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Gas Pedal Fix is Ready; Budget Goes to Congress; Iran: Celebrating a Revolution and Pushing Back at Rebellion

Aired February 01, 2010 - 11:00   ET

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

BETTY NGUYEN, CNN ANCHOR: Hi there, Kyra.

All right. It is Monday, the first day of February. There are some stories we are covering for you right here in the NEWSROOM.

Toyota comes up with a fix for gas pedals that stick. Now the company has to repair its own reputation.

Will a winter weather forecaster lose his job? Animal rights activists say replace (INAUDIBLE) fill with a robotic groundhog? We'll get the details on that.

And pearls of wisdom. Don't fear a recession. It's actually a great time to start a business. A young entrepreneur finds success on a string.

Good morning, everybody, thanks for being with us. I'm Betty Nguyen in for Tony Harris today, and you are in the CNN NEWSROOM.

All right. So the fix is on the way. We now know how Toyota plans to fix the sticky gas pedal problem plaguing millions of cars. The parts now on the way to a dealer near you.

CNN's Deborah Feyerick is in our New York bureau with the latest on all of this. And also joining me is Earl Stewart. He has a Toyota dealer in Florida.

Let's start with you though, Deb. Explain exactly how this fix is supposed to work.

DEBORAH FEYERICK, CNN CORRESPONDENT: Well, Betty, I've spoken to the head of Toyota U.S. sales today. He says that shipping the parts out could begin as early as today, and they could arrive as soon as tomorrow.

Now, the car giant's big announcement is that, one, they know why the accelerator pedals are sticking. Two, they know how to fix them. And that's good news for some 2.3 million car owners who have really been wondering whether they can drive safely.

Now, Toyota launched this image campaign on YouTube this morning with the head of sales for Toyota in the U.S., his first public comment since the recall 12 days. And he spoke to CNN a short time after on "AMERICAN MORNING."

(BEGIN VIDEO CLIP)

JIM LENTZ, TOYOTA PRESIDENT & COO: Now, you know, first off, our desire and goal is never to be number one. Our desire and goal has always been to take care of customers. And we were doing a great job. And as a result, it created a lot more demand for our products.

So, one could question, did we expand too quickly? And that's something that we could debate and study down the road.

JOHN ROBERTS, CNN ANCHOR: What do you think?

LENTZ: I think we may have. I think we may have. But it wasn't the desire to be number one. It was taking care of customers that were demanding the product.

(END VIDEO CLIP)

FEYERICK: Essentially, that's what gives drivers a steady drive. But in some cars, over time, Toyota says that the materials used, wear and tear and environmental conditions, are causing the pedal to stick rather than release smoothly. And when there's too much friction, the pedal does not return as quickly as it should, or, in the worst case, it sticks, so the car doesn't slow down or continues to accelerate unexpectedly.

Now, Toyota said it had created what's called a precision cut steel reinforcement bar. It is a small piece that's going to be installed in the gas pedal assembly. They say it will reduce surface tension and thereby eliminate that friction. And according to Toyota, engineers have, in fact, rigorously tested the new part which is being shipped to dealers, along with directions on how to stall it.

Toyota does say dealers plan to stay open late to fix this problem which affects more than two million cars, including three of the U.S.' most popular models like the Camry. What's more, cars with the problem will not be manufactured this week. Toyota is planning to fix the accelerator pedal so that when cars get off the assembly line, they won't end up just right back in the dealership -- Betty.

NGUYEN: Yes. A whole lot of fixing going on.

OK, Deborah. Thank you for that.

So let's go now to Earl Stewart in West Palm Beach, Florida.

And I want to bring this down to the dealership level, Earl, because we understand that those parts are being shipped to dealers. But are your technicians trained and ready for this fix?

All right. All right. Earl -- oh, there you go. We can hear you now. We saw your lips moving, couldn't hear you.

If you would, take on that question again, because we weren't able to hear you the first time. Are your technicians ready, are they trained for this kind of a fix? EARL STEWART, OWNER, EARL STEWART TOYOTA: We have not been trained. We've not received the instructions from Toyota yet. We expect to at any minute.

It could be written instructions or it could be sending our technicians to a class near the dealership. So we were told that we'd be advised later today when the instructions would be given to us.

NGUYEN: OK. You need instructions. You also need the parts.

How long do you think it's going to take before you can actually say, hey, Toyota owners, go ahead and bring your cars in?

STEWART: Well, I'm hopeful that they will target -- my dealership, I'm a rather large dealership, the fourth largest Toyota dealership in the southeast United States. So I'm thinking we should see them by tomorrow or the next day. They will probably target the larger volume dealers to take care of the most customers the fastest.

NGUYEN: And also, is this a fix that's going to take quite a while? Are folks going to have to leave their cars overnight, or is this something that can be done within a matter of hours?

STEWART: Well, it can be done in a half an hour.

NGUYEN: Oh, OK.

STEWART: That's according to the Toyota press release. It will take a half an hour. And actually, when you do a lot of these repairs, the technicians can probably do them even faster. So the time of the repair will not be the bottleneck.

NGUYEN: All right. The bottleneck will be actually being able to tackle all of these cars that are coming in. So, are you adding extra technicians, staying open longer? What are you doing to meet the need?

STEWART: Well, we're already open seven days a week in our service department. And we've made the decision to expand our hours to 24/7, if it needs to be.

We will turn down no one that wants to have their vehicle fixed if we have to stay all night and the next day. We're even going to be using some mobile vans to go to customers' houses and businesses for those who don't want to drive to the dealership.

NGUYEN: Really?

STEWART: Yes. Some people are afraid to drive their vehicles.

NGUYEN: Yes.

STEWART: And some people can't get in. So we're going to pull all the stops out to get as many people repaired and their accelerators as possible. NGUYEN: Well, speaking of pulling all the stops out, we heard today on CNN the president of the U.S. portion of Toyota apologizing to owners.

Let's take a listen to that just very quickly.

(BEGIN VIDEO CLIP)

LENTZ: We are truly sorry for letting them down, that nothing is more important to us than their safety and their satisfaction, and that we're redoubling our efforts to make sure that this can never happen again.

(END VIDEO CLIP)

NGUYEN: Do you believe Toyota has done enough to fix this problem?

STEWART: I think Toyota has done enough. I don't think they did it fast enough.

I think their response time was slow, and I think they learned a lesson from this. You know, Toyota has -- there's a Japanese word, kaizen (ph), continuous improvement. And I think they could learn a whole lot from what happened this time.

I really admire Jim Lentz for the apology. And I'll give Toyota, the CEO of Toyota for the whole world -- he also apologized. But I think they did the right thing. They just did it a little slower than, in my opinion, it should have been done.

NGUYEN: Yes. Still stuff to be learned from it all though, no doubt.

All right, Earl. Thank you so much for your insight today. We do appreciate it.

In other news that we're following for you, 10 Americans in Haiti are waiting to hear if they will face a judge on child trafficking charges. The five men and five women were arrested Saturday at the border of the Dominican Republic. They had 33 children aboard their bus.

Now, the kids, they ranged in age from 2 months to 12 years. The Baptist Missionaries from Idaho insist that they were just trying to save abandoned kids, but Haitian officials say many of the children were not orphans.

CNN spoke to both sides.

(BEGIN VIDEO CLIP)

JEAN-MAX BELLERIVE, HAITIAN PRIME MINISTER: Some of the children were asking for their parents, and it's in their mind that they believed that there was some illegal activities, because some of the children clearly were not orphans because they were asking for their children -- for their parents. So it's what the police and the prosecutor find very strange.

LAURA SILSBY, NEW LIFE CHILDREN'S REFUGE: By the end of the day, we were basically held in jail and the children were all taken from us, which, honestly, our tears tonight have not been for ourselves, because we're fine. It's been for these precious children who have lost everything.

And we have given them -- you know, we've been up several nights now with them, comforting them and caring for them through the night as they had wept and cried with their losses. And it hurts me greatly tonight to know that they are in some camp somewhere, once again alone and not -- you know, just without that comfort.

(END VIDEO CLIP)

NGUYEN: All right. Let's get you some other news out of Haiti as well.

Flights bringing critically injured earthquake victims into the U.S., well, they are set to resume this hour. A White House spokesman says the flights were temporarily suspended because of logistical issues, including space to care for the injured. But a spokesman for the U.S. transportation command says the flights were stopped last week when some states refused to allow entry to the injured Haitians.

President Obama, he is outlining his $3.8 trillion budget for 2011. The president wants more spending to encourage job creation, but he's also trying to get the deficit under control.

Senior Congressional Correspondent Dana Bash joins us now live from Capitol Hill, where the plan is getting a once-over.

In fact, they are going line by line, aren't they, Dana?

DANA BASH, CNN SR. CONGRESSIONAL CORRESPONDENT: That's right. Some of the staffers who are back there inside the office of the House committee -- House Budget Committee, they are doing that. But, you know, the reality is that although I am here, as you can see, in an empty hearing room, this is where the president's budget director will come tomorrow and testify, and really get a grilling from members of Congress.

The reality is, not many people are here today, Betty, because the House is actually out of session. February 1st this year happens to fall on a Monday.

But we did find ahead of time one Congressman, a Democratic congressman, Frank Pallone of New Jersey, who had been one of the Democrats who had been very concerned about the president's proposal to freeze some spending. And we went into his office just down the hall from here and asked him what he thought so far.

(BEGIN VIDEO CLIP)

BASH: Hi, Congressman. Thanks for letting us come in. Appreciate it. So you have it here?

REP. FRANK PALLONE (D), NEW JERSEY: Yes, but we just got it. So don't -- I mean, you can ask me whatever you want. But, I mean, obviously...

BASH: Exactly. And I think that's the point. I mean, you and some of your many...

PALLONE: It literally arrived 10 minutes ago.

BASH: Yes. But in general, Congressman, you have seen some of the reports. And certainly, you were among many Democrats briefed by the White House about the spending freeze that they're planning on doing.

What do you think of that?

PALLONE: Well, I think it's a good idea to have a spending freeze or spending cuts. You know, the question is the amount and where it's going to -- what it's going to include.

I mean, for example, I would include the Pentagon. I wouldn't just have it be for certain domestic programs.

But the larger issue, and I think this is what you're referencing, is, you know, how much do you want to spend versus cut and what's the impact on the deficit? I mean, obviously, the concern is that we need to reduce the deficit long term, but at the same time right now, we can't be reducing spending too much, otherwise that could create another recession.

(END VIDEO CLIP)

BASH: And that's it, Betty. That is just a philosophical point of view from many Democrats.

They feel that it is important to spend government money at a time of economic crisis. But what's interesting is that what's in this budget and the many, many other books that go along with this are some cuts that congressmen like Frank Pallone are not happy about. I'll just give you one example.

The Army Corps of Engineers -- there are some cuts in programs for that. He told me, "Well, look, I'm looking in this budget to see if it really affects my district in New Jersey," because he said there are some programs and projects that the Army Corps of Engineers is doing in his district. That means jobs.

So, everything is local, and that is why although this budget is the president's blueprint, it is his priorities, and certainly is an important document, these members of Congress who work in these committee rooms, it is their job. They hold the power of the purse strings. So they will really be determining what lives and dies with regard to what the president is proposing in this $3.8 trillion budget -- Betty. NGUYEN: Yes, no doubt they're looking at it very closely. But also, CNN looking at it very closely. We, in fact, have staffers in the D.C. office that are going line by line at this hour as well, don't we?

BASH: We do. They are going line by line.

My BlackBerry is effectively smoking at this point because our crack team is going through and giving us some really interesting insight into some of the cuts, but, more importantly, some of the spending that the president is looking at with regard to how the federal government will spend taxpayer dollars in this coming year.

NGUYEN: Yes. I can see them right there turning through the pages, typing on the computer there, trying to get us the information as they do, indeed, go line by line.

All right. Dana Bash, thanks so much for that.

In the meantime though, President Obama does want private companies to ferry astronauts into space in the post-shuttle era. His budget includes incentives for commercial firms to build and operate spacecraft. Now, the funding shift essentially kills a plan to return to the moon by 2020. Analysts predict pushback in Congress on that one.

Well, celebrating a revolution and pushing back at rebellion. We're going to take you inside of Iran.

And Rob Marciano tracking weather, checking out the proposal to replace everyone's favorite groundhog, Punxsutawney Phil, with a robot.

Really?

We're going to get you the latest on that.

But here's the latest on the numbers on Wall Street today.

It looks like the Dow is up just a little bit today, at 10,151. We'll give you another look at the Big Board shortly.

(COMMERCIAL BREAK)

NGUYEN: Well, celebrations begin today in Iran marking the 31st anniversary of the Islamic revolution, but this year's commemorations come as the country's hard-line rulers face the most potent challenge to their authority.

Our Reza Sayah reports now on the opposition movement.

(BEGIN VIDEOTAPE)

REZA SAYAH, CNN INTERNATIONAL CORRESPONDENT (voice-over): They've been beaten, arrested and sentenced to death. Dozens have been killed. Yet, Iran's opposition movement remains defiant, posing the biggest challenge ever to the Islamic republic in its 31-year history. But questions remain.

How widespread is this movement? Who exactly are its leaders? And does it have the power to bring political change to Iran?

It's impossible to say if the opposition movement represents Iran's majority. Iran's hard-line leaders say the movement is insignificant, but their protests show they have strength in numbers, able to draw hundreds of thousands to the streets and cities throughout Iran.

The demographics of the movement have expanded as well, analysts say. Men, women, rich, poor, even religious conservatives now taking part in the call for change, says Iran expert Karim Sadjadpour.

KARIM SADJADPOUR, CARNEGIE ENDOWMENT FOR INTERNATIONAL PEACE: What we've seen over the course of the last seven months is that with the passage of time, the legitimacy of the regime has only been further diluted, and the ranks of those who sympathize with the opposition has only increased.

SAYAH: Analysts say the movement has carried on without a clear leader. Early on, defeated presidential candidate Mir-Hossein Mousavi seemed to lead the charge, but no longer is this a protest against the vote he lost. The movement now, a shapeless blend of different factions with demands ranging from regime change to a freer, more open society.

Columbia University professor Hamid Dabashi calls it a civil rights movement.

HAMID DABASHI, IRANIAN STUDIES PROFESSOR: For the first time in modern history, and not just in the history of Iran, we have a civil rights movement that people are its leaders. Of course, Mr. Mousavi, Karoubi, et cetera, are also representative of this movement, but not its leaders.

SAYAH: Some experts say the absence of a clear leader is precisely why the regime can't crush the opposition movement. After all, who does the government go after when it's not even sure who's leading the charge?

So far, the movement hasn't been able to spark political change, but a recent television debate where state-run media invited an opposition supporter to speak is, perhaps, the regime's first acknowledgment, this is a movement that cannot be ignored.

(END VIDEOTAPE)

NGUYEN: And Reza Sayah joins me now from Islamabad, Pakistan.

All right, Reza. The opposition movement has been protesting for, what, almost eight months now? What should we look for next?

SAYAH: Betty, keep your eyes on February 11th. That's the anniversary of the Islamic Revolution back in 1979 when the late Imam Khomeini came back to Iran and eventually toppled the Shah's regime. This is a 10-day celebration that actually started today and culminates on February 11th. And this year, the stage is set once again for widespread protests and another potentially explosive face- off between the regime and security forces and the opposition movement. And that's one way we've been able to gauge the momentum of the opposition movement, their ability to target these major holidays with government-sanctioned events and essentially hijack them to make their voices heard.

And Betty, few holidays on the Iranian calendar are as big as February 11th. We're going to be watching closely on that day.

NGUYEN: Oh, no doubt. In the meantime, though, President Obama said that he wanted to reach out to Iran, and to reach a diplomatic solution when it comes to the nuclear program there. So, how has the opposition movement and the post-election turmoil in Iran impacted the president's strategy on that?

SAYAH: Yes, I think it's complicated matters, and I think you see a shift in the strategy with President Obama.

Make no mistake, his priority all along has been Iran's nuclear program. He doesn't want Iran to be able to make nuclear bombs. And initially, he came out and he said, look, we can solve this by reaching out and talking to Iran. That hasn't worked out very well.

In the meantime, all of a sudden you have this opposition movement that has emerged which the president has supported. So here's his dilemma. Does he continue to reach out to a regime that this opposition movement deems illegitimate, or does he not reach out to the regime and risk further isolating the Iranian government that could speed up its nuclear program? None of the answers seem easy -- Betty.

NGUYEN: Yes, not at all. All right.

Reza Sayah joining us from Islamabad, Pakistan.

Reza, thank you.

OK. So, what led to the shooting deaths of more than a dozen teenagers? We have our top stories coming up in the CNN NEWSROOM.

(COMMERCIAL BREAK)

NGUYEN: Checking our top stories right now.

Dozens of people are dead and wounded in northern Baghdad today following a suicide bombing. Iraqi authorities say it was a female bomber who targeted pilgrims in a Shiite neighborhood. The casualties include women and children.

Well, a gruesome scene in Jaurez, Mexico. Thirteen high school and college students gunned down at a party early Sunday. Police haven't said whether the attack was drug-related. Local reports do say that at least 160 people have been killed since the start of year in Jaurez, which is just across the border from El Paso. The "Los Angeles Times" in downsizing, literally. Today's edition shrinks from 48 to 44 inches in width, a trend for newspapers trying to cut costs. The Times has also eliminated its stand-alone business section, closed a printing facility, and laid off 80 press operators.

All right. This may have you talking today. Can a robot do the work of a groundhog?

An animal rights group is pushing to have Punxsutawney Phil replaced by an electronic version. So what do you think?

You can respond to my Facebook or Twitter page. All you have to do is go to BettyNguyenCNN. We'll reading those replies on the air.

(COMMERCIAL BREAK)

(WEATHER REPORT)

NGUYEN: All right. So we're asking folks what they think about this. And you heard Rob weigh in there.

Let's go to my Facebook and Twitter site real quick, because, you, the viewer, are saying a few things about it.

First, on Facebook, Lou Davis (ph) says, "I'm the biggest animal lover in the world, but I think this borders on the insane."

And quickly to Twitter, Scotty J. (ph) says, "Save the groundhog. It's a tradition. They shouldn't be replaced by a stupid robot."

And quickly, TLW3 says, "Phil is well cared for, as I understand it. Next they'll want to replace family pets with robots."

So a lot of people not really high on the idea of the fact that some folks are suggesting that Punxsutawney Phil be replaced with a robot. We'll see if it really comes to fruition.

In the meantime though, what happened in January set the tone for your 401(k) for the rest of the year. We're going to crunch those numbers and tell you about it.

Stay with us.

(COMMERCIAL BREAK)

NGUYEN: You know, there is a well-known saying on Wall Street -- as goes January, so goes the year. But January's numbers were not so hot, So what does that mean for the rest of 2010? Well, thankfully, we have Stephanie Elam here from New York to give us the details on that.

All right, so set it up for us. What did the markets do in January?

STEPHANIE ELAM, CNN BUSINESS CORRESPONDENT: Yes, Betty. No one wants to see the year start off this way, but it's true. January was the worst month for stocks in nearly a year. In fact, if you take a look at the S&P 500 it fell nearly 4 percent. Now, according to "The Stock Trader's Almanac," since 1950 all down Januarys were followed by either a new or continuing bear market, a 10 percent correction or a flat market.

And the market had plenty of reason to rally in January. You had Intel, you had Apple and Ford -- they all turned in strong earnings. Also, fourth quarter GDP, remember we got that number of growth 5.7 percent, that was way more robust than was expected. So analysts say this may be a sign of more sideways action or that other word we hear so much about, Betty, a correction.

NGUYEN: Oh, all right. OK, so does this mean we could be in for another tough year? What are some of the major roadblocks that we really need to be aware of?

ELAM: Yes, well there are some fears out there. One is that earnings growth may slow down. Also, if you take a look at some of the recent housing data, it shows that the rebound may be temporary. You had existing home sales down 17 percent, new home sales were down 7 percent. And this is leaving many to wonder what will happen when the stimulus runs out. That's all a big question that we'll have to see played out, but this is a different kind of recession than we've seen in more recent years. So we'll have to see if this changes.

Today, Wall Street is being boosted by Exxon Mobil's earnings and also Toyota's news that they found a fix for the gas pedal. So the Dow up 99 points -- there you go 10,166, off to a strong start today. Nasdaq better by 13 points at 2161. So we'll be keeping our eyes on it to see if we close this way, which would be kind of nice, Betty, the first full day of February.

NGUYEN: Yes, exactly. Wishful thinking. Not a bad way to start. Stephanie, always great talking to you. See you soon.

ELAM: You too.

NGUYEN: OK. Speaking of money and numbers and all that good stuff, how is this number for you -- 3.8 trillion, that's with 12 zeros. What will the president's budget mean for you? We're going to dig a little bit deeper with the new host of CNN's "STATE OF THE UNION," Candy Crowley.

(COMMERCIAL BREAK)

NGUYEN: Checking our top stories right now.

The gas pedal fix is ready, Toyota says it's shipping parts to dealers right now. The fix involves installing a steel reinforcement bar and Toyota says that should eliminate the friction that's causing the pedals to stick. Toyota President and Chief Operating Officer Jim Lentz spoke on "AMERICAN MORNING" today.

(BEGIN VIDEO CLIP) JIM LENTZ, PRESIDENT & COO, TOYOTA: We put all of our efforts against making sure that we knew exactly what the situation was, developing the fix and then developing the solution that we could fix our dealers -- fix the cars at our dealerships as rapidly as possible. So I know many have criticized us, but I think it's most important that customers understand that we understand the problem, we have the fix, and our dealers are ready to take care of customers later on this week.

(END VIDEO CLIP)

NGUYEN: In other news, a British couple captured by Somali pirates back in October once again plea for help. French news agency AFP recently got special permission to film the couple where they are being held. In the video, the couple says that they are being treated badly and need help quickly. The British government has refused the pirates' demands for ransom.

The New Jersey Turnpike is back open, take a look. This after an emergency landing. Yes, you don't want to see that during rush hour. Officials say the pilot of a single-engine plane put it down on the interstate after a low oil pressure indicator came on. The plane was surveying rush hour traffic for some local news stations when the energy occurred. No one was hurt.

All right. We want to get the latest now on the budget. In fact, the director of the Office of Management and Budget, Peter Orszag, is talking about it right now in Washington. Let's take a listen.

(JOINED IN PROGRESS)

PETER ORSZAG, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET: ... to get from five to three, we have a series of proposals.

The first is that we put forward specific steps to reduce the deficit over the next decade by $1.2 trillion, which would move us from 5 percent of the economy in 2015 to 4 percent. These steps include measures such as the financial services fee which raises $90 billion over a decade, helps to repay taxpayers for the full cost of TARP, and also by imposing the tax on our largest financial institutions helps to discourage the leverage that was partly the cause of the financial meltdown that we have experienced.

Second, we allow the 2001 and 2003 tax cuts to expire for those with incomes above $250,000 in 2011 and thereafter, as scheduled under the legislation. That reduces the deficit by almost $700 billion over the next decade.

Third, as part of our effort to move towards a clean energy future, we eliminate fossil fuel subsidies which reduces the deficit by about $40 billion over the next decade.

And then in addition to all of that, we have a three-year freeze on non-security discretionary spending which will reduce the deficit by $250 billion. Now, let me be very clear about this freeze. First, it is not across the board -- some agencies and programs are going up and other agencies and programs are going down. In particular, we're investing an additional $3 billion in education, because that's one of the keys to future economic prosperity, even while we're reforming those programs. For example, taking 38 existing duplicative programs, consolidating them into 11 and putting more emphasis on results rather than just funding.

Second, we are investing significantly in research and development, including more than $61 billion in fiscal year 2011, which is up 6 percent, because research and development and innovation are also key drivers of economic activity.

And third, we are investing in clean energy. More than $6 billion to move towards the energy sources of the future, working in concert with the elimination of fossil fuel subsidies so that we can become the world's leader in green energy.

All of these together move the deficit in 2015 to roughly 4 percent of the economy, which, as I've said, is above where we'd like to be. To get the rest of the way there will require a bipartisan process, which is why we are calling for a bipartisan fiscal commission tasked not only with addressing our long-term fiscal imbalance, but also producing plans that will balance the budget excluding interest payments on the debt by 2015.

NGUYEN: All right. We've been listening to the director of the Office of Management and Budget, Peter Orszag, and let's delve a little deeper into what's in President Obama's $3.8 trillion budget and what it's going to mean for your bottom line.

Congressional staffers, they are poring over the budget right now and our CNN Budget Team is also breaking it down line by line, as you see there working very hard. We're going to be speaking with one of our senior political correspondents, Candy Crowley. She's coming up right after this break to give us the details on the budget as we look into it.

Stay with us. You're in the CNN NEWSROOM.

(COMMERCIAL BREAK)

NGUYEN: All right, let's talk your money and the budget, and get some more insight on the plan in the process. CNN's senior political correspondent Candy Crowley joins me now live from Washington.

All right, Candy, we were listening to Peter Orszag, the director of the Office of Management and Budget, heard from the president earlier today. We're talking trillions of dollars, also a budget freeze. What do you think is going to be the most contentious part of this budget?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Budgets are contentious both in the specific and in the -- kind of the 50,000-foot view. So I would judge, and already we have seen republicans look at this and say, adds too much to the deficit, we need to do more program cuts, and they will object to the fact that President Obama as he promised in the campaign is going to let the Bush tax cuts for those making $250,000 and over lapse as of the end of this year.

So you will have large arguments because budgets, after all, it's kind of like they always say in a marriage one of the main things that couples fight about is money? Well, that's what parties fight about, too, because that's where their philosophy comes out. So you will hear the republicans pushing for more spending cuts and more tax cuts.

And you will hear democrats look at this and they will begin to see some of the programs that the president is proposing eliminating. And the problem with these programs is they all have somebody on Capitol Hill that believes that that program should stay. For instance, there is in this plan a plan to cut back on NASA's plan to return to the moon. Well, if you're the democratic senator from Florida, that doesn't sound good to you.

So there's going to be lots of argument about the big picture, but there will be very intense arguments about the small ones because those are the things that matter in the states.

NGUYEN: No doubt. And I said budget freeze, I meant spending freeze on some of these programs.

But as we heard from Mr. Orszag a little bit earlier, it's not all the programs. Is this going to be a key issue, too, because some of these programs are not going to get the funding that it wants?

CROWLEY: Exactly, and that's where you come in -- that's when you have the constituencies speaking up.

Now, he's there talking about, OK, we're going to take -- what? -- 38 education programs and condense them into 11. Well, supposing you run one of those that's going to get sucked up into another program, supposing you're getting a specific amount of money from whatever education program is disappearing, that program has constituencies. So you will see those arguments.

And it is not what they call an across-the-board spending freeze, because what you have heard now from some democrats is, fine, let's have an across -- let's have a spending freeze, but it should include the Pentagon, which is excluded in the president's plan. It should involve a look at those mandatory programs -- Social Security, Medicare, Medicaid. So you will hear from both the left and the right and the middle on specific programs.

Some of the things that the president's proposing to cut or eliminate have been proposed before and haven't gotten through Congress. So the specifics definitely will be contentious. But in the large part, the politics will be argued over the broader trajectory of the budget and how much it spends and whether that's too much.

NGUYEN: Yes, let's talk about the politics for just a second because we're looking at 53 billion in tax cuts, 50 billion in job creation as well as reducing the national debt. Is this something that is realistic, or is the president playing a little bit of politics and putting as much as he can on the plate and seeing where he lands?

CROWLEY: Again, they are in large part -- yes, they have figures and they are sort of a guideline, but they're also political documents and you can see within them any president's legislative priorities, what he thinks is important. There's a spending freeze, and yet the Education Department will be getting more money. For what? For student grants for colleges, for elementary and secondary education.

And -- but you put your finger right on it, because how do they estimate 10 years from now what the deficit's going to look like? Because we see in this budget the outlook is, well, then about the middle of the decade, the budget deficit will go down.

How do they know that? Well, they're depending on projections, how well the economy will recover, what the economy will look like in five years. One economist once said to me, it's kind of like you're telling me what you think lunch is going to cost in five years. So they're based on a lot of projections. I have yet to see most of those projections over the years I've covered budgets come exactly true.

But the president is in a delicate balance. He's got to show he cares about the deficit, but cutting back on spending when the economy is still hurting is not a great idea. So he's got to balance those proposals to create jobs with his showing his care for bringing the deficit down.

NGUYEN: I love how you break it down in simple terms. The lunch money example was perfect.

Hey, I may need to borrow some lunch money from you in five years because you now are the host of "STATE OF THE UNION" coming up on Sundays. Congratulations to you for that.

CROWLEY: Thank you. Thank you. I'm excited. We're going to be -- it's going to be fun, I think.

NGUYEN: No doubt. Looking forward to it.

And I want to let everyone at home know that, again, Candy Crowley is the new anchor of "STATE OF THE UNION." It's on Sunday at 9:00 a.m. Eastern, of course, right here on CNN. We are all very thrilled about that and congratulations to Candy.

In the meantime, though, 600,000 jobs -- that's how many the White House says were funded by the stimulus in the latest report. Republicans say, not so fast, though. Our Josh Levs is here to break down the numbers for us.

Hey, Josh.

JOSH LEVS, CNN CORRESPONDENT: We're all excited for Candy.

NGUYEN: Yes. She is so deserving of it.

LEVS: We're so happy for that.

And yes, these are big numbers that the White House is tossing out there today. And I want to do my best to reality check it for you, tell you what these numbers mean. Let's go to it.

First of all, this is the big figure right here. Here's what has happened, basically all these agencies out there that received stimulus funding had to report how many jobs were funded by the stimulus in the last quarter of last year. It's 600,000 -- 599,108 jobs were funded by the stimulus in the fourth quarter of last year.

But I want to emphasize something about the wording here. Notice I said funded. The way this works, these agencies needed to say these jobs were funded by the stimulus, not that they were necessarily created or saved. So they're not automatically saying we would never have had these jobs if it wasn't for the stimulus. It's possible, but that's not what they're saying. They're just saying they used the money to have these people.

Jared Bernstein, a White House spokesman, was on our air last night and he said this is a sign that to some extent, in this way, anyway, the stimulus is working.

(BEGIN VIDEO CLIP)

JARED BERNSTEIN, CHIEF ECONOMIST, V.P. BIDEN'S OFFICE: The act is having its intended effect, creating and saving jobs across this country for teachers, for cops, for construction workers, and making some key investments in the President's top priorities for the future, talking about clean energy, education, health care, et cetera.

(END VIDEO CLIP)

LEVS: But as you can imagine, republicans are saying, not so much. One thing they're pointing to right here is that unemployment remains at 10 percent. They're saying if this giant $862 billion project had really had the kind of effect the White House describes we wouldn't still be here. They also say they don't like some of President Obama's tax policies, how he's handling small businesses. They think he could do more to build jobs.

Here's what one of the top republicans said yesterday.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), MINORITY LEADER: The policies that are coming out of this administration have caused us to lose more jobs, so we have to change those job-killing policies if we expect the economy to get going again and put Americans back to work. (END VIDEO CLIP)

LEVS: So, Betty, here I can't say one's automatically right, one's automatically wrong because we're dealing to some extent with hypotheticals. Where would we be as a nation if we didn't have this $862 billion plan? Everyone can weigh in. All I can do is tell you that's where the numbers come from.

NGUYEN: All right, Josh, we appreciate you breaking it down for us. Thanks so much for that.

And we are back in the NEWSROOM right after this.

(COMMERCIAL BREAK)

NGUYEN: Well, a critical moment in America's Civil Rights Movement is being remembered today in North Carolina. The International Civil Rights Center and Museum opened its doors this morning on the site of the Greensboro Woolworth store where 50 years ago today four young black men demanded service at a whites-only lunch counter. They refused to leave, sparking similar sit-ins in 54 cities across the south.

(BEGIN VIDEO CLIP)

REP. JOHN LEWIS (D), GEORGIA: These four young men, by sitting down, they inspired an entire nation, an entire generation to stand up. You'd be sitting there in an orderly, peaceful, nonviolent fashion waiting to be served. And someone would come up and spit on you or put a lighted cigarette out in your hair or down your back. Pull you off the lunch counter stool.

I remember like so many other young students, getting arrested, being beaten, and taken to jail. But we believed in the philosophy and the discipline of nonviolence. We changed America forever.

(END VIDEO CLIP)

NGUYEN: Here's what we are working on for the next hour of CNN NEWSROOM.

California ordered to release tens of thousands of inmates to relieve overcrowding in its prisons. We'll have a report where it stands now.

And I love these stories -- a young woman with participation for pearls launches a successful company out of her parents' basement. We've been featuring small business owner who's won't or simply can't take no for an answer.

Stay with us.

(COMMERCIAL BREAK)

NGUYEN: Did you watch them last night? The Grammys -- well, they crowned Beyonce and Taylor Swift queens. Remembered a special king, as well. Our Kareen Wynter reports.

(BEGIN VIDEOTAPE)

KAREEN WYNTER, CNN CORRESPONDENT (voice-over): With Beyonce and Taylor Swift leading the nominees, it looked like it might be ladies' night at the Grammys. And indeed it was Beyonce had a fierce showing leading the way with six awards, the most ever for a female artist in one night topped off with Song of the Year for "Single Ladies Put a Ring On It."

BEYONCE KNOWLES, ENTERTAINER: This has been such an amazing night for me, and I would love to thank to Grammys.

WYNTER: Swift won four Grammys including the night's biggest prize, Album of the Year for "Fearless."

TAYLOR SWIFT, ENTERTAINER: This is the dream come true when you have crazy dreams, like, I wonder what it would be like to win a Grammy someday.

WYNTER: The Recording Academy crowned its queens, but it saved its most heartfelt tribute for the King of Pop, the late Michael Jackson. His two oldest children, Prince Michael and Paris, accepted his Lifetime Achievement Award.

PRINCE MICHAEL JACKSON, SON OF MICHAEL JACKSON: Through all his songs, his message was simple, love. We will continue to spread his message.

PARIS JACKSON, DAUGHTER OF MICHAEL JACKSON: Thank you, we love you, Daddy.

WYNTER: Earlier, the A-list audience and folks at home donned 3- D glasses for a film of Jackson's pro-environment earth song accompanied by an all-star group of singers.

Speaking of king, the Kings of Leon celebrated their Record of the Year win for "Use Somebody,

UNIDENTIFIED MALE: We're all a little drunk, but we're happy drunk.

WYNTER: It wouldn't be the Grammys without some amazing performances. This year's included Lady Gaga who opened the show paired with the equally flamboyant Elton John.

Rock album winners Green Day went Broadway, Beyonce marched on, Jamie Foxx was opera man, and Pink did some high-flying, water-soaked acrobatics.

Mary J. Blige and Andrea Bocelli sang Simon and Garfunkel's classic "Bridge Over Troubled Water" in honor of Haiti. The performance will be sold online to raise money for disaster relief. On a night when the best in music was celebrated, it was a reminder of what music does best.

WYNTER (on-camera): After the show, I spoke with Mary J. Blige who said it was a very emotional performance, one she hopes will inspire others to help.

Kareen Wynter, CNN, Los Angeles.

(END VIDEOTAPE)