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4,000 Marines Storm Helmand Province in Afghanistan; U.S. Soldier Captured by Taliban; North Korea Launches Missiles; Jackson's Memorial at Staples Center on Tuesday; California Runs out of Money

Aired July 02, 2009 - 11:59   ET

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

TONY HARRIS, CNN ANCHOR: First, this hour, military commanders in Afghanistan are putting President Obama's counterinsurgency strategy into play today. Four thousand U.S. Marines pushed in to the Helmand River Valley, and they plan to stay. The goals? Stamp out the Taliban and the opium-producing poppies that fund them.

CNN is covering this developing story with Atia Abawi in Kabul and our Barbara Starr at the Pentagon.

Atia, the goal of the mission is to clear, security and hold. It has been tough to do in the past.

What is the U.S. military saying? How will this offensive be different?

ATIA ABAWI, CNN CORRESPONDENT: Well, what makes this offensive different, Tony, is, first of all, the number. You have 4,000 U.S. Marines there, you have the Afghan national army, and you also have the coalition troops that have already been in country.

Let's remember that the British troops have been handing Helmand Province for some time now. And they have been trying to secure and hold, but they had told us when we were there a few months ago that they didn't have enough manpower to secure and hold all of Helmand Province. Helmand is almost approximately the size of Ireland. Afghanistan is a big country, and primarily Helmand, the southern region of Afghanistan, bordering Pakistan, has the most porous borders with the Taliban and foreign militants coming in and out, and it's been very hard for these coalition troops to stomp them out without this new manpower -- Tony.

HARRIS: OK, Atia. Appreciate it. Thank you for the update.

I want to bring in our Barbara Starr at the Pentagon to talk more about this mission and another development out of Afghanistan.

Barbara, is this offensive consistent with the new strategy military officials have been talking about in Afghanistan?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Oh, absolutely, Tony. As you mentioned a minute ago, it's now all in play. The new counterinsurgency strategy, move into these towns and villages, push the Taliban out, bring in economic assistance, aid, rebuilding, make the people feel more amenable to both their own government and the U.S. forces. Leave the Taliban nowhere to come back to. But right now, is it working? It's very interesting.

The Marines are running in to very light resistance, we're told. Sporadic, small-arms fire only from the Taliban in this area, because the Taliban have their own strategy, which is to run away, hide, and wait for another day. It remains to be seen how it all sorts out.

HARRIS: And Barbara, in another area of Afghanistan, you have been reporting today on a U.S. soldier captured by militants. What's the latest you're hearing on that front?

STARR: Tony, it doesn't get more serious than this. Apparently, by all accounts, this soldier, a young Army soldier, taken on Tuesday, kidnapped. The U.S. military now publicly acknowledging it for the first time.

They say they have intelligence that he was captured by Taliban, apparently now transferred and in the hands of a major warlord, a man by the name of Haqqani. This is someone very well known to the U.S. military and to U.S. intelligence.

Haqqani and his group -- you see an artist's rendition of him here -- they operate on both sides of the border, Tony. So, the greatest concern right now is that the Haqqanis may try to move this soldier into Pakistan, where it would be very tough to get him.

So, what's the strategy? Right now, at this hour, the Pakistanis, Afghan forces and U.S. forces are moving through this whole area of eastern Afghanistan, Paktika Province. They are moving through there, trying to seal it off, talk to villagers, talk to elders, talk to tribal leaders, and say do not give these people safe passage if you see them. If you see this American being held, turn him in.

They're hoping it works.

HARRIS: OK. Barbara Starr at the Pentagon.

And our thanks to Atia Abawi in Kabul, Afghanistan, as well.

Here is a little more on the Helmand River Valley.

It is possibly the most dangerous area in Afghanistan for NATO forces. British troops have taken the security lead there since 2006. They have been joined by U.S. and other NATO forces since then.

The Helmand River Valley itself is a hot, hot commodity. That's where about two-thirds of Afghanistan's opium supply comes from. It is seen as a major financial source for the Taliban. The United Nations says opium production netted insurgents between $50 million and $70 million last year alone.

North Korea testing missiles and the world's patience again today. South Korean news reports say the regime fired off four short- range missiles today. Reports say they flew about 60 miles and fell into the sea. We talked to CNN's Sohn Jie-Ae in Seoul after word of the launches surfaced today.

(BEGIN VIDEOTAPE)

SOHN JIE-AE, CNN CORRESPONDENT: I was actually at a reception at the American Embassy. They were doing an early Fourth of July embassy (ph), and it was full of South Korean and American government and military officials. And it was about -- everyone's cell phone started going off pretty much at the same time, but you weren't seeing people rushing away.

We talked to some of them at the reception, and they said this was something they had been expecting for some time. Actually, North Korea itself had really given warning to the outside world when it had a no-sail zone in the east coast of North Korea. That actually was going to last until July 10th.

(END VIDEOTAPE)

HARRIS: North Korea has been hinting at a long-range missile launch aimed toward Hawaii. We asked Americans, does North Korea pose a threat to the United States? The CNN/Opinion Research poll found about half think North Korea is a serious threat. A smaller number felt the North is a moderate or slight threat.

Issue #1, the economy. Unemployment lines are still growing. The Labor Department says the unemployment rate inched up to 9.5 percent in June, a 26-year high. That means 467,000 Americans lost their jobs last month.

A new CNN/Opinion Research poll suggests Americans' rising optimism about the economy may be leveling off. Just 12 percent of people say the recovery has started, almost half say the economy has stabilized. But four in 10 Americans feel the U.S. is still in a downturn.

President Barack Obama huddling today with leaders of companies, big and small, that have managed to create jobs in the tough economic climate. This afternoon, he will deliver remarks from the White House Rose Garden on the importance of innovation and jobs.

You can see it here live at 2:20 p.m. Eastern. That is 11:20 Pacific.

Not near enough money. It is a problem California finds itself in today.

Governor Arnold Schwarzenegger holding a news conference this hour. He declared a fiscal state of emergency yesterday.

The short-term solution? Issuing IOUs to firms doing business with the state.

Government, social, and health services will also be getting IOUs beginning tomorrow -- beginning today. California is running a $26 billion deficit. The governor and the legislature are at odds over how to deal with the deficit. And Schwarzenegger wants cuts in spending and borrowing. Senate Democrats want tax increases and less severe cuts.

Lots of reaction, because this affects so many people.

Nicole Lapin is back with some blog reaction.

And Nicole, what are people saying?

NICOLE LAPIN, CNN.COM CORRESPONDENT: They're saying a lot, Tony.

Joe Roundress (ph) -- let's get to the blog right now -- saying, "There is a saying that goes, 'So goes California, so goes the nation.' Pretty scary and too often true. This is a problem that is a result of overly generous social programs and an anti-business tax."

Also, somebody is chiming in actually understanding what's going on here, Levi (ph), who says, "It's perfectly understandable that states are starting to hand out these IOUs. The economy doing poorly, and there are consequences."

Also, Tony, lots of questions on the blog right now. This question coming in. "So, does this mean we can send IOUs when taxes come around next year?"

HARRIS: Nice. Nice.

LAPIN: Just want to make clear, there are a lot of questions, Tony, about unemployment and other benefits being paid with IOUs, and that's simply not the case. Those come out of a separate fund.

There is also a priority for schools and pension funds and Medi- Cal providers. So, not everything gets an IOU. Just want to clarify that for the blogs.

Tony, you remember, I also interviewed Governor Arnold Schwarzenegger about a month ago.

HARRIS: Right.

LAPIN: We talked about the budget crisis. Here was an interesting option he threw out.

HARRIS: OK.

(BEGIN VIDEO CLIP)

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: When we go in to our budget negotiations with the legislature, I promise you, I will threaten them that if they don't do exactly what I tell them to do, I'm going to have them watch "Red Sonja" 13 times straight without any interruption, and I tell you and guarantee you that they will then do exactly what I need them to do.

(END VIDEO CLIP) LAPIN: So, watch the bad movies.

HARRIS: Yes. Yes.

LAPIN: There you go.

HARRIS: Well, I suppose on some level you have to keep a sense of humor about it.

Nicole, we appreciate it.

LAPIN: It's almost farcical. And that's what we're seeing on the blog -- "Are you kidding me?"

HARRIS: Are you kidding me?

Thanks, Nicole.

LAPIN: You're welcome.

HARRIS: You know, federal agents have joined the investigation into what caused Michael Jackson's death. We are tracking down the latest.

(COMMERCIAL BREAK)

HARRIS: So here we go. It's been a week since we learned that Michael Jackson died. Now his death is the focus of a federal investigation.

Kara Finnstrom is at the Neverland Ranch in Santa Barbara County, California.

And Kara, you know, yesterday at this time you were showing us earth movers and people awaiting a public memorial at the ranch. That's certainly not happening there.

Describe the scene at your location today, if you would for us.

KARA FINNSTROM, CNN CORRESPONDENT: Sure, Tony.

Well, the hustle and bustle is definitely gone. We're not seeing those big trucks come in and out of Neverland anymore. But what we are seeing today are still lots of fans.

I want to give you a live look at some large condolence boards that have been set up. And as fans make their way in, they're signing a couple thoughts on there for the family. And they say it's kind of a nice way to feel that they're able to leave their thoughts behind.

Some folks, I can tell you, are actually walking in about two miles. One lady I spoke with yesterday walked in about 40 minutes because of the parking situation here. Again, it's a two-lane road that leads in.

Now, the question everyone has here, of course, is, well, what are the plans for a public memorial? At this point, Tony, the family, through their spokesperson, is just saying one is in the works. We don't have any details confirmed. Not a place, not a time.

But, you know, as we discussed earlier, Tony, we are listening and we're waiting, and once we get those confirmed, we'll certainly be passing those along.

HARRIS: All right, Kara. I gave you a hard time about that last hour because I just know -- I know -- and the only reason I did is because I know how frustrating it is for you, because I know how hard you work.

FINNSTROM: Yes. We want to nail it down, too.

HARRIS: Yes.

All right. Kara Finnstrom for us.

Kara, appreciate it. Thank you.

You know, Michael Jackson's brother, Jermaine, is speaking out about the recording industry, drugs and his brother's death.

Drew Griffin with CNN's Special Investigations Unit is covering it for us in Los Angeles.

Boy, Drew, what is Jermaine saying?

DREW GRIFFIN, CNN CORRESPONDENT: Tony, to put it in context, I want to set this up just a little bit.

HARRIS: Sure.

GRIFFIN: Number one, all the experts we've talked to fully believe that Jackson family has the results of that second autopsy, their private autopsy. So, they really should have a clear idea what caused the death of Michael Jackson.

Secondly, yesterday we reported the DEA is now involved in this investigation. What are they doing? They're looking at standard procedure now, but they are involved here. They're looking at prescription drugs. They're looking at Michael Jackson's doctors...

HARRIS: Yes.

GRIFFIN: ... the prescriptions that were given to Michael Jackson, the quantities. Basically, the supply of drugs that may have been going to this superstar.

HARRIS: Right.

GRIFFIN: And we've heard from the very beginning that drugs may be a big part of why Michael Jackson died.

So, this morning, on NBC's "Today Show," Matt Lauer asked a question to Jermaine Jackson: What if it is drugs that were involved? What would your reaction be?

This is what he said...

(BEGIN VIDEO CLIP)

JERMAINE JACKSON, MICHAEL JACKSON'S BROTHER: I would be hurt.

MATT LAUER, "THE TODAY SHOW": Hurt? Why?

JACKSON: Hurt because Michael has always been a person who was against anything like that. But I'm not saying it's right, because it's not right. But in this business, the pressure and things that you go through, you never know what one turns to.

(END VIDEO CLIP)

GRIFFIN: Now, we have heard from many of Michael Jackson's friends, past associates, others, who have said, look, this guy did have an on-and-off drug problem. So, it was a little bit surprising that Jermaine Jackson didn't come out and say there was an issue here. But also softening the blow, if indeed that is what the result will be.

HARRIS: And isn't the story that Michael Jackson may have turned to prescription painkillers after -- after -- you remember the commercial and his hair caught on fire and that whole thing? Isn't the story that that might have been the moment when Michael Jackson turned to painkillers?

GRIFFIN: Well, I mean, looking at his life, there could be a number of moments. Certainly that one...

HARRIS: Yes.

GRIFFIN: ... could have been a moment, and that one was a moment that his friends say he turned to stronger drugs, painkillers, if you will. But all the plastic surgeries, Tony, all of the...

HARRIS: Good point.

GRIFFIN: ... all of the problems he had sleeping, all of these issues all along the way, any one of which could have brought drugs, prescription drugs, into his life. That is where we believe the investigation is heading right now, as, again, we wait for the official announcement from the L.A. Medical Examiner's Office, autopsy number one, if you will, on what caused the death of Michael Jackson.

HARRIS: Drew, appreciate it.

Drew Griffin for us.

Drew, thanks.

Go behind the gates. Get a look inside the Neverland Ranch.

Boy, Larry King has a pass to go inside the house, to tour the property. You're invited to go along. "LARRY KING LIVE" from Neverland tonight at 9:00 p.m. Eastern Time.

When you don't have a job, it impacts your whole life. Our Gerri Willis will join us in just a couple of minutes with some tips on where to go to find some support.

(COMMERCIAL BREAK)

HARRIS: Well, you know being unemployed is more than just living without a paycheck. It is a way of life.

Personal Finance Editor Gerri Willis joins us with some advice for the jobless looking for some support.

And Gerri, so help is available?

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Yes. Absolutely, Tony.

Look, if you're unemployed, you're not alone. Reach out to other people in the same boat.

The Web can connect you with local support groups. Check out meetup.com. Now, this site lists unemployed groups up people who meet to exchange feedback on resumes, cover letters, interviews, you name it.

You can also check out something called layoffmoveon.com. That's a community of people who have lost their jobs. Even if it's just to vent your frustrations, it's important to have people willing to listen and understand.

And, of course, don't forget about the resources at your church or community organization can provide. And don't be afraid to tell your colleagues, customers and friends that you're unemployed. You've got to be up front to find that next job.

HARRIS: A schedule can help?

WILLIS: Well, you know, one of the big things when you're unemployed is that you don't have a way to structure your day. So, you've got to treat your job search project as you would a regular full-time job.

Get out of the PJs, put on something you would wear to your old job. And make sure your job search isn't all-consuming. Schedule downtime, too. This could be an opportunity to learn a new skill, experiment in other fields. If you can, do some volunteer work or take on a part-time job if you just have to get out of the house.

HARRIS: Hey, Gerri, should people consider going back to school? We talked about this on a couple of occasions.

WILLIS: Well, you know, it is an option, but you should always think about what it's going to buy you. Will it pay off?

If getting a degree will significantly give you an advantage and you'll reap the rewards with higher pay down the road, by all means explore this path. You can save a bundle by going to community colleges or taking some classes online. But don't go back to school just because you need to do something. It's an expensive lesson a lot of people are learning right now -- Tony.

HARRIS: Hey, Gerri, if you would, give us a bit of a preview. I know you've got a big show coming up this weekend, "YOUR BOTTOM LINE."

WILLIS: YBL, baby, 9:30 a.m., Saturday morning, right here on CNN.

We have a special Fourth of July for "YOUR BOTTOM LINE," from yard sales to eBay to good old classified ads, how to clear out the clutter in your house and build up your cash reserves at the same time.

Did I say 9:30 Eastern Time right here on CNN? "YOUR BOTTOM LINE."

HARRIS: Awesome as always.

Thank you, Gerri.

WILLIS: Thank you, sir.

HARRIS: You know, finding a way to prosper in tough times, we will show you one great example in today's "Money & Main Street" report.

(COMMERCIAL BREAK)

HARRIS: Oh, boy, the overall unemployment rate in the country now, 9.5 percent after the June jobs report. And take a look at CNNMoney.com and you see the lead story there, "Stocks plunge as the recovery..." -- my guess would be the next word would be "stalls."

As always, let's direct you to CNNMoney.com for the latest financial news and analysis. Our money team does a terrific job, CNNMoney.com.

Let's get you to the Big Board now, because it looks like the jobs report has had a definite impact on stocks today, as you can see. We're just about three hours into the trading day, and what a sell- off.

Stocks down 171 points. The Nasdaq down 42, 43 points.

We're going to follow the numbers all afternoon long with Susan Lisovicz and the rest of the money team, right here in the CNN NEWSROOM.

You know, some key senators are hoping to get more backing for the president's health care plan. Senators Edward Kennedy and Chris Dodd say their revised plan will cost substantially less than earlier estimates. They want a government-run insurance option that would compete with private insurance plans. They also propose a $750 per worker annual fee for larger companies that don't offer insurance to workers. I think that's a new wrinkle here.

Their revised plan costs $611 billion over 10 years. That is less than the plan's $1 trillion estimate from a couple of weeks ago.

Is the American Medical Association really on board with a government health care plan? Maybe. Maybe.

Yesterday, on this show, the new president of the AMA pointed out a government plan doctors might actually support.

(BEGIN VIDEO CLIP)

DR. J. JAMES ROHACK, PRESIDENT, AMA: Our AMA policy says there's a federal employee health benefit program right now that's government sponsored, it provides choice of options. It's the same benefit practice that the Congress has.

Well, if it's good enough for Congress, why shouldn't it be good enough for the individuals who don't have health insurance provided by their employer? It provides the pooling mechanism. It provides choice. It provides the ability of the government to help subsidize based on a person's income level, and you don't have to waste administratively by creating something brand new.

(END VIDEO CLIP)

HARRIS: OK. Well, what an idea. Will it work?

Elizabeth Cohen is back to help us sort through this.

So, we can talk about the federal employee insurance program in just a moment, but you were here yesterday. What did we here? Did he hear a real shift from the AMA, or was it just a minor shift, heavily nuanced?

ELIZABETH COHEN, CNN SR. MEDICAL CORRESPONDENT: What I heard was them saying, you know what? We're going to show some enthusiasm for the idea of having a government-sponsored health plan option out there.

HARRIS: Right.

COHEN: We're going to show some enthusiasm. Before, they were all worried and concerned, and now there's more enthusiasm. But they also said, but we want it done our way.

There are lots of different ways to do a government-sponsored health care plan. The one that they brought up, which is taking uninsured people and sort of mushing them in with the eight million people who are on the federal government's insurance plan...

HARRIS: Right. COHEN: ... that's their way of doing it. That's their idea of how to do it.

HARRIS: OK. So, are there other options out there for a public plan?

COHEN: Sure. You could say, let's take those 46 million uninsured Americans and put them on Medicare. Let's do that. Medicare's a program that's out there and operating. Let's put them there.

HARRIS: But the doctors don't really prefer that at all.

COHEN: No, they're not crazy about that.

HARRIS: They don't like it at all. And why is that?

COHEN: You can probably guess one of the reasons why they are not crazy about it. Medicare does not pay doctors very well. As a matter of fact, it pays doctors at 2001 rates. And nobody wants to get paid what they got paid eight years ago.

The federal employees insurance program which insures eight million people, they pay much better. I mean, it's sort of a healthy, robust insurance program like a lot of big employers have.

HARRIS: I get it. So they would prefer the federal employee insurance program because it pays better.

COHEN: I'm sure they would give other reasons, too, but I'm sure that's got to be one of the reasons.

HARRIS: All right, Elizabeth. Appreciate it. Thank you.

COHEN: OK. Thanks.

HARRIS: Maintaining any type of business in this environment is a challenge, but how about a small business offering products for less while also trying to turn a profit?

CNN's Stephanie Elam takes a look at one business that others can actually learn from.

(BEGIN VIDEOTAPE)

XAVIER HELGESEN, CO-FOUNDER, BETTER WORLD BOOKS: We thought, wow, like, there's all these books out there, that the bookstores would just say, no, I don't want it, but there's totally value in those books. You've just got to get them and efficiently get them up on the Internet, and then someone will buy them.

STEPHANIE ELAM, CNN BUSINESS CORRESPONDENT (voice-over): Building and maintaining a successful small business in this environment is a challenge, one that Xavier Helgesen and his partners Kreece Fuchs and Jeff Kurtzman know all too well. When they were in school, the bookstore wouldn't buy back their used textbooks, so they tried selling them on Half.com. It worked and the idea took on a whole new chapter.

UNIDENTIFIED MALE: There's some great stuff in there. That I promise you.

ELAM: With more than two million books at any given time in this Mishawaka, Indiana, warehouse, the owners of Better World Books think they have a book for everyone and a small business plan others can follow.

XAVIER HELGESEN, CO-FONDER, BETTER WORLD BOOKS: We bring a lot of stuff in, even in full truckloads, so we'll bring about 50,000 pounds of books in at once, drop it off in the bay here and then put it up on the shelves.

ELAM (on camera): After funding the business themselves for the first five years, the founders got a Small Business Administration credit line in 2004, followed by a $2.4 million venture capital investment in 2008. All to build up the website and the Better World Books brand. As other small businesses have struggled, Helgesen and partners have seen their revenues grow from $4 million a year in 2005 to a projected $31 million in 2009 and all the time helping others buy books at a cheap price.

HELGESEN: The cheapest they find would be $3.48 with free shipping.

ELAM (voice-over): The books are donated by libraries, bookstores and college campuses from across the country. Every day, Better World brings in 40,000 to 50,000 books, sending just as many out.

HELGESEN: We've sold orders up to 5,000 books at once and we sell a lot of single book orders. So our average order is 3,000 or 4,000 books.

ELAM: The Better World founders built the company on the foundation of the broke college student. So textbook deals remain at the heart of the business.

HELGESEN: What's cool about us is we price them at market level. So you may be getting a $100 book for $10. That happens every day here.

ELAM: And Better World Books believes in giving back. It donates five to 10 percent of its revenue back into the hands of libraries and literacy programs around the world. Stephanie Elam, CNN, New York.

(END VIDEOTAPE)

HARRIS: As you can see "Money & Main Street" segments every Thursday right here in the CNN NEWSROOM. And you can see even more "Money & Main Street" reporting tonight at 8:00 P.M. Eastern on "Campbell Brown."

Before you head to the pool with your little ones, we've got some important safety information for you. Our Gerri Willis will bring us details next in the NEWSROOM.

(COMMERCIAL BREAK)

HARRIS: And very quickly now, Kara Finnstrom has some breaking news on the Michael Jackson story. Kara, what do you have?

KARA FINNSTROM, CNN CORRESPONDENT: Well, Tony, we finally have some answers for everyone that has really been wondering about a tribute to Michael Jackson. A person briefed by a representative of the family says a service or tribute will be held at 10:00 A.M. on Tuesday at the Staples Center. So, this tribute that we've been talking about to Michael Jackson open to the public, being held, we are told, by a person briefed by a representative of the family at 10:00 A.M. on Tuesday at the Staples Center.

Now, in addition to that, a person with some direct knowledge of the contents of the Michael Jackson family trust. Has provided us with a little bit more insight in to what will happen with his estate. They say that according to the trust, 40 percent of Michael Jackson's net worth will go to Katherine, and that will revert to his children, rather, upon her death. Forty percent will go directly to the children, and 20 percent to charities.

So, again, a little bit of insight there in to how his estate will be divided up. But the news that everyone has -- all of his fans, anyway, have been waiting for, especially those here in the Los Angeles area, who have been up here and were kind of hoping to see a tribute here is that it now appears the family will hold their public tribute 10:00 A.M. on Tuesday at the Staples Center.

HARRIS: OK, Kara, good work on that, we appreciate it, thank you. You've really been working the phones and every source that you can identify to get that information for us. Kara Finnstrom for us, thank you.

We just got a bit of breaking news for you. Vice president Joe Biden we understand is in Iraq. That story -- that news -- just coming to us here in the CNN NEWSROOM. Vice President Joe Biden, on the ground, right now, in Iraq. We will get our senior White House correspondent, Ed Henry, up as soon as we can with additional information on this reporting. Vice President Joe Biden, on the ground right now in Iraq.

Four thousand American marines swarmed over Taliban territory in Southern Afghanistan today. And they say they're going to stick around for a while. The push is happening in Helmand Province, a lawless, poppy-producing area. Let's talk to senior international correspondent, Nic Robertson, he's in Islamabad, Pakistan. And, Nic, this U.S. surge in Afghanistan, is it the first time there's been an effort to get things stabilized there? Is it?

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: There have been efforts before. It's been incremental efforts. What we're going to see now is these 4,000 marines and the other marines who are deploying to the south and east of Afghanistan, we're going to see a huge step up in the number of troops, in the areas that they cover. They've got a huge task ahead of them. Because the areas that they're going into right now are places that the Taliban have had free rein in, intimidating the populations, having their own rifts in those areas, if you will. And this is where -- this is exactly where the marines are headed. But it's the heat of the summer. They're going to have a very, very tough fight on their hands. Tony?

HARRIS: Hey, Nic, how is all of this impacting Pakistan, where you are? Is the U.S. seeing any more cooperation from the government there?

ROBERTSON: You know, again, this is an incremental situation we're in. And we're seeing incremental changes in the position of the Pakistani government. And, yes, they are now, we've been told, Pakistani army sending troops to the border of Helmand Province and Pakistan. It's a desert area with mountains. It's an area where the opium and heroin traders have had their labs, their factories, they've shipped heroin out of the country down on that border, now Pakistan moving more troops in there, they say, to stop those Taliban fighters running away from the fight against the marines and crossing into Pakistan. Because, of course, now Pakistan is fighting against the Taliban in a way that it hasn't ever done before. Tony?

HARRIS: OK, our senior international correspondent, Nic Robertson for us, thank you.

How about this? A story that really developed this morning? A computer crash caused a big backup at Chicago's O'Hare Airport today, just in time for the fourth of July travel. United Airlines had to delay or cancel flights because of the system-wide outage. At its peak, about 1,000 passengers were in line. Look at this scene! Computers began coming back online about two hours ago, we're told. Things seem to be getting back to normal now. But as Chad Myers will tell you, that causes some kind of a ripple effect, doesn't it, Chad?

CHAD MYERS, CNN METEOROLOGIST: It does. And the northeast has low cloud cover, especially rain in Boston. Martha's Vineyard, a little bit of thunderstorm activity north of you. So, we have Boston, LaGuardia, JFK, Newark all over an hour already today. San Francisco, Teetersboro and there's Martha's Vineyard there with a ground stop there, at least for a while. There are still 11 planes in the air to Martha's Vineyard right now. Feel sorry for them because they're going to Martha's Vineyard any way.

(WEATHER REPORT)

HARRIS: It looks like the state of California will have to start paying its bills with IOUs. Boy, that's the topic of our blog today. What's the deal? Send us your comments, cnn.com/tony. We're back in a moment.

(COMMERCIAL BREAK) HARRIS: Very quickly we want to get to our senior White House correspondent, Ed Henry, with more on the breaking news we brought you just moments ago. That Vice President Joe Biden is on the ground in Iraq. Ed, if you would, how much more do you know about this story?

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, the significance, Tony, of course, the Fourth of July weekend. It's an opportunity for the vice president to go and thank U.S. troops who continue to sacrifice and serve in Iraq. The big news, of course, this week, the other significance, in the context here, is that U.S. troops have moved out of the cities in Iraq.

HARRIS: That's right.

HENRY: And are letting the Iraqis take on a bigger role. But we cannot forget that there's still over 130,000 U.S. troops still there on the ground. Still ready to go into combat. Still there very much in harm's way. And so that's very significant. And, of course, the vice president just in the last couple of days has been given a new assignment by the president.

He already has been handling implementation of the stimulus package on the domestic side. But on the foreign policy side, Vice President Biden has been tasked to sort of help move the Iraq policy for the U.S. forward in the days ahead, to make sure that all of the security changes are implemented.

And so that's significant as well, because he's going to have some meetings, we're told, tomorrow presumably that would be with General Odierno, Ray Odierno, the commanding general on the ground there, Ambassador Chris Hill, the relatively new U.S. ambassador to Iraq. There's a lot of important thins in the days ahead, not just with making sure the Iraqis can take over security, but pushing them along on political reconciliation which is the real key to make sure U.S. troops can eventually come home. Tony?

HARRIS: Very good. Our senior White House correspondent, Ed Henry, for us. Appreciate it, thank you, sir.

Some consumer news for you here. Millions of inflatable baby floats -- baby floats -- getting recalled because of a drowning hazard. CNN's personal finance editor, Gerri Willis, joining us live now. Gerri, good to see you again. What's the problem?

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: If you have a baby, if you have a toddler, listen up, about 4 million baby floats, 14 different models, manufactured by a company called Aqua Leisure Industries are getting voluntarily recalled. The problem the leg straps in the seat of the float can tear and this can cause the kids to unexpectedly fall into the water. It's an obvious drowning risk. There have been 31 reports of float seats tearing, causing kids to fall into the water, but no injuries have been reported. That's the good news according to the Consumer Products Safety Commission.

The floats come in a range of styles and colors. Here are some examples, for specific model numbers go to the CPSC website, it is cpsc.gov, take a look at these. Baby and Me combo, deluxe toddler racer, sunshade buggy, quacker (ph) float.

Now you would have bought these at Target, Toys R Us, Wal-Mart, Dollar General, Kmart, Walgreen's, stores like this, even Bed Bath & Beyond between December 2002 and June of this year. Now look for the names and model numbers that should be on the back of the float. If you have one of these floats at home, you've got to put it away. Get rid of it. Throw it away. You can call Aqua Leisure for a full refund. Here's their number, 866-807-3998. Or just go to the website, you can get help there too, aqualeisure.com. But get rid of those things, they are not safe.

HARRIS: OK, boy, great advice, man, and information for you there. Gerri, appreciate it. Thank you.

WILLIS: My pleasure.

HARRIS: The latest on the California budget mess. The latest comments from Governor Schwarzenegger. We're going to talk to a reporter from the "Los Angeles Times" who is covering this story, in just a moment. You're in the CNN NEWSROOM.

(COMMERCIAL BREAK)

HARRIS: IOU! Get used to it. Boy, in California, and in at least one other state, California will begin issuing IOUs to vendors, state social and health plans, all because the government failed to fix a huge budget deficit. Evan Halper is with the "L.A. Times." Evan, good to see you again. Thanks for your help on this story. Are the governor and legislature anywhere near a solution on fixing this?

EVAN HALPER, LOS ANGELES TIMES: It's hard to tell. It's looking like they're far off right now. The deficit's just getting bigger. They missed a couple of deadlines and IOUs are going out today.

HARRIS: Boy, and how will the IOUs work? Explain this to us.

HALPER: Well, if you're expecting a payment from the state, well, various folks are expecting payments from the state. Not everyone will be getting these IOUs instead of checks. It will just be a piece of paper that says the state of California owes you this money. It's a registered warrant. And there's a lot of anxiety about it. Some banks may accept them for a short period of time, but other banks are, you know, aren't being clear whether they will accept these.

HARRIS: Evan, what has history taught us about this process? Because California's been here before.

HALPER: Well, when we went through this in 1992 --

HARRIS: Yes.

HALPER: -- the banks did accept the warrants. The banks are on much shakier footing now than they were back then, and so it's unclear whether they will take them.

HARRIS: Can recipients cash in these IOUs before October 1st?

HALPER: Not unless they're, you know, their bank decides to let them. If they're at a bank that will accept them, Bank of America, for example, will take them until July 10th. That's only eight days, after which point the recipients will have to wait until October 1st, then they can cash them in with some small amount of interest.

HARRIS: Can they be used to pay taxes?

HALPER: Not as far as we can tell.

HARRIS: Yes.

HALPER: There was an effort in the legislature to allow people to use them to pay, you know, government obligations like taxes. But it hasn't passed and it doesn't look like it's going to pass.

HARRIS: All right. So, break this down. Look, how wide is the divide here?

HALPER: Well, it's pretty wide. Because the governor wants, you know -- the whole thing done with no taxes. He wants, you know, to really cut into some of the social safety net. The democrats are reluctant to go there. And they're at, you know, the usual gridlock.

HARRIS: All right, Evan, boy, I guess one of the questions is, the banks. How long will they be willing to play? Evan, we appreciate it. Thanks for your time on this. You've really helped us out a lot on this story.

HALPER: OK, thanks Tony.

HARRIS: Evan Halper of the "Los Angeles Times."

The Honduran government has until Saturday to restore its ousted president or face expulsion from the Organization of American States. Our Karl Penhaul is in Honduras with more on the demonstrations following the sudden change in power.

(BEGIN VIDEOTAPE)

KARL PENHAUL, CNN CORRESPONDENT (voice-over): An angry mob faces off with Honduran security forces. Soldiers peer over their riot shields. Several thousand supporters of ousted President Manuel Zelaya curse them for staging a military coup.

SATURNINO SANCHEZ, TEACHERS' UNION LEADER: "We're going to risk our lives and bloodshed to defend the constitution," this teachers' leader says.

PENHAUL: I asked an army officer why he and his men are backing the coup that toppled President Zelaya Sunday. He tells me they're only here to protect the civilian population. In fact, these soldiers and riot police are guarding the congress building. This is where lawmakers voted to back the power grab and swear in interim President Roberto Micheletti, a move that sparked international diplomatic condemnation. Honduras' military gets major support from the United States. Its economy is also heavily dependent on selling bananas, coffee, and textiles to the U.S. The White House has refused to recognize the new government, but protesters clearly want the United States to take tougher measures. Teachers, public sector workers and farm workers have joined a national strike. Women's groups were also out in force. "We have to take part in all the decisions of this country, because until now we have not had a voice," she says.

The trigger for the coup was Zelaya's plan to hold a referendum to change the law so he could seek another four-year presidency. These protesters vow to continue their struggle, and were collecting cash to bus in comrades from the countryside. Out of the crowd, protesters dragged a plain clothed policeman armed with a loaded pistol. He told me he was a security agent, but said he had come to protect, not to harm, the demonstrators. Zelaya supporters disarmed him and freed him.

(On camera): Protest leaders were intervening here and have asked the riot police today to withdraw to avert the possibility of a clash with protesters.

(Voice-over): More demonstrations are planned, and the population is polarized. There's little sign the coup leaders or the toppled president's supporters are ready to back down. Karl Penhaul, CNN, Honduras.

(END VIDEOTAPE)

HARRIS: Listen to this, a French aviation investigator today saying the Air France plane that crashed in the Atlantic did not break up in flight. Instead, Air France flight 447, in the words of one investigator, went straight down, almost vertically -- if you can imagine this -- towards the surface of the water very, very fast. The plane crashed June 1st. The investigator says it appears the plane was being flown by the pilot and was not on autopilot. Searchers will continue to look for the plane's flight data recorders until July 10th.

The Michael Jackson case points out a widespread problem. Patients shopping for doctors who will give them what they want.

(COMMERCIAL BREAK)

HARRIS: Just what killed Michael Jackson? It is a question that won't go away. CNN's Brian Todd reports on claims about Jackson's prescription drug use from his doctor and a nurse.

(BEGIN VIDEOTAPE)

BRIAN TODD, CNN CORRESPONDENT (voice-over): The medical mystery surrounding Michael Jackson seems to grow deeper each day. One of the most troubling questions, what information did the star share and not share with his health care providers about his medication. Nutritionist Cherilyn Lee, a registered nurse who says she worked with Jackson earlier this year, tells of a frantic call just a few days before he died. Lee says Jackson's staff said he wasn't feeling well and begged her to come and help him, but she was in Florida. Three months earlier she said, Jackson pleaded with her to find someone who could provide him with the powerful sedative, Diprivan, used mostly in hospitals during anesthesia. Lee says she advised him against it.

CHERILYN LEE, NURSE WHO TREATED JACKSON: I said Michael you keep wanting to sleep, you keep saying you want to be knocked out and sleep. But what about waking up tomorrow?

TODD: Did Jackson's personal physician know about that call just days before his death or had he ever been approached by Jackson about Diprivan? We tried to contact the attorneys for Dr. Conrad Murray. The lawyers' representative said they couldn't answer those questions. They issued a statement saying, quote, "We will not be responding to rumors and innuendo." Dr. Murray's attorneys had previously said he was not aware of any prescription drug abuse by Jackson. But they also said this --

EDWARD CHERNOFF, ATTORNEY FOR DR. CONRAD MURRAY: He didn't know for sure whether he had any other doctors. There were some suspicions that there might be other doctors, but he didn't know for sure.

TODD: Dr. Murray hadn't started as Jackson's personal physician until early May. Cherilyn Lee says she hadn't seen Jackson since April, but that he had asked her about Diprivan then. Mentioned he'd gotten Diprivan from another doctor a long time ago, but wouldn't say who that doctor was. An expert on medical ethics says many patients, not just the wealthy and famous, play health care providers off each other and compartmentalize information.

PROF. PAUL WOLPE, DEPT. OF BIO-ETHICS, EMORY UNIV.: They might assume that one health care professional would disapprove of a behavior and another one seems more open. They might think that I should tell the nutritionist about one thing and my doctor about another and not see that the doctor needs to know the whole picture.

TODD (on camera): And Paul Wolpe says compartmentalizing like that can be dangerous. The personal physician he says is the captain of the team and needs to know all the drugs you're taking so that your care can be coordinated and you can be warned about risky behavior. Brian Todd, CNN, Washington.

(END VIDEOTAPE)

HARRIS: Well, CNN is going to take you behind the gates. Get a look inside the Neverland Ranch. Larry King has a pass to go inside the house and tour the property. You are invited to go along. "Larry King Live" from Neverland tonight at 9:00 Eastern.

We are pushing forward now with the next hour of CNN NEWSROOM with Kyra Phillips.