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E-mail, Economy Stamping out Post Office; 200 Days in Office; Judgment Day for Sotomayor; Grading the President and His Money Moves; Will Homeowners Be Underwater Soon?; Two Is the Loneliest Number In Condo Building To Yourself

Aired August 06, 2009 - 14:00   ET

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

FREDRICKA WHITFIELD, CNN ANCHOR: All right, hello again. I'm Fredricka Whitfield in for Kyra Phillips. So, today, pushing forward, the future of the U.S. Postal Service. Right now, that future's looking pretty gloomy. The recession means fewer businesses are sending ads through the mail. E-mail and e-bills mean fewer people are buying stamps. Add all of that up, and you've got billions of dollars in losses. And the post office looking to bail itself out. There is talk of closing some post offices and cutting delivery from six days a week to five. Today, Postmaster General John Potter spoke before a Senate subcommittee.

(BEGIN VIDEO CLIP)

JOHN POTTER, POSTMASTER GENERAL: We believe that fundamental restructuring of the legislative and regulatory framework for postal services is required. At stake is the future of what has been, since this nation's founding, the right of every American to send and receive mail. The Postal Service exists as a governmental entity whose mission is universal service to all. That mission is a direct reflection of the values on which this country was founded.

(END VIDEO CLIP)

WHITFIELD: Closings, reduced hours and maybe fewer mail days are just some of the ways the postal problem could affect you. Here's how the red ink is laid out.

Postal offices reported a $2.4 billion loss for the period between April and June and expect to be $7 billion in the hole by the end of the fiscal year September 30th. And I told you fewer people are mailing stuff because of e-mail and e-bills. Well, the volume of so-called snail mail fell by 20 billion pieces this year and is expected to drop another 10 billion next year. Up to 3,200 post offices nationwide could be closed.

My next guest testified before a Senate committee today that in his 31 years with the postal service, he has never seen a crisis like the one that it now faces.

Fredric Rolando started out as a letter carrier, and now he is president of the union representing 300,000 active and retired letter carriers. He joins me now live from Washington.

Good to see you. FREDRIC ROLANDO, PRESIDENT, NATIONAL ASSOCIATION OF LETTER CARRIERS: How are you doing?

WHITFIELD: All right.

So, during your testimony, did you primarily focus on how people would be hurt by the cuts, or did you try to focus, instead, on, hey, here are some suggestions on how the postal service could save money?

ROLANDO: Well, a little bit of both. Most of the testimony concerned the -- as Senator Carter put it, the future retiree health benefit mortgage, if you will, that was created by the committee back in 2006. And everyone agrees that there is a need to refinance that mortgage to not only look at some more responsible payments to be paid, but to look at the rate at which that money is being paid, and also to look at the amount of the down payment that was used from the Civil Service retirement fund surplus.

And the Congress is going to have to be looking at all three of those things. And that will do a lot for the cash flow for the postal service for years to come, both the short-term and long-term legislation that's necessary to do that.

WHITFIELD: So, most Americans are primarily concerned about, wait a minute, what is this going to mean for my delivery? Does this mean that we're going to cut back to five days a week, or does it mean even less than that? And with those kinds of cuts means a number of the postal carrier jobs, the postal service jobs, would be in jeopardy.

How serious a concern is that for you?

ROLANDO: Well, it's a serious concern that it's more than a job that's in jeopardy. The future of the postal service is in jeopardy if we start dismantling the postal service to deal with a short-term issue by reducing delivery from six days to, five days, four days, three days, whatever it is, before we fully research the possible -- the potential for revenue by using the network that we have today to generate new forms of revenue. And we believe that's the way that we need to go before we start considering cutting service.

WHITFIELD: And this problem didn't just come up overnight. Clearly, the union has been talking about this, seeing this day coming for a long time.

So, knowing that, what sort of proposals did you try to inject into the subcommittee hearing to allow them to ponder some ideas about how to save money, as opposed to cutting jobs or cutting back on a retirement benefit plan?

ROLANDO: Beyond the legislation that I discussed, we are just looking at using the energy that's being put into studies for cutting back service; using that energy to explore additional ways to generate revenue; putting together coalitions to use the delivery network where we are six days a week, 145 million homes with the most trusted federal employees going house to House every day, how we can use that network in the future.

WHITFIELD: Fredric Rolando, thanks so much for your time. Appreciate it.

ROLANDO: Thank you.

WHITFIELD: Well, back in February, our Special Investigations Unit found out that the postal service was spending millions on a relocation program for its employees. The houses weren't cheap either, not all of them.

Here's CNN's Abbie Boudreau.

(BEGIN VIDEOTAPE)

ABBIE BOUDREAU, CNN NEWS CORRESPONDENT (voice-over): This lakefront mansion in South Carolina is one of 14 homes costing more than $1 million, all purchased by the U.S. Postal Service to move its employees. Our investigation into those purchases prompted a review by the Inspector General's Office, which criticized the postal service for the amount it spends on relocation benefits. The Inspector General's report found the postal service spent $73 million last year alone in total relocation benefits to more than 2,000 employees and concluded some of the relocations were exorbitant.

Senator Chuck Grassley requested the report after we showed him the results from our investigation.

SEN. CHUCK GRASSLEY (R), IOWA: My reaction is that it's outrageous particularly if you look at specifics within that report.

BOUDREAU: The 14 homes purchased by the postal service and later resold date back to 2004, according to records obtained by CNN. Here's what some of the properties looked like: This one in northern California, these two homes outside Los Angeles, others in Florida and Virginia.

And that $1.2 million South Carolina mansion? It was owned by a small town post master who applied for a mid level management job in Texas so he could live in the same town as his wife. That home is now under contract according to the report, but the postal service will take a $250,000 loss on the deal. It also paid the employee more than $16,000 for a house hunting trip.

GRASSLEY: He wanted to voluntarily move. Nobody was making him move. They bought his house. They lost $250,000 on his house.

BOUDREAU: And the most wasteful purchase? It was this secluded Florida home in Indian River Shores that cost the postal service $2.8 million in November, 2007. Eight months later we've learned it was sold for just $1.1 million, a $1.7 million loss. And according to the inspector general's report, the employee who was relocating is a vehicle maintenance program analyst.

GRASSLEY: It just doesn't reflect well on the administration of the postal service. BOUDREAU: In a statement to CNN, the postal service says the number of relocations with "high value" homes prompted it "to reevaluate and change its policy."

Just before we aired our story in February about the South Carolina mansion, the postal service had no limit on the amount it would pay for an employee's home. But it then imposed a $1 million cap. Now the postal service's days of buying mansions like this one are over. Starting in mid June, it will pay no more than $800,000 to buy a home.

Abbie Boudreau, CNN, Atlanta.

(END VIDEOTAPE)

WHITFIELD: And like Abbie said, the postal service has changed the relocation policy. But the question now, is that enough? Coming up later in the hour, we will hear from Senator Tom Carper, who chaired today's hearing on the future of the U.S. Postal Service.

All right. How much can one man do in 200 days? Not always as much as he would like.

We'll look back and push forward on President Barack Obama's ambitious agenda.

(COMMERCIAL BREAK)

(WEATHER REPORT)

WHITFIELD: All right. A lifetime appointment now just an hour away. We're pushing forward on a historic moment for Sonia Sotomayor and the U.S. Supreme Court.

(COMMERCIAL BREAK)

WHITFIELD: All right, when you or I pass 100 days in a new job, or 200 days, for that matter, nobody much cares; right? You and I are not the president.

President Obama is nearing the end of 200 days in office with progress on the economy and an iffy prognosis on health care.

CNN White House Correspondent Dan Lothian joins me right now.

So, Dan, how does the president think he's doing? And is he counting? Does he notice that 200 years (sic) is about to arrive?

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: You know, it's interesting. I don't think he's counting...

WHITFIELD: Two hundred days. Sorry.

LEMON: Yes, because I remember last week, I talked to a senior administration official pointing out that the day was approaching. And they were sort of puzzled, didn't even realize that the second 100 days was drawing near.

But, you know, the president would say that they have made a lot of progress, but there's still a lot of work to be done. And one senior administration official put it this way -- he said, "The incline on the treadmill is not as steep but it's still moving very fast."

But what we've seen though in the last few days and certainly last few weeks is this administration really focus on health care reform. It's a top priority for this administration. We saw the president today meeting with a bipartisan group of senators who are trying to push this bipartisan health reform bill. So, that really remains the focus.

As for how the public has viewed what the president has done over the last 200 days, some interesting things that come out of the recent CNN/Opinion Research polling. In particular, about the issue of whether or not the president is juggling too much, dealing with two wars overseas, health care, education, the stimulus.

When Americans were asked about this issue, 65 percent said, yes, that he was taking on more issues than he should. That's up 10 points from just in March. Thirty percent said no.

Of course, the president has responded to this criticism in the past by saying this is not something that you can just pick and choose, all of these situations are very critical and they need to be addressed now.

And one other interesting note from the polling is that Americans seem to separate what they think of President Obama as doing his job and President Obama as a person. His approval rating had slipped. His favorability rating though still remains quite high. Not as high as it was right before coming into office in January, but still relatively high. Favorable, 64 percent, Americans see it. Unfavorable, 34 percent -- Fredricka.

WHITFIELD: OK. We talk about 200 days, but I bet you he feels like it's just one long day. Surely, he has had no time to sleep. So much on the plate.

LOTHIAN: That's right. It's very difficult to sleep. And in particular, I mean, health care, you've heard the criticism out there that, depending on what happens with health care, that it really could define this presidency.

Mr. Obama doesn't believe that that's necessarily the case, but this is something that's very important for this administration. As the president has pointed out, it's not really about him or his legacy, but it's about getting health care for Americans. And he also believes that if he can get health care for all Americans, affordable health care, and he can make it deficit-neutral, it will also help the economy.

WHITFIELD: All right.

Dan Lothian at the White House.

Thanks so much.

Of course, what matters is what people think about his policy that he is pushing toward. So, later on this hour, our Jessica Yellin will be checking in from a diner in Ohio where folks are grading the president's second 100 days, or first 200 days.

Anyway, you can grade him as well. Go to CNN.com/report card and watch tonight the "National Report Card," a CNN prime-time special.

Well, perhaps a feather in the cap for President Obama today. The U.S. Senate is about to pass judgement on federal judge and Supreme Court nominee Sonia Sotomayor. We expect to see a vote in less than an hour. And we don't expect it to be close.

CNN's Brianna Keilar is counting heads.

Brianna, all the Dems are on board, but how many Republicans are actually going to vote for Sonia Sotomayor?

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: We're expecting nine Republicans certainly to vote for Sonia Sotomayor. But, Fred, 31 Republicans have said they are not going to.

They have concerns about where she stands on issues like gun rights. But also, they are really concerned about some of the statements that she has made off the bench that lead them to believe that some of her personal experiences and opinions are going to cloud the judgment that she makes as a Supreme Court justice. So, debate has been going on and is continuing to go on at this moment on the Senate floor.

Just take a listen to what one of those Republicans, Senator Orrin Hatch of Utah, who is not going to vote for her, said on the Senate floor, and then listen to what Senator Patrick Leahy, Democratic, chairman of the Senate Judiciary Committee, said in a bit of a rebuttal.

(BEGIN VIDEO CLIP)

SEN. ORRIN HATCH (R), UTAH: I hope that on the Supreme Court, Judge Sotomayor will take an objective, modest and restrained approach to interpreting and applying written law. I hope that she actively defends her impartiality against subjective influences such as personal sympathies and prejudices.

SEN. PATRICK LEAHY (D), CHAIRMAN, JUDICIARY COMMITTEE: She is a judge of unimpeachable character and integrity. These critics have also chosen to ignore her extensive record of judicial modesty and restraint, a record made over 17 years on the federal bench. Instead, they focused on and mischaracterized her rulings in just a handful out of her more than 3,600 cases.

(END VIDEO CLIP) KEILAR: So, all in all, we are expecting that at least 67 senators will be voting to confirm Sonia Sotomayor as the first Hispanic Supreme Court justice. We're expecting this vote here to happen in about the next hour, and then we're expecting that Sotomayor will be sworn in, in a public ceremony, before the end of the weekend -- Fred.

WHITFIELD: All right. We will keep tabs on that.

All right. And may I shift gears, so to speak? We'll talk about Cash for Clunkers.

KEILAR: That's what everybody's doing.

WHITFIELD: That's right, that the Senate is supposed to vote on this $2 billion as an extension of the program. Might it really happen today?

KEILAR: Yes. They've got a lot on their plate before they leave for their August recess. We're expecting them to debate this, to debate some proposed changes, and then to vote on this sometime after the Sotomayor vote, a few hours afterwards.

But the Senate, Fred, has to pass this Cash for Clunkers bill in the same way that the House did. They have to take this House-passed bill and just pass the same thing, or else they would have to reconcile differences with the House-passed bill, and then it's possible that Cash for Clunkers could run out of money sometime over August recess while Congress is out.

So, Republicans who are opposed to this extra money for Cash for Clunkers, they've added some amendments that are really hard for Democrats to vote no on, things like, instead of scrapping the cars, that you would donate them for charity instead, or a tax credit for buying a home for first-time homebuyers. And so, Democrats are going to have to take some pretty tough votes in order to get this Cash for Clunkers bill out as is, but it is expected to pass -- Fred.

WHITFIELD: All right. Interesting stuff.

All right. Thanks so much.

Brianna Keilar from Capitol Hill.

Appreciate that.

All right. On our "Money & Main Street" segment today, saving your home from foreclosure. One New Jersey woman literally takes the cake with a new spin on the old adage of "An apple a day."

Here now is CNN's Allan Chernoff.

(BEGIN VIDEOTAPE)

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT (voice-over): Actress Angela Logan has played many roles to earn a living. She's worked as a teacher, model, hairdresser, and is studying to be a nurse. But when she recently fell into foreclosure on her Teaneck, New Jersey, home, she turned to baking.

ANGELA LOGAN, MORTGAGE APPLE CAKE BAKER: It was a flash of desperation. And I thought, wow, we can sell these cakes, they're so good.

CHERNOFF (on camera): A major reason Angela fell into a squeeze is that two years ago she hired a contractor to renovate the house. He took his money, but he only did a portion of the work.

(voice-over): To save her home, Angela set a goal of selling 100 Mortgage Apple Cakes in 10 days at $40 each. She asked everyone she knew to buy a cake.

LOGAN: The hardest part was to say, "Can you buy my cake? This is my problem."

CHERNOFF: A local Hilton hotel offered its kitchen so Angela could bake faster. Angela says she's baked about 200 cakes, double her goal. And by qualifying for the federal Make Home Affordable Program, her monthly mortgage payment is dropping by nearly 20 percent.

Other Americans in a financial bind, she says, can also find creative answers to their cash crunch.

LOGAN: Find your talent. Find something that you can do that will help. I can paint fences, you know. Who needs one?

CHERNOFF: Almost any talent can generate extra cash -- teaching a skill like playing an instrument, home repairs for those who are handy, even dog walking or pet sitting for animal lovers.

LOGAN: Wow, this is incredible.

CHERNOFF: Internet retailer Bake Me a Wish got a whiff of the Mortgage Apple Cake and now is greasing pans to mass produce it and share the proceeds with Angela. A whole line of Angela Logan cakes is planned.

Escaping foreclosure could propel Angela Logan to a new career as the queen of cakes. But back in her kitchen, she still studies nursing, knowing from experience never to depend upon just one role.

Allan Chernoff, CNN, Teaneck, New Jersey.

(END VIDEOTAPE)

WHITFIELD: All right. That's an inspiring slice of life.

All right. As the president marks his second 100 days, we want to know, are he and Congress making the grade? We'll hear from the heartland.

(COMMERCIAL BREAK) WHITFIELD: All right. It's been a pretty busy first 200 days for President Obama. So, what exactly does he have to show for it?

Our Jessica Yellin is at a diner where people are serving up all kinds of opinions, right, in Steubenville, Ohio?

Why Steubenville?

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: Hi, Fredricka.

WHITFIELD: And you're dark where you are.

YELLIN: Is it very dark? Yes.

Well, the crowd has come and gone because they are having their lunch. They had their lunch and they're back to work. But this is a town that's sort of a microcosm of what is going on in Main Street America.

This town, Jefferson County, went for Obama, but just by the slimmest of margins, 76 votes. It's got a higher than national average unemployment rate of 13.5 percent. And I am right now within 10 miles of three different steel mills which used to be the source of employment for almost everyone in town, and they are all, if not closed down, running on the bearest of employment margins, down from 13,000 in one case to just a couple hundred employees.

So, this town is transitioning from a manufacturing economy to a new kind of economy where they are trying to build on health care and on educational facilities in the area. They are struggling.

So, we talked to many so of the lunch crowd, Fredricka, about both President Obama, but also Congress. I asked them how they think Congress is doing, especially on the health care front. Here's what they had to say. The first woman you are going to hear from is a Republican. The man you hear from is a Democrat. Their views of Congress.

(BEGIN VIDEO CLIP)

DONNA STRANEY, REPUBLICAN: I think some of them are sticking up for us, but some of them will cave, because I think, I don't know if money is involved. There are a lot of these Congressmen, they are thinking of getting re-elected again. I am telling you, they better be afraid, because the people are going to speak. We're not going to take it.

DON RASSBACH, DEMOCRAT: I would like to see, particularly Republicans with Democrats as well, come up with their own plan. Right now, people are saying, no, no, no, no, no. All right. You are saying no. What's the alternative? Let me hear an alternative. I don't see that much from Congress.

(END VIDEO CLIP) YELLIN: Fredricka, in all cases, the folks here are very impassioned, engaged and aware of what's going on in Washington, following the details of the health care plan largely on the Internet. We are going to be here for the day and night asking folks for their grades on a lot of issues.

WHITFIELD: Thanks so much. Jessica Yellin in Steubenville, Ohio. You have an opportunity to grade the president at CNN.com/reportcard. You can watch tonight, 8 p.m. Eastern the "National Report Card," a CNN primetime special.

So, it's up to you to grade the president. How is he doing? How is he doing as it pertains to the economy? Our CNNmoney.com writers and editors have their own opinions? And our Poppy Harlow is there at the big wall to give us a breakdown. Poppy?

POPPY HARLOW, CNNMONEY.COM: Hey there, Fredricka. I don't get to be at the touch screen wall everyday. But we're here. It is a special day, grading the president. Obama's Money Moves is the name of this special tool, only on CNNmoney.com.

We are putting it in basketball terminology. President Obama likes to shoot hoops from time to time. There are some slam dunks, but there are also some air balls.

And I want to start out with a slam dunk. It is, believe it or not, auto bankruptcies. Click on this and we'll show you why, because there were few people that thought it was a viable option for GM and Chrysler to fall into bankruptcy, restructure and emerge. But the president was pushing for this. He was hard on creditors. He pushed for those warranty guarantees. As a result, we had a very quick turnaround and both companies were able to exit bankruptcy in a matter of weeks.

Here is what our team's - click here and play the video - here's what our team thought of why this was such a slam-dunk. Take a quick look.

(BEGIN VIDEO CLIP)

PETER VALDES-OAPENA, SENIOR WRITER, CNNMONEY.COM: In a way, it was like what nobody predicted.

CHRIS ISIDORE, SENIOR WRITER, CNNMONEY.COM: I think there was a lot of doubt that you could have them be in and out of bankruptcy as quick as they were.

UNIDENTIFIED MALE: It really -- unprecedented for a company that size, the size of General Motors, to go through a bankruptcy in, what, 40 days?

LEX HARRIS, MANAGING EDITOR, CNNMONEY.COM: Obama pushed it through. He really nailed it.

(END VIDEO CLIP)

HARLOW: Fred, you can hear, they say he nailed it. A slam-dunk, according to our editorial team on that one.

WHITFIELD: All right. So, CNNmoney.com rating that a big success. The administration, a few air balls. How? Why?

HARLOW: I mean, just -- more than a few. Take a look here. For the first 200 days, you have a number of them. Health care reform, obviously, a big question right now.

Let's get to job creation. Click on that and we'll see why. The president has said time and time again, my administration will save or create 3.5 million jobs. In the numbers, we see some jobs saved so far are created. Really, this economy, Fred, has shed 3.4 million jobs this year alone. We have more than 6 million people losing their jobs in this recession alone. So, they're grading that somewhat of an air-ball.

Take a look at some other ones. When you look at the AIG bonus raids, a lot of talk, not so much action. You look at executive compensation. Is that really paying off? Rating agency reform. A lot of questions still.

I want to read you a quick Facebook comment. You should weigh in on this page on Facebook. Here is what Brandon wrote in. He said, "Obama's spending policies are wrong, just like George Bush in many ways. He was right to save GM, however, I live in the Midwest and it would have been a catastrophe if they went into liquidation." John wrote us, he's grading the president. He said, , "I give him a C- minus, and I feel his first 100 days were very good, the last 100, I think he overspent."

So let us know what you think. Go to this page, play around with this tool, weigh in on Facebook right below it. An interesting tool. Interactive. Getting people involved ahead of tonight's special, grading the president. Fred.

WHITFIELD: All right. Perfect stuff. Thanks so much, Poppy Harlow. Appreciate that.

Hard times at the U.S. postal service. The bad economy and the digital age, where so much is done over the Internet has been a mean one-two punch. Thrown the postal service billions of dollars into debt and looking for ways to adapt and survive. Closing post offices, reducing hours and cutting back delivery all on the table.

Senator Tom Carper of Delaware is with me right now. He cosponsored a bill to reorganize the post office retiree fund and maybe get it out of the hole. Good to see you.

SEN. TOM CARPER (D), DELAWARE: Nice to see you. Is your name Fredricka?

WHITFIELD: Fredricka, yes.

CARPER: We have a town in Delaware named after you just south of Dover. WHITFIELD: OK. Looks like I need to visit. Thanks so much, Senator. Let's talk about this pitch to reorganize the postal service. What's your best case scenario? How do you do that?

CARPER: Well, let's back up a little bit to follow up on what you said at beginning. We have a perfect storm here. Part of it is the electronic diversion of the mail. We pay our bills electronically in a lot of cases. We send Christmas cards and do all kinds of things by electronic payment, Internet and so forth.

In addition, we are in the worst recession since the Great Depression. You put those two things together and add one more ingredient to it. When the Postal Reform Bill was passed in 2006, the Bush administration and the president signed the bill for the Postal Service and the Congress had to agree to an incredibly aggressive, actually very conservative prefunding of health care costs for retirees for the post office. More conservative than any state or local government than I am aware of. Actually more conservative than any business that I am aware of...

WHITFIELD: Are you proposing a change on that now?

CARPER: What we're saying -- I use the example of a couple buying a home. They are buying a home. They are young, have no kids, both working. They go to buy a home and they get a ten-year mortgage. Very aggressive. They find out later on somebody loses their job, they start having kids and they go back to the bank and say, we would like to renegotiate the mortgage, maybe get a 20-year mortgage. That's essentially what we are doing here. We are not talking about extending these obligations forever but something more realistic, if you will, than this analogy...

WHITFIELD: So, in that reorganization, I, as a consumer, does that mean that I'm going to feel it or see a difference in the postal service when I go to the post office or my delivery at home even change as a result of what you are proposing?

CARPER: Actually, there are a number of ways to fix this problem. One, for the near term, what we want to do is help the postal service over the next couple of years to buy a little bit of time, allow the labor contract negotiations to go forth next year and the year after that. In some cases, they have thousands in the post offices stationed across the country. They have hundreds of processing centers. Some of those probably should be closed -- not all, not most, but some should be closed.

And a very important, a third element is the post office has to be more entrepreneurial. They have to use their business model to do things like flat boxes. We've seen a lot of TV ads on flat boxes, and it turns out it's a big hit...

WHITFIELD: And when you talk about entrepreneurial, we had the president of the mail carriers union on with us earlier. He testified about other things the postal service needs to take advantage of. Perhaps vote by mail (ph), ways in which the post office can prove its viability and usefulness. E-commerce deliveries ought to be taking place, conducting census, perhaps, and national polling. And maybe even delivering medication. Might these be ways to help kind of close that gap?

CARPER: Well, there are some other things that the post office can do. One of the things that was mentioned this morning by the postmaster general, in other countries, the post office could do a variety of things other than simply deliver the mail. I am not so sure we are interested in emulating all of those.

But there's some other work. For example, things the federal government does now that can be handled, centralized and handled more appropriately at the post office. We have to use that basic model and go into everybody's home every day, six days a week and also, the idea you are in every community. Use that basic business model and presence to generate different sources of revenue. I think it can be done. We have to be smart about it.

WHITFIELD: All right. Senator Tom Carper of Delaware, thanks so much. Looks like I need to pay Fredricka, Delaware a visit.

CARPER: We will see you in Fredricka, Delaware.

WHITFIELD: All right, sounds good to me. Thanks so much. Good to see you.

All right, underwater, unless you are a fish, it is not a good thing. And a new report suggests about half of homeowners with mortgages will soon be underwater. Meaning they will owe more money than their house is actually worth. Not good at all. CNN personal finance editor, Gerri Willis is here with a breakdown. Grim news. I don't want to hear that.

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: I know. I know. That's right. You got the numbers right, almost half of U.S. homeowners, that's 25 million homes, will be underwater by 2011. Home prices, according to this report, will fall another 14 percent on average. This is a report that came out today from Deutsche Bank.

Right now, about 26 percent of homeowners are upside down on their mortgages, owing more than the house is worth. The report went on to say that the markets with the fastest growing appreciation during the housing boom could find as much as 90 percent of borrowers could be underwater. And here they're looking like they're adding markets like Fort Lauderdale, Miami, Modesto in California and Las Vegas. Lots of California localities included on this list.

You might be wondering, what are the consequences? More people defaulting on their mortgages, it's, going to send prices lower, more foreclosures. Normally, we would see this obviously, with after a life event. It goes on and on. No increase in consumption. People tend to take out home equity loans when prices are going up, up, up. When they go down, down, down, they can't do that, right. They can't spend that money on other things to help boost an already struggling economy. So it could push the economy back down further into recession. Fred?

WHITFIELD: So, if you are a homeowner with a mortgage, what else does this mean for you?

WILLIS: Well, you know, it depends. It may not mean much at all if you are going to stay in that house for a long period of time because markets are always cyclical, right. Prices will go up. Prices will come down. If you are planning on staying in your house for five, 10, 15 years, ultimately, it may not mean that much to you.

Experts say that this report is especially, though, pessimistic, especially when it comes to the home price idea that it's based on. Consensus is that home prices will only fall 5 to 10 percent more. But the report we just discussed, Fred, said 14 percent more. So, you see, there is a little disconnect there...

WHITFIELD: Yes. I don't like either number, though.

WILLIS: It does look, according to some numbers, like we are coming to the end of this downturn. It looks like the job market is stabilizing. We have been talking about job losses of 700,000. Now, it is about half of that. That's good news. Foreclosure mitigation seems to -- it has been slow, but it may help homeowners out there.

Remember,earlier this year, there was no plan at all. It is likely by next spring, housing prices could begin to stabilize. So, glass half full, glass half empty. There is some criticism of this report. People should know, there are some very smart people out there who think that the likelihood that you would owe more than your house is worth is high indeed. Fred?

WHITFIELD: Smart people out there, including you, Gerri Willis. I am always listening to what you have to say.

WILLIS: You're so nice. Good to he see you, Fred.

WHITFIELD: Good to see you, too, Gerri. Thanks.

OK, well, how about this? Imagine having a 32-story condominium building all to yourself. Peace and tranquillity is one thing. But for this couple, their retirement oasis proved only a mirage, thanks in part to the hard-hit housing market. Here is CNN's John Zarrella.

(BEGIN VIDEOTAPE)

JOHN ZARRELLA, CNN CORRESPONDENT (voice-over): Ah, yes. Resort living. At the pool, there is always a chair.

(on camera): Your own private gym with state-of-the-art equipment, and you can work out all by yourself. There's nobody here to bother you.

Look at this parking garage. You never have to hunt for a space.

And when you get on the elevator, you never have to worry about anybody getting off first.

Sounds great, right? Well, maybe you should talk to Victor Vangelakos. VICTOR VANGELAKOS, CONDO OWNER: This is our condo on the seventh floor.

ZARRELLA: This was going to be Victor and his family's vacation and retirement home in the Oasis, a 32-story condominium building in Fort Myers, Florida. The New Jersey fireman closed in November, paid $420,000.

VANGELAKOS: I tell people at home, and they just say, it's your own building. It sounds great. But, you know, it can be eerie at night. It's almost like a horror movie.

ZARRELLA (voice-over): Why? Because the rest of the building is empty. This is a ghost tower. When the housing market collapsed, Ft. Myers got hit hard. Most of the units never sold. Those that did -- the owners were able to move to the sister tower next door where there are people. But Victor's lender won't agree to let him swap his unit here for one there.

VANGELAKOS: I called them up a couple of times. I got their law department, which they told me don't leave your unit. They recommended that's abandonment so I have to stay here.

ZARRELLA: Vangelakos's attorney and the developer are trying to negotiate a solution, nothing yet. Victor's biggest concern -- safety. Someone got into the building a month ago. Now every night, Vangelakos checks the building's locks.

VANGELAKOS: Well, I have to make sure, yes, because if I don't? What happens is they can get to this pool area through the parking garage.

ZARRELLA (on camera): The Vangelakos family has no idea how this will ultimately work out. But what's really starting to bother them is the eerie silence. When the only other voice they hear is...

UNIDENTIFIED FEMALE: Door's opening.

ZARRELLA: John Zarrella, CNN, Ft. Myers, Florida.

(END VIDEOTAPE)

WHITFIELD: It's an American flag that is more old than glory. Take a look right there. Neighbors weren't exactly thrilled. They wanted it gone. The guy who owns it, no way that he was going to take that down. Not until something special happened.

(COMMERCIAL BREAK)

WHITFIELD: OK. While her man was on a mission in North Korea, U.S. secretary of state Hillary Clinton headed to Africa for a seven- nation tour. But as she told CNN's Fareed Zakaria, she was kept in the loop throughout.

(BEGIN VIDEO CLIP) FAREED ZAKARIA, HOST, "FAREED ZAKARIA GPS": So, President Clinton comes back. He spends three hours talking to the leader of North Korea, Kim Jong-iIl, what was his impression?

HILLIARY CLINTON, SECRETARY OF STATE OF THE UNITED STATES: We are going to get a full debriefing, which we really haven't had the chance to...

ZAKARIA: But you must have spoken to him on the phone?

CLINTON: I do. I have spoken to him on the phone. I have this policy, I never talk to what I talk to my husband about, Fareed. What we are hoping that maybe, without it being part of the mission in any way, the fact that this was done will perhaps lead the North Koreans to recognize that they can have a positive relationship with us.

ZAKARIA: But the Bill Clinton mission -- it was unorthodox. Here you have a former president going on what appeared to be a state visit from the way in which he was greeted, being received by North Korea, stop nuclear negotiator.

CLINTON: This, as you know, came from the families. This was a message that Laura and Euna were given by the North Koreans, which they passed on to their families and former vice president Gore...

ZAKARIA: ... naming him specifically.

CLINTON: Naming him specifically.

(END VIDEO CLIP)

WHITFIELD: So, you want to catch that entire interview with Secretary Clinton on "FAREED ZAKARIA GPS". Sunday, 1:00 p.m. Eastern, only here on CNN.

(COMMERCIAL BREAK)

WHITFIELD: All right. Despite some neighbors who thought it was an eyesore and kind of disrespectful...

RICK SANCHEZ, CNN ANCHOR: I love this story.

WHITFIELD: ... a Fresno father kept his word. Yeah, because you actually spoke with...

SANCHEZ: I love this story.

WHITFIELD: Everyone loves this story.

He kept it up there, saying I am not taking this flag down until his son were to come home from a year-long deployment.

SANCHEZ: And neighbors were mad at him.

WHITFIELD: They must not have known the entire story. You think? So, we do have an update now. A few hours ago, Corporal Paul Haros and 80 of his fellow soldiers actually returned home. The old flag, it was retired. And a new one is flying in its place. Now, I'm sure the people of dad's neighborhood, now that they know the story, they have to feel pretty embarrassed and ashamed...

SANCHEZ: They were dropping off brand new flags at his doorstep, at his front porch.

WHITFIELD: Saying please replace it.

SANCHEZ: Get rid of that thing. A lot of them were veterans and they were offended by looking at that.

WHITFIELD: They probably thought of it more as symbolic. This is the emotional journey that he has been on since his son has been away. Look at it that way. So hence, the tattered flag.

SANCHEZ: Think of the "Star Spangled Banner" and the term Old Glory. It's not prepackaged and plastic, is it?

The guy says, I love my son too much to take anything down until he comes back. I made the promise, and I'm going to keep it. Our viewers, twitterers, they loved this.

WHITFIELD: I am sure now everybody will come together in the neighborhood because the homecoming is quite extraordinary.

SANCHEZ: You are going to see it. Three o'clock. The embrace of dad and the son and the whole thing. We are so happy. We are excited about that.

Oh, and this health care thing, we are going to be all over it.

WHITFIELD: We'll be watching. You be all over it. Rick Sanchez, thanks so much. Appreciate it. See you in a few minutes, six minutes from now.

Two rape suspects held over after some tear-filled court hearings. The nine and ten-year-old boys accused of attacking a younger girl. We'll have the very latest from Phoenix.

(COMMERCIAL BREAK)

WHITFIELD: All right. Vote taking place right now on the confirmation of Sonia Sotomayor as Supreme Court Justice. Let's listen in right now to Senate Majority Leader Harry Reid.

SEN. AL FRANKEN (D), MINNESOTA: Mr. President, I would ask you now if we begin the vote now and we will make sure that -- two or three minutes we are starting early.

SEN. HARRY REID, SENATE MAJORITY LEADER : Without objection.

FRANKEN: The yeas and nays been ordered?

REID: The yeas and nays have not been ordered.

FRANKEN: I suggest (INAUDIBLE) quorum. There's been a request for quorum. (INAUDIBLE)

REID: The clerk will call the role.

UNIDENTIFIED FEMALE: Mr. Akaka (ph)?

(AUDIO GAP)

WHITFIELD: OK. We're expected to keep a close watch on this, as the vote is to take place. It is believed it will be a unanimous decision among the the Democrats and a handful of Republicans voting for the confirmation of Sonia Sotomayor. The first Hispanic Supreme Court justice to take to the bench. That will take place momentarily.

I am going to hand it over to Rick Sanchez for the 3 p.m. Eastern hour.