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Outsiders Take on the Establishment; Fears of a Worsening Economy; Critics Link Bad Eggs to Abused Hens; Animal Rights Groups Claim Egg Salmonella Outbreak Linked to Animal Cruelty; Fires in California and Storms in Arizona Causing Problems; WikiLeaks to Release More Classified Documents; Man Catches Burglar 1,500 Miles Away Using App; Dismal Housing Report Drives Stocks Down; World War II Hero Thought he was American; Trapped Miners' Families Speak Out

Aired August 25, 2010 - 09:00   ET

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

KYRA PHILLIPS, CNN ANCHOR: Thanks, guys. And good morning, everybody. We're taking a hard look at the economy and your money.

Grim news about housing and the recession. We hit the bottom line info, what it means for you, your family and your future.

And we know something that 33 miners trapped underground don't know. They have no idea they may have to sit tight until December.

And congrats to a new citizen of the United States. The thing is, this World War II hero and FDR voter thought he was an American for decades.

Sixty-nine days to the November elections. And new battle lines are drawn this morning after voters in key states headed to the poll.

First up, Arizona. Senator John McCain crushed former Congressman J.D. Hayworth. He won by a pretty big margin, too. But the victory came with a big price tag for the incumbent. $21 million.

And in Florida's race for governor, Rick Scott, an outsider with deep pockets, slipped past GOP favorite Bill McCollum.

In Florida's Senate race Marco Rubio easily won the GOP nomination for Senate. He probably couldn't have done it without the Tea Party, although he did mention them once Tuesday night.

Then in Alaska, votes are still being counted in neck-and-neck Republican Senate race. Right now Tea Party favorite Joe Miller is a few thousand votes ahead of incumbent Senator Lisa Murkowski.

You may remember Sarah Palin who beat Murkowski's dad in '06 for governor campaigned hard for Joe Miller. But it could be days before we know the final results as absentee ballots are tallied.

CNN's senior political editor Mark Preston is running through all the key races for us this morning.

So, Mark, you're in Miami. We're going to get to Florida in just a second. But let's go ahead and start with the developing news in Alaska where Joe Miller is holding on to a razor thin lead right now. He called in to "AMERICAN MORNING" just a few hours ago.

Let's just listen to a little bit of what he had to say.

(BEGIN VIDEO CLIP)

JOE MILLER (R), ALASKA SENATE CANDIDATE: Again, I think it boils down to common sense. We see just a complete breakdown of common sense in D.C. now. We consider it a crisis of leadership.

And absolutely common sense Americans, common sense Alaskans, they recognize that we've got to change out the people in D.C. to change D.C.

(END OF VIDEO CLIP)

PHILLIPS: The breakdown of common sense. It's a common thread, I guess, that seems to be emerging from Alaska to Florida. Right?

MARK PRESTON, CNN SENIOR POLITICAL EDITOR: Yes. Absolutely. And what we saw in Alaska -- what we're seeing play out in Alaska right now is that this incumbent, Lisa Murkowski, is fending off a challenge that she shouldn't even be facing right now, Kyra.

She had a lot more money. She spent a lot more money. But this really little known voyeur with the help of Sarah Palin at the end, with the help of the Tea Party, really was able to get out these grassroots, this anger at Washington.

Here in Florida, we're seeing the same thing. Rick Scott, although he was aided by $50 million, was able to drive up this anger against incumbency. He defeated Bill McCollum who's the attorney general, Kyra.

So the fact of the matter is there still is this anti-incumbency thread that we're seeing weaved throughout the 2010 election.

PHILLIPS: Now this could be the end of one political dynasty as well in Alaska. But the revival of another -- we're talking about Dan Quayle's son -- that primary win despite the political questions about honesty and the racy Web site that he was allegedly tied to.

PRESTON: Yes. And what we saw last night is Ben Quayle, who's a young man in his 30s, Kyra, defeated nine other Republican candidates to win this nomination for this Phoenix-based congressional seat.

He did have a real bumpy road along the way. He was connected to this six -- rather this sex-themed Web site. Even though he was running as this family values candidate, Kyra, but was able to emerge and because of the area he's representing, he is the favorite to win in November.

And, of course, his father was the former vice president and a former senator. So we could see the revival of the Quayle dynasty. At the same time that this Murkowski dynasty in Alaska is perhaps on the road to perhaps fading away.

PHILLIPS: Well, and a lot -- lots of money spent in Florida last night. We can't ignore that. But voters had a pretty mixed message for the big money candidates.

PRESTON: Yes, they did. And you know, we were talking Rick Scott. You know, you said it at the top. Rick Scott, this health care executive, spent $50 million, Kyra, which is amazing for a job that probably pays less than $200,000.

So you see these very wealthy candidates who want to get into public service. He defeated Bill McCollum, the establishment candidate. A lot of Republicans, a lot of party Republicans angry about that. But Rick Scott clearly has the deep pockets to move on, Kyra, and to take on the Democratic nominee, Alex Sink, who's the chief financial officer here in Florida.

However, not so much good news for Jeff Greene. He is that billionaire real estate investor, Kyra. He spent more than $20 million to try to win a Senate seat. However, he came up short and we'll see Kendrick Meek head into this primary -- rather this general election in November as the Democratic nominee.

However, that will be the race we'll all be looking at, Kyra, because it will be Kendrick Meek, the Democrat, Marco Rubio, the Republican, and Charlie Crist, independent. Many people don't know if he's a Republican or he's a Democrat now. So really a premier race we'll be watching down here in Florida.

PHILLIPS: Mark Preston, thanks for covering it for us.

All right, whether you're writing a check for your mortgage or just paying for your groceries you probably wonder when the heck you're going to feel better about the economy.

Well, today probably isn't the best day to address that. After a week of grim news we're expecting even more next hour. The sales of new homes are believed to have held steady last month. Well, that's not so bad. Right? Actually it is.

The level, the second lowest on record and it comes on the heels of the worst housing report in 15 years. Homes are losing value, Americans are losing their jobs. And all of us, it seems, are losing money in the stock market.

Which leads me to Ali Velshi. The man of bad news.

(LAUGHTER)

PHILLIPS: And we're headed -- are we headed, I guess, for that double-dip recession, Mr. Chief Business Correspondent?

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: I'll give you some good news. There are two things you have to think about with the economy. One is how to feel about it. We all have accepted that how you feel influences your behavior and that influences the economy.

And you have weeks like this where we actually have report after report which actually tells you how things are. So you said that yesterday we had this existing home sales number. That's most homes are existing. Used homes, homes people live in. That's about 85 percent of the market. We saw that number drop.

But home prices are actually up a smidge compared to last year. Stock market is down this year. But it was up a lot last year. So something has changed. And today we're going to get these numbers about new homes.

Now new homes make up a very, very small part of the home sale market. But new homes are important because if you're buying -- building new homes, construction workers have jobs, appliances get sold, furnishings get sold. Places like Home Depot and Lowe's do well, contractors do well.

So that's why that's an important part of the economy. But we have this mixed message out there right now. And mixed messages mean that people hold back from buying big purchases like houses, like cars, things like that.

PHILLIPS: It's not just because they're scared, though. They're broke, too.

VELSHI: Well, there's a combination of -- well, let's say you don't have a lot of money but you have enough. Let's say you got credit. You may put a down payment for a house. Interest rates have never been lower.

PHILLIPS: Yes --

(CROSSTALK)

VELSHI: And you got a mortgage for -- yes, I mean a 30-year mortgage, you get for about four and change? So --

PHILLIPS: That's amazing.

VELSHI: But if you think you're going to lose your job, why do you want a mortgage payment? Because you've been burned already.

PHILLIPS: Yes.

VELSHI: And that's the issue. We really are at this turning point of not sure whether it's getting better or worse. We have to look at the numbers.

PHILLIPS: Well, and there's the talk of the double-dip recession.

VELSHI: Right.

PHILLIPS: Where some people say, what are you talking about? We haven't even gotten out of the first recession.

VELSHI: Right. We don't -- we have not gotten the word that we're out of the first recession.

PHILLIPS: Yes.

VELSHI: Most economists will tell you it's sort of ended last year. But the issue is there are external factors to a double-dip recession. One of them is how is Europe doing? How's the rest of the world doing? Could they drag us into a double-dip recession?

And then there is American sentiment. We are still a consumer driven society. Not as much as we were before the recession. But we still are. So until the consumer steps in and starts buying, we're depending on the government for all of this buying.

Anyway, we'll get more numbers through the course of the week. We -- we just got durable good numbers which is the measure of things that are bought that last more than three years. So appliances all the way to cars. It was up a little. It was not up as much as economists had wanted. So it's up a little. So it's not all bad.

PHILLIPS: Just little good news. Yes.

VELSHI: It's just not enough. We need growth and we're not getting it. So obviously this is going to play out as we continue to head into elections. But there'll be numbers out all the time. And I'll just give you a running tally basically of where we are.

PHILLIPS: Fabulous. Just pop up here --

VELSHI: Yes.

PHILLIPS: -- whenever you like and join the crew.

VELSHI: Good.

PHILLIPS: Thanks, Ali Velshi.

VELSHI: All right.

PHILLIPS: Well, when times are bad, there's one thing that you can always count on in Washington. The blame game. The first to point fingers for the dismal economy, the top Republican in the House.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R), MINORITY LEADER: President Barack Obama should ask for and accept the resignations of the remaining members of his economic team starting with Secretary Geithner and Larry Summers, the head of the National Economic Council.

Now this is no substitute for a referendum on the president's job killing agenda. That question will be put before the American people in due time.

JOE BIDEN, VICE PRESIDENT: Very constructive advice and we thank the leader for that.

(LAUGHTER)

BIDEN: But let's take a look at the rest of the -- his advice. But first let's reveal a little bit of history here. For eight years before we arrived in the West Wing Mr. Boehner and his party ran the economy and the middle class literally into the ground.

(END OF VIDEO CLIP)

PHILLIPS: Vice President Biden says that despite the latest bad news, the economy continues in, quote, "the right direction".

The list of states into the egg recall has gotten bigger, folks. Michigan becomes number 23. Now the big question is where did the salmonella that's making people sick actually come from? Some animal rights groups with undercover video say cruelty and filth are to blame.

(COMMERCIAL BREAK)

PHILLIPS: America's egg recall has gotten even bigger. Michigan is now the 23rd state with eggs that might be tainted with salmonella. The outbreak has made about 1300 people nationwide sick.

The FDA has traced the problem to a couple of farms in Iowa. And today we're expecting the Centers for Disease Control and Prevention to talk more about the problem.

So the big question is, how did this sickening bacteria get into those eggs? Well, animal rights groups say looking conditions inside of massive egg farms, conditions they claim are cruel, nasty, and perfect for salmonella.

The undercover video that you're about to see isn't pleasant, by the way. We just want to warn you.

CNN's Casey Wian reports.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): This undercover video was taken at a Maine egg farm in 2008 and '09 by an investigator for an animal rights group who we'll call Joseph.

JOSEPH, ANIMAL RIGHTS ACTIVIST: I was hired to help try and repair some of the egg belts. And a lot of them were broken and there were eggs that had piled up for as much as five days on the belts.

WIAN: His video shows chickens being twirled by the head then dumped on the floor still twitching and kicked under cages.

JOSEPH: The footage that I have shows some of these hens are dead and they're kind of rotting and they're laying there up against the belts. Others, as they're dying, they're gasping for breath and drooling on the belts.

WIAN: Other hens are thrown in trash cans, still alive. Many birds are in obvious distress.

JOSEPH: And they have no feathers left. They're covered in scratch marks. They're covered in dried blood. WIAN: Animal rights groups say there is a link between animal cruelty, unsanitary conditions and salmonella contamination. But poultry industry experts say no clear link has been established.

And what links the New England Farm with the Iowa farm at the center of the latest national salmonella outbreak? The chickens involved are owned by the Decoster family, one of the nation's largest egg suppliers. And witnesses have reported unsanitary conditions at both farms.

In June the Maine farm admitted to 10 counts of animal cruelty and paid a $125,000 state fine as a result of Joseph's undercover investigation.

At the time operations manager Jay Decoster said in a statement, "This is matter we take very seriously and over the past year we have implemented a number of corrective measures that ensure excellent care of our flocks. The mistreatment shown on the video was unacceptable".

Bon Leclerc, safety manager at Quality Egg, told CNN, quote, "There is no salmonella here."

A DeCoster spokeswoman directed us to this video showing conditions at the farm today. In Iowa, Manuel Larma worked as a truck driver for DeCoster-owned Wright County Egg until last year, hauling away dead chickens.

WIAN (on camera): Did you ever have a chance to go in where the chickens were kept in the cages and things like that? Did you see any of that?

MANUEL LARMA, FORMER EMPLOYEE, WRIGHT COUNTY EGG: Yes. I used to be there many times in the arena.

WIAN: What did it look like to you?

LARMA: Well, pretty bad. Pretty bad. Without feathers, a little bit faded. Very dirty cages.

WIAN (voice-over): A spokeswoman for Wright County Egg said in a statement, "Our farm is committed to excellent care of our flocks, and our policy for all farm workers is that any concerns raised about hen treatment must be immediately reported. Mr. Larma never brought any issues to our attention."

DARRELL TREMPEL, POULTRY DISEASE EXPERT: I did not see any of those problems.

WIAN (voice-over): Iowa State professor Darrell Trempel visited Wright County Egg's facility this spring.

TREMPEL: I saw operations that appeared to be operating as they should be. For example, there were rodent control traps along the buildings, and every egg operation should have those rodent control measures in place. Everything looked perfectly normal. WIAN (voice-over): Normal in modern egg farms include some bird deaths and feather loss. Trempel says allegations of animal cruelty are not likely related to the current salmonella outbreak, which he suspects is linked to mice and chicken feed.

TREMPEL: This could have happened anywhere.

WIAN (voice-over): Casey Wian, CNN, Galt, Iowa.

(END VIDEOTAPE)

PHILLIPS: Raging wildfires in southern California burned more than 1300 acres in a mountain community just north of LA. Some 50 homes have been threatened. Residents were evacuated for a little while, but now they're back in their homes. No reports of injuries so far.

Then in Arizona, lightning-packed storm in Tucson knocked out power, toppled trees, triggered a brush fire that led to some evacuations. Firefighters quickly got the upper hand on that blaze, and nobody was hurt.

Hurricane Danielle's expected to get a little stronger. Jacqui Jeras is following that for us. Hey, Jacqui.

JACQUI JERAS, AMS METEOROLOGIST: Hey, Kyra. Yes. It's having a little identity crisis, right? We're a hurricane yesterday, then we went down to a tropical storm, and we're back up to hurricane status. And we're likely going to get a little stronger here.

The latest on Danielle, it's a category 1 storm with maximum winds of 85 miles per hour. And you can see we're getting some of that bright purple coming back into the picture, showing some intensification, a couple of these thunderstorms here as well.

The track of Danielle showing you, it's moving west-northwest now and expected to curb on up towards the north. In the cone uncertainty is Bermuda, so we'll have to watch that down the line. But it's looking very unlikely right now that this could have an impact on the US.

Coming in back behind Danielle is a tropical wave. And this is starting to look a little bit better organized, and the National Hurricane Center says there's actually a 100 percent chance now that this is going to be a tropical depression. It would be TD Number 7 within the next 24 hours. And if it gets a name, which many of the models are intensifying it to, it would be Earl, just so you know.

All right. We saw the pictures of all the heat across the west and fires that are burning and thunderstorms. Look at all of the records that we had here yesterday. Expecting to see more of those records broken as we head into tomorrow. So we're going to see those conditions really extreme. That includes you in San Francisco, San Jose, heading down towards the Los Angeles area. And Phoenix, too.

The complete opposite going on across the northeast. Look at these highs today, 68 in Boston, 75 degrees in New York City. Though, as a consequence of that, you're going to have those rain showers. And there you can see them in Boston and we're also going to see a lot of airport delays. We're already starting out with delays, oh, about 45 minutes at LaGuardia, and Newark at 30 minutes. Kyra?

PHILLIPS: Jacqui, thanks.

An iPhone app helps a man stop a burglary at his home while he was 1500 miles away in another state.

(COMMERCIAL BREAK)

PHILLIPS: Let's check the top stories. Some key primary election results to tell you about. In Arizona, Senator John McCain wins the state's Republican primary. Then in Florida, political newcomer and wealthy businessman Rick Scott had an upset victory in the Republican primary for governor, edging out GOP favorite Bill McCollum. In Florida's senate race, former House Speaker Marco Rubio takes the GOP nomination. He's going to face off with Democratic Congressman Kendrick Meek and Governor Charlie Crist.

Former president Jimmy Carter is arriving in North Korea. He's on a mission to secure the release of an American sentenced to eight years of hard labor for illegally crossing North Korea's boarder with China.

And those 33 miners in Chile that have been trapped for 20 days may not be rescued until Christmas. Chilean officials are asking NASA and navy -- and its navy, rather, for help. They want advice on how to help these guys cope mentally while they are down there and trying to drill an escape shaft.

(COMMERCIAL BREAK)

PHILLIPS: WikiLeaks says it's going to roll out thousands more classified papers today. Recently, the whistleblower Web site set off a firestorm when it posted some 76,000 documents related to the war in Afghanistan. The Defense Department was outraged, saying that it threatened security and demanded WikiLeaks return all the documents. Well, now WikiLeaks it has another 15,000 reports it's going to reveal.

Seems like there is an app for just about everything. And a man from Dallas bought $4.99 app that actually helped him stop a burglary in his home. Jason Whitely of CNN affiliate WFAA has the story for us.

(BEGIN VIDEOTAPE)

VINCE HUNTER, BURGLARY VICTIM: This is the guy that came in, he went like this. To look inside the house.

JASON WHITELY, WFAA CORRESPONDENT (voice-over): Vince Hunter considers himself tech savvy.

HUNTER: And then, so, we checked -- we just checked on our phone. And I've got a few web cams set up here. And we could see it kind of unfolding as the guys were leaving.

WHITELY (voice-over): But never realized the newest app on his iPhone would thwart a burglary while he was out of town.

HUNTER: Fifteen hundred miles away, live footage to our phone of some guys breaking into our house.

WHITELY (on camera): The technology is amazing.

HUNTER: They had just gotten done robbing the house.

WHITELY (voice-over): It sent him a text message Friday afternoon alerting him of movement inside his house. As two men wearing gloves peeked through the patio door, then started throwing a brick at the glass.

HUNTER: This is where it hit here. We watched them throw it three times. Right here, kinda see where it hit.

WHITELY (voice-over): Vince Hunter was in Connecticut visiting his parents, watching helplessly as it all unfolded on his mobile phone.

HUNTER: The fourth time, they decided to wind up and really let it rip and it just -- it just went right through, and this here brick was sitting in the middle of our living room floor.

WHITELY: It's called the iCam, a $4.99 app.

HUNTER: The software broadcasts sound.

WHITELY: The Hunters called 911 from Connecticut as their home security system did the same in Dallas. Minutes later, police with guns drawn stepped inside.

(END VIDEOTAPE)

PHILLIPS: Wow. Police are still looking for the two men that were caught on Hunter's iCam. They're suspected in a number of neighborhood burglaries, by the way.

Stocks take a dive after terrible news on existing housing sales yesterday. We're going to have the opening bell in just a few minutes.

(COMMERCIAL BREAK)

PHILLIPS: Stocks sold off yesterday, thanks to a dismal housing report. And today, investors get yet another housing report. Patricia Wu from the New York Stock Exchange talking about how it's going to affect trade this time around. Hey, Patricia.

PATRICIA WU, CNN BUSINESS CORRESPONDENT: Hey, Kyra. I'm tired of giving you all this bad news. Dow futures are down 60 points, which points to an open below 10,000. Now, of course, this follows the Dow's 134 point drop yesterday, sparked by the dismal existing home sales report.

Today, we get the new homes sales report. That's expected to show a rise in July. But they'll still be at a very low level. Now remember, new home sales make up only about 10 percent of the housing market. That's a small slice, but it's got a big ripple effect.

Remember, when you build a home, you've got to use raw materials, and then once it's built, you've got to furnish it, light it, decorate it. All of that money, that spending affects sectors from construction to retail.

While we're expecting a slight increase in this new home sales report that's due out in about half an hour, analysts say that it may be another two years before we see a normal selling rate.

There goes that opening bell, so we'll take a look soon at how those numbers are doing. But back to why we're not going to see a normal selling rate for another two years, tight lending, rising foreclosure, and a weak labor market, all factor in the housing market.

The one positive sign might be that inventory fell in June. So, when you have less inventory, that support the prices.

So, let's take a look at the Big Board now. Dow right now is down 22, so not as bad as the futures suggested.

WU: -- one positive sign might be that inventory fell in June. So when you have less inventory that support the prices.

Let's take a look at the big board now. Let's see. Dow right now is down 22. So not as bad as the futures suggested, at 10,014. The Nasdaq down 14, and the S&P down nearly three.

Kyra, back to you.

PHILLIPS: All right. You had a little good news in there.

Thanks, Patricia.

WU: A little bit. We're trying.

PHILLIPS: OK, appreciate it.

Some hotels are offering to pay for those checked baggage fees. Listen to this. According to "USA Today," Intercontinental Hotel Group, which owns Holiday Inn, will pay baggage fees up to $50 for customers booking two straight weekend nights. The offer runs from September 1st to December 30th. Kimpton Hotels also has a similar offer.

We've got some breaking news out of Iraq now. At least 48 people are dead in a wave of attacks in 12 cities. At least 286 people wounded. Most of those attacks targeted Iraqi security forces. It's the deadliest bombing in Baghdad. Actually that's not true. But it's a suicide car bomber that hit this police station. Overall violence has actually gone down significantly over the last two years. But security is still a concern as more U.S. forces leave the country.

The U.S. troop level in Iraq has fallen below 50,000 troops. That marks the lowest level since the 2003 invasion. President Obama had set an August 31 deadline to bring down the troop numbers. Beginning September 1st, U.S. troops will transition to Operation New Dawn with the focus on Iraqi -- training Iraqi security forces.

President Obama plans to talk to the nation about the end of combat operations in Iraq. The president wants to hold an Oval Office address next Tuesday night and CNN will bring it to you live.

While U.S. troops in Iraq are transitioning to a support role, combat operations go forward in Afghanistan. And one general thinks it could be nearly a decade before his troops go home for good.

CNN's Barbara Starr reports.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): Grim words from the head from the U.S. Marine Corps.

GEN. JAMES CONWAY, COMMANDANT, U.S. MARINE CORPS: I sense our country is increasingly growing tired of the war.

STARR: General James Conway just returned from Afghanistan. Facing plummeting public support for the war, he is skeptical that President Obama's order to begin withdrawing troops in July 2011 will mean much for his Marines fighting in southern Afghanistan.

CONWAY: Helmand and Kandahar adjacent, are the birthplace of the Taliban. I honestly think it will be a few years before conditions on the ground are such that turnover will be possible for us.

STARR: Similar worries from the head of Army Special Operations Command. Lieutenant General John Mulholland says he doesn't have a crystal ball but does have a projection.

LT. GEN. JOHN MULHOLLAND, COMMANDER, U.S. ARMY SPECIAL FORCES: When I talk to my leaders and to my families who are coming up on nine years of this war now, I tell them it's going to be at least another nine years.

STARR: Many top officers now openly are raising the prospect of an extended U.S. Military presence in Afghanistan. When General David Petraeus was asked if he could reach the point where he might have to tell the president the July 2011 date needs to be delayed he answered certainly, yes.

Why the sober outlook? One reason, Afghan security forces are far from ready to take over. The top U.S. general in charge of training them says, while some Afghan units aren't eager to fight many are illiterate, many are on drugs. Corruption remains a huge problem and there just aren't enough of them.

LT. GEN. WILLIAM CADWELL, COMMANDER, NATO TRAINING MISSION- AFGHANISTAN: So, if somebody says, when will the security force have the lead in a particular area, we will not have conned building the army until October of next year.

STARR: For Conway, public support appears to be an increasing issue.

CONWAY: The only concern perhaps best addressed by a Lance Corporal I spoke to was when he said sir, don't let our country go wobbly on us now.

STARR (on camera): General Conway's candor may be in part due to the fact he's about to retire as head of the Marine Corps. But even some junior enlisted troops are expressing their concerns about public support for the war and how long they may be serving on the frontlines.

Barbara Starr, CNN, the Pentagon.

(END VIDEOTAPE)

PHILLIPS: Sex ads on Craigslist. Police say that they have become a haven for prostitution and even child trafficking. CNN showed you the problem. Now, the top cops in 17 states say they have the answer. We will tell you about it in just a couple of minutes.

(COMMERCIAL BREAK)

PHILLIPS: Earlier this month CNN showed you how the online ads on Craigslist have become a bit of a smoke screen for prostitution and even child trafficking.

Well, today the top cops from 17 states are demanding that Craigslist crack down immediately. A letter from the attorneys general say that the web site should eliminate its adult services section altogether. It also acknowledges that Craigslist would lose a lot of revenue if it removed the moneymaking feature.

Just about two years ago, attorneys general put pressure on Craigslist to police the section. The company put safeguards in place but critics say that they fall short.

Checking other top stories. Eggs are now being recalled from Michigan, and that makes 23 states that possibly receive contaminated eggs from two farms. The salmonella outbreak has made about 1,300 people sick.

And the markets have just opened for the day. Investors may still be shaky from the latest housing report. The sales of existing homes plummeted 27 percent last month, hitting the lowest level in years.

And former President Jimmy Carter is in North Korea trying to win the release of a detained American. The Boston resident has been sentenced to eight years hard labor for illegally crossing the border.

It could take three to four months to reach those trapped miners in Chile. We've been told that but the miners have not.

(COMMERCIAL BREAK)

PHILLIPS: Crossing our political ticker, this morning, 69 days to the November elections and new battle lines are drawn this morning after voters in key states headed to the polls last night.

First up, Arizona, where the son of former vice president Dan Quayle won the GOP primary for a congressional seat. But his campaign didn't skimp on the high drama. In one ad he actually called President Obama, quote, "the worst president in history." He also campaigns as a family values conservative. Turns out that his values apparently included writing for a racy sex-laden web site.

Also in Arizona, a big win for John McCain. He crushed former congressman J.D. Hayworth. McCain is seeking his fifth term in the Senate.

And in Florida's race for Governor, Rick Scott, an outsider with deep pockets slipped back GOP favorite Bill McCollum. In Florida's Senate race, Marco Rubio easily won the GOP nomination for Senate. He probably couldn't have done it without the Tea Party, although he didn't mention them once Tuesday night.

In Alaska, votes are still being counted in neck and neck Republican Senate race. Right now, Tea Party favorite Joe Miller is a few thousand votes ahead of incumbent Senator Lisa Murkowski. You may remember Sarah Palin, who beat Murkowski's dad in '06 for governor, campaigned hard for Joe Miller. But it could be days before we know the final results as absentee ballots are tallied. The dust is far from settled in the race for Vermont's Democratic gubernatorial nod. Only about 900 votes separate the top three contenders. And get this, as of our last update, there's only a 121 vote gap between the two contenders, Peter Shumlin and Doug Racine.

Well, there were big money campaigns, big-time upsets, and a lot of the races are hard fought and hard won. And we still have over two months to go until the big November vote.

National political correspondent Jessica Yellin is zeroing in on the highlights from phoenix.

(BEGIN VIDEOTAPE)

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT (voice- over): In Arizona, Senator John McCain beat backup primary challenge, handily defeating former congressman J.D. Hayworth for the Republican Senate nomination. SEN. JOHN MCCAIN (R), ARIZONA: I promise you, I take nothing for granted. I will fight with every ounce of strength and conviction I possess to make the case for my continued service the Senate. YELLIN: After a primary fought over immigration policy the senator's victory speech included only one brief mention of the issue.

MCCAIN: We will secure our borders.

YELLIN: Perhaps a sign he'll moderate his position to woo independents and Latinos in the general election.

Across the country in Florida's Senate race Democrat Kendrick Meek trounced billionaire Jeff Greene who had spent millions of his own fortune. KENDRICK MEEK (D), FLORIDA SENATE CANDIDATE: I made the case that I am the real Democrat in this race. And also made the case that I have the will and the desire and the energy to pull a double shift to get Florida back to work.

YELLIN: Now Meek enters a fierce three-way contest with Republican turned Independent Governor Charlie Crist and Tea Party favorite Marco Rubio who walked to victory in the Republican primary.

MARCO RUBIO (R), FLORIDA SENATE CANDIDATE: I'm not interested in running to be just simply against people. I believe there is a better way to do things.

YELLIN: But the big upset of the night came in Florida's governor's race. Multimillionaire businessman and health care reform opponent Rick Scott narrowly defeated the establishment candidate Attorney General Bill McCollum.

RICK SCOTT (R), FLORIDA GOVERNOR CANDIDATE: Tonight we sent a clear message to the Washington insider insiders. To the Tallahassee insiders.

YELLIN: McCollum responded to the loss with a statement calling Scott a multimillionaire with a questionable past, who shattered campaign spending records. This one threatens to divide the state's Republican party. Now Scott faces Democrat Alex Sink in November.

(on camera): We can draw one conclusion from these results. This year the voters are in a deeply dissatisfied mood and almost no candidate can simply walk to an easy victory. In this environment it seems just about every race is going to be a bitter vigorous fight.

Jessica Yellin, CNN, Phoenix.

(END VIDEOTAPE)

PHILLIPS: Congrats to a new citizens of the United States of America. You're looking at what he calls the happiest day in all his 90 years. The thing is, he thought he was already an American. We're talking to him in just a couple of minutes.

(COMMERCIAL BREAK) PHILLIPS: Yesterday I told you how some retired Marines in Denver refused to honor a former Marine, who died recently. And they were asking his family not to bury him at Ft. Logan National Cemetery.

Well, here's why. Raymond Sawyer killed his second wife and was in prison when he died. There were also claims that he never got the Navy Cross award that he claimed that he did. Despite that, Sawyer was buried in that cemetery yesterday with military honors.

His grave marker says he earned a Purple Heart during World War II. But there's no mention of the Navy Cross. You can imagine many fellow Marines are not happy about that.

Now, here's a story about a bona fide World War II hero. No doubt about it. Frank Lenartowicz was on the beaches of Normandy in 1944. He got wounded in Germany. And he received four Bronze Stars and a Purple Heart. He voted for FDR absentee and he came home to his wife in Michigan, married, by the way, for 67 years.

Frank has lived the life of the greatest generation. He can't get much more American than that. And there he is, standing proudly under Old Glory, the flag that he fought for. But guess what? All that time Frank wasn't an American at all. He was actually a Canadian citizen until Monday, when he took the Oath of Citizenship. That little bit of unfinished business, the happiest day in his 90 years.

Frank is with us now from Flint, Michigan. Great to see you Frank.

FRANK LENARTOWICZ, WORLD WAR II VETERA, NEW AMERICAN CITIZEN: Thank you. And I'm -- it's a pleasure.

PHILLIPS: I know it is. And I know you -- you're actually holding your papers right there. Go ahead and show them to us. And I'm curious, how did you find out you weren't a citizen?

LENARTOWICZ: By attempting to get a driver's license that would permit me to cross the border into Canada.

PHILLIPS: So were you shocked?

LENARTOWICZ: I certainly was. I -- I -- considered myself a citizen throughout my life. And then all of a sudden, that was -- was disputed.

PHILLIPS: Did you find out how this slipped through the cracks and for 80-plus years you had no idea you weren't an American?

LENARTOWICZ: I never did. Anything I ever did, I -- would show my father's citizenship papers and crossing the border, going to work, whatever it may be. And nobody ever mentioned that I was not a citizen. And -- and my father actually when he became a citizen, he told us that we are citizens. And I followed that suit right on through.

PHILLIPS: Unbelievable. All right, so then in your 80s you go to apply for your driver's license. And you find out ok, I'm not a citizen. But I want to become one. What did you have to go through in order to become a citizen? Did they fast track you, Frank? Or did it take a while?

LENARTOWICZ: Well, it took -- it took a while. But actually, you went through a number of agencies and didn't receive the -- the -- the opportunity that I thought I should get. And eventually I got what the immigration office that I'm working with right now, and -- and it was a pleasure for them to take interest in me. And I followed suit on everything that I was -- had to do, and from that point on, well, it came to this, and my becoming a citizen.

PHILLIPS: Well, I'll tell you what. Thank goodness you were still able to serve our country because you are quite the hero, my friend, as we look at the pictures of you back in the '40s.

Tell me about the moment you were crossing into Normandy and what happened when you were on that tank.

LENARTOWICZ: Well it -- very frankly, it was -- there was a very sad moment when the gate was dropped for -- for us to drive the tanks out. We got -- we got off on shore, and death was around us, and excitement was there, and so we just did what we had to do, and in the end, we won out.

PHILLIPS: And you actually kept the telegram, or at least your wife Anna did, from when you were wounded. Do you -- do you remember that -- that moment, and do you remember that the telegram had to go out, and were you worried about your wife and -- and how she was going to handle things if you didn't come home?

LENARTOWICZ: Yes, ma'am, I did worry, and truth of the matter is for the first time when -- when I was able to do some writing or prior to that a nurse did it for me, and she informed my wife what it was, and there was -- she was very glad to hear from me and it was a sad moment for her.

PHILLIPS: Well, you have been married 67 years. What the heck is the key, Frank?

LENARTOWICZ: Well -- well, very frankly, we live like normal couples should live. We've had our little spats now and then, but we managed to somehow be able to settle our differences not by apologizing to each other, but then just thinking, well, it happened, let's forget about it and let's start anew.

PHILLIPS: I love it. That's great advice.

Before we let you go Frank, as you know, we've got a lot of men and women coming home from the war in Iraq. Do you have a message for our troops?

LENARTOWICZ: Yes, ma'am. I -- I say that it's a great fight for them. They fought for this country. I'm proud of them, and I think when -- when they get back to the country here, they should cherish it much more than they had in the past and try to make life better in this -- in this country and abide by the laws.

PHILLIPS: Amen. Well, Frank Lenartowicz, you were born in Canada. Canadians are fantastic people. It shines right through you but it's fantastic that we can say you're an American now. Congratulations, Frank.

LENARTOWICZ: Yes, ma'am, thank you. And this is the greatest moment in my life right now.

PHILLIPS: And you got to share it with us. What an honor. Thank you, Frank and thanks for serving our country so bravely.

LENARTOWICZ: Thank you. It's a pleasure.

PHILLIPS: It was for us too.

Well, here's what we're following up on in the next hour of the CNN NEWSROOM. Let's go ahead and began with Stephanie Elam.

STEPHANIE ELAM, CNN BUSINESS CORRESPONDENT: That's a good story there. Well, we have new home sales numbers out in about ten minutes and existing home sales at their lowest level in 15 years. We're asking that perennial real estate question. Should you buy or should you rent? Some factors that you should consider coming up in the next hour.

DEBORAH FEYERICK, CNN CORRESPONDENT: And listen up, parents. If you're giving your kids cell phones but you're not setting up good ground rules, you may be responsible for getting them suspended. We're going to have that coming up.

DREW GRIFFIN, CNN CORRESPONDENT: I'm Drew Griffin. Five years later, a Katrina mystery unsolved. Did doctors really kill patients they couldn't evacuate? That story at the top of the hour.

PHILLIPS: We're also going to talk about why some people in Buffalo burned the city's newspaper in protest. It printed the criminal past of shooting victims. We're going to ask the editor why the paper did it and why it's relevant.

We're also going to talk to a pastor who says it was a very offensive move.

(COMMERCIAL BREAK)