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California's Cash Crisis; Best Time to Buy a Chrysler; Fixing Hybrid and Electric Cars; Waterspout iReport; Home Movies From Space; Cancer-Stricken Boy Missing; California's Cash Crisis; House to Take up Reform Bill; Iran: Missile Test Successful
Aired May 20, 2009 - 12:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
TONY HARRIS, CNN ANCHOR: California looks at Plan B. Governor Schwarzenegger meets with legislative leaders late today to work on the state's budget gap. Voters soundly rejecting the governor's plan to pull the state out of its latest money crisis. One in five voters didn't even bother to vote. Now comes sweeping cuts in jobs and state services.
Kevin Riggs with Sacramento affiliate KCRA takes a look.
(BEGIN VIDEOTAPE)
KEVIN RIGGS, KCRA-TV REPORTER: No balloon, speeches or parties on this election night in California, but conservative opponents of the governor's reform say, there is reason to celebrate.
MARK MECKLER, TAX OPPONENT: We wanted to send a message of resounding defeat that if they act in a way that's fiscally irresponsible, it's going to be a tsunami that they're going to face. They're going to face the wrath of the public.
GEORGE RUNNER, CALIFORNIA STATE SENATE: I interpret this as saying the taxpayers saying, hey, look, we've already done our share. After all, Californians are some of the highest taxed Americans in the nation, and they've said, hey, we're done.
RIGGS: Rejection of the ballot reforms means an extra $6 billion in cuts and employee layoffs. Labor groups, who formed a strange alliance with tax opponents, say they're hoping to avoid deeper cuts now with higher taxes.
LILLIAN TAIZ, CALIFORNIA FACULTY ASSOCIATION: We all have to chip in, not just the man or the woman buying diapers at the counter in the grocery store, but everybody in this state has to kick in.
RIGGS: But that's considered politically unlikely.
(on camera): How soon do they have to reach an agreement?
AARON MCLEAR, GOVERNOR'S SPOKESMAN: Well, the governor doesn't think there's any reason not to have this done by the new fiscal year on July 1. So, the governor believes that we've already debated a lot of these issues, and that we need to act quickly to resolve our budget deficit.
(END VIDEOTAPE)
HARRIS: Congress is charging ahead. That credit card reform legislation, it would make it tougher for credit card companies to raise interest rates and fees. The House takes up the bill today. The Senate approved it yesterday.
Congressional Correspondent Brianna Keilar following developments on Capitol Hill for us.
Brianna, what's the next step for the credit card bill?
BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: Tony, ,we're expecting the House to vote on it here in the next hour or so. And then the next step would be for it to be sent to President Obama, and he's expected to sign it. So here's what it means for you, the credit cardholder.
Credit card companies under this bill would have to give you 45 days' notice before they raise your rates. And then if you're late on a payment, a credit card company would have to wait at least 60 days before increasing your rate for it. It would also prohibit some fees, and there's a minimum age requirement in here, Tony, which means that it's going to be more difficult for people under 21 to go ahead and get these credit cards -- Tony.
HARRIS: Well, Brianna, there's something else in this credit card bill. We talked about it a bit last hour, a pro-gun amendment.
How is it that that's not scuttling this bill in a Democratic-led Congress?
KEILAR: Yes, it's kind of counterintuitive. What this is a provision inserted by a Republican in the Senate, Tom Coburn of Oklahoma. And assuming President Obama signs this into law, his signature is also, aside from the Credit Cardholders' Bill of Rights, it's going to mean that people can take concealed loaded guns into national parks, providing they have a permit to carry a concealed weapon in the state where the park is located.
And the reason this could happen, Tony, is because in the last election, even though there was an influx of Democrats, by and large we're talking about conservative Democrats. The Republicans have found this time on the Credit Cardholder's Bill of Rights, but also other times in this Congress, that they have allies across the aisle when it comes to issues of guns -- Tony.
HARRIS: Yes. All right.
Brianna Keilar on Capitol Hill for us, following the vote expected maybe in the next hour.
Brianna, thank you.
KEILAR: You're welcome.
HARRIS: Dire warnings from credit card companies about the reform legislation making its way through Congress. Have you heard this?
The companies say the changes could ultimately lead to higher rates and lower credit card limits, and more. Oh, really?
The warnings were a hot topic of discussion on CNN's "ANDERSON COOPER 360" last night.
(BEGIN VIDEO CLIP)
ANDERSON COOPER, HOST, "AC 360": I've heard that banks may start charging interest immediately on a purchase instead of allowing a grace period.
ED MIERZWINSKI, SENIOR FELLOW, CONSUMER PROGRAM: First of all, Anderson, everything thee banks are saying is based on the fact that they have been cheating their customers for the last five or 10 years. The Federal Reserve, the House, the Senate and the president have all said no longer can you cheat your customers.
I don't see the banks saying no more grace period on their best customers. People will stop using credit cards.
COOPER: So you think they're bluffing, basically?
MIERZWINSKI: Absolutely a bluff, and it's somewhat sour grapes. The banks have owned the Congress for 20 years. This is the first time we've won a bill.
It's because they brought it on themselves. And they didn't just raise the fees on high-risk customers, they tricked good customers into paying late. That's what's going to be illegal.
COOPER: Peter, do you agree with that? Do you think the banks are kind of, well, not telling the truth here?
PETER MORICI, ECONOMIST: Oh, I think that they are not telling the truth at all. The whole notion that they need to charge ordinary folks who pay on time more implies either that the -- they've been basically subsidizing ordinary folks with the very high rates and fees they charge, people who fall behind quite a bit, or they're just bluffing.
There may be something else going on here, actually. You know, the banks are really in a lot of trouble. They're looking for ways to raise money. All of them saying this at the same time in public. It looks a little bit like price fixing to me. It's like all the airlines discussing raising their rates at the same time.
In the end of the day, though, I think what will happen is, if they try this, there are 8,000 banks in the country. A few will peel off and start offering the good customers a separate deal, and they'll kind of segregate the business so that different credit card companies will cover people with different levels of credit.
COOPER: It's interesting, Ed, though, because you hear from credit card companies saying, well, look, we don't make money on people with good credit. You know, that people are paying their bills, they're not paying any interest, they're paying on time. We're not making the money off of them and we've got to make our money somewhere.
MIERZWINSKI: Well, my answer to that, Anderson, is, if they weren't making money on them, why did they give them the biggest and the most rewards? They're making money every time somebody using a credit card or a debit card on fees from merchants. And when they make harder to pay your bill on time and they raise your interest rate for being one minute late, they're making money hand over fist.
They're making bad money instead of good money, and that's why the Credit Cardholders' Bill of Rights is going to become the law of the land. They'll be forced to change their business model into one that's based on fairness rather than "gotcha" fees.
And there are a lot of people out there who have been punished by unfair practices, but the people who have good credit will not see their rates going up the way that my friend from the Bankers Association just alleged that they will. They are unfortunately going up a little bit now. The banks are trying to get ahead of the new law, but they can't sustain it for a long time. People are going to get angry and stop using the cards.
(END VIDEO CLIP)
HARRIS: Wow. How about that for perspective, huh?
Your money and the economy topping the agenda for President Obama today. The president just wrapped up a meeting with a team of economic advisers. The Economic Recovery Advisory Board is made up of people from outside the government. The idea is to give the president a fresh perspective on the economy.
(BEGIN VIDEO CLIP)
BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES: They are helping to advise us in our approach to the financial regulations regulatory regime that we are looking to put before Congress this year. They are helping us in thinking about employment, manufacturing. There is a whole host of issues that this group is providing wonderful expertise for.
(END VIDEO CLIP)
HARRIS: Well, the president signs two bills today designed to help homeowners caught up in the mortgage mess. One encourages banks to spare homeowners from foreclosure, the other is aimed at cracking down on mortgage fraud. It also sets up an independent commission to investigate the cause of the global meltdown.
To follow all these stories and more, just go to CNNMoney.com. There you will find the latest on news affecting your mortgage, your investments, your job, and much more -- CNNMoney.com.
Iran sent a blunt political and military message to the West today. The government says it successfully tested a medium-range missile, one that could easily strike Israel and parts of Europe.
Think about that for a moment, and then let's talk with CNN's Pentagon correspondent, Barbara Starr.
Barbara, is this missile new to the Iranian arsenal?
BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, not necessarily, Tony. There was a missile test last November, we are told, when a missile very similar to this was tested. They rename them often, so it's a little hard to constantly keep track.
But the bottom line is this is a missile that could hit Israel if Iran chose to launch it. They test-fired it yet again, demonstrating their real goal here, which is to develop a large arsenal of missiles, more reliable, more accurate, things that they can really count on, which is tough for them. Because in their missile program, they're facing a lot of international sanctions. The international community trying to keep missile parts out of their hands.
When you look at the map, you just begin to see the range of this missile and what it could encompass. So they were pretty determined to try and keep testing this one. It's important to their overall message to the world that they're a player in the region and they have the kind of technology to back it up -- Tony.
HARRIS: All right. Barbara Starr for us at the Pentagon.
Barbara, appreciate it. Thank you.
And earlier this morning, an Indonesian military plane crashed into a residential neighborhood, killing at least 98 people and injuring 15 others. Most of them have severe burns.
Amazing video of the aftermath here.
The plane was carrying troops and their families. Four homes destroyed. It is not clear what caused the crash, but witnesses say they watched the plane's right wing snap off while the plane was still in flight.
And back in the United States, rescuers are frantically searching for two people missing after a U.S. Navy chopper went down in the waters off the coast of San Diego. It happened during a training exercise late last night, the chopper operating from the aircraft carrier USS Nimitz.
Three other Navy personnel were also on board the chopper. Their bodies have been recovered.
Today the cameras are chasing Michael Vick as he is released from prison. Where are the dogs he was convicted of abusing? The answer may surprise you.
(COMMERCIAL BREAK)
HARRIS: The Senate voting on a bipartisan amendment to prevent detainees currently being held at the military prison at Guantanamo Bay, Cuba, from being transferred to the United States. A developing story right now.
Let's get to our senior congressional correspondent, Dana Bash.
And has that voting wrapped up, Dana?
DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: It has. And if you want to know the power of this issue, you just have to look at the vote just now.
It was 90-6, Tony, 90-6 on this amendment that effectively prohibits the detainees currently at Guantanamo Bay from coming to the United States, anywhere on United States soil. I should say that.
And the way it does that is to say that no funding in this particular spending bill or anything that has ever been passed by Congress before can be used to do that. So, it effectively chokes the opportunity to bring these detainees to U.S. soil. So that gives you some indication at least of the thinking of members of Congress, and specifically senators, about where this thing is in particular, until and unless they get a plan from President Obama.
We talked yesterday. We first reported the news about the fact that they were going to take the money out. Well, this goes even further and explicitly saying not only are we not going to give you the money, but we are going to say that right now, we don't want you to bring anybody at Guantanamo Bay, any of the terror suspects, to U.S. soil.
Wow, Dana. This is something.
The closing of the Guantanamo prison must have seemed like a really good idea at the time for the president, but he really has a hot potato on his hands right now.
This issue can be revisited once the president submits a plan?
BASH: That's right. And Democrats, even many of them, most of them who voted for this amendment, are being very careful to say that they are still supportive of the president's idea of closing Guantanamo Bay.
In fact, many Republicans support that idea, still. But again, they say we're not going to do anything in terms of money, which is what Congress really has the power over, the purse strings. We're not going to do anything that allows you to do that until we get a plan here.
Now, you know, the next step in this debate is, well, what happens to the detainees there? I just interviewed one Democratic senator from Nebraska, Senator Ben Nelson, who said it is inappropriate for these detainees to be brought anywhere on U.S. soil. And, in fact, the FBI director, Robert Mueller, just raised some concerns about the same thing, about trying these suspects in here or, even more specifically, putting the suspects in even secure prisons in the United States.
So this is a very, very hot debate that is going on. And look, I mean, the bottom line is the president is going to begin to narrow and to basically focus this debate a little more, as soon as he gives some idea of his plan. Until then, though, this debate is hot and it is being stoked big time, still, by Republicans.
HARRIS: Yes, it really is.
All right. Our Senior Congressional Correspondent Dana Bash.
Good work on this, Dana. Appreciate it. Thank you.
BASH: Thank you.
HARRIS: And as Dana just mentioned, FBI chief Robert Mueller is on the record about the Gitmo detainees. Mueller strongly opposes them being brought to the United States. And earlier today, he told Congress he is worried the detainees could support terrorism if they're sent here.
(BEGIN VIDEO CLIP)
ROBERT MUELLER, FBI DIRECTOR: The concerns we have about individuals who may support terrorism being in the United States run from concerns about providing financing to terrorists, radicalizing others with regard to extreme -- violent extremism, the potential for individuals undertaking attacks in the United States. All of those are concerns relevant to an individual comes into the United States from whatever source who may present a challenge.
(END VIDEO CLIP)
HARRIS: All right. FBI chief Robert Mueller there.
This morning, former NFL quarterback Michael Vick was released from a federal prison to serve out the last two months of his sentence, confined to his home in Virginia. Vick was sentenced back in 2007 to 23 months in prison for bankrolling a dog fighting ring, an action he admits was "heinous." Many of the dogs rescued from Vick's Bad Newz Kennels are hurt, scarred and chained up, labeled potential dangerous, but today they have new hope and a new life.
Here's CNN's Randi Kaye.
(BEGIN VIDEOTAPE)
RANDI KAYE, CNN CORRESPONDENT (voice-over): Don't let those sharp teeth fool you.
UNIDENTIFIED FEMALE: You're making a very scary face.
KAYE: That's Jhumpa, one of 51 pit bulls rescued from football great Michael Vick's dog fighting ring back in 2007. Two died of disease. Two others were put down. One for medical reasons, another too dangerous. But the rest are thriving. They had to be socialized and housebroken, even taught how to walk upstairs. But today half of them are either in permanent homes or foster homes. The rest are in an animal sanctuary in Utah. None are in shelters.
And look at Jhumpa. She was adopted by Kathleen, who didn't want us to use they are last name and now lives in New York. She has company, too. Two other pit bulls, a black lab, a terrier and five cats.
KATHLEEN, JHUMPA'S OWNER: One of the things that brought her out of her shell so much was the other animals. And her learning from them and watching them and watching them trust me and learning that, you know, living in a home was actually a really good thing.
KAYE: Jhumpa lives the life of luxury. When she's not on the couch, she sleeps in her pink bed. She walks or runs about five miles a day and snacks on doggy bonbons. Her favorite, though, is cheese.
Jhumpa's owner says she's great with children and loves to be around people and other animals.
(on camera) Like the other pit bulls who were adopted by families, Jhumpa was closely evaluated to make sure it was safe for her to be around people, especially young kids. All she need was time, Kathleen says, to understand the world is a better place than she'd known before.
KATHLEEN: The real truth of the matter is that she's taught me far more than I will ever teach her about repair and trust and growth and how, you know, how we can -- how we can aspire to things that are bigger and better than we had ever, ever imagined. So I'm very, very fortunate to have her in my life.
KAYE (voice-over): And just like Jhumpa, Kathleen says the man who abused her deserves a second chance, too.
KATHLEEN: I think that, in spite of everything he's done to these dogs, I think he deserves a second chance. And I think he needs a chance to show the world that he, too, can repair. I hope that he's -- I hope that he has the tools to do that.
KAYE: Michael Vick is already trying to make good. After his release, he'll be working with the Humane Society to help kids who have been involved in dog fighting and to prevent more from getting involved in it. No doubt, Jhumpa will be happy about that.
Randi Kaye, CNN, New York.
(END VIDEOTAPE)
HARRIS: Well, you know, Michael Vick made millions in the NFL, and now he is expected to start a job with a construction company. The salary, $10 an hour, but his spokesman says Vick is still hoping the NFL will take him back.
The question is, do you think he should be allowed to play again?
Send me a message on the blog page there. Yes, there's the satire. Just go to CNN.com/newsroom and click on "Tony" and share your thoughts with us.
Feel powerless to get answers from those in charge? We will show you how one transit rider used the power of the Web to expose a bus driver texting on the job.
(COMMERCIAL BREAK)
HARRIS: Pretty outrageous stuff here, putting your life in the hands of a public transit driver, and that driver's hands are not on the wheel.
Nicole is back with some video.
Nicole, you found this online?
NICOLE LAPIN, CNN.COM CORRESPONDENT: Found it online.
HARRIS: And what is this? This is the texting thing that's...
LAPIN: I know it makes you so mad.
HARRIS: It drives me crazy.
LAPIN: You have to do so this video. Let's get right to it, because this is the latest from a passenger who was on a bus ride from Boston to New York City.
HARRIS: Look at this.
LAPIN: Here's what the guy captured. The bus driver is texting, doing paperwork. At one point, you see him take his hands off the wheel altogether. He eats a snack.
HARRIS: Oh, come on.
LAPIN: He talks on the cell phone.
These are just parts, Tony. I've got to tell you, this video was long. It was about 10 minutes. The passenger put all of it on YouTube.
HARRIS: So, this guy, you're telling me, is doing all of this...
LAPIN: While driving.
HARRIS: Ten minutes worth of video?
LAPIN: And you're looking at this, probably, Tony, and you're saying, "My God, I have seen this before." You are right.
This is a bitter sense of deja vu from another seen in Boston recently when a driver of a trolley was texting his girlfriend, and that trolley rear-ended a stopped trolley, and 49 people were injured.
Then we had this scene out of San Antonio recently when a bus driver was texting and slammed into the back of an SUV.
HARRIS: Look at this. Look at this.
LAPIN: Both drivers in this case were injured, as were two passengers. There it went. On that bus, it was carrying disabled people.
HARRIS: Right. Right.
LAPIN: One of the most horrific texting while driving scenes, you remember this, Tony, from last summer in Los Angeles, when 20 people died, 135 were injured in this crash of this commuter train.
So let's get back to what we started looking at out of Boston, Tony.
This isn't an isolated incident. Before I came on, I got on the phone with the vice president of safety and security for this bus line, Peter Pan Bus Lines.
He says that this driver has now been put on an investigative suspension since they just got word of this video two days ago. But the passenger who says he took this video, tried to alert the bus line of the problem, he says right after the actual bus ride happened in early April, but he was given the runaround. So he says it wasn't until it was posted online that anything he says was done.
So bus lines do, I should tell you, have some stricter regulations against texting while driving than the 10 states that have laws against texting right now. A majority of states don't have any laws against it. The question now, Tony, is how are they being enforced?
HARRIS: Yes.
LAPIN: Because, are there others out there we don't actually know about since they aren't on YouTube? You can just see, Tony, the power of the Web right here.
HARRIS: You wonder what this guy is thinking, because you do feel like you can do both. And really, I'm not offering a defense, but you feel like you can do both. You feel like you can text. You certainly feel like you can talk on a phone and drive. Everybody is doing that.
But this whole idea, you wonder what he's thinking. I mean, it's not just you, buddy.
LAPIN: It's a long bus ride, and some people -- I put this on my Facebook page -- they were trying to go give him the benefit of the doubt. It is a long bus ride, but a lot of these passengers are saying it's a long bus ride with my life in your hands.
HARRIS: Yes. Did you put it on my Facebook page?
LAPIN: I'll get on that.
HARRIS: Thank you, Nicole.
LAPIN: You're welcome.
HARRIS: Are Californians literally walking off a financial cliff here? We'll find out what options the state has now that voters have rejected a stack of proposed budget reforms.
And that brings us to today's "Faces of the Story." Take a look.
Governor Arnold Schwarzenegger, he hasn't fixed the fiscal problems that brought him to office in a recall vote. My guest looks at his impact.
Another face of the story today, former NFL quarterback Michael Vick released from prison today.
Do this -- just go to my blog page, tell us if Vick should be allowed to play in the NFL again.
And finally, you, the American consumer, a face of the story today as well. New protections are on the way if you use credit cards.
(COMMERCIAL BREAK)
HARRIS: So, a lot to get to before we get to the top of the hour and join Kyra Phillips.
First of all, let's drive you to cnn.com. CNN Money is the page there where you will find the latest financial news and analysis.
Quickly now, let's take you to the New York Stock Exchange. We're just on the nose, three hours into the trading day right now. And as you can see, the Dow is up 21 points, off of session highs a bit. The Nasdaq is up 12, three hours into the trading day.
California voters are say no loud and clear to five budget proposals. The patchwork of fiscal fees and fixes were sadly defeated in Tuesday's special election. It is a crushing blow to Governor Arnold Schwarzenegger, who is facing what he called California's financial Armageddon. CNN's Ted Rowlands takes a look.
(BEGIN VIDEOTAPE)
GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: We are mad as hell and we are not going to take it anymore.
TED ROWLANDS, CNN CORRESPONDENT (voice-over): When he decided to run for governor of California, Arnold Schwarzenegger vowed that with him in charge, things were going to change.
SCHWARZENEGGER: We are here, ladies and gentlemen, to clean house. We are here to clean house.
ROWLANDS: In a state plagued by years of legislative gridlock and partisan bickering, Schwarzenegger believed he could do what no other recent governor could.
SCHWARZENEGGER: Every governor proposes moving boxes around to reorganize government. I don't want to move boxes around. I want to blow them up.
ROWLANDS: But over the past six years, Schwarzenegger has failed to blow up much of anything. In 2005, his budget initiatives that he took directly to the voters without wide political support went down in flames.
DAN SCHNUR, USC UNRUH INSTITUTE OF POLITICS: You can't blow up boxes and you can't sweep out buildings by yourself. It has to be done with support and with coordination of the legislature.
ROWLANDS: Schwarzenegger's effort to bridge the gap between the parties has often cost him support in his own party.
RON NEHRING, CHAIRMAN, CALIFORNIA REPUBLICAN PARTY: When you're moving forward with ideas from the Democrats' side, well, you know, don't expect a lot of Republicans to be, you know, particularly enthusiastic about that.
ROWLANDS: Despite the failures, Governor Schwarzenegger seems upbeat that he can still somehow change the state that many believe is simply ungovernable.
SCHWARZENEGGER: I never give up. When you believe in something, then you never give up. Because I don't just put, you know, you don't see the way the wind blows. I don't do that. You know, I am very passionate about this.
(END VIDEOTAPE)
HARRIS: Well, let's talk about the governor's political misfortunes and the defeat of his proposals. Michael Rothfeld covers the California state house in Sacramento for "The Los Angeles Times."
Michael, thanks for your time here.
MICHAEL ROTHFELD, LOS ANGELES TIMES: Hey, Tony.
HARRIS: A simple, straightforward question and then we've got some -- let's see if I can find it here -- a statement from the governor just a couple of moments ago in a conversation with reporters. Has Governor Schwarzenegger failed the leadership test here?
ROTHFELD: Well, the governor has been talking about trying to fix Sacramento since the recall. And he said he was going to do it. He has not been able to do it. He made promises he hasn't been able to deliver on it. It's not totally his fault because a lot of the problems in Sacramento are systemic. They've been going on for a long time. But he may be guilty of over promising on what he could do. And the truth is, he hasn't lived up to the promises.
HARRIS: So why is it, Michael, that so much of the analysis I read on the California budget situation describes the state as ungovernable? Will you -- and don't get wonkish on us, and I know you won't -- but please try to explain this in a way that makes sense to everyone east of California.
ROTHFELD: Yes, absolutely.
California is essentially a state that lets voters have a ton of power. The voters have the ability to go to the polls and tell the state officials how they should spend their money. And it binds the hands of the state officials in a lot of cases. So they say we want to allocate $1 billion for this or that. And so essentially it's very difficult. The elected officials have to go back to the voters and get permission to untie their hands. And the other thing the voters have done in California, which is one of only a couple states, I think, that has this, is two-thirds of the legislature has to approved budgets and tax increases because there's extreme partisan gridlock in Sacramento, that high threshold makes it difficult for the elected officials to get anything done. Those are two of the main reasons that people say California is ungovernable.
HARRIS: OK. Yes, so, Michael, so do the people in your state not believe the dire predictions?
ROTHFELD: I think they -- a lot of them don't believe it because it's kind of like . . .
HARRIS: What are they crying wolf or something?
ROTHFELD: Yes, exactly. They've been hearing this thing for like two years -- the better part of two years. Everything's going to be a catastrophe. And then the governor and the legislature say, oh, we're going to fix it now and then it doesn't get fixed a few months later. Just three months ago they said, we have a plan now that's going to take us through the middle of 2010 and we have solved the problem. And, of course, that turned out not to be true. Now they're looking at $20 billion more in deficits.
HARRIS: Yes.
ROTHFELD: They don't believe what they're hearing.
HARRIS: OK. Let's drill down then. That's a perfect opportunity. You segued me perfectly into the new statement from the governor. There will be around $5.3 billion in additional cuts in education. Real or crying wolf here?
ROTHFELD: Well . . .
HARRIS: What does your reporting tell you?
ROTHFELD: Well, I think, in part, it is this federal stimulus dollars are going to backfill some of that, but the school districts were also counting on that. I think, for the most part, it could be real. Unless they find some solution, thousands of teachers could be laid off and class sizes could go up, the school year could be shortened.
HARRIS: You could lose a week, is that a possibility here?
ROTHFELD: Yes, seven days in the school year could be taken off. And not just that. In the prisons, thousands -- about 40 -- up to 40,000 prisoners could be let out and 5,000 state workers could be laid off.
HARRIS: But what about the health care cuts that have been threatened here? Kids, kids being dropped from health care roles here.
ROTHFELD: Yes.
HARRIS: Better than 200,000, I guess, at the last number I saw. Is that real or crying wolf?
ROTHFELD: Well, it depends on what the governor and the legislature do. So I -- the governor made this proposal before the special election because he wanted to warn the voters what could happen and get them to pass these measures. And, obviously, they did not listen to that. They didn't do that. So unless the legislature and the governor come together and find some another solution, and they've said they don't want to raise taxes again, then there could be very real and severe cuts to health care.
HARRIS: Gotcha. Well, Michael, what's going to happen here?
ROTHFELD: Well, you know, the truth is, we don't know because they have been unable to come up with a solution in California to this for the better part of two years. And if they don't find one by the end of July, the state could not be able to pay its bills. That's what the financial officials here have predicted. So, you know, unless they come to some solution they haven't been able to come to yet, you know, the state could find itself unable to pay bills.
HARRIS: All right. We're going to make you one of our go-to people on this story in your state.
ROTHFELD: Thanks, Tony.
HARRIS: Michael, we appreciate it. Thank you.
Still doubt it's the right time to buy a new car? You may actually change your mind after seeing the prices on the Chrysler lots.
(COMMERCIAL BREAK)
HARRIS: How about this figure? One hundred million U.S. dollars going to help Pakistanis displaced by the government's war with the Taliban. Fighting in the Swat Valley forcing more than 1.5 million people from their homes. Tens of thousands of them are now crammed into deplorable tent cities. We're told they've been arriving at the rate of about 85,000 people a day. The U.N. high commissioner for refugees saying the refugee crisis could pose a bigger threat to the stability in Pakistan than the war itself.
You know, this may actually be the best time to buy a new car. Some serious price cuts out there right now at car dealerships that are shutting down. Our Brian Todd explains.
(BEGIN VIDEOTAPE)
BRIAN TODD, CNN CORRESPONDENT (voice-over): Angling out of the Dulles Motor Cars' lot to test drive a new Jeep Wrangler. As we tool around Leesburg, Virginia, dealer Hamid Saghafi points out the popular features.
HAMID SAGHAFI, JEEP DEALER: It's very fun during the summertime.
TODD: Folks in this town won't be able to test drive these models much longer. Saghafi and his brother, Kevin, who own the only Jeep dealership around here, were abruptly told by Chrysler last week the Jeep division of their business, which also includes Subarus and Kias, has to shut down by June 9th. One of the nearly 800 dealerships the automaker is mothballing in bankruptcy.
The Saghafi's have to sell dozens of vehicles in three weeks and are slashing prices more than they and many other dealers would have ever thought possible.
TODD (on camera): It's springtime in northern Virginia. Normally a really hot time of the year to sell the Jeep Wrangler. Normally dealers would not be offering any discounts on this particular vehicle. But right know, this 2008 Wrangler is $7,000 off the original asking price.
TODD (voice-over): The high-end Jeep Commander SUV is marked down even more.
KEVIN SAGHAFI, JEEP DEALER: We're taking deep discounts from $42,385 MSRP to $29,900. That's about a discount of $12,000 from the MSRP, about $10,000 from invoice.
TODD (on camera): Right, below what you paid for it.
TODD (voice-over): Down the street, Ohanka (ph) Chrysler Dodge is shutting down completely and Ray Obrium and his partners are making even more drastic cuts. Take the Dodge Nitro SUV, please.
RAY OBRIUM, OHANKA CHRYSLER DODGE: This particular vehicle here, it's almost $30,000 -- $29,170 and we've marked this thing down to a sale price of $17,510. You know, if you do the math on that one, it's 40 percent off.
TODD: These two dealerships have been successful, but now have no choice but to take huge losses on the Chrysler/Dodge/Jeep brand.
TODD (on camera): Can you put a dollar value?
K. SAGHAFI: Millions. Literally millions.
TODD (voice-over): That's because unlike a normal situation when a dealer has to shut down, this time because Chrysler's in bankruptcy, it can't buy back the cars or parts, so the dealers have to absorb all the losses. A Chrysler spokesperson told us they're sorry for what the dealers on the shutdown list are going through, but they're trying to at least help them sell their cars and parts to other dealers who will remain in business.
Brian Todd, CNN, Leesburg, Virginia.
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HARRIS: Perfect. Let's get an "Energy Fix" right now. President Obama's push for cleaner, more fuel efficient cars means we'll be seeing a lot more hybrids and electric car in the next few years. But at the same time, GM and Chrysler are closing hundreds of dealerships. So what happens when your next generation vehicle needs a tune-up or something? Where do you go? CNNMoney.com's Poppy Harlow has our "Energy Fix" from New York.
Hi, Poppy.
POPPY HARLOW, CNNMONEY.COM: Hey, Tony.
Yes, the problem there, you can't just take it to any gas station if you have an electric car or if you buy a hybrid. And we know that GM and Chrysler are closing 1,900 dealerships across the country. Of course, Chrysler doesn't have any hybrids on the market right now, but GM has a huge lineup. Two hybrid Saturns, the Chevy Malibu, the GMC Yukon. Also the Cadillac Escalade. When you need to service them -- this question actually came to us from one of our colleagues here at CNN saying, what do you do?
So we looked around. We asked some experts. And basically an auto repair trade group said, listen, if it's basic maintenance, if it's an oil change, you need new brake pads, you can take it anywhere. But if it's something hybrid specific, like a battery, you're better off taking it to a certified dealership. The question out there, when the dealerships close, what do you do.
What you can do is you can look up some independent auto repair shops. We're going to show you a website of one. It's fixhybrid.com. I think we have it for you. But it's just fixhybrid.com. Pretty easy for you there.
HARRIS: OK. There it is. Yes.
HARLOW: You can go to it. There it is right there. And you can look up those hybrid shops in your area. The owner told us, listen, there are about 400 independent hybrid shops across the country. About 1,500 repair shops have technicians that are trained to fix your hybrid.
HARRIS: Yes. Well, what about the reliability here? I mean, really, Poppy, how reliable are hybrids and electrics compared to, you know, the regular gas models?
HARLOW: I was surprised with this answer. Possibly more reliability. Still new to the market, of course. But the hybrid seems like a pretty safe bet. We ask Intelichoice, one of the experts there, and they said, listen, hybrids are even more reliable than traditional gas powered cars because that gas engine, it's not running all the time. So less wear and tear on the vehicle. Hybrid batteries, they've proven themselves. JD Power and Associates named the Toyota Prius the most reliable of all compact cars this year.
For electric cars, in theory, they should need less maintenance, right, because all there is, is that battery. But the battery -- it can really drain -- the power can really be drained out of that. In cold weather, the battery's ability to charge is decreased by about 20 percent.
HARRIS: That's a good point.
HARLOW: And, Tony, when we drove an electric car, when I tried to start it a few months ago, we had to try three times and move to another electric car that the manufacturer brought to us because this one wouldn't start.
HARRIS: And they were showing it off to you.
HARLOW: They were showing it off. And that's a problem if you're trying to get to work and it's not going to start. There are going to be some glitches that -- at least as we start out.
HARRIS: Don't want glitches when you're talking to a reporter and you're showing off a vehicle to a reporter who's going to go on television and . . .
HARLOW: It was bad.
HARRIS: All right, Poppy, appreciate it. Thank you.
HARLOW: Sure.
HARRIS: Man, are you planning on buying or selling a car in the near future? Do you have questions about your options in these, you know, difficult economic times? In the next hour of CNN NEWSROOM, two car dealers are taking your questions. Get in touch with us at cnn.com/newsroom and click on Kyra. You can also Twitter us, tweet us -- Twitter -- tweet us? All right. At Kyracnn -- OK, is that right? And we will get you answers, next hour.
Do you like to shoot home video? Well, so do the astronauts aboard the shuttle. We will show you some of their out-of-this world moments. That's next.
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HARRIS: Very quickly now we want to get to Jacqui Jeras in the severe weather center. And, Jacqui, I know you're focusing on Florida and the weather we've been watching there over the last couple of days, all the rain, the possibility of flooding, but you've got something pretty hot for us, don't you.
JACQUI JERAS, CNN METEOROLOGIST: Oh, my gosh. Are you ready to say wow? Say "wow" with me, Tony.
HARRIS: Wow.
JERAS: This is amazing.
HARRIS: This is good, isn't it?
JERAS: It really is good. You know, so good that we're using it because this happened on Saturday and normally we wouldn't use something this old but we just got this in late yesterday and the pictures are phenomenal. Alex Raymond and Eric Miller took these pictures on Saturday.
HARRIS: Is this Metairie?
JERAS: Yes, Metairie, Louisiana. This is a waterspout over Lake Pontchartrain near the levee. This thing actually did make its way to land. And when it is a waterspout and it moves over land it becomes . . .
HARRIS: A tornado.
JERAS: A tornado. And there was a little bit of spotty damage. Nothing major. No big injuries. But, yes, you hear all the bleeps?
HARRIS: Yes.
JERAS: We wouldn't recommend this behavior at home, just so you know. But incredible pictures. A real strong-looking waterspout. A real high base. You can see how tall that thing is as well. So really incredible.
Do we have the Florida iReports? Yea or nay?
HARRIS: I hope so.
JERAS: Not yet. All right. We're working on it. You know what, it's going to have to be next hour. Sorry about that, Tony.
But let's do talk about what's been going on across Florida because that rain has just been incredibly heavy. Yes, today's day three that you've been dealing with the incredible downpours that we've been seeing. In fact, some areas have seen over a foot of rain now. The heaviest kind of focused in here between about Melbourne, on up towards Jacksonville. We've had quite a bit of flooding in this area. And also some damage. We're getting reports of some power lines down and also trees down because of the strong wind gusts associated with this. We do have a tornado warning that was just issued. This is for Palm Beach County. You can see it's west of Palm Beach and it's moving up to the north and the west. So it's moving away from the beach. It's moving inland. Kind of the opposite of what can happen. Oftentimes it's going to be a weak storm, but you do need to take it seriously and certainly take some cover.
Let's talk temperatures for a second. This is crazy. My hometown, Minneapolis, Minnesota, love that place, 97 yesterday. That is amazing. That doesn't happen in July.
HARRIS: That is -- I was about to ask you, how often does that happen?
JERAS: It's very rare. High pressure building and all that heat that's been in the southwest, that has made its way across parts of the upper Midwest. So you're going to be baking here once again today, but a cold front's moving through, so you're going to be back to reality in the twin cities, 71 tomorrow.
HARRIS: Nice. Jacqui, see you next hour with Kyra.
JERAS: OK.
HARRIS: I'm going to be out of here.
JERAS: All right. You can watch, though.
HARRIS: I will watch.
Yes, kicking back in space today. The crew of the shuttle Atlantis getting a well-deserved day off after five grueling space walks to fix the Hubble Telescope. And what do astronauts do during their down time? Well, take a look at their home movies from space. John Zarrella reports.
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JOHN ZARRELLA, CNN CORRESPONDENT (voice-over): Look at the size of those pants. Spacewalking astronaut Mike Massimino needed a little help from his friends getting into his space suit. Home moves from 350 miles high. The lighter side of a grueling mission. A little chitchat about travel expenses.
MIKE MASSIMINO: Do I get per diem?
SCOTT ALTMAN, SHUTTLE COMMANDER: I don't know. Yes, you are getting per diem, you know that, right?
MASSIMINO: Yes, like $2 a day.
ALTMAN: $2 in a sling is expensive.
MASSIMINO: Can't beat that.
ALTMAN: I'm -- we're playing poker tomorrow for it. ZARRELLA: You might actually watch these moves more than once. Megan McArthur, all focused, carefully steering the shuttle's robotic arm. Outside, at the end of the arm, Andrew Feustel, don't drop that piano. Feustel is in the process of changing Hubble's wide field camera. Later, the astros debate who's going to touch Hubble last.
UNIDENTIFIED MALE: Megan, you're going to get to touch it with the arm tomorrow.
UNIDENTIFIED MALE: I think we agree that's Megan tomorrow.
UNIDENTIFIED MALE: It's Megan because she's going to do it with the arm.
ZARRELLA: Massimino spent most of the time behind the camera shooting everyone else. Pilot Greg Johnson saying in shape, a Navy guy, figures, no time for fun.
GREG JOHNSON, SHUTTLE PILOT: Well, I mean, I'm making some time at 17,500 miles an hour.
ZARRELLA: Commander Scott Altman on the flight deck.
ALTMAN: You take care of all these button here. These buttons we've got over here. You've got buttons. We've got control sticks.
ZARRELLA: Clearly Massimino is the crew funny man. This space flight may launch his career as a comic.
MASSIMINO: I think I might have set the record for prayers said during a space walk.
ALTMAN: Yes, I know (ph).
MASSIMINO: I really think I . . .
ALTMAN: You (ph) were being echoed here in the cabin (INAUDIBLE).
MASSIMINO: It was unbelievable. And it was Sunday, which was appropriate. I got dispensation from Father Dominic (ph) that I didn't have to go to church.
ZARRELLA: With the telescope fixed, the crew has one more little thing to take care of.
ALTMAN: We're in orbit. We've got to land, come down.
ZARRELLA: That would be Friday, weather permitting, at the Kennedy Space Center.
John Zarrella, CNN, Miami.
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HARRIS: Authorities are on the lookout for a 13-year-old cancer patient and his mother who have refused chemotherapy. They disappeared after a court-ordered x-ray showed the boy's tumor had grown. Doctors say the chemo could save his life. CNN's Randi Kaye has the latest.
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RANDI KAYE, CNN CORRESPONDENT (voice-over): Take a good look at this boy. His name is Daniel Hauser (ph). At just 13 years old, he's on the run. Running from court-ordered treatment for his cancer. If the law doesn't find him soon, he could die.
Diagnosed in January with Hodgkins Lymphoma, doctors says he likely won't survive without chemotherapy and radiation. But that treatment is why he and his mom were a no-show at a welfare hearing. Daniel and his family were supposed to bring the results of his latest chest x-ray to court, but only the boy's father showed up. He told the judge he last saw his wife Monday evening. He said she'd left her cell phone behind and he doesn't know where they are. A family friend, who came to support them, was shocked.
DAN ZWAKMAN, HAUSER FAMILY FRIEND: This is probably a case of stress upon the family. They're not accustomed to this type of thing and the courtroom is pretty intimidating to them. They're a close family. They stick pretty much to themselves.
KAYE: Still, the judge ordered that Daniel be apprehended and issued an arrest warrant for his mom. This all stems from the family's beliefs. They are Roman Catholic, but follow the beliefs of some Native Americans who only approve of natural healing. UNIDENTIFIED FEMALE: It's our religious freedom and right to do this.
KAYE: So instead of chemotherapy, Daniel has been treated with herbal supplements, vitamin and ionized water. This was Daniel on the family farm not long before he disappeared.
DANIEL HAUSER: I'm feeling great lately.
KAYE: But Daniel's doctor said his cancer has spread significantly. Last week, Daniel's mom testified she didn't believe her son was in any medical danger, but the judge ruled Daniel had been medically neglected and, against his parents' wishes, ordered Daniel to undergo chemotherapy.
UNIDENTIFIED FEMALE: We're a simple, honest family. We're not out to harm anybody. We never -- this is just our way of life. And why people want to infringe on it, I don't know.
KAYE: Daniel tried chemotherapy once, but later told the judge he believes it would kill him. And that if anyone tried to force it on him, he would punch and kick them. The judge ruled Daniel did not understand the treatment's benefits, in part because his "reading and writing skills are extremely limited."
KAYE (on camera): If and when Daniel is found, the judge ordered he be placed in protective custody so he can get proper medical treatment. Doctors have said Daniel had a 90 percent chance of survival with that treatment. Without it, they say, there's just a 5 percent chance he'll survive.
Randi Kaye, CNN, New York.
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HARRIS: And we are pushing forward with the next hour of CNN NEWSROOM with Kyra Phillips.
