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June Jobless Rate Falls to 9.5 Percent; Supermodel Naomi Campbell Subpoenaed

Aired July 02, 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, everybody. I'm Kyra Phillips. Here's what we're working on this morning.

Just in, dire jobless numbers. 125,000 more Americans have lost their jobs. But don't get too discouraged yet. Unemployed Americans join us live with some inspiring advice.

A supermodel tied to an ousted Liberian warlord. Naomi Campbell ordered to testify in a war crimes trial. Prosecutors say she received blood diamonds.

Yesterday we exposed dirty dental equipment. Today, we are learning VA hospital workers are ordered to take immediate action. We're fighting for our sick veterans who need better health care.

We begin with the lost jobs and vanishing paychecks. How many times have we welcomed you into the NEWSROOM and then told you about more Americans finding themselves out of work?

Autoworkers seeing their jobs disappear in Detroit. Teachers and other public employees getting pink slips around the country. And then, of course, the oil disaster. Wiping out jobs all around the Gulf.

The bad news just seems to keep on coming. And today, a sliver of good news. Just about a half hour ago we learned that the nation's unemployment didn't climb higher as expected. It actually fell to 9.5 percent in June.

But more Americans are still wondering where's that economic recovery that we keep hearing about?

Let's try and get some answers and some context. Christine Romans, part of the CNN money team. She joins us me live from New York.

So, Christine, what does this number actually tell us?

CHRISTINE ROMANS, CNN CORRESPONDENT: It tells us that the unemployment rate in this country now, Kyra, stands at 9.5 percent. And you're right. That's better than people had hoped and it is a decline in the jobless rate. But not necessarily because a bunch of people got jobs because 600,000 people simply stopped looking for work and are no longer counted in those figures. When we look at job creation overall the economy lost 125,000 jobs in the month of June. 125,000 jobs, that makes it the first month this year that we have had negative job creation in this country.

Part of the reason here is because 225,000 census workers are no longer working for the government. So those jobs are no longer counted. And that more than offsets the 83,000 jobs created by the private sector.

Kyra, this is the really important part of the equation. The private sector. When will we get sustained jobs creation from companies who are seeing their business do better? We know in May there was less of this private sector job creation than we thought.

We know there are 83,000 jobs in June. That's not enough even to keep up with the natural growth of the American population. And we need to see 150,000 jobs created just to stay steady.

So bottom line here -- bottom line is that the private sector has been creating jobs. But not enough to dig us out of the hole that was created by the recession for years to come.

I will give you a little sliver of good news here. About half a million people over the past couple of months have started to get more hours at work. They were working part time. Not because they wanted to work part time but because their company wasn't giving them more hours.

But a half a million people over the past couple of months now are getting more hours. That signals that companies, instead of hiring new people, maybe they're giving more hours to people they already have on staff -- Kyra.

PHILLIPS: All right, Christine Romans. We'll be track this, obviously, throughout the hour because just a little -- in just a little bit, actually probably within the next 45 minutes or so, President Obama is expected to make a statement on the new unemployment numbers. He's also expected to announce thousands of new jobs that will be created with stimulus money.

The president due to speak at about 9:35 Eastern Time. We'll carry his comments live.

Fundamentally broken. That's how President Obama describes our immigration system. And he's blaming a GOP roadblock for holding up reform.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Reform that brings accountability to our immigration system cannot pass without Republican votes. That is the political and mathematical reality.

I believe we can put politics aside and finally have an immigration system that's accountable. I believe we can appeal not to people's fears but to their hopes. To their highest ideals. Because that's who we are as Americans.

(END OF VIDEO CLIP)

PHILLIPS: So how would the president fix it? He says that he supports a plan like the one proposed in March by Senator Schumer, a Democrat, and Senator Graham, a Republican.

That blueprint would require high-tech Social Security cards that would help keep illegal workers from landing jobs. It would strengthen border security and bolster domestic enforcement. It would rewrite the rules for admitting temporary workers.

And how about the estimated 11 million illegal immigrants already here? They want to stay? They'd have to admit that they broke the law, pay back taxes and pass a background check before getting in line for legalization.

But a lot of Republicans say that securing the border should be immigration priority number one. Just last night, 21 people died in a gun battle just 12 miles south of Arizona/Mexico border in the state of Sonora.

Mexican officials blame rival drug gangs. And Arizona Governor Jan Brewer says that cartel crime is creeping across her border. She's doling out some choice words to the White House.

(BEGIN VIDEO CLIP)

GOV. JAN BREWER (R), ARIZONA: And I say to the president of the United States, do your job. Secure our borders.

As for me, I'm not surrendering. I'm going to continue to do everything in my power to protect this state. No apologies, no quitting, no retreat. And I will tell you something else. We are not going to pick up the tab either.

(END OF VIDEO CLIP)

PHILLIPS: Governor Brewer is on the frontline of this debate and because of her state's controversial immigration law that will have police checking the status of people they believe are in the country illegally. It goes into effect later this month.

And we've got our hands on the new guidelines for officers how to enforce SB 1070. Police cannot use race to form a suspicion that someone is in the country illegally but they can rely on someone's ability to speak English, whether they're wearing a lot of layers of clothing in hot temperatures and if they're hanging out where illegal immigrants look for work.

Now that developing story that we've been covering all week long. Our veterans. Hundreds of them. Put in the line of danger. No, not by enemy fire but by dirty dental equipment. 1800 veterans may have been exposed to HIV or hepatitis. And this isn't the first time this has happened.

I spoke to several lawmakers as well as a Navy vet who got a certified letter telling her to come in for testing. And I asked, how could this happen?

(BEGIN VIDEO CLIP)

KASSY DEVINE, U.S. NAVY (RET.): There was a moment of alarm, I have to be honest with you. But then thinking about it, I'm not -- I can't really freak out right now until I get the test results back.

SEN. KIT BOND (R), MISSOURI: We are embarrassed, saddened, and deeply apologetic that you may have been exposed.

REP. RUSS CARNAHAN (D), MISSOURI: It absolutely makes your blood boil. The VA has a solemn responsibility to take care of our veterans. This is not the battle they need to be fighting now.

(END OF VIDEO CLIP)

PHILLIPS: And since our interviews, the VA issued a statement saying it's implemented safeguards to keep this from ever happening again.

New this morning, we have our hands on what appears to be an internal memo about the VA's practices when dealing with our sick or injured veterans.

Our Barbara Starr is investigating, talking to the VA right now. The story is still developing and we'll have the very latest coming up next hour.

A deadly attack today on a U.S. aid agency compound in northern Afghanistan. At least four people were killed, 20 others wounded in the predawn attack by Taliban militants in the town of Kunduz.

The raid started when a suicide bomber on foot and another in a car detonated at the gate of the compound. Four other armed men then stormed the facility firing machine guns and hurling grenades.

The latest attack came on the day that General Petraeus is due to arrive in Afghanistan to begin his new job as head of the U.S. military operation there.

The Senate unanimously confirmed Petraeus Wednesday. He replaces General Stanley McChrystal who was relieved of his duties after he and his staff were quoted in a "Rolling Stone" magazine article mocking key Obama administration officials.

Day 74 of the Gulf oil disaster. Let's get you up to speed on the latest details.

EPA administrator Lisa Jackson heads to the Gulf Coast today. She'll hold town hall meetings in New Orleans and tour areas in Pensacola, Florida. Jackson's trip happens a day after her agency and the Coast Guard issued a directive telling BP how the company should deal with recovered oil and contaminated waste collected in the cleanup operation.

And yesterday the House passed its first major bill linked to the oil rig explosion. It allows the families of the 11 workers killed on the rig to be compensated for non-monetary losses such as pain and suffering.

A mammoth tanker billed as the world's largest oil skimmer is in the Gulf of Mexico waiting for approval to help clean up the oil. It is called a whale. And check it out. It's 10 stories high. About the length of 3 1/2 football fields.

A spokesperson for the Taiwanese company that owns it says that the vessel can skim up to 21 million gallons of oil a day. The Coast Guard says it has to be tested.

Our own Ed Lavandera actually got a chance to check out a whale and we're going to show you his tour of it next hour.

Strange bedfellows. What does this supermodel known for violent outbursts have to do with this ex-Liberian warlord? The war crimes tribunal says it's blood diamonds.

(COMMERCIAL BREAK)

PHILLIPS: Naomi Campbell is the supermodel known for violent outbursts. Charles Taylor is the ex-Liberian warlord accused of rape, running guns and kidnapping.

Campbell has been ordered to testify in Taylor's war crimes trial. Prosecutor say that Campbell received so-called blood diamonds from Taylor. But so far Campbell has refused to answer prosecutor's questions.

So what exactly do we know about this relationship between the supermodel and this brutal warlord? Well, the Netherlands war crimes tribunal says that Naomi Campbell must testify in his trial.

Paula Newton live in London.

So Paula, is it really all about the diamonds and are there other celebrities involved as well?

PAULA NEWTON, CNN INTERNATIONAL SECURITY CORRESPONDENT: Well, what's so interesting about this is the fact that this is an incredibly serious trial. Former president of Liberia, Charles Taylor, accused of fueling a bloody civil war in Sierra Leone and using the proceeds of so-called rough diamonds, the unpolished version, to fuel, to fund, that war.

Now the prosecution says that they want Naomi Campbell to answer as to whether or not she received a rough diamond from Charles Taylor. That, they say, would prove that he actually was in possession of them.

Right now the former Liberian president says, look, I've never used rough diamonds. I never had them, I never sold them for any purpose.

Interesting, Mia Farrow is the one now confirming to prosecutors that she was told that Naomi Campbell did receive a blood diamond, so- called, from Charles Taylor.

Now, Kyra, she has refused to cooperate so far. No comments from her or her lawyers to CNN when the subpoena was issued yesterday. She is a resident here in London, in Britain. It will be up to British authorities to enforce that subpoena.

PHILLIPS: And we will follow it, Paula Newton, for sure; appreciate it.

One time hurricane, now Tropical Depression Alex, still doing a lot of damage; more torrential rains expected across northern Mexico. At least two people have been killed there.

Alex made landfall as a category two storm Wednesday night about 100 miles south of the Texas border. Parts of Texas still got flooded. Bonnie Schneider, you are following this for us.

BONNIE SCHNEIDER, AMS METEROLOGIST: That is right, Kyra. We are still looking at more rain, even though it is just the remnants of Alex that we are now talking about. Heavy rain has been pounding the Houston area, San Antonio; no relief in sight. This tropical moisture will continue throughout the day today. And as we look toward the afternoon hours, we will be looking for some changes as well.

Let's zoom in to San Antonio, and you can see that we are definitely looking at some very wet conditions across a good portion of the region; heavy rains sweeping all the way southward toward Tampa; into Florida, we will be watching for that. We are also watching for the threat of flooding. That will persist down through southern Texas, on into areas of Louisiana, flood watches are posted.

So, heavy rain south of the front and nice conditions across the northeast, at high temperatures today, really comfortable, 82. But do not get used to it, New York City. We are looking at some big changes for the Fourth of July. You can see the fireworks on the map. For those of you that are planning an outdoor celebration, maybe you are heading for a barbecue; scorching temperatures. How hot will it be? You have to see this.

For Independence Day, in Washington, D.C., a high of 98 degrees on Sunday, on the fourth; and if you are off on Monday, it is going to get even hotter, up to 99. Same forecast for Philadelphia, only slightly cooler for New York; so the heat is on. It will just build through the weekend and get really intense for the fourth. Kyra --

PHILLIPS: All right, Bonnie, thanks.

We are going to be back in just a moment; but before we go, just a little patriotic test as we celebrate the Fourth of July this weekend.

(COMMERCIAL BREAK) PHLLIPS: Checking top stories, day 74 of the Gulf of Mexico oil disaster; choppy seas from one-time Hurricane Alex may keep smaller skimming boats from going out today.

Meantime, the EPA chief returns to the Gulf, after the government gave BP new rules on the oil cleanup.

And the House has passed a bill that would allow more damages to be paid to the oil rig victims' families. New jobless numbers show many Americans have given up hope. The Labor Department says 125,000 jobs were lost in June. Add to that, 650,000 job seekers dropped out of the labor market.

General David Petraeus due to arrive in Afghanistan today; he is taking over as the new U.S. Military Commander. The senate confirmed Petraeus' nomination on Wednesday.

This next case against former Vice President Al Gore; ahead, Portland police explain why they reopened the investigation; to get more details about the case.

(COMMERCIAL BREAK)

PHILLIPS: Kidnapping victim, Jaycee Dugard, will be getting $20 million from the State of California. Dugard had filed a claim for damages saying corrections officers did not keep tabs on parolee Phillip Garrido.

Garrido is accused of kidnapping Dugard, holding her captive for 18 years, and fathering two children with her. The settlement with Dugard was approved by state lawmakers.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I firmly believe had this claim gone to court or to a jury trial, it would have been in far, far larger dollars than what we actually settled on.

(END VIDEO CLIP)

PHILLIPS: Inspector General's report says that Garrido was only properly supervised for 12 out of the 123 months that he was under California's parole supervision.

A memorial service for Senator Robert Byrd will take place in West Virginia this morning. A horse-drawn carriage took Byrd's casket through the streets of Charleston yesterday. His body lay in repose at the state capitol overnight. President Obama and Vice President Biden will attend today's memorial. Byrd will be buried next week at Arlington National Cemetery.

Portland police revealing more about why they reopened an investigation into a sex case against former Vice President Al Gore; in a statement released yesterday, the Portland Police Department says it uncovered "procedural issues" involved in that 2009 investigation. Our Joe Johns has more on the case. (BEGIN VIDEOTAPE)

JOE JOHNS, CNN CORRESPONDENT (voice-over): The allegations against the former Vice president are salacious and shocking. Here is the woman making the accusations. CNN does not normally identify anyone alleging sexual assault unless the person comes forward themselves.

In this case, Molly Maggerty, a 54-year-old massage therapist in Oregon, is telling her story to "The National Enquirer." In an interview she gave to the Portland Police Department in 2009, Haggerty says she was the victim of unwanted sexual contact by Gore. She said it happened three years earlier, on the night of October 24th, 2006, here at the Hotel Lucia.

She said Gore was staying at the boutique hotel under the name of Mr. Stone and had requested a massage. At approximately 11:00 p.m., the woman said she entered Gore's hotel room, sweet 903. Gore opened the door with a big smile and said, "Call me al." The woman alleges.

She claims Gore made her uneasy from the start. He began dimming the lights way down to near darkness, she told police. She said she started to massage Gore but claims it appeared he was demanding sexual favors. According to the police, she said, "Gore grabbed my right hand and shoved it down under the sheet to his pubic area." She called his behavior angry and intimidating.

She said she then tried to leave; but alleges, "Gore wrapped me in an inescapable embrace and caressed my back, and buttocks, and breasts." She also said, "Gore forced an open-mouth kiss on me."

Haggerty said she said she was afraid she was going to be raped. She said she eventually left the room; but not before Gore allegedly told her, "You know you want to do it."

That interview took place last year. Early last month, Portland police say the woman contacted them and said she wanted to edit her statement. They say she also told them she was planning on taking her case to the media.

Haggerty's attorney apparently contacted police about the case as early as 2006. But police say the attorney canceled three meetings that had been scheduled with detectives. The attorney also said that they planned to take their case to civil court.

On June 23, just last week, the police said, "The case was not investigated any further because detectives concluded there was insufficient evidence to support the allegations." Now the police say they are reopening the case because of procedural issues in last year's investigation.

Reached by CNN for comment, a spokeswoman for the former Vice President said the decision to reopen the case will only benefit Mr. Gore. The spokeswoman added the following. "The Gores cannot comment on every defamatory, misleading, and inaccurate story generated by tabloids. Mr. Gore unequivocally and emphatically denied this accusation when he first learned of its existence three years ago. He stands by that denial."

Joe Johns, CNN, Washington.

(END VIDEOTAPE)

PHLLIPS: The unemployment rate drops, but will it be enough good news to actually help the DOW? Opening bell just minutes away.

(COMMERCIAL BREAK)

PHILLIPS: All right, those new numbers on the job market; an hour ago, the government said the unemployment rate dropped to 9.5 percent; but the economy still losing jobs, 125,000 in June. Alison Kosik at the New York Stock Exchange; Alison, how is Wall Street taking the report?

ALISON KOSIK, CNN FINANCIAL CORRESPONDENT: Kyra, we are starting off with some fireworks on Wall Street. Literally, Macy's is just about to ring the opening bell in a few seconds, as it does every Fourth of July week, to celebrate the Macy's fireworks show right here in New York.

As for stocks, futures are pointing to a flat open as the jobs report offers as a little bit of everything for just about everyone. First, the numbers may already be priced into the market. For the past two weeks, we have been seeing disappointing reports on economic growth, housing, manufacturing and spending. So, expectations for this economy are low at this point. And in that respect, today's jobs report was pretty much in line with what we have been seeing.

Now, If we go ahead and look behind the headline numbers that we got, we find that the job losses last month were due to the expected end of the line for temporary census workers, but private sector hiring was a bit weaker than expected. And this is likely to be a light trading day today which is typical ahead of a three-day weekend. The markets are closed on Monday. All right. With the fireworks going on behind me, let's check on the early numbers. The Dow Industrials up about 10. The NASDAQ right now is flat. The Dow, by the way, Kyra, is riding a streak of six straight losses. Let's see if we can break that losing streak today. Kyra, back to you.

PHILLIPS: That would be nice. I think we don't like that. Thanks, Alison.

KOSIK: You got it.

PHILLIPS: California's budget crisis could soon take money out of the pocket of its state's workers. Governor Arnold Schwarzenegger says if a new budget is not reached soon, as many as 200,000 state workers will face pay cuts. Their pay would be reduced to minimum wage, $7.25 an hour. The state labor official says that this is not a scare tactic. And it is, in fact, required by law if a new state budget is not reached soon. She says if the cuts are, in fact, put into effect, workers would be repaid the difference once a new budget goes into effect.

Now, at any moment, President Obama expected to talk about the new unemployment numbers. He also announced that thousands of new jobs will be created with stimulus money. The president due to speak 9:35 eastern time. We will carry his comments live as soon as he steps up to that mic.

Do you remember the stimulus? You know the $862 billion project that supposed to help turn the economy around. Minutes from now, as we just told you, the president is going to announce a plan to spend $800 million out of that pile. Josh Levs is at our new stimulus desk, I guess to tell us more. You used to be in the newsroom, but we now have a new set. So, there you go. You got your big board and you can tell us all about it.

JOSH LEVS, CNN CORRESPONDENT: As long as I'm not too far from you, Kyra. We're right next to each other. This is all good. So, yes, here's what's going to happen. I got two things to talk to you about. One, the timing of this announcement. We're coming right off these jobs report. That's not too thrilling according to a lot of the analysts, and the president is choosing today to make this announcement about a big sum of money, $800 million that's going to be going to a project that a lot of you will care about a lot and that's developing more broadband around America. I have a map here, Broadband.gov.

And all you need to know where you see more pink and more red, these are places where it's a lot tougher for people to get online. And not going to be able to get online has a real impact for people economically to get through opportunities. Even health wise, you can't get as much information, can't necessarily get in touch with some authorities as quickly as you want to. One thing that the nation wants is more people getting more access to broadband more quickly. Fewer places that are pink or red on this map.

So, here's what's happening today. The president is going to be announcing in just a matter of minutes $800 million. $795 million in the stimulus funds to support a series of projects all over the country that will increase opportunities for people to get on broadband. Now, whenever we hear about stimulus funding, first thing we want to know is how many jobs will it create. Boom. They're saying direct jobs, 5,000 jobs will be created directly, but they're also saying that's just a little drop in the bucket for what they believe this will achieve because all these people out there will have more access to getting online.

We will have, therefore, access to more information, will be able to do more jobs, will have access to more education that will have this broad effect for hundreds of thousands or even millions of people all over the country. There's also something else to understand about directly created jobs. Any time the government talks about those jobs being created, they have way of breaking it down, and I want to show you this here. This is the direct job, right? If the stimulus pays for someone let's say to do construction, that's a direct job. The indirect job that they then say is also created to people who are creating the wood in the machinery, the concrete whatever it is, for someone to work with.

And then they say this person can now go to the grocery store. And someone at the grocery store can get paid because now this person has money. He has more money flowing into the system. So, this is what the government says any time they announce handful of direct jobs in this case, 5,000, they say hey, that's just a piece of the pile. The big picture is going to be a lot bigger. So, Kyra, today, we will be keeping an eye on the president's announcement what he has to say about this and on how far it will impact the entire country all coming by now.

PHILLIPS: Got it. Thanks so much, Josh. New jobless numbers and new questions. We're going to take a closer look and try to answer the big question -- is the economy really getting better? Live pictures of the president there stepping into Marine One. He'll be heading to, as told you, Senator Robert Byrd's funeral service, but prior to that, he's going to make comments about those jobless numbers. We'll take it live as soon as he touches down at Andrews Air Force Base.

(COMMERCIAL BREAK)

PHILLIPS: Checking top stories. Choppy seas from one time hurricane Alex may keep smaller skimming boats from going out today. Meantime, the EPA chief returns to the Gulf today after the government gave BP new rules on oil cleanup. And the House just passed a bill that would allow more damages to be paid to the oil rig victims' families.

New jobless numbers show many Americans have given up hope. The labor department says that 125,000 jobs were lost in June and that -- 650 thousand job seekers dropped out of the labor market.

Three accused Russian spies appeared in federal court yesterday in New York. A judge denied bail for a couple who lives in New Jersey and set bail for another. In all, 11 people suspected of being part of a Russian spy ring were arrested this week. Court documents show that one of them admitted he worked for Russia's intelligence agency.

And leave it to Jon Stewart to have some fun with the Russian spy story. It's his turn. Take a look.

(BEGIN VIDEO CLIP)

JON STEWART, HOST THE DAILY SHOW: War in Iraq, war in Afghanistan. Still raging. The oil spill, ravaging our stories, and now it seems we're facing an even more insidious enemy.

UNIDENTIFIED FEMALE: Ten people are in custody this morning accused of spying from Russia, from the suburbs of the northeast, and its throwback to the days of the cold war.

STEWART: The cold war is back. First the A-team, then the Karate Kid movies are back, and now this. We really do love the 1980s.

(END VIDEO CLIP)

PHILLIPS: And new this morning. The jobless rate takes an unexpected tumble. What does that mean for you and your wallet? Business expert will join us to look behind the numbers and tell us what they reveal about our economy.

(COMMERCIAL BREAK)

(JOINED IN PROFRESS)

OBAMA: The state of our economy. This morning, we received the June employment report. It reflected the planned phase out of 225,000 temporary census jobs, but it also showed the sixth straight month of job growth in the private sector. All totaled, our economy has created nearly 600,000 private sector jobs this year. That's a stark turnaround from the first six months of last year when we lost 3.7 million jobs at the height of the recession. Make no mistake, we are headed in the right direction. But as I was reminded on a trip to Racine, Wisconsin earlier this week, we're not headed there fast enough for a lot of Americans.

We're not headed there fast enough for me either. The recession dug us a hole of about 8 million jobs deep. And we continue to fight head winds from volatile global markets. So, we still have a great deal of work to do to repair the economy and get the American people back to work. That's why we're continuing a relentless effort across multiple fronts to keep this recovery moving. And today, I'd like to make a quick announcement regarding new infrastructure investments under the recovery act. Investments that will create private sector jobs and make America more competitive.

Secretary Lott and Secretary Vilsack have joined me here today to announce that the Department of Commerce and Agriculture will invest in 66 new projects across America that will finally bring reliable broadband internet service to communities that currently have little or no access. In the short term, we expect these projects to create about 5,000 construction and installation jobs around the country. And once we emerge from the immediate crisis, the long term economic gains to communities that have been left behind in the digital age will be immeasurable. All told, these investments will benefit tens of millions of Americans, more than 685,000 businesses, 900 health care facilities, and 2,400 schools across the country.

Studies have shown that when communities adopt broadband access, it can lead to hundreds of thousands of new jobs. Broadband can remove geographic barriers between patients and their doctors. It can connect our kids to the digital skills in 21st century education required for the jobs of the future. And it can prepare America to run on clean energy by helping us upgrade to smarter, stronger, and more secure electrical grid. So, we're investing in our people and we're investing in their future. We're competing aggressively to make sure the jobs and industries and the markets of tomorrow take root right here in the United States. We're moving forward.

And to every American who is looking for work, I promise you, we are going to keep on doing everything that we can. I will do everything in my power to help our economy create jobs and opportunities for all people. Sunday is the Fourth of July. And if that date reminds us of anything, it's that America has never backed down from a challenge. We faced our share of tough times before. But in such moments we don't flinch. We dig deeper, we innovate, we compete and we win. That's in our DNA.

And it's going to be what brings us through these tough times towards a brighter day. So, I want to say happy Fourth of July to everybody. I want our troops overseas to know that we are thinking of your bravery and grateful for your service. Thank you very much, everybody.

PHILLIPS: The president of the United States making a pretty bold promise there. Hopefully, we can all count it. He says he promises he's going to create those jobs. Let's talk more about the economics here. Peter Morici, a professor of international business at the University of Maryland. Joining us live from our Washington bureau. You heard the president. Short and sweet. Is it enough, Peter?

PETER MORICI, INTL. BUSINESS PROFESSOR, UNIV. OF MARYLAND: No. It's really pail of water on a forest fire, 5,000 in construction jobs and internet. It's great to bring in internet access to rule communities (INAUDIBLE), but it's hardly a jobs program at a time 12 months into the recovery only 83,000 private sector jobs created when we believe to create 13 million by the end of 2013 to bring unemployment back down to 6 percent.

PHILLIPS: I read your article and it scared me. Here's the title. "A Double Dip or Off the Cliff." I don't think any of us want to start think -- then again, I think a lot of Americans feel like they've already fallen off the cliff. Your predictions?

MORICI: If we take a second dip and that is starting to materialize, the economy won't recover so quickly. The economy has national -- natural recesitive (ph) qualities when it goes into a recession, and those will have been spent. You know, for example, people refinancing their mortgages when interest rates went down. The first time they went down, they did that, it was a gush of spending. Now, interest rates and mortgages are down again, but no one really qualifies to refinance.

PHILLIPS: All right. You point out why this is happening. All right. Health care not reforming. You say bank reforms that make credit more expensive for businesses, no help for the 8,000 regional that will serve small to medium-sized businesses. The trade deficit with China, where do we begin?

MORICI: OK. With the regional banks, something the president can do right now. We have money left in the TARP. Let's use it to create a resolution trust as we did during the savings and loan crisis to help those 8,000 regional banks that don't have money to lend, lend money to small and medium-sized businesses that create all the jobs. The trade deficit with China is a bigger drag on the economy than the stimulus package provides in the other direction. The Chinese simply won't revalue their currency. We can do it for them. They license currency transactions. We can do the same and put a tax on dollar-Yuan conversion until they quit. Those are two policies that can be put in place tomorrow morning that would -- yield pretty big change, pretty fast, but 5,000 stimulus jobs by creating internet access in Montana does not relieve unemployment in Manhattan.

PHILLIPS: You know, you also point out when we talk about what we should do on the oil front. Creating more domestic oil and gas resources and reduce our need for foreign supplies. Wow. You look at what's happening with the oil disaster. I'm reading your advice here. I mean, now is the time.

MORICI: Hard reality. The Department of Energy doesn't believe that green energy, alternative energy supplies, can make an appreciable dent in the petroleum we use over the next two decades. It will help. But we're going to need a lot of petroleum. We have a lot of onshore natural gas that we can drill, and we can build out the natural gas pipelines so folks in New England aren't using -- a heating oil which comes from imported oil.

And like it or not, Mr. President, we're going to have to drill offshore. Or we're going to have to pay for very expensive oil from places that don't really share our values and are very unreliable in terms of supply.

For example, a lot of African supplies.

PHILLIPS: Peter Morici, professor at University of Maryland, if you're a student there take Peter's class. Peter, thanks.

MORICI: Take care and happy Fourth of July.

PHILLIPS: Same to you.

Next hour: tips for job seekers and advice is hard earned. It comes from people who first reached out to perspective employers as guests of our 30-second pitch. Well, they're are going to tell you about their jobs searches and the lessons they have learned.

But first, flashback. This day, in 1937, aviator Amelia Earhart disappeared over the Pacific Ocean. Earhart was attempting to make the first around the world flight at the equator. She has already received a Distinguished Flying Cross Award for becoming the first woman to fly solo across the Atlantic Ocean. Earhart was declared legally dead in 1939.

And it was a weather balloon or a little green man; 1947, on this day in Roswell. Oh, yes, that mysterious aircraft crashed in the desert. The Roswell Army Base claimed it was just a weather balloon. But eyewitnesses say no way. It was a UFO. We'll let you decide.

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PHILLIPS: More and more BP and the Obama administration facing criticism that they aren't doing enough to clean up the oil gushing into the Gulf.

Some of the complaints, there aren't enough skimmers. The skimmers are deployed to the wrong place and the U.S. is ignoring foreign offers of help and equipment.

CNN's Allan Chernoff reports.

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ALLAN CHERNOFF, CNN CORRESPONDENT (voice-over): After visiting the Louisiana coast, Republican Congressman Darrell Issa claims areas most vulnerable to oil slicks are not getting the resources they have been promised, even told that they received.

Plaquemines Parish officials told Congressional investigators BP and the Coast Guard had a map indicating 140 vessels were cleaning up oil in the area, when less than a quarter of that number were at work.

REP. DARRELL ISSA (R), CALIFORNIA: It's very clear they didn't have 140 skimmers on the water in the locations they said they had.

CHERNOFF: The Congressman says part of the problem is the White House has been slow to accept foreign help. A charge the administration denies.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: It's a myth that has been debunked literally hundreds of times. There were already 24 foreign vessels that were operating in the Gulf before the State Department announced two days ago additional international assistance.

CHERNOFF: Political battles aside, what is clear is there are not as many oil cleanup vessels as could be used. The unified command which includes BP and federal agencies has been deploying oil skimmers, which skim oil off the water. There are, according to the Coast Guard, just over 500 vessels prepared to do the job once the seas settle after Hurricane Alex.

St. Bernard's parish president says the process has been too slow and bureaucratic, so he's putting local fishermen to work cleaning up oil.

CRAIG TAFFARO, PRESIDENT, ST. BERNARD'S PARISH: When we're converting our own shrimp boats, our own oyster loggers into skimming task forces that are winding up being a very efficient way to skim oil, using the ability and the skills of our local fishermen.

CHERNOFF: A shortage of skimmers is the problem claims BP. The issue is not about paying for them, it's finding them. The Coast Guard tells CNN it's found another 25 coming from the Navy, to which former General Russel Honore says what took so long?

LT. GEN. RUSSEL HONORE, U.S. ARMY (RET.): We've got to fix the command and control problem. We need more command and control at sea to control the vessels. We need to break it down into sectors and zone and put command and control there so we can get the skimmer at the right place and we get them in the right numbers. (END VIDEOTAPE)

PHILLIPS: Now yesterday I told you about those toxic FEMA trailers. You remember the 100,000 or so that were used to house people who lost everything to Hurricane Katrina. Well, many of them had formaldehyde levels five times the level considered safe by the federal government and they were banned from ever being used for long- term housing again.

Well, those trailers are back in the Gulf, being used to house oil cleanup crew workers. But the warning labels, the ones that warn about the potential for itchy eyes, respiratory problems, even nasal cancer, well, they're a thing of the past in many cases.

And my blood was boiling when I first heard about this and it turns out I'm not the only one. A couple of Congressmen are now asking for an investigation immediately.

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REP. EDWARD MARKEY (D), MASSACHUSETTS: It is absolutely preposterous that workers who are asked to go out to clean up toxic materials are then going home to trailers, toxic trailers, loaded with formaldehyde that are not fit for human habitation.

Congressman Melancon from Louisiana and I wrote a letter today to the GSA asking that that there be a full disclosure of what has happened with these trailers in the past, how did we get to a situation where the trailers are now being used to house people without notification to them that it could be dangerous to their health.

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PHILLIIPS: And we want to follow that investigation. Are you living in one of those trailers and have you ever? If so, we want to hear from you. And viewers what do you think? Should oil cleanup workers be living in these things? Head to my blog CNN.com/kyra and sound off.

We've got a lot going on in the CNN NEWSROOM this morning. Let's check in with our correspondents. We begin with Alison Kosik at the New York Stock Exchange -- Alison.

KOSIK: Hi Kyra, it's a big day for Wall Street. Investors are learning how things are going here -- will be going on main street. We're going to focus on this number, 14.6 million. That's how many people are out of work these days. More on that and the reaction on Wall Street at the top of the hour.

SUSAN CANDIOTTI, CNN CORRESPONDENT: And I'm Susan Candiotti. More on that surprising confession from an alleged Russian spy in the next hour. Plus, what he had to say about loyalty to the Russian intelligence service over his own son.

SCHNEIDER: I'm meteorologist Bonnie Schneider tracking the remnants of Alex bringing heavy rains to Texas and Louisiana. Plus we're watching storms across Florida and your Fourth of July plans maybe stormy or extremely hot. I'll have a look at the forecast for the holiday coming up.

PHILLIPS: Also coming up, we've got our hands in what appears to be an internal memo from the VA cracking down on some not so very nice practices when dealing with sick or injured vets. Our Barbara Starr is investigating, talking to the VA now. The story is still developing but we're going to bring you up to speed at the top of the hour.

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PHILLIPS: Oh, that brings back memories. Remember this 1980s icon? Wonder Woman played by Lynda Carter -- by the way, she is still so beautiful -- bringing down the bad guys in her skimpy star-studded uniform, full makeup and all, by the way. It seems the comic book super heroine is undergoing a costume change.

Check it out. The updated crime fighter has a sleek look about her. More covered up than undercover, actually. Hundreds of people have weighed in on the marquis blog with their views on the new look; some people not so happy.

One person actually wrote, Wonder Woman is an Amazon and at the very least should wear something that looks like armor. I hate those pants in particular."

I guess we can't please everybody.

Here is something else that grabbed our attention. Edible birthday cards; the American greeting cards come with a dissolvable strip for the birthday boy or girl. Flavors include chocolate, cupcake, and doughnut. As for the adults, oh, yes, margarita. Don't worry, no hangover involved.

Checking top stories at the top of the hour: new jobless numbers show many Americans have given up hope. The labor department says 125,000 jobs were lost in June. Add to that 650,000 job seekers dropped out of the labor market.

And a deadly attack today at a U.S. Aid agency compound in northern Afghanistan. At least 4 people killed, 20 others wounded --