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Potential Glitch in Gulf Oil Disaster; Secretary of State Clinton Announces Aid Package for Pakistan; "The Washington Post" Reports Top Secret Intelligence is Out of Control; Tempest in the Tea Party; Obama Speaks Live About Unemployment Extension
Aired July 19, 2010 - 10:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, CNN ANCHOR: Let's check our top stories.
Day 91 in the Gulf oil disaster and a new potential glitch. There could be a leak in the capped off oil ll. The leak is not at the well head site but some distance away. The government is giving BP more time to test the integrity of that cap that was placed on the well Thursday.
In Islamabad, U.S. Secretary of State Hillary Clinton announces a $7.5 billion aid package for Pakistan. The money is destined for infrastructure, though, not the on-going war on terror. Clinton calls it a long-term investment in Pakistan's future.
Top secret intelligence here in the U.S. is pretty much out of control. That's "The Washington Post's" big story today. It also is reporting that no one knows really how much all that intel is costing or if it's even working.
The "Post" found 1,200 government organizations and almost 2,000 private companies working on counter terrorism, homeland security and intelligence. The reports says an estimated 854,000 people actually hold top secret clearance.
Tempest in a tea party. The movement has long faced criticisms of racist undertones, but now the outcry is exploding. A leader of one of the group's blogs about colored people and the national movement gives him the boot.
CNN's Jim Acosta has been following the tea party protest. He joins us from Washington.
So Jim, walk us through this wild weekend.
JIM ACOSTA, CNN CORRESPONDENT: Yes, this is sort of like one tea party group throwing another tea party group under the bus. All of this started last week, Kyra, when the NAACP condemned the tea party movement for some of those racially insensitive signs and language that we have seen at some tea party rallies, and that prompted Mark Williams, who is a leader of the Tea Party Express, of those infamous bus tours to write what he thought was a satirical letter from the president of the NAACP to Abraham Lincoln.
That letter was filled with racially charged comments. Over the weekend, a spokesman for another major tea party group, the National Tea Party Federation said they had had enough.
(BEGIN VIDEO CLIP)
DAVID WEBB, NATL. TEA PARTY FEDERATION: We in the last 24 hours have expelled Tea Party Express and Mark Williams from the National Tea Party Federation because of the letter that he wrote which he, I guess, may have considered satire but which is clearly offensive. And that is what we do, self-policing is the right and the responsibility of any movement or organization.
(END VIDEO CLIP)
ACOSTA: Now, Mark Williams, he says he is finished giving interviews on the subject. In fact, he cancelled an appearance on CNN yesterday but he did release a statement slamming the National Tea Party Federation. Reading quote, we'll put it on screen. "Apparently, I have offended the tea party leadership. Mind you, there is no tea party leadership. Every tea partier is a tea party leader but something happens when the stronger egos and personalities in a movement begin to feel a sense of ownership."
And so, you know, even though he put out that statement, this controversy may be starting to subside. The president of the NAACP, Ben Jealous, said that he was pleased that the National Tea Party Federation had gone out and taken that step to boot out the Tea Party Express and Mark Williams from their organization. Kyra.
PHILLIPS: So what's with all of the tea party groups? Why can't it just be more organized and have one streamlined mantra?
ACOSTA: You know, this has gone on since the beginnings of the tea party movement, Kyra. You know, you talk to these different tea party groups and you have the Tea Party Express. They had those bus tours that were very successful all over the country. You talk to the Tea Party Patriots, which is a very different organization.
The National Tea Party Federation is another new organization that has cropped up. And all of them will tell you, we don't want to be another political party like the Republicans or the Democrats. We would rather stay in the front lines, hold grassroots events and try to keep both parties accountable for their actions.
And what that has done while, you know, some may log the achievements of the tea party movement, they have been able to, you know, really bring some conservative discipline to the republican party, for example, but it makes it very difficult to police people within your ranks when you have all of these different organizations. It's very difficult for them. Kyra.
PHILLIPS: Jim Acosta, thanks.
And here's another appeal to voters looking for change, and if you ask him, he'll tell you that he's already bound for an image award. His name is Alvin Greene, and to say he's a political newcomer may overstate his background. You see, he never really campaigned for the U.S. Senate in South Carolina but he won the Democratic nomination anyway. Now fast forward six weeks to last night, his first campaign speech.
(BEGIN VIDEO CLIP)
ALVIN GREENE, SOUTH CAROLINA SENATE CANDIDATE: I'm the best candidate in the United States Senate race here in South Carolina. I am also the best candidate for the - I'm also the best choice for the image award next year.
We spend more than two times of our tax paying dollars on inmates than students. Let's get South Carolina and America back to work and let's move South Carolina and America forward.
(END VIDEO CLIP)
PHILLIPS: Well, Greene's campaign speech was long-awaited but it sure wasn't long-winded. It lasted just about seven minutes.
And a potential problem on the 91st day of the gulf oil disaster. A leak has been detected on the sea floor but not at the well head site. There is no confirmation that the seepage contains oil but those watching this disaster say it does raise concerns.
Let's get live now to CNN's Reynolds Wolf who is in New Orleans. OK, Reynolds so where does this put us in this long ordeal now?
REYNOLDS WOLF, AMS METEOROLOGIST: Absolutely, the delays we have is that again just a cryptic message we got last night from the federal government and also BP about the seepage. Very, very cryptic. There's a lot that we don't know about it.
For example, Admiral Thad Allen mentioned that it is some distance from the well head. Well, we don't know exactly how far that distance is. Is it 20 feet? Is it a mile? We don't know.
Also, we don't know who discovered it. We don't know where precisely the seepage is. We don't know what it is, oil or is it methane? We are still not sure but the thing that's alarming about it, Kyra, is that any sign of seepage coming up anywhere in that area combined with the pressure readings inside the well could indicate that there is a rupture below the sea floor.
And if you have a rupture that could really compound the problems we have had. Now, concerning the pressure, the latest reading on the pressure as of yesterday morning was 6778, which has actually gone up an average of about one to two psi per hour. To have that number go up is great news. To have it go down is a sign, combined with the seepage, that something bad could be happening. But so far, that's the latest we've got in terms of that.
Let's send it back to you.
PHILLIPS: Well, what's Thad Allen telling BP?
WOLF: Well, he can be very direct, as you know, and he sent a tersely worded letter yesterday to BP. And in it, just a few of the highlights. He wanted BP to report any future seepage within a four- hour span. So very quickly, they want the information. Second, is that he wanted detailed instructions for opening the choke valve on top of the containment cap and the third is he wanted a written update within 24 hours.
Some breaking information that we have for you though is that the federal government will allow the testing to continue. So that is certainly good news in some regards that the cap is going to remain in place. If that cap remains in place, obviously we're not going to see the oil flowing out into the Gulf of Mexico and that we can see the drilling of the not one but two relief wells continue.
Now the other alternative we have if the testing were to cease is that we remove the cap. The cap would be removed. They put on the riser on top of the old well head and that would mean that we could see anywhere from one to three days of oil flowing freely back into the Gulf of Mexico.
That certainly is the last thing that anyone wants to see, but, again it looks like the end game, Kyra, is going to be one of those relief wells. One or two of them, if they finally break through towards the end of this month and they insert that mixture of cement and mud and kill the well altogether.
But even then you still have the long-term effects of what this would mean economically and of course, environmentally for the Gulf of Mexico.
PHILLIPS: Yes, that will be for decades. Reynolds, thanks.
And all this work to fix that busted well head and clean up the oil is costing big bucks. BP says that the price tag so far is about $3.95 billion. Yes, billions of dollars.
Now this ought to make us all a little nervous. "The Washington Post" is reporting that the 9/11 terrorist attacks created an intelligence community so large and unwieldy that it has become unmanageable and inefficient. According to a two-year investigation by the post, "the system put in place to keep the United States safe is so massive that its effectiveness is impossible to determine."
The newspaper reports that there are more than 1,200 government organizations working on programs related to counter terrorism, homeland security and intelligence. The paper found almost 2,000 private companies doing that work as well.
The "Post" estimates that there are 854,000 people holding top secret security clearances. Among those 854,000 people with top security clearance was a government worker named Kendall Myers. 73- year-old Myers was sentenced to life for spying for Cuba. His wife got six years for assisting him. Myers worked at the State Department's Foreign Service Institute and later at the department's Bureau of Intelligence and Research.
Now we're hearing that he spied for Cuba for 30 years. He had top secret clearance since 1985. Myers was also ordered to pay back the government more than $1.7 million. From espionage to the economy, President Obama set to speak from the White House Rose Garden in about 20 minutes. He's expected to chastise Republican lawmakers who have successfully blocked an extension on unemployment benefits the last three times the measure has come up. We're going to bring you the president's speech live as it happens right here on CNN.
Now, as the politics of joblessness play out on Capitol Hill, millions of Americans are now living in a far more uncertain financial lurch. CNN's Kate Bolduan brings the issue home with one man's hope to get off the dole and back into the work force.
(BEGIN VIDEOTAPE)
JOE BOYD, UNEMPLOYED: So you want some milk or something? You want to stir it?
KATE BOLDUAN, CNN CORRESPONDENT (voice-over): Out of work and, he says, out of options. 59-year-old Joe Boyd has been an electrician in Washington for more than a decade. But for the past year and a half, the jobs have simply dried up.
BOYD: I have never been like this ever in my history of my life been out of work like this for this long a period of time, for no reason.
BOLDUAN: Also dried up, his unemployment benefits.
(on camera): Come June, you were done.
BOYD: Right.
BOLDUAN: What's the past month been like then?
BOYD: Right. The past month has been a struggle. I have stopped doing everything.
BOLDUAN: Boyd lost his apartment and now has to live with his daughter while here, just a few miles away, lawmakers are fighting over whether to further extend unemployment benefits for people just like Boyd who have already exhausted theirs.
SEN. MITCH MCCONNELL (R), MINORITY LEADER: What we are not willing to do is use worthwhile programs as an excuse to burden our children and our grandchildren with an even bigger national debt than we've already got.
SEN. RICHARD DURBIN (D), ILLINOIS: I don't understand the Republican sentiment here. There used to be a bipartisan sentiment that when America faced a disaster we would pull together.
BOLDUAN (voice-over): The Senate failed to extend emergency benefits before leaving for its fourth of July break. Republicans opposed the extension because of the cost and concerns over the growing national debt. Some economists argue there are other problems with prolonging unemployment benefits. DAN MITCHELL, CATO INSTITUTE: The academic evidence is very clear that any time you extend and lengthen and increase unemployment benefits, you lengthen, extend and increase unemployment. That may sound harsh, that may sound cold, but there are people out there who will delay getting a job until their benefits run out.
BOLDUAN: But talk to people like Joe Boyd and he'll tell you. Staying out of work is the last thing he wants.
BOYD: When times are really bad you're going to turn your back. Why? Would you turn your back on your brother or sister when times are really bad?
BOLDUAN: Boyd says he hasn't lost hope and is still searching for a job.
(on camera): The Senate's expected to take up the issue again this week. Now that democrat Carte Goodwin has been chosen to fill the late Robert Byrd's seat Democrats are confident they have enough votes to overcome Republican opposition and pass another extension of unemployment benefits.
Kate Bolduan, CNN, Washington.
(END VIDEOTAPE)
PHILLIPS: And again, keep it right here. President Obama expected to talk about the economy and a proposed extension of unemployment insurance. That's live from the White House Rose Garden, 10:30 Eastern, right here on CNN.
Now, when Muslims pray, they are supposed to face toward Mecca. But Muslims in Indonesia have got some pretty bad advice. And they could use a few prayers now to clear out some of the confusion.
(COMMERCIAL BREAK)
PHILLIPS: Let's scan our morning passport. Muslims in Indonesia will need something besides a map when they pray. How about a compass? Religious leaders mistakenly told Muslims to turn west toward Mecca for prayer, trouble is, that faces Africa. So the new edict, turn northwest. One man says Allah will listen no matter which way I'm facing.
And you're looking at the face of a winner. A world class runner, Caster Semenya of South Africa, she who won an 800-meter race in Finland yesterday but can't outrun rumors that follow her everywhere. Some critics say that she is really a man. Caster was cleared to race as a woman though after passing a series of gender tests that kept her away from the sport for nearly a year.
And when kids can't get to school in Bangladesh, the school comes to them, a floating classroom big enough for 30 children. Monsoon flooding washes out roads making it impossible for children to get to school and some are just too far away by land.
Few kids in Bangladesh can match what this school boat can even offer, including computers powered by solar panels.
People in eastern Kentucky have a lot of hard work ahead of them today, cleaning up from flash floods that killed two people yesterday. The story behind this video just ahead.
(COMMERCIAL BREAK)
PHILLIPS: Flash flooding in eastern Kentucky yesterday left this in its wake. At least two people killed and about 200 homes damaged or destroyed. As rivers rose quickly, some had to be rescued. And today assessment teams will try to add up the damage. It's cost some people everything they own.
(BEGIN VIDEO CLIP)
SARAH LEEDY, FLOOD VICTIM: Our trailer is probably at least at least a good 200 foot from where it usually sits.
APRIL BLACKBURN, FLOOD VICTIM: It's just really bad. I lived in this park since I was in fifth grade and I'm 37 now and this has never happened before. Never.
(END VIDEOTAPE)
PHILLIPS: Now the cleanup continues after the severe flooding in Kentucky over the weekend. It's tough to see what they are going through. And watching those people just immersed in mud.
JACQUI JERAS, AMS METEOROLOGIST: Yes, hundreds of homes are being impacted there and thousands of people being impacted as well, and the waters could continue to rise in some parts across Kentucky into Indiana as well as in the midwest. As we have what we call a zonal flow pattern, that is when the jet stream runs pretty flat from west to east. So that means we'll get storm after storm developing.
Our frontal system kind of stationary here. So things will trigger periodically and you can expect thunderstorms almost every day, maybe every other day, and some of those could be severe across the upper midwest in this dark area right there that you can see in the dark red. That's a moderate risk of large hail, damaging winds and maybe even some tornadoes.
We expect some development later on today, and we'll also be watching the northeast from that, across parts of the south. That's where the heat begins. So those are the big weather headlines today.
We'll show you the radar picture. And that's where we're seeing some of these storms in the northeast. New York City up towards Hartford, getting some thunderstorms at this time as a result of that.
And then we're seeing some thunderstorms across the midwest as well. Those aren't strong right now. We expect severe weather to kick in, we think as we head into the afternoon hours. We're also keeping our eye on the tropics here. Of course, we're in the hurricane season now. There's two areas of disturbed weather, not really expecting much for development here in the next couple of days but we do especially want to watch this one over the Leeward Islands right now because some of the computer models bring it towards the Gulf of Mexico.
They're not developing it much but anything that gets in there we really have to watch this time of year. So we just want to give you a heads up, Kyra, and let everybody know what's going on out there.
PHILLIPS: Thanks, Jacqui.
Let's check our top stories. Day 91 in the gulf oil disaster and a new potential glitch. Apparently there could be a leak in the capped off oil well. The government is giving BP another 24 hours to test the integrity of that cap that is put on the well.
The "Washington Post" reporting the nation's intelligence community has grown so large that it's unwieldy, unmanageable and inefficient. The two-year investigation also determined that no one knows how much the intelligence gathering is even costing us. "The Post " says 33 building complexes where top secret intel work are under construction or have been built since 9/11 and it found an estimated 854,000 people hold top secret security clearance.
And it's curtains for tea party activist Mark Williams. The National Tea Party Federation has expelled him and his Tea Party Express organization. That comes after Williams was highly criticized for an inflammatory blog post that he wrote last week. You recall that get satirized a fictional letter from what he called "colored people" to President Lincoln.
Every journey begins with a single step and for Sanjay Gupta and some of our viewers it ended with a six-mile run. That was just the last part of their grueling fitness challenge. You'll see it, straight ahead.
(COMMERCIAL BREAK)
(MUSIC PLAYING)
PHILLIPS: When was the last time you heard "Chariots of Fire?" Well Dr. Sanjay Gupta had it ringing in his ears. He's our chief medical correspondent, surgeon, tri-athlete. He actually earned that last title just yesterday when he and six of our viewers culminated their six-month "Fit Nation" challenge and took on the New York City triathlon.
(BEGIN VIDEOTAPE)
DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT (on camera): All right, good morning. I'm supposed to wake up at 3:15. It's 3:08. How did you sleep?
UNIDENTIFIED FEMALE: I slept really good. Yes.
GUPTA: Here we go.
UNIDENTIFIED FEMALE: Do you think that's realistic? GUPTA: this is our setup over here, all of our bikes. "Fit Nation" team.
UNIDENTIFIED MALE: Good luck, kid.
GUPTA: Thank you.
UNIDENTIFIED FEMALE: Do well.
UNIDENTIFIED FEMALE: Be strong, be strong, group!
UNIDENTIFIED FEMALE: Yes, CNN!
UNIDENTIFIED FEMALE: You look good! Go, go!
UNIDENTIFIED MALE: Dr. Sanjay Gupta, no problem, looking to do it all over again.
UNIDENTIFIED MALE: How was it?
GUPTA: It was well worth it, tired.
UNIDENTIFIED MALE: Amazing. I almost died a few times, I felt like. It feels great to finish.
UNIDENTIFIED MALE: Everyone, 1, 2, 3, CNN!
(END VIDEOTAPE)
PHILLIPS: Well, if you want to see more coverage of the Fit Nation" team at the New York City triathlon, check out "Sanjay Gupta, M.D." this coming Saturday and Sunday, 7:30 a.m. Eastern time.
Former President Bill Clinton has a lot on his plate these days, campaigning, helping Haiti, running his Clinton Global Initiative, and oh yes, and planning his daughter Chelsea's wedding to here fiance, Marc Mezvinsky. Hillary Clinton talked about it actually with NBC's Andrea Mitchell.
(BEGIN VIDEO CLIP)
ANDREA MITCHELL, NBC: The former president, your husband, should we assume that he is not going to be officiating?
HILLARY CLINTON, U.S. SECRETARY OF STATE: You should assume if he makes it down the aisle in one piece, it's a major accomplishment. You know, he is going to be so emotional as am I. But we're both looking forward to it and very happy about it.
(END VIDEO CLIP)
PHILLIPS: The wedding is coming up soon, set for July 31st at the John Jacob Astor estate in upstate New York. The president and first lady Michelle Obama are on the guest list.
So how would you like to work two days a week for 100k a year? In California, where small town administrators cash in big, and interest is compounding.
And again, we're looking at a live picture of the White House Rose Garden where President Obama is expected to talk about the economy and a proposed extension of unemployment insurance. That will start any minute. We'll bring it to you live.
(COMMERCIAL BREAK)
PHILLIPS: All right. We are waiting for President Obama's remarks from the White House Rose Garden any minute now. He's expected to talk about effort tots get unemployment insurance extended. Extensions have been blocked three times, as you know in the last few weeks by Republicans. As soon as this gets underway, we will take it live.
All right. Big salaries in a little town have some people in Los Angeles County pretty outraged. We are talking about Bell, California. It's one of the poorest cities in Los Angeles County, but get this. City manager Robert Rizzo makes close to $850,000 a year. That's more than the president of the United States. And his assistant, nearly $380,000 a year. How about Bell's police chief, Randy Adams? He pulls in $457,000 a year. That's more than L.A.'s police chief, by the way. As you can message, Bell's residents are furious.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: It's shocking. It's -- did they go to school for this? How do they get it? They're making more than the president. That's totally not fair.
UNIDENTIFIED MALE: They promise a lot of things and all it is their wallets are just getting fatter and fatter. Our taxes are continue to rise and rise and they have money for nothing but themselves.
(END VIDEO CLIP)
PHILLIPS: However, the mayor of Bell credits the city manager for putting Bell back on sound financial footing. And Rizzo says that he deserves his paycheck. The steep salaries don't appear to break any laws, according to experts, but the district attorney is investigating why Bell city council members make about $100,00 a year for part-time jobs.
Talk about ringing the bell for big bucks. The small town's burly compensation package is exactly what a California assemblyman tried to slim down back in 2005. Now five years removed, assemblyman Hector de la Torre joins us live. He represents California's 50th district, which encompasses Bell, California.
So, Assemblymember Torre, I mean, talk about abusing the system and taxpayer money.
HECTOR DE LA TORRE (D), CALIFORNIA ASSEMBLYMAN: Well, as you said, the motivation for the legislation I did five years ago was exactly this situation. In California, general law cities like Bell was -- they meet twice a month. The city council does, and they get paid a few hundred dollars compensation for that part -time work. In the city of Bell, they did an end run around my legislation and now are now making up to $100,000 for a part-time job. And mind you, this is in a city, Bell, where the median income is under $35,000 a year.
PHILLIPS: And like we mentioned, there is nothing against the law here because we are talking about charter versus general law, so they are able to do this. But with a state that's struggling as badly as it is, and when you look, like you said, at the median income of people in that area, people I have been reading about can't even get jobs that make $9 an hour, how do you justify this? And what can you do to actually change it? Or can you really do anything to change it, since its charter?
TORRE: Again, coincidentally, in 2005, the year my legislation was passed but before it became effective and took effect in January of 2006, the city fathers -- this city council, took a measure to the voters to become a charter city, to essentially exempt themselves from broad state laws. So they, I think, knew this was coming and found a way to get around it.
We are looking at it. We'll see if we can do anything in Sacramento, but more than likely what will have to take place is that the voters themselves amend the charter in the city of Bell to add those protections for themselves.
PHILLIPS: So - so - there's -- what needs to be done is that voters have to step up and demand that change. How quickly can that happen, though?
TORRE: Well, they have to get 10 percent of the signatures of the voters in the city, and then take the measure to an election. If they are successful getting the signatures, they would take it to an election in November of this year, March of next year, and try to pass it in that way.
Clearly, the two examples, the city council salaries and the outrageous salaries for the staff, have really riled up the community. It's a community, it's a bedroom community. It's a working class community. They're busy just trying to survive in this tough economic climate, and --
PHILLIPS: Let's just take a look at the numbers. The government officials' salaries, from the city manager, compared to what Barack Obama makes. The mayor of Los Angeles and the governor of California, what they make, not nearly as close to what these guys are making in Bell, California, yet two -- by the way, we tried to get an interview with anyone that would speak to us in Bell, California, and they wouldn't give it to us. I'm not surprised.
But I can pull two quotes I'd like you to respond to. Robert Rizzo saying -- by the way, he's run Bell's day-to-day civic affairs since 1993. He said he's unapologetic about his salary. Here's his quote, "If that's a number of people -- if that's a number that people choke on, maybe I'm in the wrong business," he said. "I could go into private business and make that money. This council has compensated me for the job that I have done."
Then the mayor of Bell, Oscar Hernandez, defended his salary, saying, "Our streets are cleaner, we have lovely parks, better lighting throughout the area, our community is better." He goes on to say, "These things just don't happen. They happen because we had a vision and made it happen."
Okay, whether they've made fantastic changes within Bell or not, is it worth the amount of money that they are getting paid?
TORRE: Absolutely not. Just to put it in context, the general fund for the city of Bell is $15 million. So, Mr. Rizzo with his salary and compensation package, around $800,000 is about one- fifteenth of the budget for the city of Bell.
This isn't a town where the streets are paved with gold. This is a working-class community. And Mr. Rizzo is obviously a little delusional about what the private sector would be to pay anybody, certainly not $800,000. Certainly not double what the president of the United States, who has to manage all of the complexities of the United States foreign policy and a country of 300 million people compared to a small town with 36,000.
PHILLIPS: And - and -- let me ask you -- go ahead.
TORRE: Well, in terms of the city council, that's your job. Your job is to perform for the people that elected you. It isn't to pad your own pocks with taxpayer money.
PHILLIPS: And just out of curiosity, the police chief, Randy Adams, who makes $457,000 a year, what's crime like in Bell?
TORRE: It's not significantly different from any of the communities around the city of Bell. So it isn't judged by that metric, certainly.
The interesting thing here, as you pointed out, in relation to some of the neighboring, larger cities like Los Angeles -- or the attorney general in the state of California makes less, about half of what Mr. Adams makes in the city of Bell. It is not significantly different. They're performing jobs roughly the same as some of the better-run cities around, but those other cities are not paying their people anywhere near what these folks are getting.
PHILLIPS: When you look at the modest neighborhoods and you look at the majority of the Hispanics living in the neighborhoods and what they're making and the number of people out of work, and then you see the high six-figure salaries that these guys are making, there is definitely a sharp contrast and an ethical discussion to be had, for sure.
Assemblymember de la Torre, I appreciate your time today.
TORRE: Thank you, Kyra.
PHILLIPS: Crimes put them behind bars and the new crime was making them rich.
(BEGIN VIDEO CLIP)
PHILLIPS: One of the main guys at one point was telling one of his cohorts that he's not going to do white collar street crime anymore because Uncle Sam was taking good care of him.
(END VIDEO CLIP)
PHILLIPS: Actually, it was you taking good care of the convincing convicts because they were scamming the IRS out of a fortune. CNN's John Zarrella breaks it down for us.
(COMMERCIAL BREAK)
PHILLIPS: It's day 91 in the Gulf oil disaster, and a new potential glitch. Apparently, there is a leak on the sea floor and it's feared it could be from the capped off oil well. The government is giving BP another 24 hours to test the cap.
"The Washington Post" reporting the nation's intelligence community is out of control. It reports that the community has grown so large that it's unwieldy, unmanageable and inefficient. The Post says that 33 building complexes for top secret intel work are under construction or have been built since 9/11, and it also found an 854,000 people hold top secret security clearance.
In Islamabad, U.S. Secretary of State Hillary Clinton announces a $7.5 billion aid package for Pakistan. Now, that money is destined for infrastructure, not the war on terror. Clinton calls it a long- term investment in Pakistan's future.
It's been more than a year since General Motors and Chrysler moved in and out of bankruptcy, but the controversy about how it all went down is still swirling around. Carter Evans at the New York Stock Exchange with details of a new report that actually goes after the government and how it handled everything.
Carter, what's the criticism?
CARTER EVANS, CNN BUSINESS CORRESPONDENT: The report basically says that the government forced GM and Chrysler to close too many dealers too quickly without considering the economic impact of the communities that the dealerships were in.
Now, this all comes from Neil Barofsky. That name may sound familiar. This is the guy who oversees the $700 million T.A.R.P program. Now, remember, the government wanted the automakers to make big cuts as they went into bankruptcy, so GM and Chrysler submitted plans to close dealership. And the government rejected them.
Why? Well, the government said at the time the plan was too slow. It did not close dealerships fast enough for the economy where the automakers were in right now. And Neil Barofsky basically says the "Treasury made a series of decisions that may have substantially contributed to the accelerated shuttering of thousands of small businesses ... potentially adding tens of thousands of workers to the already lengthy unemployment rolls."
Now, GM and Chrysler then announced more than 2,000 closures at the time. So, there's been a lot of changes since then. But now this criticism, Kyra, basically saying that these dealerships were closed too fast without putting enough thought into it.
PHILLIPS: So what's the government's response? What's going to happen now?
EVANS: Well, the government is basically saying hey, without us, without this plan, it would have been a lot worse. So here's what the government is saying. "GM and Chrysler faced almost certain failure and liquidation which would have resulted in the loss of hundreds of thousands of American jobs across multiple industries."
Now, since last year, some of these dealerships have been reinstated, and Barofsky says that's proof that the government's push was just too hard to cut. So, this debate is going to continue right now, and a lot of dealerships are fighting back, Kyra, basically saying, "Hey, we didn't need should shut down. We were profitable." But basically the two automakers were trying to basically make slashes left and right to show the government they could, in fact, be viable.
Speaking of viable, let's take a quick look at stocks after Friday's big, big decline. We are recovering a bit today, but stocks have turned a bit lower now. The Dow actually back up about three- and-a-half points. It was kind of flirting with the negative range there. The NASDAQ currently up just a fraction of a point right now. Kyra, it looks like financial companies are leading the way down today. Back to you.
PHILLIPS: All right. Carter, thanks.
How is this for a scam? A network of seasoned crooks conning the IRS out of millions of dollars of your money? And get this: the people getting rich at your expense are already locked up behind bars. It's a follow-up to our "What The?" segment. And our John Zarrella takes us inside.
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JOHN ZARRELLA, CNN CORRESPONDENT (voice-over): Just a routine search of a jail cell. Officer Mark Lindback didn't expect to find much.
OFFICER MARK LINDBACK, MONROE COUNTY DETENTION CENTER: After the inmates had exit the cell, went over, basically pulled up the mattress. He had some of the items under his mattress. He had additional items underneath the bunk.
ZARRELLA: The items -- tax forms, an address book with social security numbers, birthdates and cheat sheets for filling out returns. That was December of 2006. What Lindback had stumbled upon was a lucrative income tax fraud scheme run by inmates at the Monroe County jail near Key West. Before they were busted, the inmates filed for more than $1 million in tax refunds involving half the jail population.
CAPT. PENNY PHELPS, MONROE COUNTY DETENTION CENTER: But what they would do is go to other inmates and suggest to an inmate, I can get you $4,500 in a tax return. It will cost you $500.
ZARRELLA: In some cases, with the help of friends and family, the prisoners would fill out the 1040EZ short form, then attach a 4852 form with the names of businesses that didn't exist, and income they never earned. The 4852 is a substitute used when an employer doesn't provide a W-2. The additional investigation was handled by county prosecutor, Jon Ellsworth. Phone calls were recorded.
JON ELLSWORTH, COUNTY PROSECUTOR: One of the main guys at one point is telling one of his cohorts that he's not going to do white- collar -- street crime anymore because Uncle Sam's taking good care of him.
ZARRELLA: Before they were caught and the jail started intercepting incoming checks, the inmates collected, Ellsworth says, at least $100,000 from the IRS. One inmate had checks sent to his brother's house.
(on camera): Dozens of checks were going to one address and that didn't raise any red flags with the IRS?
ELSWORTH: Apparently not.
ZARRELLA (voice-over): By 2007, Ellsworth turned over boxes of evidence to the IRS. Case closed, right? Not so fast.
UNIDENTIFIED MALE: And they said, well, we're working on it, we're investigating. We can't take your investigation and prosecute from your investigation. We have to do our own investigation.
ZARRELLA: Earlier this year, nearly 3 1/2 years after the scheme was busted, federal indictments were finally brought against a couple of the ring leaders and family members. Why so long? The IRS wouldn't say.
(on camera): Now don't think this inmate get-rich-quick scheme started here at the Monroe County Detention Center. Oh, no. Authorities tell us it's been going on for decades at state and federal prisons all across the country.
PHELPS: One of the inmates that I interviewed said that he had learned of it when he was in a federal prison.
ZARRELLA (voice-over): In a statement, the IRS told CNN that it has programs to combat this. But the IRS said, quote, "It is not a simple process, particularly considering the fact that some inmates are entitled to tax refunds and that the prison population is not static." According to congressional testimony in 2004, more than 4,000 bogus refunds were issued to prisoners for almost $15 million, but the IRS blocked more than $53 million in false claims.
UNIDENTIFIED MALE: The system has a flaw that needs to be fixed. And it should be easy enough to fix by changing a form or changing the submissions.
ZARRELLA: And while the IRS is now prosecuting the Monroe jail case, guess what some inmates are still doing? Filing fraudulent returns and still getting checks.
UNIDENTIFIED MALE: I think we have one here that came in that was for about $5,000.
ZARRELLA (on camera): Here it is.
UNIDENTIFIED MALE: It's about $5,000.
ZARRELLA: So this is an IRS check --
UNIDENTIFIED MALE: Right.
ZARRELLA: -- that was sent to that inmate --
UNIDENTIFIED MALE: Right.
ZARRELLA: -- for $5,920 that was intercepted.
UNIDENTIFIED MALE: Exactly.
ZARRELLA (voice-over): At least here the checks end up in the hands of the FBI.
John Zarrella, CNN, Key West, Florida.
(END VIDEOTAPE)
PHILLIPS: We've all heard about the right to life debate. We've also talked about the right to die on one's own terms. So, what do you think about a billboard promoting the final exit? It's drawing a different type of traffic. We'll explain.
We're also looking at a live picture of the White House Rose Garden where President Obama is expected to talk about the economy and a proposed extension of unemployment insurance. That's going to start any minute, and we'll bring it to you live.
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PHILLIPS: If you thought Jack Kevorkian raised awareness and plenty of eyebrows, take a look along New Jersey's Route 22. This billboard, erected late last month by a group called Final Exit Network. It's getting plenty of attention and discussion. The sign reads "my life, my death, my choice."
Now, not only does this group promote the idea of giving terminally ill people the right to end their lives in a compassionate fashion, but for a membership fee, you can actually learn how to do it. What do those driving by the billboard think?
(BEGIN VIDEO CLIP) UNIDENTIFIED MALE: It's not a good billboard. I think they should take that down.
UNIDENTIFIED MALE: "My life, my death, my choice." Yes, that's not a good message to be sending out to kids. I don't think so.
(END VIDEO CLIP)
PHILLIPS: Well, the Newark archdiocese has spoken out against the billboard and the Final Exit Network's message. We're going to debate that more tomorrow.
Want to take you live to the White House now, where the president of the United States is getting ready to step up to the mike. He is going to be talking about efforts to get unemployment insurance extended. Let's listen in.
(JOINED IN PROGRESS)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Right now, across this country, many Americans are sitting at the kitchen table, they're scanning the classifieds, they're updating their resumes or sending out another job application, hoping that this time they'll hear back from a potential employer. And they're filled with a sense of uncertainty about where their next paycheck will come from.
And I know the only thing that will entirely free them of those worries, the only thing that will fully lift that sense of uncertainty is the security of a new job.
To that end, we all have to continue our efforts to do everything in our power to spur growth and hiring. And I hope the Senate acts this week on a package of tax cuts and expanded lending for small businesses, where most of America's jobs are created.
So we've got a lot of work to do to make sure that we are digging ourselves out of this tough economic hole that we've -- that we've been in. But even as we work to jump-start job growth in the private sector, even as we work to get businesses hiring again, we also have another responsibility: to offer emergency assistance to people who desperately need it, to Americans who've been laid off in this recession.
We've got a responsibility to help them make ends meet and support their families, even as they are looking for another job.
And that's why it's so essential to pass the unemployment insurance extension that comes up for a vote tomorrow.
We need to pass it for men like Jim Tschkalis (ph), who's with me here today. Jim worked as a parts manager at a Honda dealership until about two years ago. He's posted resumes everywhere. He's gone door- to-door looking for jobs. But he hasn't gotten a single interview.
Now, he's trying to be strong for his two young kids, but now that he's exhausted his unemployment benefits, that's getting harder to do.
We need to pass it for women like Leslie Mako (ph), who lost her job in a fitness center last year and has been looking for work ever since. Because she's eligible for only a few more weeks of unemployment, she's doing what she never thought she'd have to do -- not at this point, anyway -- she's turning to her father for financial support.
And we need to pass it for Americans like Denise Gibson (ph), who was laid off from a real estate agency earlier this year. Denise (ph)has been interviewing for jobs, but so far nothing's turned up. Meanwhile, she's fallen further and further behind on her rent. And with her unemployment benefits set to expire, she's worried about what the future holds.
And we need to pass it for all the Americans who haven't been able to find work in an economy where there are five applicants for every opening, who need emergency relief to help them pay the rent and cover their utilities and put food on the table while they're looking for another job.
And for a long time there's been a tradition, under both Democratic and Republican presidents, to offer relief to the unemployed. That was certainly the case under my predecessor when Republican senators voted several times to extend emergency unemployment benefits.
But right now these benefits, benefits that are often the person's sole source of income while they are looking for work, are in jeopardy.
And I have to say, after years of championing policies that turned a record surplus into a massive deficit, the same people who didn't have any problems spending hundreds of billions of dollars on tax breaks for the wealthiest Americans are now saying we shouldn't offer relief to middle-class Americans like Jim or Leslie (ph) or Denise (ph) who really need help.
Over the past few weeks, a majority of senators have tried, not once, not twice, but three times to extend emergency relief on a temporary basis. Each time a partisan minority in the Senate has used parliamentary maneuvers to block a vote, denying millions of people who are out of work much-needed relief.
These leaders in the Senate who are advancing a misguided notion that emergency relief somehow discourages people from looking for a job should talk to these folks.
That attitude, I think, reflects a lack of faith in the American people. Because the Americans I hear from, in letters and -- and town hall meetings, Americans like Leslie (ph) and Jim and Denise (ph) -- they're not looking for a handout. They desperately want to work. It's just, right now, they can't find a job.
These are honest, decent, hardworking folks who have fallen on hard times through no fault of their own and who have nowhere else to turn except unemployment benefits and who need emergency relief to help them weather this economic storm.
And tomorrow we will have another chance to offer them that relief, to do right by not just Jim and Leslie (ph) and Denise(ph), but all the Americans who need a helping hand right now, and I hope we seize it.
It's time to stop holding workers laid off in this recession hostage to Washington politics. It's time to do what's right, not for the next election, but for the middle class.
We've got to stop blocking emergency relief for Americans who are out of work. We've got to extend unemployment insurance. We need to pass those tax cuts for small businesses and the lending for small businesses.
Times are hard right now, we are moving in the right direction, I know it's getting close to an election, but there are times where you put elections aside. This is one of those times.
And that's what I hope members of Congress on both sides of the aisle will do tomorrow.
Thanks very much.
