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No Survivors Found; Are You Better off Now?; First Fire, Then Earthquake; The Stimulus Project

Aired January 25, 2010 - 09:00   ET

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

KYRA PHILLIPS, CNN ANCHOR: And good morning everyone. It's 9:00 a.m. here on the East Coast and 6:00 a.m. out west. We're glad you're getting your day going with us.

Let's go ahead and get you caught up on the news right now.

A jet liner explodes into a ball of flames and crashes into the Mediterranean Sea; so far no signs of survivors.

And many people fall in love with the Picasso. However, one woman -- well, let's say she really fell for this one. The heart of the canvass torn. Can it be repaired?

And a literally lost in Laredo. The nearest bookstore now hours away? What is going on in this Texas town?

And we're not forgetting Haiti. We're going to actually take you to the capital's most desperate slum and tell you about a two-week plan to help those people there in Haiti survive.

Also, Suzanne Malveaux at the White House where the president is preparing to reveal his five-point plan on helping middle-class families. We'll talk to Suzanne or Suzanne in just a little bit.

And then Christine Romans -- Christine is going -- well, actually she's read the entire stimulus plan, I'm told, and she's going to explain it all to us in two minutes, I believe. All right, I'm exaggerating, but she's playing along with me. She's a trooper. Christine is going to talk about projects and paychecks in just a second.

All right, upfront this hour. A developing story out of Lebanon where it's a day of mourning amid a multi-national rescue effort. An Ethiopian Airlines flight crashes minutes after takeoff from the Beirut airport. Ninety people aboard, 23 bodies recovered so far but no survivors.

Let's get straight to CNN's Cal Perry. He's live in the Lebanese capital.

So Cal, is weather hampering the rescue crews right now?

CAL PERRY, CNN CORRESPONDENT: Well, certainly that's a concern here for the Lebanese president. He wanted to, of course, extend his condolences to all the family members of those who are on that plane. And he said he's worried about the weather now.

Those rescue efforts not only of the Lebanese, maybe we're also talking about the German Navy as well as UNIFIL of the U.N. Peacekeeping forces that's based in Southern Lebanon, and the fifth fleet, the Americans joining that rescue effort.

We heard the prime minister say they will continue the search and recovery effort for at least the next 72 hours. Officials here telling CNN 20 bodies have been recovered. There were 90 people on total onboard, Flight 409 headed for Addis Ababa.

It was 2:37 a.m. local time when it simply lost contact with the control tower here in Beirut. So we're talking about rescue operations now have been going on for 11 hours. Those passengers, at least 54 of them were Lebanese, 22 of them Ethiopian, and then a mixture of other Lebanese nationals.

I do want to tell you, Kyra, that family members have been showing up here in the dozens hoping for any kind of news. The prime minister is actually been sitting with those families right here in the airport.

Very, very depressing scenes, of course. That said, we have heard some stories of life and luck. We spoke to one man, Filad Shebab (ph), a 50-year-old businessman, who was supposed to fly today to (INAUDIBLE) and his daughter asked him not to get on the plane -- Kyra.

PHILLIPS: Boy, we'll definitely follow-up on those rescue efforts, hoping for any sign of life.

Cal Perry, I appreciate your report this morning. I know you've been working through the night.

Well, your money and the bottom line of the Obama presidency. Are you better off now than you were a year ago?

As President Obama gets ready for his first State of the Union address, he is focusing on the economy and so are we.

We begin our coverage with CNN White House correspondent, Suzanne Malveaux.

Suzanne, the president seems to have a few things to straighten out before he addresses the country. Wouldn't you say?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, you know, the Obama administration is definitely trying to regroup here after last week. It was hard, probably one of the toughest most challenging weeks for the president and his administration.

But we saw his top advisers hitting those Sunday political shows, talking about the fact that the president is focused on what American people say is the number one concern and that is creating jobs.

And Kyra, one White House official today put it that the State of the Union on Wednesday is going to focus on creating good jobs, addressing the deficits, changing Washington as well as fighting for middle-class families.

Now we are focusing clearly on the economic stimulus package, the $787 billion. Where did all of this go? Well, White House advisers over the weekend talked about that. They want to make sure that people believe that the president has been on top of the economic situation.

So they say, yes, the stimulus package has created or saved jobs, but it is far from clear, Kyra, when you take a listen to what they're saying, just what those numbers are and what they mean. Take a listen.

(BEGIN VIDEO CLIP)

VALERIE JARRETT, SENIOR WHITE HOUSE ADVISER: The recovery act saved thousands and thousands of jobs.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: We finally saw the first positive economic job growth in more than a year largely as a result of the recovery plan that's put money back into the economy that saved or created 1.5 million jobs.

DAVID AXELROD, SENIOR WHITE HOUSE ADVISER: The recovery act the president passed has created more than -- or saved more than two million jobs.

(END VIDEO CLIP)

MALVEAUX: Now, Kyra, you know, some people take a listen to that and go, OK, they're talking apples and oranges, they don't have their figures straight here. Well, I had a chance to talk to two out of those three people that we just listened to last week. And they say a priority of this administration and this president is to clear up the message to hone the president's message.

Obviously, they've got work to do on that. The president is going to go for it in the State of the Union and try to explain in some very real and clear and specific ways of how that economic stimulus package has bourn fruit -- Kyra.

PHILLIPS: Meanwhile, the White House rolling out some specifics on financial help for the middle class, right?

MALVEAUX: That's right. You have Vice President Joe Biden who's the head of this middle class tax force, and the president and vice president are going to come forth later this morning and talk about some specific and initiatives that they put forward.

They kind of have 11 meetings or so throughout the country and the White House to deal with that. A couple of initiatives that are on the table this morning, Kyra, one nearly doubled the child independent care tax credit. That's for middle -class families that are making under $85,000 a year. There's also something for students. There are federal loans to limits those payments of about 10 percent or so. That is what the income level above the basic living allowance. And then finally, one of the other initiatives that is expanding tax credits to meet with retirement savings.

These are the kinds of things we're hearing from administration officials. They're putting forth, trying to convince the American people that the president, yes, gets the message loud and clear, that the American want him this response to the economic crisis -- Kyra.

PHILLIPS: All right, Suzanne Malveaux at the White House. Suzanne, thanks.

On Wednesday night, watch President Obama deliver his State of the Union address here on CNN. Out primetime coverage begins, 8:00 Eastern, and 5:00 Pacific.

More talk about your money now. Most Americans feel a lot of the stimulus funds have been wasted. Check out the numbers in the latest CNN Opinion Research poll. One in 5 say that nearly all of the money has been wasted. One in 4 believed that most of it has been wasted and 29 percent think half the money has gone to waste.

Most Americans also believe the projects and the stimulus bill were just put in for political reasons.

Well, with that in mind, we've taken on a special project here at CNN. All this week CNN is looking at where the $158 billion in stimulus funds have gone or where they're going.

Take a look at this. It's one of 12 folders, listing nearly 57,000 projects, which one could stimulate the economy and which ones just plain fail. Well, we're trying to zero in on all of that.

That's just one of my post-it or part of it that that I'm trying to read and understand. Let's try and crank it up a bit here as we start in the nation's financial center. And that is New York.

CNN's Christine Romans working on the stimulus projects for us.

So why don't we try and give a little background here? How do we explain the whole stimulus package in two minutes and 45 seconds? You can that do that, right?

CHRISTINE ROMANS, CNN CORRESPONDENT: I can.

(LAUGHTER)

ROMANS: It's big. I mean, we can say, Kyra, it is really big. We have never in the history of this country undertaken such a massive spending of taxpayer money in such a short amount of time.

This is nothing short than a rescue of the American financial system and the American way of life. How big is the stimulus? Well, we're talking about here is what Congress passed last February. $787 billion. This is Congress's part. But more was spent than that when you add in the Fed and some other programs.

But Congress, $787. The Iraq war, to date, $599 billion has been spent. The new deal, we have inflation adjusted these numbers, would have been about $500 billion. The Marshall plan to rebuild Europe after World War II, $115 billion.

These are all events that have defined -- defined how we lived. And the stimulus is much bigger than all of those.

Want to break it down for you. Most of the money coming out in tax benefits. So you might not have even known it was coming your way, but it ended up in the Social Security check, ended up in your paycheck.

$275 billion in loans and grants, $224 billion in entitlements. That means things like food stamps. I mean things like an unemployment check. $265 billion has been paid out.

Not all of this money has gone out the door yet. Look, a big chunk of it still remains to be paid out. And there's a reason for that, Kyra. It's because this was all meant to be time released, to go over two years, to coincide with the bottoming of the economy, a little bit of a recovery to try to juice, to add gasoline on to any kind of economic spark that might be coming back, and that's what they're hoping to do.

So a lot of this money still is meant to be paid out.

PHILLIPS: And, you know -- and that's -- critics come forward and say OK, let's try and talk about where all of this money is going, because some has been spent, some has not been spent, some projects are in the works, some things are on paper.

It's really hard to see right now the data. I mean we're stories...

ROMANS: Right.

PHILLIPS: ... but not seeing the actual data.

ROMANS: Look, it's too soon to judge. That there are a lot of projects, very different kinds of projects, but I can tell you in a very personal level, we've talked to people, many, many people who have already felt this and who can tell you one way or another how this has affected their lives.

I mean the first phase of the stimulus was the rescue phase. That money went out, that was food stamps, Medicaid, filling budget gaps, saving jobs. We've talked to hundreds of teachers, special ed teachers, who would not be, the firefighters, police officers who have been out of a job.

They have two more years to figure out how to stay on that job before they need to have -- funded again.

The second phase is job creation. That's just getting started. That is infrastructure, construction, research, big investments in the smart grid, big investments in high-speed rail. You know, all different kinds of programs. Those are just now getting under way.

A lot of those construction projects were the shovel-ready projects. We're seeing some of those actually being completed now, believe it or not. In just a matter of months, some of those have been completed but on the books for years. Finally they got the money, boom, they got them done.

So it would be all week, all week we're going to have tales for you on how this has been spent and what still is going to be done.

PHILLIPS: Sounds good. Christine Romans, thanks so much.

ROMANS: Sure.

PHILLIPS: All right, take a look at this. Christine is not the only one hard at work. This is actually our stimulus project team right here in the CNN NEWSROOM. Right now they are pouring over the paperwork on nearly 57,000 stimulus money projects.

We're going to tell you about one energy savings project that is part of that stimulus funding as we break it all down.

A new message allegedly from al Qaeda. Osama bin Laden weighs in on that Christmas day attack attempt.

And he says the music makes him feel like he's alive. You want to hear about a Haitian music teacher rescued from the rubble.

JACQUI JERAS, AMS METEOROLOGIST: And I'm CNN meteorologist Jacqui Jeras. Heavy rain brings flooding across parts of the southeast. We'll show you the pictures plus travel delays that you need to know but you probably don't want to see.

That's coming up next.

(COMMERCIAL BREAK)

PHILLIPS: It's no surprise that Osama bin Laden is now taking credit for the Christmas day attack in Detroit. New audiotape allegedly from the al Qaeda leader is out. In it he said that al Qaeda's message was sent with the hero fighter, Umar Farouk, confirming same message from 9/11. Umar Farouk Abdulmutallab is charged in that attack. Neither CNN or the U.S. government has authenticate that tape that aired on Al Jazeera.

All right, let's take a look now at some of the headlines from Haiti.

Haiti's government says that they buried 150,000 bodies now. But that's just going to be a portion of the death toll. They are counting bodies still in the rubble, buried by family members or any death outside Port-au-Prince.

And there is now a desperate need for tents. The plan is to move the homeless out of Port-au-Prince and into new tent cities. But there aren't enough tents or places to put them. The U.N. says there are about one million homeless in Haiti right now, and that includes Leogane, southwest of the capital.

About 85 percent of the people there lost their homes. They're just now receiving their first mattresses and blankets.

Even before the quakes, survival was tough in Haiti's most desperate slum. And now food supplies are being delivered into Cite Soleil.

Our Karl Penhaul reports that for every person who gets food today, thousands of others will go away hungry. U.N. Peacekeepers and U.S. military leaders admit they can't feed everyone every day but they say they do have a plan.

(BEGIN VIDEO CLIP)

GEN. P.K. KEEN, DEP. CMDR., U.S. SOUTHERN COMMAND: Provide food for a percentage of them every day, so over a two-week period, every citizen has sufficient food to last for that two weeks.

(END VIDEO CLIP)

PHILLIPS: U.N. Peacekeepers say that the security situation in Cite Soleil is under control.

Romel Joseph had a dream, build a music school for Haiti's poor children. Well, the school was destroyed once by fire and now by earthquake. But Joseph, pulled from the rubble, is determined to rebuild again.

Take a look at this report from (INAUDIBLE) at our affiliate WSBN out of Miami.

(BEGIN VIDEOTAPE)

UNIDENTIFIED REPORTER (voice-over): This sound is not only music to Romel Joseph's ears, it's also healing to his soul.

ROMEL JOSEPH, EARTHQUAKE SURVIVOR: It kind of makes me feel like I'm alive.

UNIDENTIFIED REPORTER: The South Miami Middle School string ensemble playing for Joseph while he recovers at Jackson Memorial Hospital.

Joseph is blind so he can't see the students but for this violinist who went to school at Julliard and trained with the Boston Symphony, the comfort comes from what he hears.

JOSEPH: I'm really thankful that I'm (INAUDIBLE), I'm alive to hear some great music once more. UNIDENTIFIED FEMALE: He's extremely in high spirits and he's extremely hopeful and I know as long as he can talk and he's OK and he can walk he'll be fine.

UNIDENTIFIED REPORTER: You see Joseph runs a music school in Haiti for impoverished children. He was at his New Victoria School outside on the balcony when the earthquake hit.

UNIDENTIFIED MALE: He most likely was standing on this balcony right here as it fell.

UNIDENTIFIED REPORTER: It took 18 hours for rescuer to find him.

(On camera): Joseph suffered two shattered legs and a crushed left hand in the quake as well, as well as three detached fingers. He worries that he may never be able to play violin again, yet he remains hopeful because he says he still has feeling in all five of his fingers.

(Voice-over): This isn't the first time Joseph's school has been destroyed. Ten years to the day of the quake, a fire burning it to the ground. Now he once again vows to pick up the pieces and bring the miracle of music to the hurting children in Haiti.

JOSEPH: That's going to be my top priority.

(END VIDEOTAPE)

PHILLIPS: Well, it's pretty clear that the quake victims need all the help that they can get. And to find out how you can get involved, you can go to CNN.com/impact. We have links to more than five dozen organizations that are providing everything from basic needs to medical assistant.

Well, it doesn't matter where you live, but you're very much likely dealing with some nasty winter weather today in all types of forms.

Meteorologist Jacqui Jeras has the breakdown for us.

What do you got, Jacqui?

(WEATHER REPORT)

PHILLIPS: Thanks, Jacqui.

Well, there is oil everywhere. Exxon involved again. This time a major waterway in Texas is closed down while crews are trying to mop off the crude.

(COMMERCIAL BREAK)

PHILLIPS: Time now to check on some of other stories that we're watching this morning for you.

Crews still working to contain a big oil spill in Texas. It happened two days ago near Port Arthur, Texas. It's not far from Houston. More than 460,000 gallons spilled when an ExxonMobil tanker collided with a barge. Two wildlife preserve areas are now threatened.

And this just in to CNN NEWSROOM. Word out of Baghdad today that the cousin of late dictator, Saddam Hussein, Ali Hassan al-Majeed, better known by his nickname, Chemical Ali, was executed this morning in Baghdad.

You may recall that he was given his fourth death sentence just last week for 1988 gassing of thousands of Kurdish Iraqis. Ali Hassan al-Majeed, cousin of late Iraqi dictator, executed. This coming to us from Iraqi State TV.

Casey Anthony due back in court in Florida this afternoon. Both her murder case and check fraud case are being reviewed today. Anthony is accused of killing her 2-year-old daughter Caylee. Her attorneys want to question the ex-wife of the man who found Caylee's remains.

Let the good times roll. Orleans Saints headed to the Super Bowl, as you can imagine. Bourbon Street, alive with celebrations. Looks like Mardi Gras, doesn't it? Even more than usual, the Saints beat the Minnesota Vikings to earn their first trip ever, ever to the Super Bowl. They'll face the Indianapolis Colts February 7th.

Billion and billion for economic stimulus projects. We're going to take you to our stimulus desk for a look at one project aimed at lowering your power cost. Keep your seat. A trip to our stimulus desk coming right up.

(COMMERCIAL BREAK)

PHILLIPS: Let's get back to our project this week. A look at where all that stimulus money has gone or is going.

T. J. Holmes at the stimulus desk.

So, T.J., the desk has been looking at one project, right, designed to lower your home energy costs?

T.J. HOLMES, CNN ANCHOR: Yes, you talk about where this money is and where it's going. That's a lot of money. I don't know if I can keep up with it all in this 2 1/2 minutes here. But I'm going to try at least.

But you're still talking in particular about a project we're going to show people in a second. But I'm just giving an idea here. The stimulus desk, what we're doing is keeping up and essentially investigating as many projects as we can this week. Some 58,000 projects. A lot to get to.

This shows you active investigations we have going on. And Kyra, to your point, we'll I'll tell you about this one. About more energy efficient and making our homes more energy efficient. Saving some money by improving the electricity grid in the country, the smart grids, if you will.

Well, $3.4 billion is going out in 49 states for several projects. Some of them in Houston, they're getting $200 million for the smart grids. Also over in Baltimore, they're doing the same thing, getting about $200 million for these smart meters and also smart meters that go in your home.

But I want to highlight what's happening in Augusta, Maine. And to talk about this a little more, come over with me to the actual desk. This is where everybody is kind of hanging out. I may have to excuse me.

Everybody is working. They didn't even know we were coming over. Excuse me for a second, I need to talk to Ines Ferre over here. She actually volunteered for this desk, if you believe it or not, to go through these mounds -- really, 58,000 projects represented here.

But the one in Baltimore, we're highlighting here, the smart grids. It sounds great. It sounds like it's going to be creating some jobs. But a little controversy here.

INES FERRE, CNN STIMULUS DESK PRODUCER: Right, yes. It's actually up in Maine and it's $95 million -- $96 million for smart meters and it's going to help out some 600,000 homes and businesses. But the thing is, is that, they're saying the company -- power company is saying look, this is going to create some 200 installation jobs within the next year and a half.

HOLMES: That sounds great, right?

FERRE: Yes, right, exactly. But you've got union leaders that are saying but hold on a second, because in the long run there's going to be about 141 jobs that are going to be lost including meter readers, the people that go out and read the meters, and they look for damaged lines, et cetera.

So I mean you've got this real, kind of controversy here about jobs that are going to be created but yet on the other hand, some people are saying but you're actually going to have some jobs lost.

HOLMES: And that exactly, Kyra -- thank you, Ines. And that is exactly what we're are looking at over here today. The actual numbers. Yes, it sounds great and the government can tell you, and you look at recovery.gov, it says yes, this project, this money, these jobs created.

But when we over here look a little deeper, make a few phone calls and just look into it a little deeper, you find maybe it's not all of what it seems. So there are two sides to this particular story.

All these jobs being created to install these grids, that sounds great. But some argue but once we're more efficient, we're actually going to be losing so many jobs because you don't need those people any more. You know, Kyra, so that's exactly what this desk is designed to do. We'll be doing this the rest of the week. So we'll be checking in with you clearly (ph).

PHILLIPS: Sounds good. And we'll have a number of economic experts on to talk about the pros and the cons as well. They've looked through the rims of paper right there along with you, T.J.

HOLMES: Yes.

PHILLIPS: Thanks, T.J.

HOLMES: Bye-bye.

PHILLIPS: Well, tonight on "CAMPBELL BROWN" at 8:00 you can find out why some residents of Montana think that their state has made a double fault with their tax dollars. Then "AC 360" investigates why stimulus money is going to so many companies that have a history of law breaking.

"THE STIMULUS PROJECT," all this week, 6:00 a.m., 8:00 a.m. and 10:00 p.m. Eastern time.

Billions of dollars, thousands of projects, countless questions. So did the government spend your stimulus money wisely? We are going to talk to one economic expert coming right up who says no way.

(COMMERCIAL BREAK)

ANNOUNCER: Live in the CNN NEWSROOM, Kyra Phillips.

PHILLIPS: President Obama rocked Wall Street last week when he sent the markets into a tail spin.

Susan Lisovicz at the New York Stock Exchange. And I think it was the word "regulation."

SUSAN LISOVICZ, CNN CORRESPONDENT: It was the word regulation, Kyra. It was unexpected. It sounded pretty harsh. Took the market by surprise. And I'm telling you, we needed the weekend to recover. We are also concern about Ben Bernanke's chances for a second term. That sent the Dow plunging more than five percent over the past three sessions. I mean, that's where you start hearing the word correction coming quite a bit. It's the Dow's worst losing streak since the market bottom down last March, but check it out.

We've got some green arrows with the brand-new trading week. That's good to know. But time is of the essence for Ben Bernanke. His term expires Sunday. A growing course of senators have been pinning the struggling economy on the Fed chief. There were signs over the weekend that he will get the 60 votes in the Senate needed for confirmation. This comes at the same time, the Fed will be holding its regular meeting on interest rates.

Finally, at Sam's Club is cutting 10,000 jobs. Most of the losses will come from the many part time positions in the product sampling department. The jobs will now be outsource to a different company. The announcement comes just week after Sam's Club said that it was closing ten stores resulting in 1500 job cuts.

Checking the early numbers. Well, we are seeing a little bit of a bounce back. And that is a relief because we have lots of triple- digit moves last week, and most of them were to the downside -- Kyra.

PHILLIPS: All right, Susan. Thanks.

LISOVICZ: See you.

PHILLIPS: Well, in case you're just joining us, we've taken on a pretty special project this week at CNN. We are looking at where the $158 billion in stimulus funds. That's nearly 57,000 projects, by the way. Have gone, or where they are going. So our team is looking at projects that really stimulate the economy, and those which you might ask, well, is that's really helping. Stimulus at work, setting aside $1 billion for police, setting jobs in high demand.

CNN's Jim Spellman has more on this part of the money in a certain state from Inglewood, Colorado.

(BEGIN VIDEOTAPE)

JIM SPELLMAN, CNN CORRESPONDENT (voice-over): Swing shift roll call at the Englewood, Colorado PD. Two rookies are ready to roll.

OFFICER EDDIE BLACKWELL, ENGLEWOOD POLICE: A new recruit. I just got hired as of October 12th.

OFFICER PATRICK DUNN, ENGLEWOOD POLICE: I just started three days ago.

SPELLMAN: Hundreds of people applied for their jobs, jobs that came courtesy of the federal government.

DUNN: If it wasn't for the stimulus, I probably would have been hired.

SPELLMAN: An engineer by trade, Officer Dunn was laid off numerous times before finally losing his job for good last March. At 42 years old becoming a cop wasn't an easy decision to make.

DUNN: We've had one income. My wife has handled the whole income. We have three kids. I have 5-1/2-year-old daughter and 20- month-old twins. And so there was a lot of pressure put on her.

SPELLMAN: Officer Dunn says so far so good.

DUNN: This has probably been the best three days of my life.

BLACKWELL: I said I always wanted to become a police officer.

SPELLMAN: After 11 years on the job as a probation officer, 40- year-old Eddie Blackwell decided to chase his dream.

BLACKWELL: The stimulus package open the opportunity, gave me the golden opportunity to become a police officer, so I jumped on it.

CHIEF TOM VANDERMEE, ENGLEWOOD POLICE: Our slice of this stimulus package I can tell you has been extremely rewarding for this community.

SPELLMAN: In March, 2009, Chief Tom Vandermee applied for a chunk of a billion-dollar federal grant program design to put more cops on the street for community policing.

VANDERMEE: We submitted our application in March just like 7,000 other cities across the country. And we really didn't expect that we would be successful with it.

UNIDENTIFIED FEMALE: 453.

SPELLMAN: But sure enough, his department received $697,000 to hire three new officers at Forma Community Policing Unit. They've dubbed the impact team.

Sgt. Christian Contos will lead the new squad.

SGT. CHRISTIAN CONTOS, ENGLEWOOD POLICE: Drug activity, transients, coming and going, alcohol, stolen cars.

SPELLMAN: Its houses like this the impact team will focus on, recurring issues out in neighborhoods that can be hard for police to deal with.

CONTOS: We will be able to devote 100 percent of our time to solving problems like this house or quality of life issues that the patrol officers don't otherwise have time to solve.

SPELLMAN: For the new guys, these are stimulus funds well spent.

DUNN: I think the stimulus package in areas like this is a great thing. Fire departments, police departments, anything that serves the people, that we need to protect the people.

BLACKWELL: It's definitely a win-win situation. Yes, we win as new recruits and also the community wins.

SPELLMAN: Jim Spellman, CNN, Englewood, Colorado.

(END VIDEOTAPE)

PHILLIPS: How the money is still being spent? (INAUDIBLE) a full time detective to investigate crimes against women, but the stimulus isn't just being used to add jobs. In Pickens, South Carolina, they bought two new police cars this month. And in Philadelphia, officers will get 1,000 new tasers. It's all part of the $1 billion cops program.

Well, the big question for most taxpayers, are we getting the most bang out of our buck?

Our next guest says the answer to that is a big fat costly no. Jeffrey Miron has some pretty impressive credentials. He's a visiting professor in the Department of Economics at Harvard, and is also tied at MIT and the University of Michigan.

All right, Jeffrey, I think it was about a year ago, you said that this stimulus package was a bad idea.

Do you still think it is?

JEFFREY MIRON, HARVARD UNIVERSITY, DEPARTMENT OF ECONOMICS: I still think it's a bad idea. And I should emphasize it's this stimulus package that I'm criticizing, because it was focused specially on spending rather than being focused on tax cuts. When you decide you're going to spend a lot of money quickly, it's very hard to spend it well, and a lot of the things we are spending it on are not especially productive or they are mainly just shifting people from jobs they already had into different government jobs. Had we done tax cuts, we would have put that money purchasing power in the hands of individuals and firms, and that would have lead on average to much better decisions about how that extra demand would have been spent.

PHILLIPS: All right. Let's talk about the tax cuts for a minute. Because Jeffrey Sax, and you know Jeffrey Sax, highly- respected economists, said -- let me address that tax issue. You know, he says there is no room, nor case for broad-based personal or corporate income tax cuts or credits or rebates. He said the deficit is hemorrhaging and will do so for years to come. And with aging, health care costs increases, etcetera, the underlying chronic deficits will tend to rise not fall. We will therefore need increased, not decreased taxes.

MIRON: Well, Jeff is taken as given that we need to do all the spending that we are doing. But my position is that a huge amount of existing government spends is actually not especially productive. And over the long term, we should be cutting it very substantially.

And he is ignoring the evidence, which part of it produced by Christina Romer, the chairman of the council of economic adviser under Obama, which finds tax cuts are very effective in stimulating the economy evidenced by a lot of other people. It doesn't find much evidence that spending increases our effect at stimulating the economy. Either one, of course, adds to the deficit in the short term. But over the longer term, the tax cuts probably add less because they help make the economy more efficient and that leads to more income etcetera that can be taxed going down the road.

PHILLIPS: All right. Jeffrey, you talk about evidence, right? So I've been doing some light reading. I don't know if you can see this book here, but basically it's 1,300 pages. And I will point out this is the White House saying these are our success stories.

So, you know, chronologically, from Alabama all the way to Wyoming, OK, it's story after story after story of what they say is a successful example of where this stimulus money has gone. So I just randomly flipped through.

OK, on page 110, it says, in Arizona, that 200 valley business participants in stimulus-funded youth employment program hired 500 disadvantaged youths for summer internships, OK?

And I went through and just went to another random page and posted this on page 465. Indiana will receive $24 million in stimulus funds to hire 2,000 young people who will improve natural habitats as members of the Young Hoosiers Conservation Core. And, you know, I could keep going and going.

MIRON: Right.

PHILLIPS: You know, what do you say to this book of what the White House says is a number of success stories, evidence that it's working?

MIRON: So what that is is evidence that people are being hired using the stimulus money, but what it leaves out is that someone is going to have to pay the taxes to pay for that spending. So if you think that the extra spending now is creating jobs now, the extra taxes later to pay for that are, of course, going to destroy some jobs.

So at best, we're may be substituting some jobs in the future for some jobs now. Second, in many of the cases, a lot of the people who get them were already employed. So you are shifting people from one kind of employment to another kind of employment. But even more, it's not the whole story. The question has to be are these uses of the stimulus, are the additional spending things productive.

The example, you had a few moments earlier about the smart grid in Maine so it raises the right question. Do we really want to insist that everyone build a smart grid now, or will we get more productive, gradual adoption of smart electricity grids if we let individual city, state, etcetera develop them when they have the other infrastructure, when they have the appropriate scientists and engineers available and things like that.

If you told every homeowner, go put a porch around your house now, because that's the way we're going to spend the stimulus, of course, a lot of these porches would be completely silly and useless. And that's the effect of what we're doing with stimulus money, insisting that the private sector spend its money in ways which may or may not be productive.

PHILLIPS: Yes. There are definitely a lot of stories out there, now we need to see more data. And maybe you and I need to have this conversation today or a year from now. And I'll see where you stand. But a lot of points to bring up.

MIRON: Right.

PHILLIPS: It's obviously an important debate to have.

Jeffrey Miron really appreciate your time.

MIRON: My pleasure. Thank you.

PHILLIPS: All right, you bet. And tonight on "CAMPBELL BROWN" at 8:00 p.m., you can find out why some residents in Montana thinks that their state has made a double fault with their tax dollars. I bet Jeffrey Miron would weigh in on that. And then "AC 360" investigates why stimulus money is going to so many companies that have a history of law breaking. The stimulus project all this week, 6:00 a.m., 8:00 p.m., 10:00 p.m. Eastern Time.

And a quick check of your top stories this hour. Prior to his first state of the union address later this week, President Obama set to roll out some economic relief to America's cash-strapped middle class. The proposals are said to range from doubling down on child care tax credits to elder care. President Obama expected to announce the initiatives later this morning during a meeting of his middle class task force.

And we're getting word out of New Orleans this morning that the U.S. Coast Guard has suspended its search in Lake Pontchartrain for a missing U.S. Navy pilot. Apparently, he and other pilot were aboard a training plane that crash landed into the lake late Saturday night. One of the pilots we're told was rescued. The Navy has yet to identify either of those pilots.

And it appears that blue dog Democrats are about to lose another member of the pack. Dual sources telling CNN now that Arkansas Rep Marion Berry is expected to announce today that he will not seek re- election, and will instead retire at year's end. He'd be the 12th House Democrat to announce that he's not running for re-election in the 2010 midterm vote.

The final chapter or a new challenge? The final bookstore shuts down in a city already struggling with illiteracy. We're going to show you what's being done about it.

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PHILLIPS: Laredo, Texas, a quarter million people live there but this next story focuses on what the city will not have. A corporate decision is closing the last bookstore in a town already struggling with illiteracy.

CNN's Ed Lavandera has the story.

(BEGIN VIDEOTAPE)

ED LAVANDERA, CNN CORRESPONDENT (on camera): For as long as anyone can remember the only bookstore in Laredo has been in this mall. And sandwiched between a hip-hop t-shirt store and a Fun Land play area for kids is where you'll find the B. Dalton bookstore.

It's small but inside Zhuara Rivera discovered the world.

ZHUARA RIVERA, LAREDO, TEXAS: This is my bookstore. This is my home.

LAVANDERA (voice-over): The store is closed. Barnes & Noble which owns B. Dalton says it's shutting down all of its small stores and that means Laredo, Texas, population 250,000 is a city without a bookstore.

RIVERA: I love it and I seriously don't understand why people just don't like reading that much?

LAVANDERA (on camera): And so the idea of not having a bookstore here in your hometown?

RIVERA: It hurts.

LAVANDERA: Your mom told me you cried a couple of times?

RIVERA: Yes, maybe. Hi, excuse me -- I'm collecting signatures to see if we can open a new bookstore here in Laredo...

LAVANDERA (voice-over): Zhuara Rivera and dozens more are collecting signatures trying to convince book sellers that a big store can survive in this border town.

RIVERA: If you don't know how to read, you're not going to get very far in life. You know there's letters everywhere - obviously.

LAVANDERA (on camera): How old are you?

RIVERA: Turning 15.

LAVANDERA: Turning 15, you've got to be kidding me. That's pretty impressive.

(voice-over): Zhuara and many others here fear the bookstore's demise gives the city an ignorant backwater image.

XOCHITL MORA, CITY OF LAREDO SPOKEWOMAN: Just assuming that we don't read because we're Mexican and we're immigrants and we're poor and obviously that is not the case so it does -- it does hurt us.

LAVANDERA: Now that the bookstore is closed, this HEB grocery store will pass as one of the biggest bookstores in Laredo.

That book sitting in the cart with tortilla's and potatoes was written by Oscar Casares.

OSCAR CASARES, AUTHOR, "AMIGOLAND": Well, thank you so much for selling us.

UNIDENTIFIED FEMALE: Thank you.

LAVANDERA: Casares grew up in south Texas where bookstores are hard to find. He's written two books and pushed to sell them in grocery stores. But he wants books to have a true place to call home in Laredo.

(on camera): What do you think it does to the spirit of a city to not have a bookstore? CASARES: I think it creates a void, I mean, it's a void that isn't instantly recognizable. But it's one that over time I think that is deflating.

LAVANDERA: Laredo does have two libraries but it won't be able to handle demand for popular books and librarians are looking to add more books to shelves.

MARIA SOLIZ, LAREDO PUBLIC LIBRARY MANAGER: I'm hoping that the circulation of the library will go up because of that and maybe that will be a way to convince the big book sellers to come to Laredo, that there is a need.

LAVANDERA: Barnes & Noble says it want to reopen a bigger store in Laredo, no one knows when that will happen. Zhuara Rivera waits, heartbroken.

(on camera): Do you think a bookstore will come back here?

RIVERA: We should have one. Yes I really do hope so that whoever to see that it's able as to see, it's motivated and see that we can actually have one here. If we were to just...

LAVANDERA: Well, I think after a bookstore sees you, that should happen.

Ed Lavandera, CNN, Laredo, Texas.

(END VIDEOTAPE)

PHILLIPS: Get some of that stimulus money in there.

Well, highways and streets repaved, sidewalks built, bridges repaired but is all the stimulus money going to worthwhile projects? That's the Stimulus Desk right there. Do you see them behind me working hard?

Up next, another project in the limelight.

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PHILLIPS: Jacqui Jeras, some pretty nasty winter weather out there.

(WEATHER REPORT)

PHILLIPS: Thanks, Jacqui.

Well, you've heard of a bull in a China shop. How about a complete klutz in an art museum? Updating a Picasso masterpiece by falling on it; the unkindest cut of all.

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PHILLIPS: Picasso's master painting "The Actor" needs another take. You know there were many, many women who fell in love with Pablo Picasso. But this love clumsy gal fell on him; on his painting, that is.

It happened at New York's Metropolitan Museum of Art adding a six-inch gash to the canvass. Museum curators say, don't worry, though. They're going to fix the century-old work in time for a Picasso exhibit slated for later this year.

The life size painting had hung at the Met in its uncut version that you should see here since it was donated in 1952.

It's shaping up to be a pretty busy day in the CNN NEWSROOM. Our correspondents are working on several stories. Let's go and check in on that. We start with Christine Romans in New York.

CHRISTINE ROMANS, CNN CORRESPONDENT: Good morning. That's right. At the top of the hour, I'm going to have the big story for you about the big stimulus spending. How much is out the door. How have you felt it? Is it creating jobs in your neighborhood? And did it avert an economic disaster? I'll have that at the top of the hour.

STEPHANIE ELAM, CNN CORRESPONDENT: I'm Stephanie Elam in New York as well. And create jobs and cut utility bills at the same time; $5 billion in stimulus money was set aside with that goal in mind by making low income homes more energy efficient. But the program is off to a slow start. I'll tell you why in the next hour.

JERAS: I'm CNN meteorologist Jacqui Jeras in Atlanta; storms on both coasts of the country. If you're trying to travel today, we've got major problems at some of the big airports. Not to mention some of the roadways covered with water. We'll have a detailed report coming up.

PHILLIPS: And we're also going to take you live to Haiti. Our Dr. Sanjay Gupta visits one hospital where patient treatment is going much better than just a few days ago.

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