better.

BAGG: Tax preparers aren't counting on the state to keep any time promises for returns right now.

DAVID SCHUCK, OWNER, LIBERTY TAX SERVICE: I filed my taxes in the middle of March, and I'm still yet to receive my state refund.

BAGG: With the State Department of Revenue's latest estimate, your money could arrive in eight to 12 weeks if you file right now.

LUNDRIGAN: And a four and a three and a seven...

BAGG: The Lundrigans have already been waiting 10.

LUNDRIGAN: We've done our part. They haven't done theirs, and that's very frustrating to know we've done nothing wrong and my children are being penalized.

(END VIDEOTAPE)

PHILLIPS: Well, back by popular demand, we showed you this Web site yesterday, MSN.com (ph). It's where does your state rank on taxes. And it's actually divided up by gas, cigarettes, beer, and sales.

Well, what caught everybody's attention, what created a lot of e- mails, this section on beer. And we pointed out yesterday that beer taxes in Wyoming actually remain the cheapest place to do your drinking. Per gallon, you pay as little as two cents on tax.

Well, of course you can imagine the crew had a lot of fun responding to this, including my director, Scotty (ph).

Can we get a shot of Scotty (ph) in the control room by chance?

I've got a little special message for you, Scott (ph). OK.

So, here's the deal. So Scott (ph) said, I don't know if I could move the Wyoming. I mean, I love my beer, I love to pay low taxes.

Did you notice how he got that shot up within two seconds?

So I got an e-mail from a viewer, Scotty (ph). This is from Pam K. in Wyoming. And she says, "Hey, why doesn't your director, you know, want to come to Wyoming? Consider it's the natural beauty of our outdoor parks, incredible outdoor sports opportunity, the kind, helpful people. And the low cost of living makes it a haven for people."

So, Scotty (ph), if you want to see what Wyoming is really like, have a couple of cheap beers, contact me. I'll be glad to have you visit us and see what Wyoming is really about."

So Scotty (ph), what do you think? Will you take Pam up on it? All right.

Pam K., thanks for writing in.

There you go. Wyoming, the cheapest place to drink your beer right now, low taxes.

Well, they put their lives on the line at the first sign of danger. And today, the first lady sings the praises of the Secret Service and more.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: The Recovery Act, the bank capitalization program, the housing plan, the strengthening of the non-bank credit market, the auto plan, and our work at the G-20 all have been necessary pieces of the recovery puzzle. They've been designed to increase aggregate demand, to get credit flowing again to families and businesses, and to help families and businesses ride out the storm. And taken together, these actions are starting to generate signs of economic progress.

(END VIDEO CLIP)

PHILLIPS: Well, you saw him live here on CNN. President Obama taking stock of all his plans to bring the nation out of recession. He points out this year -- or the year ahead will still be hard with more job loss, more foreclosures, and even more pain.

Well, our T.J. Holmes has got an earful today about all those things right here at the CNN Center.

T.J., the president sees glimmers of hope. How about anybody that you've talked to?

T.J. HOLMES, CNN CORRESPONDENT: Not so much. "Hope" is maybe an operative word there certainly, but everybody can't quite figure it out, if you will. That's the sense you get from talking to people.

They hear this, they hear stimulus, they hear all these numbers, they hear all these plans, but what they don't hear, what they don't see, necessarily, is money in their paychecks. They don't see the numbers going up when it comes to unemployment, those real tangible things that they are looking at in their day-to-day lives.

Of course they're keeping up and they're listening to the speeches, and they're watching the news, but a lot of it just still doesn't make a whole lot of sense because they can't see all of the talk being interpreted into something that affects their day-to-day lives.

So, yes, down here in the atrium, we're never short on finding people to talk to down here. Found plenty of people to talk to. A lot of people from out of town, out of state. A lot of spring breaks going on. Well, one guy I talked to, of all places, he's from Ohio, a place -- a state that's been hit pretty hard. And listen to him when I asked him a question about all this money, should we be spending all this money to try and then make some money? Just take a listen to him real quickly.

(BEGIN VIDEO CLIP)

HOLMES: A lot of people argue you have to spend money to make money. A lot of people argue you have to get this stimulus, you have to get this thing going for the economy to get going.

Are you buying that?

UNIDENTIFIED MALE: I have a hard time believing that the government, who has no money, can give money away to spend money to make things better.

(END VIDEO CLIP)

HOLMES: All right.

And I'm here with Deanna Hall, one of those folks I was talking about, an out-of-towner. She's from North Carolina, a state that has pretty severe unemployment.

You've been able to keep your job. You're in kind of a good place. You're one of the lucky ones. But still, we talk about confidence, and that's the key to all of this.

What would make you more confident? We hear these plans, we see this stimulus, all this going on. What still is the one thing that would make you feel better?

DEANNA HALL, VISITING ATLANTA: I would feel a lot better, T.J., if I saw more American jobs staying in America and not being outsourced to other companies -- other countries and continents. And that way more Americans will stay more gainfully employed.

HOLMES: What do you think when you see this stimulus? When you do see that things are being done, things are at least being put in place, are those still not enough to -- like you were telling me, you were shaken to the core, if you will -- to unshake you, if you will? Does that stuff not do it about the stimulus package?

HALL: Well, I think it's a good idea. Once it gets up and running and you can see more effects from it, yes. But right now, in the beginning stages, I'm not really comfortable with what it is.

HOLMES: Can any rhetoric, can any speech help you out? We saw another speech by the president today, but is it really a matter of numbers and seeing some positive numbers, or can the president say something to make you feel better?

HALL: Well, I think his speeches are motivational. They get us in the right mindset. However, actions will speak a lot louder than what he's saying. I do have confidence in him, though, and I think we'll actually get on track eventually, but we have a lot of undoing to redo. So it's a step in the right direction.

HOLMES: In the right direction.

Deanna Hall here.

Again, thank you so much. Again, enjoy the rest of your vacation here.

HALL: Thank you, T.J. I will.

HOLMES: Sure thing.

But again, Kyra, that is a lot of what you hear. And again, Kyra, quite frankly, for a lot of us, it's tough for us in the news. We're doing this every single day, trying to keep up with all these packages, and pass this, and how many billions did you say? And to keep all these things straight.

Americans are trying to keep it straight, as well. But until they see those numbers, unemployment numbers stop going up, up, up, up, up, that's -- in their day-to-day lives, that's what they're really waiting to see and that's when their confidence will then go back up here.

PHILLIPS: Sure, and then we all see it here in the NEWSROOM every single day, T.J. We see all the video coming in state by state by state with people that are out of work, lining up at job fairs, collecting unemployment. You know, it's frustrating for us, too. You really want to see the positive signs that things are changing.

HOLMES: And we would love to be able to report some of that news. That's why we almost bounce out of those anchor chairs sometimes when we have a positive economic story to report sometimes. But for a lot of these folks, that's exactly what it is. What affects me in my day-to-day life?

People down here as well. They're not seeing any effect in their paycheck day to day just yet. So, maybe, when those numbers -- it's all about the unemployment numbers for these folks here.

PHILLIPS: T.J., thanks.

Well, throughout the newscast, we have talked with two people whose personal recessions would end a lot faster if they could land the right jobs. Kim Thomas, unemployed mom, living here in Atlanta; and John Eller is an underemployed dad in Kansas City.

Kim and John, we've been talking about, you know, whether you feel more hopeful today than you did yesterday.

And Kim, you know, just a reminder for our viewers, you've got two daughters.

THOMAS: Yes. PHILLIPS: You lost your husband, then you lost your job. I mean, you're living with your mom. You amaze me at your strength and how you continue to go on day by day.

How do you do that? You know, for those out there that feel, wow, I didn't realize how bad it could be, what do you say to them? How are you getting by day to day?

THOMAS: Well, I will tell the American people to just have faith, be strong, and you know, resolve and just know that the light will come at the end of the tunnel, basically. I'm just trying to be very optimistic. This time shall pass, as far as the bad, gloomy recession. And I really feel confident I will land the job that's perfect for me and things will turn around in my personal situation.

PHILLIPS: And the type of job that you want, what would you really like to do, and what are you doing on a daily basis to land it?

THOMAS: OK. I have a background in criminal justice and also in administration. I ran programs, after-school programs in public schools. I was a program director for six years, so I have a very strong background in administration and management. So, I would love to go back into that field, education field, working with children in public schools, or I would like to work in criminal justice as an investigator.

So, I'm just very confident that hopefully I will land a job in one of those two areas.

PHILLIPS: And we're going to keep your e-mail up as we talk to you, as well. I know we had it up there for a minute. We'll bring it back in just a second.

And John, with you, too, you know, you've got eight kids, you used to make six figures, you're now making about $34,000 a year. How are you -- what are you doing right now to try and land a job that does provide more for you and your family? What's it like on a daily basis? Cause, you've got to go to the job you're going to now to bring home something. How are you pushing it forward for something even better?

ELLER: Well, you've got to -- you've got to continue to have a lot of trust and you've got to have confidence in yourself that, you know, this economy will turn around, there will be more jobs that will be open up to the American public. And, you know, you've just got to -- you've got to continually stay positive and continually stay focused.

PHILLIPS: John, you see his e-mail there right up on the screen. And one more time can we show Kim's e-mail, guys, that we had up just a minute ago? We're doing the switch right now. We'll get track of both of them. There you go.

That's John's e-mail right there which is jeller2@kc.rr.com.

And there's Kim's right there kwilson217@yahoo.com. So you let us know if you hear anything.

And John, will you let us know as well if you hear anything?

ELLER: Yes, I will.

PHILLIPS: All right, we'll follow up with both of you and we're thinking about you all and your families. And thank you so much for being so candid and open.

THOMAS: Thank you.

PHILLIPS: I appreciate it.

ELLER: Thank you for your time.

PHILLIPS: We appreciate it so much, John.

ELLER: Bye-bye.

PHILLIPS: Thank you.

Well, it was a pretty emotional first lady paying tribute to homeland security employees today. Michelle Obama spoke to hundreds of DHS workers in D.C. thanking them for their sacrifices and hard work. She got a bit choked up when she singled out one group in particular, the Secret Service.

(BEGIN VIDEO CLIP)

MICHELLE OBAMA, FIRST LADY OF THE UNITES STATES: Today, I want to personally thank the men and women of the United States Secret Service. See, a lot of people don't even know that they operate under DHS, but it is those men and women who are responsible for the safety and security of the president, the vice president, me and our families.

Every day, I see how hard they work. Every day, I see how much time they spend away from their own families to keep mine safe. And it has been an honor to get to know each and every one of them throughout the course of the campaign and our day-to-day interactions. They represent the utmost of excellence, and we are so honored to have them serving alongside of us.

(END VIDEO CLIP)

PHILLIPS: Well, her praise of the Secret Service actually coincides with the 144th anniversary of the assassination of President Lincoln.

And he's been saying it for months in the streets, on talk shows, on the radio. Now former Illinois Governor Rod Blagojevich has said that he's not guilty in court. Blagojevich formally entering his plea today on 16 federal corruption charges. Some of them stem from that alleged plot to sell President Barack Obama's former Senate seat. He's also accused of abusing his power as governor to make money. State lawmakers impeached him then kicked him out of office in January.

It's the Senate battle that just won't stop. Republican Norm Coleman and his attorneys are weighing their options after a three- judge panel ruled that democrat Al Franken beat Coleman by 312 votes. Coleman has ten days to ask for a review and they've been battling it out since the November fourth election, that's more than five months ago. Franken is calling on Coleman to give up saying he wants to get to work in Washington as soon as possible.

The captain and crew from the hijacked Maersk Alabama arrive tomorrow night at Andrews Air Force Base after their ordeal at sea.

Check out the pictures.

The U.S. Navy getting a handle on that lifeboat and hauling it aboard the USS Bainbridge. That boat, the scene of Captain Richard Phillips hell. The Bainbridge commander said that today the pirates threatened Phillips' life over and over again. That, of course, all ended with three shots from Navy SEALs.

As if General Motors didn't have enough problems, it's recalling more than a million cars it built over the past 12 years. We're going to tell you which cars and why.

(COMMERCIAL BREAK)

PHILLIPS: Well, it's one of the last things the embattled GM needs - more bad publicity. The automaker is recalling 1.5 million cars because of potential engine fires. The cars were made between 1997 and 2003. Included are Chevy Impalas, Luminas, and Monte Carlos, Buick Regals, Oldsmobile Intrigues, and Pontiac Grand Prixs. GM says it hasn't received any reports of engine fires or injuries.

Well, what could be worse for GM than a massive recall? Some say bankruptcy. One possible survival-of-the-fittest scenario has GM broken into two parts.

CNN's Brian Todd reports.

(BEGIN VIDEOTAPE)

BRIAN TODD, CNN CORRESPONDENT (voice-over): A slow-as-molasses Chevy showroom in Lanham, Maryland. It's almost a given that the $82,000 Corvettes aren't moving despite the attractive features.

UNIDENTIFIED MALE: A seven-speed manual transmission...

TODD: But the $18,000 Cobalts, traditionally one of the most popular models, aren't selling either. Only two or three a month these days at Darcars Chevrolet.

Tammy Darvish, who owns this dealership and several others, says reports that GM is working out a bankruptcy plan with the government has prospective customers nervous.

TAMMY DARVISH, OWNER, DARCARS CHEVROLET: I think it's like buying a house knowing that the builder, the financier and everybody else is going to be gone tomorrow.

TODD: "The New York Times" reports the Obama administration is directing GM to prepare for a bankruptcy filing by June 1st, possibly a so-called surgical bankruptcy. That would split the company between its so-called good brands, like Chevy and Cadillac, and its unhealthy divisions like Saturn and Hummer.

The good GM would enter an exit bankruptcy in a matter of weeks, sold quickly to a new company backed by the government. The bad GM would be left behind in bankruptcy court, possibly for eventually liquidation. Contacted by CNN, a Treasury official wouldn't comment on The Times report, saying speculation on the end result is premature.

Tammy Davis is concerned that a bankruptcy deal might allow GM to go around franchise agreements that dealers have with the states and close dealerships en masse.

DARVISH: These are people who are on our payrolls in our own communities. These aren't people that work for the manufacturers. There's absolutely no tie between the businesses that are running the car dealership and the business that's run in the manufacturer.

TODD: Darvish says that's because the individual dealers purchase the cars themselves, make some of the financing arrangements and operate as independent businesses. She says dealerships are waiting to see what comes of this possible bankruptcy deal, but they might have to fight if GM and the government try to go around the dealers' franchise agreements with the states and eliminate some dealerships.

Brian Todd, CNN, Lanham, Maryland.

(END VIDEOTAPE)

PHILLIPS: The big three have long been hurt by small, fuel- efficient, foreign cars, but are they really small ones, the minis and micros, safe? What you're seeing are head-to-head crashes between mini and micro cars and midsized cars. The test, conducted by the Insurance Institute of Highway Safety, involved 2009 versions of Smart 42, Honda Fit, and Toyota Yaris. Well , the makers of the cars insist that they're safe, saying the tests simulated crashes that rarely happen on the road.

High school principals dread this time of year, graduating seniors pull their traditional pranks. But dread turned to glee in Austin, Texas, thanks to the seniors of West Lake High School. Instead of being destructive, well, they got constructive and spent $400 to beautify the landscape of a once barren traffic island. Seniors say, they hope it spawns a trend.

Protecting your financial security, CNN's "Help Desk" answers your questions about dipping into your 401(k) and preventing foreclosure.

(COMMERCIAL BREAK) PHILLIPS: Is it OK to borrow from your 401(k) and how do you fight foreclosure if you've been laid off?

CNN's Gerri Willis at "The Help Desk."

(BEGIN VIDEOTAPE)

WILLIS: We want to get you answers to your financial questions. Let's go straight to "The Help Desk."

Donna Rosato is a senior writer for "Money" magazine and Ryan Mack is the president of Optimum Capital Management.

All right, let's get to that first question, guys. It's from a viewer in New York who asks, "Do you think it's a good to use my 401(k) to pay for graduate school instead of taking out a student loan? Are there penalties and tax implications?"

Donna, everybody's talking about how do I retrain and how do I pay for it?

DONNA ROSATO, SENIOR WRITER, "MONEY" MAGAZINE: It's a good idea to go back to school if - and it's good to educate yourself more, but remember, your 401(k) is for your retirement and you don't want to dip that into that pot now if you don't have to.

Now, if you do have a 401(k), you can borrow from it if you're still employed and you may be able - but if you borrow from it, you're going to have to pay it back, you have to pay it back with interest.

And then if you leave your employer, say you want to go to grad school full-time, you have to pay the whole thing back. Now, if you're talking about - just taking it all out and cashing it out, there are taxes and penalties. You'll pay a 10 percent penalty and you'll pay federal and state taxes, as well.

WILLIS: As much as 40 percent out the door right away. Generally doesn't pay to break into the 401(k) because interest rates on the student loans are so low.

ROSATO: Exactly.

WILLIS: Let's go to Caroline's question. "My brother lost his job in December. He contacted the bank in January to see if he could work out his mortgage when he didn't hear back, he called again and again. Finally, yesterday, he reached someone who told him because he couldn't show an income, besides, obviously, unemployment benefits, he didn't qualify for assistance. Where else can he go for help to avoid foreclosure?"

Ryan, the dirty little secret of foreclosure is that if you don't have an income, you can't get a new mortgage.

RYAN MACK, PRESIDENT, OPTIMUM CAPITAL MANAGEMENT: Exactly. Exactly. Well, the first thing is to get a job. You have to make sure you have some sort of proof of income. Get a part-time job. I mean, go down to your local community center and see if there are jobs available. Ask your local politicians for job listings if they're available.

The major four things we have to do is, first of all, we have to say don't ignore the problem. Go to the mortgage lender with a plan. Know your options - restatement, forbearance, maybe at the end of the day, short sale, that's the last option, but it is a viable option. And finally, stick to the plan. Once you get a plan to come together, stick to it and you should be fine.

WILLIS: All right, guys, great answers. Very good questions, indeed.

"The Help Desk" is about you getting answers. Send me an e-mail to Gerri@CNN.com or log on to CNN.com/HelpDesk to see more of our financial solutions.

And "The Help Desk" is everywhere. Make sure to check out the latest issue of "Money" magazine on newsstands now.

PHILLIPS: Samuel takes Manhattan. The five-year-olds adventure on the New York subway and his frantic mom's odyssey looking for him.

(COMMERCIAL BREAK)

PHILLIPS: Well, he's a huge baseball fan, but don't ask Timothy Dolan if he's pulling for the Mets or Yankees, because he probably won't tell you. But what you can count on this evening, the New York Archbishop designate will knock on the doors of St. Patrick's Cathedral, symbolically asking New York's Catholics to accept him as their new leader. It's the first of two installation services. The other is a mass at the cathedral tomorrow. Dolan, who is 59, most recently served as archbishop of Milwaukee.

T-minus eight hours and change till NASA makes its big announcement on "The Colbert Report." They're sending a real astronaut to the fake news show to reveal the name of the newest module on the International Space Station. You might have heard about NASA's stellar snafu. They ran an online naming contest, but allowed write-ins. Well, Stephen Colbert asked fans to write his name in, and guess what, it won. NASA said those results aren't necessarily binding and that a space toilet may be named for the TV host instead.

As always, "Team Sanchez" - well, that's a nice segue right into Rick - working the next hour of CNN NEWSROOM.

Hello, Ricardo.

RICK SANCHEZ, CNN ANCHOR: We've got a developing story that we're following for you right now that's quite interesting.

PHILLIPS: What is that?

As a matter of fact, Ash (ph), can you take that shot? See that white van that's being followed right now? Inside that van is John Demjanjuk. Kyra, you're going to know who John Demjanjuk is obviously, because you follow this story as did just about did anybody who's been in the news business in this country for many years.

John Demjanjuk, back in like the 1980s, was accused of being "Ivan the Terrible," the guard, the Nazi guard at Treblinka who was accused of killing 29,000 people. Imagine being accused of 29,000 murders. Well, he beat the rap in Israel after he was taken there.

Have we got that picture up, by the way?

PHILLIPS: We sure do.

SANCHEZ: I couldn't see it.

PHILLIPS: Yes, we've got it. It's coming through our affiliate WOIC.

SANCHEZ: This is what's interesting about this story as we're watching it now, despite the fact he beat the rap, came back to his home in Cleveland where he was before he was extradited to Israel. Now is being deported from the United States. Why? Because he lied on his entrance application to come into the United States. Immigration is saying, I'm sorry, the information you provided was wrong. You didn't say where you were actually from.

And interestingly enough, this information didn't become available until the Soviet Union fell -- the Soviet Union fell and suddenly those documents became available. They started going through them and they found out what this guy really was or where he'd actually come from.

So, this is a fascinating story. He's being taken out now and there you have it, Kyra. We're on it.

PHILLIPS: And we'll be following it. Thanks, Rick.

SANCHEZ: All right.

PHILLIPS: Seriously, there are some adults who haven't mastered New York City's subway system, but for 5-year-old Samuel Sosa (ph), it's child's play. This little cutie gave his mom a heart attack yesterday when he snuck onto the Number One train and road it for 34 stops from the Bronx all the way through Manhattan to the end of the line.

But would you believe the Big Apple had an even littler commuter? In February, a 3-year-old slipped away and rode the Number Seven for seven stops.

Well, it's a disturbing new trend involving illegal immigrants in the U.S. Caught in the middle, kids forced to choose between their parents or life in this country.

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PHILLIPS: It's a growing dilemma that's likely to fire up the immigration debate. According to a new study by the Pew Hispanic Center, nearly 12 million illegal immigrants are living in the U.S. They make up four percent of the nation's population and more than five percent of the nation's workforce.

Four million kids born here have at least one undocumented parent. And if that parent is arrested and deported, the kid's life is turned upside down.

CNN's Thelma Gutierrez takes a look.

(BEGIN VIDEOTAPE)

THELMA GUTIERREZ, CNN CORRESPONDENT (voice-over): Julie Quiroz is American. She was born in Washington state. In one day, she says, she lost everything - her friends, her school, even her country. It happened in 2007, when immigration agents arrested her two older brothers and her mother, Anna, who was working illegally, cleaning hotel rooms to support four children.

JULIE QUIROZ, U.S. CITIZEN: I was there when they handcuffed her. I was there when they took her down.

GUTIERREZ: Julie says it happened in her living room on her mother's birthday, the day Julie was supposed to graduate from elementary school.

QUIROZ: Once you get there, you're shocked.

GUTIERREZ: Julie's family was deported to Mexico City. She and her little sister, Cherise (ph), also a U.S. citizen, had no choice but to follow.

(on camera): Do you ever feel like you belonged in Mexico?

QUIROZ: I don't belong there.

GUTIERREZ: Did you ever have friends there?

QUIROZ: I had - no.

GUTIERREZ: How did you do in school?

QUIROZ: Really bad. I would just come home, sit down, cry. Be like, mom, I can't do it.

GUTIERREZ: Why?

QUIROZ: I can't read or write Spanish.

GUTIERREZ (voice-over): At 13, Julie was a stranger in a foreign land.

QUIROZ: I felt there was no more dreams.

GUTIERREZ: Then Joe Kennard, a land developer from Texas, heard about Julie's plight and the four million American kids just like her who, according to a new study by the Pew Hispanic Center, have at least one parent who's undocumented. JOE KENNARD, FOUNDER, ORGANIZATION TO HELP CITIZEN CHILDREN: You can make the argument that, you know, she deserved what she got because she was an adult, she made the choice, she knew the consequences, et cetera. But why the children? They're hers, and they're born here. They're U.S. citizens.

GUTIERREZ: The Kennards reached out to Julie's mother and arranged for her to move to Texas to continue her education.

But Julie's mother, who entered the U.S. illegally before Julie was born, didn't want her teenager to pay for it. So, she made the painful decision to implore Julie to go.

QUIROZ: The thing I like about Texas is that it's so beautiful, wonderful.

GUTIERREZ: Julie now lives with Joe's family near a lake. She's a freshman in high school and adjusting to all the changes.

When she's alone, she says, it still hurts.

QUIROZ: You know, I want to be in my mom's arms.

GUTIERREZ: The dream that keeps her going -- she's determined to be to become a lawyer to fight for kids who are forced to endure painful separation.

(END VIDEOTAPE)

GUTIERREZ: Julie tells us that she worries most about her 7- year-old sister, Cherise (ph), who's also an American citizen. She says that after two years of living in Mexico, her sister is now losing her ability to speak English and because she's not fully proficient in Spanish, Julie worries her little sister is not getting an education. But for now, she has to stay in Mexico with her mother - Kyra.

PHILLIPS: Thelma, well these kids are American citizens, so are there any groups helping them out?

GUTIERREZ: You know, Kyra, any help they're getting is really happening at a local level. Now, Joe Kennard , who is Julie's guardian, has an organization to help citizen children. He's been able to help about a dozen in the last year. But again, there are four million children who are facing this predicament and right now there's just no national coordinated effort to help them.

PHILLIPS: All right, Thelma Gutierrez, we'll follow up on this story for sure. Thanks so much.

That does it for us. Rick Sanchez takes it from here.