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Finding the Terrorists; Murdered Couple's Funeral Today; Health Reform Hot Topics; Cries for a New Constitution; Gas Prices; Family's Fresh Start; A Positive Spin on the Recession

Aired July 17, 2009 - 12:00   ET

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

T.J. HOLMES, CNN ANCHOR: We'll turn back to Indonesia now. Those hotel bombings caught on tape. Take a look at some of the new video we're getting not too long ago. An unidentified man you see here walking through the lobby of the J.W. Marriott, one of the hotels that was bombed there. You can see him. He kind of disappears back there, and then that large explosion hits. Smoke comes out of the restaurant.

Again, moments after that blast, another explosion at the nearby Ritz-Carlton. Now, again, we should emphasize here that authorities are looking at that tape. No indication that the man in there may be an innocent bystander, wrong place at the wrong time or if he's involved in some way. But authorities are looking into that.

We do know at least six people were killed in the two blasts, including the two suicide bombers. So, eight altogether, but two of those were the suicide bombers. Another 50 people wounded, including eight Americans. President Obama has strongly condemned the attacks and says the U.S. government stands ready to help the Indonesia government respond.

Well, investigators say suicide bombers who checked in as guests smuggled explosives into those two hotels in Jakarta. The hotels located side by side in an upscale business district in the southern part of the capital.

We are getting iReports of the bombing aftermath from some of our viewers. This one comes to us from a lady named Jill. She took these photos from her hotel room. She says she heard an explosion and saw smoke rising from the Marriott. She saw a second explosion from the Ritz.

Another iReporter walked inside one of the damaged hotels. Take a look and listen.

(BEGIN VIDEO CLIP)

GREG WOLLSTENCROFT, IREPORTER: As I walked up there, as I said, the windows were all blown out in the cafe area that's beside the (INAUDIBLE) restaurant. And as I walked in, there was just glass all over the floor, the ceilings were all blown out. There was just -- all the furniture's blown around anywhere. Just pieces hanging down from the ceiling.

It was basically unrecognizable. It was just a massive destruction of the actual building, of the area.

And as I said, I've been in there many times, but you couldn't even recognize it. After one side, I then walked a little further in and then there was this body laying on the ground, strewn and mutilated. It was a very disturbing scene.

(END VIDEO CLIP)

HOLMES: And a group connected to al Qaeda is suspected of carrying out this attack.

And as our Barbara Starr now reports, finding and taking out terrorists, not an easy thing to do.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): In the movie "The Bourne Ultimatum," Matt Damon plays a agent in the exotic world of a CIA assassin, but does it really exist?

CIA Director Leon Panetta just shut down an agency program reportedly aimed at killing al Qaeda terrorists. Congress may not have been informed...

UNIDENTIFIED MALE: That's a serious breach. Look, you can't gloss over it.

STARR: ... but experts say nobody should claim to be surprised that the U.S. is hunting down terrorists.

SETH JONES, RAND CORPORATION: We have seen a range of al Qaeda leaders that have been assassinated since September 11th in Afghanistan, in Pakistan, and a range of other places.

STARR: Indeed, CIA drones flying over Pakistan have killed dozens of suspected terrorists in recent years. But Jones says one of the diciest missions? U.S. troops secretly on the ground in Pakistan, in 2008, trading gunfire with al Qaeda.

JONES: There was a Special Operations Force, direct action engagement in Waziristan. It was for a very short period of time.

STARR: Other hits? Somalia, 2007. Air Force AC-130 gun ships launched strikes into southern Somalia, but failed to kill their al Qaeda targets.

Iraq, 2006: The U.S. military hunts down and kills Abu Musab al- Zarqawi.

2003: Saddam Hussein's sons are killed.

Yemen, 2002: A CIA drone kills an al Qaeda operative the U.S. says was involved in the bombing of the USS Cole.

But whether it's the CIA or U.S. troops on the trigger, there are rules to be followed. JONES: The United States cannot ipso facto kill individuals in foreign countries. I mean, they're generally -- with foreign fighters, there has to be a determination that this individual in general is plotting and does threaten the homeland of the United States.

(END VIDEOTAPE)

STARR: So, whether it's any of these countries that we've just talked about, or Indonesia, where we saw an attack in the last several hours, experts say one of the biggest challenges to these types of operations, if U.S. troops or U.S. agents go in, they have to, T.J., be in coordination with the host country, or if they're found out, it could be a diplomatic disaster that could reverberate around the world -- T.J.

HOLMES: Well, are Special Forces out there still doing their thing, or would we not even know it if they were?

STARR: Well, I don't think we would readily know it if they were. We're not really supposed to know it. But let's face it, they are out there.

Afghanistan, Pakistan, really the center of a lot of that activity. They are in other countries still today. Officials say one of their major jobs, though, has shifted, to some extent, when they can't target a specific individual, training foreign militaries out in all of these countries to really step up their efforts to go after terrorists -- T.J.

HOLMES: All right. Our Barbara Starr for us today.

Barbara, thank you so much.

STARR: Sure.

HOLMES: We want to turn back and update you on that developing story we told you about not long ago, that chemical explosion at a Chicago factory. Two people injured in this blast, according to our affiliate, WLS. One of those people in fair condition.

Officials say the other person was mixing chemicals at the time of this blast. That person listed in serious condition.

Fire officials initially classified the scene as a level two hazardous materials response, but the situation was soon considered to be stable. Not clear what chemicals were involved.

And also, this is happening right now, the funeral for that Florida couple murdered in that stunning home invasion last week.

Let's take you a live picture outside of a Liberty Church in Pensacola. This is where it's happening.

Our reporter tells us a large crowd of family, friends and others attending that funeral. The names of the couple, Byrd and Melanie Billings. They were known for taking in special-needs children.

Let's check in with our Ed Lavandera in Pensacola.

Again, Ed, this is just really a confusing situation to put together, a confusing crime with all these people involved. So what is the latest? Eight people under arrest, and I was amazed to hear you say a little while ago that they might not be done arresting people.

ED LAVANDERA, CNN CORRESPONDENT: Unbelievable, right? Authorities have told us there is the possibility that another arrest could be made next week, and there's still two or three other people of interest that they're looking into.

But, really, what we need to get to is this statement that has been made by the family's attorney, before going inside of this funeral service this morning. You know, there's been a lot of talk about what exactly has been inside this safe. That was what was taken from the Billings' home when these murders occurred. So, obviously a great deal of speculation as to what might be inside.

And even though authorities and prosecutors here have tried very hard to keep that information very close to the vest, they say that that's the kind of information they don't want to reveal, because it would compromise their prosecution of this case. The family attorney revealed that information just a short while ago.

(BEGIN VIDEO CLIP)

CRYSTAL SPENCE, BILLINGS FAMILY ATTORNEY: As a result of the intense speculation regarding the motive of the crime, I have been authorized to tell you that the safe that was removed from the Billings' home contained only children's prescription medications, important family documents, and some jewelry of sentimental value. Hopefully, this will put to rest the intense speculation and rumors that are swirling about the Billings family.

(END VIDEO CLIP)

LAVANDERA: And, T.J., I think a little bit of a backstory here -- we have been dealing with this attorney for several days now. There's a great deal of sensitivity and frustration that we sense from the family's part with the reports of the DEA's involvement in this case. There's been a lot of frustration that they were worried that the people would paint the connection between the DEA and the Billings family themselves. So, that has been something that's been very frustrating for them.

Authorities here say that the DEA was called in mostly to assist into the investigation of these suspects, that they are looking into their background and that sort of thing. So, that's really what's perhaps driving a lot of this. This family, and especially this attorney, very sensitive to that fact, that people are painting the Billings family with this brush of DEA involvement. And they feel that that's putting them in a bad light. HOLMES: All right. Ed Lavandera, we appreciate you keeping an eye on what has been certainly a sad and confusing case here. But we'll be checking in again with you, Ed.

Thank you so much.

We turn back now to the push for health care reform, and it's hit a pretty big snag. Congressional number crunchers say none of the plans unveiled so far would reduce medical costs. They would actually increase government spending.

We asked the communications director for the White House Office of Health Reform about that. Listen.

(BEGIN VIDEO CLIP)

LINDA DOUGLASS, COMMUNICATIONS DIRECTOR, WHITE HOUSE OFFICE OF HEALTH REFORM: First of all, the president has made it very clear that health reform, which will lower costs for family and businesses, has got to be -- cannot add a penny to the deficit. It is going to be deficit-neutral. That is absolutely a condition that he has put on any health care plan.

(END VIDEO CLIP)

HOLMES: All right.

Well, our senior medical correspondent, Elizabeth Cohen, is back for more in our health reform roundtable. And coming to the table with us now, Senior Congressional Correspondent Dana Bash, joining us from Capitol Hill.

Dana, do they consider -- and again, talking to Linda Douglass a little earlier, she said no. But how big of a snag and a blow was it to hear from the CBO director saying this is going to cost money, not save money?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, it was a big snag, and I'll tell you why. Because although Linda Douglass said that the president wants to it be deficit-neutral, that is a different issue, I think, from what is causing such problems here with regard to what the CBO director said, because the biggest problem and the biggest bombshell that he dropped, really, was the idea that what the Democrats are working on doesn't reach the goal that the president wants it to achieve, which is a really important thing here. And that is to use reform to bring down health care costs for Americans, bring down those medical costs that are bankrupting so many Americans.

And what he basically said is the way the Democrats are going right now, particularly on the House side, that's not going to happen. That's why that was such a big deal and a big blow.

And although publicly, nobody is saying it is a big blow, privately we're hearing a very different story. They're admitting it -- T.J.

HOLMES: OK. I'm going to go ahead and bring in Elizabeth Cohen here now.

And so many concerns, so many issues. Let's bring in -- I want to talk about -- a lot of people -- we're getting a lot of questions about this.

One we're getting from Mark here. And this is a concern a lot of folks have. And he says, "If this goes through, I, as a small businessperson, will be forced to lay people off. That's the bottom line. Nice job, congressional Dems and Obama. You're really fighting for the small guy."

You certainly sense the sarcasm there.

ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: Oh, yes.

HOLMES: But what -- I mean, this is what we're hearing.

COHEN: I assume that what Mark is referring to is that there are some plans to tell small businesses, look, you had better insure all of your people. And if you don't, then you will have to pay basically what amounts to a tax. And the House and the Senate sort of do this in different ways.

And so, what I guess Mark is saying is, look, I don't want to have to pay these taxes. If he doesn't insure his people, I assume he does that because he can't afford it.

So, there definitely are concerns for small businesses. They really feel like someone's got to pay for health care reform, and it's kind of being done on their backs. That's how they feel.

HOLMES: And Dana, we're talking here about who is going to pay for this. And we had Linda Douglass on, like I mentioned, and she said -- I mean, it took me a while to get the answer out of her, but talking about the plan out there to possibly -- that surtax, the 5.4 percent on people making over $350,000. She finally did say that the president thinks is a good idea. And I quote -- all right, she finally said, "Yes, it's a good idea."

When is the president going to get more involved in this process and maybe start pushing some of his weight around, his popularity around, and some of that political capital he still seems to have?

BASH: T.J., it's so funny, because that is the very question we're hearing from some of the president's fellow Democrats here on Capitol Hill, when is the president going to start doing that?

We certainly saw him doing it a little bit at the beginning of the week, just in terms of the process, saying, look, guys, let's go. I mean, we need to do this and we need to do it fast.

But in terms of the specifics, it's interesting that you said that, because certainly it is -- the idea of that surtax is popular among some Democrats, particularly in the House, but it is causing some problems among Democrats. In fact, I just interviewed a conservative Democrat, the sort of lead person from the so-called Blue Dog -- conservative -- Democrat Coalition, and he, you know, said point-blank, he believes that some of the president's fellow Democrats could actually block this if they don't change things like the surtax in this bill, that they do believe, just like Republicans, it could hurt small businesses.

HOLMES: All right. Dana Bash for us.

And we had so much more to get to, Elizabeth Cohen, so much more to talk about. So I'm glad we are able to talk about this here on this show.

So, Dana, we appreciate you. We'll continue to talk right here.

Tony Harris will be back next week. And, again, all next week we'll be talking about health care, so we'll see plenty more of you when Tony gets back.

Thank you both so much.

COHEN: Thanks.

HOLMES: Meanwhile, the outrage and protests, now tear gas, return to the streets of Iran. Look at these scenes, some of the new pictures we are getting in. Our iReporters helping us out.

(COMMERCIAL BREAK)

HOLMES: All right. Back here now. Again, our International Desk, which has really turned into our Iran Desk over the past several weeks, keeping an eye on what's happening there since the election, since the protests, and all of the turmoil been going on there.

Reza Sayah has been really our point man on this.

We're getting some new video of stuff we haven't seen for a little while now.

REZA SAYAH, CNN CORRESPONDENT: Yes, the Iran desk working hard, and so are our iReporters.

We're going to show you one of the most important pictures that has come in to the Iran Desk over the past couple of hours. And it's a picture of Mehdi Karroubi. This is the opposition leader without his turban.

Over the past couple of hours we've had a flood of reports coming in from the ground that Mehdi Karroubi was attacked by members of the volunteer militia, the Basij, at Friday prayers. This picture appears to corroborate that.

We certainly can't say definitively he's beeniing attacked here, but he certainly does look disoriented, and his turban is off. So, again, it could corroborate some of those reports that he was attacked, the opposition leader, Mehdi Karroubi.

Also, another picture here showing what looks like someone with an injured head. We've had reports of people before the sermon and after the sermon, clashing with security forces. These are all from iReporters.

We encourage anyone who has pictures to post them on iReport.

Also, lots of video coming in to the Iran Desk. This one of (INAUDIBLE), this gives you an idea of the crowd that's out there. Estimates of 10,000 people. And this is a chant that's saying (SPEAKING ARABIC). It says, "Iranians are dying and the nation will not tolerate it."

According to witnesses, tens of thousands of people showed up for Friday prayers. Again, some of them clashing with protesters.

This video that Azara (ph) is going to play showing security forces using what appears to be tear gas, and then you see the masses run away from the tear gas. If security forces weren't using tear gas at times, they were using those motorcycles and those batons.

And if we can run that video, we can show you what's become a familiar scene. Here you see the protesters, many of them wearing green wristbands and armbands, protesting.

And now, in a few seconds, you're going to see security forces on motorcycles wearing helmets, some of them carrying batons, going through that crowd. And then you see the crowd running away.

All these people here to see Ayatollah Rafsanjani speak at Friday prayers. He delivered some criticism to the Iranian leadership, saying that the aftermath of the elections has left a bitter taste in the nation.

Here's what he had to say.

(BEGIN VIDEO CLIP)

AYATOLLAH RAFSANJANI (through translator): Doubt has been created in people's minds. We consider doubt to be the worst calamity. This doubt has attacked our nation like leprosy. There are two currents, though. One doesn't have any doubt and is moving ahead with their job. And there are a large portion of the wise people who say they have doubts.

(END VIDEO CLIP)

SAYAH: Also appearing at Friday prayers, according to this picture, opposition leader Mir Hossein Mousavi.

So, once again, Rafsanjani, the key figure in the opposition movement, lending his support to the opposition supporters, keeping the door open for this opposition movement to keep going -- T.J.

HOLMES: All right. Reza Sayah for us at our Iran Desk.

Reza, we appreciate you and all the editors and producers working over there. Thank you so much. SAYAH: You're welcome.

HOLMES: We'll now turn to Sonia Sotomayor. After her nationally televised job interview, now she must wait to find out if she gets the job.

Let's bring in our Brianna Keilar, our congressional correspondent.

Brianna, we've all been through this before. We go through a job interview and we wait to hear whether or not she got the job.

How long will she have to wait?

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: Well, the first vote, the committee vote, Senate Judiciary Committee, is going to vote on Tuesday. Then, later, there will be a vote before the full Senate. That is expected to come, though, before Congress takes a break for its August recess.

But what we've heard, T.J., from Democrats and even some Republicans on this committee yesterday, they were impressed by Sonia Sotomayor's performance. She stayed pretty cool, very deliberate, as she answered questions about same-sex marriage, abortion, and, importantly, the Second Amendment.

(BEGIN VIDEOTAPE)

KEILAR (voice over): Gun rights dominated the discussion as Sonia Sotomayor spent her last day on the hot seat.

SEN. TOM COBURN (R), OKLAHOMA: My constituents in Oklahoma understand, as do most Americans, that the right to own guns hangs in the balance, may very well hang in the balance with your ascendancy.

KEILAR: As Republican Senator Tom Coburn pressed her on the Second Amendment for the second day in a row, asking whether Americans have a fundamental right to bear arms, she demurred.

JUDGE SONIA SOTOMAYOR, SUPREME COURT NOMINEE: Senator, would you want to judge a nominee who came in here and said, "I agree with you, this is unconstitutional," before I had a case before me, before I had both sides discussing the issue with me. I don't know that that's a justice that I can be.

KEILAR: Fellow Republican Lindsey Graham signaled he may vote to confirm Sotomayor and is hopeful she will keep an open mind on gun rights.

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: Because I think, fundamentally, Judge, you're able, after all these years of being a judge, to embrace a right that you may not want for yourself, to allow others to do things that are not comfortable to you, but for the group, they're necessary.

KEILAR: But even he, once again, addressed her off-the-bench comments, including her "wise Latina" remarks.

GRAHAM: And you have said some things that just bug the hell out of me.

SOTOMAYOR: I regret that I have offended some people. I believe that my life demonstrates that that was not my intent -- to leave the impression that some have taken from my words.

GRAHAM: You know what, Judge? I agree with you.

KEILAR: Though not many Republicans seemed one over.

SEN. JOHN CORNYN (R), TEXAS: That you appear to be a different person, almost, in your speeches and in some of the comments that you made.

KEILAR: Still with Sotomayor's confirmation almost certain, Democrats were already looking ahead.

SEN. PATRICK LEAHY (D), VERMONT: Experience and wisdom will benefit all Americans. And when you walk under that piece of Vermont marble over the door of the Supreme Court, speaking of equal justice under law, I know that will guide you.

Judge Sotomayor, thank you. Godspeed.

(END VIDEOTAPE)

KEILAR: Chairman Patrick Leahy is expecting to get some Republican support in that committee vote on Tuesday. And then with this expected full Senate vote, T.J., before Congress goes for its August recess, that would put Sonia Sotomayor on the Supreme Court with plenty of time to spare before the court's new session this fall.

HOLMES: All right. Brianna Keilar for us.

Thank you so much today.

Well, part pep talk, part wake-up call, and all history in the making. President Obama speaks at the NAACP convention. The highlights coming up.

(COMMERCIAL BREAK)

HOLMES: Well, to celebrate its 100th year, the NAACP welcomed the country's first black president to its convention. This happened last night.

The president said to the crowd that civil rights leaders from decades past made it possible for him to become the leader of the most powerful nation on Earth. At times, as you can imagine, he brought the crowd to its feet.

Take a listen.

(BEGIN VIDEO CLIP) BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Because civil rights laws were passed, black mayors, black governors, members of Congress serve in places where they might once have been able not just to vote, but even take a sip of water.

And because ordinary people did such extraordinary things, because they made the civil rights movement their own, even though there may not be a plaque, or their names might not be in the history books, because of their efforts, I made a little trip to Springfield, Illinois a couple of years ago, where Lincoln once lived and race riots once raged, and began the journey that led me to be here tonight as the 44th president of the United States of America.

(APPLAUSE)

One hundred years from now, on the 200th anniversary of the NAACP, let it be said that this generation did its part. That we, too, ran the race, full of faith. That our dark past has taught us full of the hope that the present has brought us, we faced in our lives. And all across this nation, the rising sun of a new day begun.

(END VIDEO CLIP)

HOLMES: Now, the president urged the group to expand its work in battling discrimination.

And we have are just days away from CNN's in-depth look at being "Black in America." You can watch stories of people stepping up, taking charge, and creating solutions. The documentary "Black in America 2" premiering next Wednesday and Thursday, 8:00 Eastern, right here on CNN.

Well, the last trading day of the huge week of gains on Wall Street. And though the upbeat corporate earnings reports continue to roll in, the market having trouble keeping up with the momentum.

Susan Lisovicz here to explain why.

Susan, why?

SUSAN LISOVICZ, CNN BUSINESS CORRESPONDENT: Well, T.J., I mean, you know, earnings are of great interest to Wall Street always, and when it comes to big banks, especially because they'll tell us, among other things, whether those banks are making money.

When you think about all of the money we taxpayers have given to them, yes, that's of interest on Main Street as well. And so what we've been hearing early in the reporting season is overall pretty good.

So, going into today, the Dow rallied more than 560 points, or nearly 7 percent. The NASDAQ and the S&P 500 also up by that amount.

It's not to paint a complete -- completely rosy picture here, T.J. I mean, there are warning signs in there, especially when it comes to consumer loans. Bank of America today posting a quarterly profit of more than $3 billion. Not bad for three months' work. It beat Wall Street's consensus.

The CEO of the company did warn of more weakness ahead for the global economy. Bank of America, remember, acquired Countrywide Financial -- that's the housing market -- and Merrill Lynch. Think toxic assets.

Citigroup profits, meanwhile, topped $4 billion. Also better than the Street expected.

Here, largely thanks to the bank sale of the Smith Barney division. Together, these two banks have received about $90 billion in TARP loans from the government.

The bailout, of course, controversial, but proving it may have helped to stabilize the banking industry, T.J. So important.

HOLMES: Well, we've been talking a lot about the banks and their earnings, and rightly so. But they're not the only ones reporting. How's everybody else doing?

LISOVICZ: Well, and that's important, too, because to get an overall picture of the economy, you want to hear from everyone. And so we have also heard from tech companies. Also important to know whether consumers are buying things like computers. Whether corporate America is upgrading things. We did get good numbers from IBM and Google.

Google posted profits of nearly $1.5 billion. The company says it saw more clicks. It said people are spending less. IBM, meanwhile, raised its full-year outlook. Its revenues were down, but the computer giant reported better-than-expected profits thanks to cost cutting. That's another theme we're hearing on Wall Street, and a shift to its more profitable businesses.

Unfortunately, we're not seeing the positive mood (ph) midway through the session. The Dow, the NASDAQ, S&P 500, all down, but just modestly so.

And one last thing. A quote. A very interesting quote from Larry Summers, the director of the president's National Economic Council. "We were at the brink of catastrophe at the beginning of the year, but we have walked some substantial distance back from the abyss."

Let's keep -- let's keep hoping that we walk further back from the abyss, right, T.J.?

HOLMES: All right. From the brink of catastrophe to what, now we're just on the edge?

LISOVICZ: Well, we're a little bit further out, yes.

HOLMES: All right. LISOVICZ: Yes, we want to keep removing ourselves from that brink.

HOLMES: All right, Susan Lisovicz, we appreciate you. Good to see you, as always.

LISOVICZ: Thank you, T.J.

And we're going to turn to California next and that budget stalemate they've been dealing with for three weeks or so. Well, now, more and more people are desperate -- flat-out desperate for a solution.

(COMMERCIAL BREAK)

HOLMES: Well, in California, lawmakers have yet to agree on how to close on $26 billion budget gap. So as lawmakers keep talking, more people keep hurting, and there are more and more proposed cuts to government services. One prominent business group now is fed up and says it's time to start over. Not start over with the budget process. Start over with a new state constitution. Here now, CNN's Dan Simon.

(BEGIN VIDEOTAPE)

DAN SIMON, CNN CORRESPONDENT: This is the man leading the effort for a new California constitution.

JIM WUNDERMAN, BAY AREA COUNCIL: You call a constitutional convention when the government is not performing its basic functions. It's failing the people. And that's what's happening in California now.

SIMON: Jim Wunderman heads the Bay Area Council, a group of nearly 300 of some of the best-known companies here and in the U.S., including Google, Yahoo!, Chevron, the Gap, AT&T.

WUNDERMAN: We want to be a competitive region and a competitive state. And we won't be if our government basically is in a complete state of dysfunction.

SIMON: The dysfunction has been most evident with Sacramento's difficulties closing a $26 billion deficit. In part because the constitution requires that two-thirds of lawmakers agree. A new constitution would make passage easier, with the proposed 55 percent majority.

The call for drastic changes in state government has reached a fever pitch in recent days. Protests seem to pop up almost daily. This one in San Francisco made up of teachers, health care workers and the disabled, who say Governor Schwarzenegger's proposed cuts would hurt their lives.

SIMON (on camera): What would you say to the governor and to lawmakers who are considering making these cuts?

BRENDA JACKSON (ph): I would tell them that they're making these cuts on our backs, the backs of the consumer and the backs of the in- home care providers. We need this.

SIMON (voice-over): Brenda Jackson is a state in-home care provider to the elderly and the disabled. She worries that her wages, already low at $11 an hour, could be cut.

JACKSON: I won't be able to pay my rent. I can't -- you know, I pay rent, water, utilities, food. I mean, all the necessities of life I will need -- I will lose.

SIMON: For his part, Schwarzenegger has been holding steady. Unleashing a 60-second ad saying the cuts, while painful, are necessary.

GOV. ARNOLD SCHWARZENEGGER, (R) CALIFORNIA: I'm standing firm for a balanced budget that does not raise your taxes.

(END VIDEOTAPE)

HOLMES: All right, let's bring in our Dan Simon here now.

Dan, this would leave a lot of folks just scratching their heads and thinking it's a wacky idea. But this is a legitimate group out here, the Bay Area Council. Not just some wacky group out there yelling about a new constitution. So what are the chances of something like this, like a convention, actually happening?

SIMON: Well, you're right, T.J., they bring a tremendous amount of credibility to the table. And according to the Bay Area Council, they feel like because of the disgust right now in the electorate, they feel that they would get the votes at the ballot box.

To get this to happen, first, it would go to state voters to call this constitutional convention. That could appear on the ballot perhaps as early as next year. Then the convention would be made up of regular citizens, about 400 citizens of all different backgrounds. They would draft this new constitution. Then it would go back to the voters. This hasn't happened since 1878, but they feel like, because of the climate right now and the problems with the budget, that could get this done perhaps in total in about three years.

In terms of where we are right now with the budget, we were told that lawmakers and the governor were close to reaching a deal, but things have stalled again. And apparently they're stalled when it comes to education funding. But bottom line is this, when it's all said and done, everybody seems to acknowledge that there are going to be deep cuts when it comes to education and social services. And a lot of people are going to be hurt by this, T.J.

HOLMES: And we haven't seen a constitutional convention, you said, since 1878, and it's come to this now in California. We will see.

Dan, we appreciate you as always. Thanks so much.

Well, got some more budget news coming up for you, but it's some good budget news if you're driving. (COMMERCIAL BREAK)

HOLMES: All right. We want to continue to keep you updated about the breaking story we've been keeping an eye on. That double attack in Indonesia terrorists launched. There were detonated bombs at the J.W. Marriott and Ritz Carlton hotels in Jakarta. At least six people confirmed dead. Two suicide bombers dead as well. Another 50 people wounded, including eight Americans.

Investigators say the suicide bombers checked into the hotel as guests and smuggled explosives inside. The Islamist militant group Jemaah Islamiyah is suspected, but so far no one has claimed responsibility. President Obama strongly condemning the attacks and offering help from the U.S. government.

Well, Indonesia's deadliest terrorist attack was back in 2002 on the island of Bali. Bomb blasts killed more than 200 people at nightclubs. Most of those victims were tourists. Several members of the militant group Jemaah Islamiyah were later convicted for the attacks.

Then in 2003, the same al Qaeda-linked group launched a suicide car bombing at the Jakarta Marriott killing 12 people. Yes, the same Marriott that was just bombed yesterday. And then in '04, terrorists struck the Australian embassy in Jakarta. Nine people died there. The following year, suicide bombers struck again in Bali, this time killing 20 people.

Well, this weekend on "Fareed Zakaria GPS," coalition efforts in Afghanistan going on for close to eight years now. Should they change course? Should they end? Fareed talked to two experts.

(BEGIN VIDEO CLIP)

FAREED ZAKARIA, CNN'S "FAREED ZAKARIA GPS": Andrew Bacevich, you think the best thing to do, cut our losses, withdraw, and we'll be surprised at how little the instability, if there is any in Afghanistan, affects us, our core national security, correct?

ANDREW BACEVICH, AUTHOR, "THE LIMITS OF POWER": Yes, by and large. I mean the -- last week, "Time" magazine, Fareed, had a story about the new U.S. commander in Kabul. And the headline on the cover was -- described him as the general who's remaking Afghanistan.

I simply believe that remaking Afghanistan is something that we're not capable of doing. That we can't afford to attempt to do. And then, frankly, is unnecessary. And so we need to examine strategic alternatives, rather than simply continuing down this path that we've been on for almost eight years.

DAVID KILCULLEN, AUTHOR, "THE ACCIDENTAL GUERRILLA": I think we need to be there. We need to make it stable. We need to step up to our moral responsibilities to the Afghan people. But I would agree with Professor Bacevich that we need to do that in the cheapest way possible. And we need to make sure that we don't over commit and we don't soak ourselves up in an unsustainable effort. (END VIDEO CLIP)

HOLMES: You can see the rest of that interview on "Fareed Zakaria GPS." That's this Sunday at 1:00 Eastern, 10:00 a.m. Pacific, right here on CNN.

All right. Exactly one year ago today, you were paying the highest price for gasoline ever recorded. So, how much have prices come down since then? Will they continue to head lower? Allison Costic has our "Energy Fix" from New York.

Alison, any -- I mean nobody, every time you go fill up, you think gas prices are too high. But, still, we've got to put this in perspective from what we were seeing last year.

ALISON COSTIC, CNN CORRESPONDENT: Exactly, T.J., lots of perspective. I mean, think about it, last year, on July 17th, the nationwide average for a gallon of gas hit $4.11. That's the highest price ever. Today, AAA says the average price is $2.48. A drop of nearly 40 percent from that all-time record.

So, how much more money is that in your pocket? Well, we went ahead and did some calculations for you. Assuming you drive 13,000 miles a year and get 23 miles per gallon, the difference translates into savings of more than $900 a year. Not too shabby, T.J.

HOLMES: Well, that is huge to think you could be saving about $1,000 a year when you put it in perspective like that. That is significant. So when you're talking about how much it has dropped, will we continue to see them drop and maybe save us some more money?

COSTIC: Well, funny you asked that, because analysts we talked to expect gas prices to fall even a bit more. They could dip below $2 in some markets, but they don't expect to see last year's lows again, when gas was $1.60, $1.70 per gallon. This summer, the average got as high as $2.69 on June 21st, but lost steam as more Americans stayed home during the traditional driving season.

Prices have now fallen for the past 26 straight days. And we could see prices slip even more if oil continues to decline. Crude hit an eight-month high of more than $73 a barrel. That was on June 30th. But it's come down more than $10 a barrel since then.

But, you know, let's not forget, it is hurricane season. There are a lot of gasoline refineries along the Gulf of Mexico. So if a big storm threatens like Hurricane Ike did last year, we could see gas prices spike again. But I'll tell you what, T.J., no one sees it getting even close to the record high that caused so much pain a year ago, which we remember very well, right, T.J.?

HOLMES: We do remember it well. And, Allison, it's been an absolute treat to talk to you today. Got some good news on the economy and our budget, all of our budgets. Thank you so much.

COSTIC: Sure.

HOLMES: Well, looking for the road out of the recession. In Michigan, all you have to do is literally follow the signs.

Also, who's going to be signing the pope's cast? Yep, he has to sport one. We'll tell you about the spill that sent the pontiff to the hospital.

(COMMERCIAL BREAK)

HOLMES: All right. He's got the white robe and he's got a white cast. Check it out there, the pope with the matching cast on the -- let's see, the right -- which hand is it? There it is. You can see it there a little bit. The 82-year-old pope broke his right wrist in a fall this morning while on vacation in the Italian Alps. Doctors say it's just a small fracture. He was treated at the hospital and released.

Well, family and health are what we're talking about this week in our "What Matters" segment in partnership with "Essence" magazine. In a week dominated by Sonia Sotomayor's Supreme Court confirmation hearings, President Obama nominated another woman for the top position.

She is Dr. Regina Benjamin. There she is. She's been tapped to be the next U.S. surgeon general. Benjamin has spent much of her career treating patients in the family clinic she started on the Gulf Coast of Alabama. She says her own family's history has made quality health care a personal mission.

(BEGIN VIDEO CLIP)

DR. REGINA BENJAMIN, SURGEON GENERAL NOMINEE: My father died with diabetes and hypertension. My older brother and only sibling died at age 44 of HIV-related illness. My mother died of lung cancer, because as a young girl, she wanted to smoke just like her twin brother could. I can't -- or I cannot change my family's past. I can be a voice in the movement to improve our nation's health care.

(END VIDEO CLIP)

HOLMES: Well, if confirmed by the Senate, Benjamin will be the fourth woman to serve as surgeon general.

Also, a growing number of single black women are choosing to adopt children. Adoption agencies say the rising numbers can be attributed to infertility and many black women simply not getting married. And recent census numbers find 45 percent of African- American women have never tied the knot. That's compared with 23 percent of white women. Go to cnn.com or essence.com to read personal stories about why many single black women are choosing to adopt on their own.

Well, low-income and homeless families are finding hope in a new development in the Bronx. It's a project that's both socially and environmentally responsible. Fredricka Whitfield took a visit (ph).

(BEGIN VIDEOTAPE) FREDRICKA WHITFIELD, CNN CORRESPONDENT (voice-over): A few more steps and Christine Prince (ph) and her daughter will be home. It's a new life, far away from the misery of a temporary shelter.

CHRISTINE PRINCE: We killed more than 300 mice in that apartment. We was living literally in fear.

You have a lot of homework?

WHITFIELD: A new address.

PRINCE: My first food pantry.

WHITFIELD: And a fresh start for this family.

PRINCE: It's like I won the lottery. I was so overjoyed because I know my children will finally have a place to call home.

WHITFIELD: Last March, they were among the first residents of Interveil Green (ph), an innovative, low-income housing project developed by WHEDCo, the Women's Housing and Economic Development Corporation, in the Bronx.

PRINCE: It's like one big family. I feel like a dream come true.

WHITFIELD: This home has residents seeing and saving green, with features like compact fluorescent lights, efficient appliances and low-flow plumbing designed to conserve both energy and cash, saving residents nearly a third on monthly utility bills.

NANCY BIBERMAN, FOUNDER, WHEDCO: It's the largest, affordable, green building in the country.

WHITFIELD: From the donated tile in the lobby to the rooftop garden, this 128-unit apartment building is green from the ground up.

BIBERMAN: This is green that they can see and feel and touch and live.

WHITFIELD: But for this grateful family, it's home sweet home.

Fredricka Whitfield, CNN.

(END VIDEOTAPE)

HOLMES: Well, we're going to head to Michigan next, where things are looking up. Literally, look up at the billboards.

(COMMERCIAL BREAK)

HOLMES: Michigan's unemployment rate now tops 15 percent, making it the first state in 25 years with a jobless rate that high. Even with so much to be down about, there's a creative ad campaign trying to remind folks it's only temporary. Here now, Liz Dueweke of CNN affiliate WJRT.

(BEGIN VIDEOTAPE)

LIZ DUEWEKE, WJRT-TV CORRESPONDENT (voice-over): It's one simple sign, reminding drivers headed south down I-75 through Independence Township, that despite tough times, we're still on the right road.

JEFF GOLIMOWSKI, OILILIL (ph) OUTDOOR ADVERTISING: We want people to just kind of reconsider their mindset.

DUEWEKE: These billboards are the product of an anonymous donor, along with the Outdoor Advertisers Association, to lift the spirits of a nation in fear of recession.

GOLIMOWSKI: And putting up a billboard isn't going to change anything, but what we're hoping is by getting people to look at things in a different way, then they -- it will help accelerate the process of standing back up and dusting yourself off and maybe moving in a different direction.

DUEWEKE: It's positive thinking. Genesys' Behavioral Services director, Dr. Mark Vogel says, can balance out economic tension.

DR MOARK VOGEL, GENESYS BEHAVIORAL SERVICES: We get so fixed in our way of looking at things that sometimes even billboard or somebody else who might have a different perspective takes us out of kind of maybe our very narrow way of looking at it and helps us kind of expand and say, well, gee, I never thought about it that way.

DUEWEKE: And people are thinking about it. As the campaign has gone viral, on websites like Twitter. And during times when we don't know where the economy is headed next, this campaign is driven to sell a little bit of hope, if you look in the right direction.

GOLIMOWSKI: Maybe if somebody sees the Bill Gates billboard and they say, you know, maybe it's not a bad time to try that idea I've always had.

(END VIDEOTAPE)

HOLMES: All right.

Well, that's it for me now. T.J. Holmes sitting in for Tony Harris today.

Now it's time for me to hand it over to Kyra Phillips.