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The US National Debt; Navy Investigates Raunchy Video; Stress Eyed In Bird Deaths; Five New Governors Taking Oath Today; Cancer Blood Test Gains Big Backer; Expedia.com Drops American Airlines; Online Travel Agencies Versus Airline; Facebook Valued at $50 Billion; Ex-Aide to President Bush Found Dead in Delaware Landfill; Another Crop of Governors Being Sworn in Today;
Aired January 03, 2011 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ALI VELSHI, CNN ANCHOR: Joe, good to see you. You have yourself a great afternoon. Thank you so much, Joe Johns.
Listen, let's talk about something you're probably familiar with. Have you ever had the balance on your credit card run up against your credit limit? That is happening to America right now. America needs a credit limit increase. So where does the United States of America go for a credit increase? Itself. Congress sets the nation's credit limit, or what is called the debt ceiling. That's what you'll hear it referred to all week until this is fixed. It needs to raise that limit soon.
Now, some Republicans are saying they won't support that move. They are digging in about stopping what they call out of control spending. What happens if they don't increase the debt ceiling? Well, Austan Goolsbee, the chairman of the Council for Economic Adviser, said yesterday on TV "The impact on the economy would be catastrophic." And he calls -- he says that Republicans in Congress are "playing chicken with the debt ceiling." He also says that we have been in the worst financial crisis -- we will be in a worse financial economic crisis, than anything we saw in 2008, if the government doesn't raise the debt ceiling.
Now, let me explain to you a little about this debt ceiling. Right now the debt ceiling again, I'm using these words interchangeably, it's the same thing as your credit limit. It's $14.3 trillion. The national debt, right now, is $13.9 trillion. So, very soon, because the government is spending more than it's taking in, that debt is going to increase, and it's going to hit the ceiling. Just like if you had a credit card. Let me show you how we deal with the debt, why this is a big concern.
Now, the bottom line is this is the same as in your house, OK? You have a budget. And, basically, you have income, and you have expenses. This is the same for you as it is for the government. Income minus expenses is what you're left with. Now, either you're left with a surplus, or you're left with a deficit.
In recent years, all we've had are deficits in the United States. When you add deficit after deficit every year, you end up with debt. So, all of your deficits equal your national debt.
Now, the bottom line is because we're in a debt, we have no surplus. We have none of this have a money with which to pay for things. So, we have to have this credit limit. Right now this credit limit is, basically, here, and we're going to end up spending beyond it.
Now, if you don't raise that credit limit, basically, the government is in default. Same thing if you go before your credit limit and that means that the price of borrowing goes up a lot for the government, that results in higher interest rates for you, sort of puts the brakes on an economy that we're just starting to see recover.
This is a serious issue. We'll be discussing it a lot. So, I wanted to give you some sense of why we're discussing this. The credit limit of the United States ready to be increased and there's fight on Capitol Hill as to whether that's get being done.
OK, I'll talk to but that a little bit later. But, first, US aircraft carrier a lot of things to a lot of people. It's an airport, it's a military base, a shining display of US power and prestige. What it is not is a floating frat house. And that's why the Navy brass are taking such a dim view of some raunchy and amateurish videos produced and shown on the USS enterprise in 2006 and 2007. These are not family friendly videos, so if you have children in the room, I'll give you a minute to get away -- get them away from the TV. You might want to send them outside while we air some excerpts and investigate the uproar with Barbara Starr. She's got our Two At The Top, right now -- Barbara.
BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Ali, going outside and getting some fresh air, rather than watching these videos, seems pretty appealing, I think, even for the US Navy. An aircraft carrier has 5,000 people on board, the commanders word is law and now the commander of the USS Enterprise, Captain Owen Honors, is under investigation for making these videos. What on earth was he thinking? And some of it we cannot show you. Very explicit in terms of raunchy, but, hey, if you're to stay, the least simulated sex scenes, dropping the "f" word many times. Even showing what is to be reported to be two women in a shower. But we did clean up some of it, so we could show you what we're talking about. Watch and listen.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I just [ bleep ] can't get that.
UNIDENTIFIED MALE: [ bleep ] toilet paper in there.
UNIDENTIFIED MALE: See, you [ bleep ] up, too, didn't you?
UNIDENTIFIED MALE: Oh, I was just screwing with them.
UNIDENTIFIED MALE: Just screwing with them.
UNIDENTIFIED MALE: [bleep] you.
(END VIDEO CLIP) STARR: So, after the Navy issued an initial statement saying that these were just meant to be humorous skits, top leadership actually watched the videos, and, pretty much, hit the roof announcing this investigation into the behavior here and saying in part, and I quote, in a new Navy statement, "...production of videos like the ones produced four to five years ago on USS Enterprise...were not acceptable then and are still not acceptable in today's navy, the Navy does not endorse or condone these types of actions."
VELSHI: OK. Interesting thing here, Barbara. These weren't somebody's home videos. These weren't videos that were just sort of taken and kept amongst friends. These were, actually, produced and shown to people. What -- how is the Navy seeing this? Boys being boys or a command and control problem?
STARR: Yes, no. It is what you just said, absolutely, Ali. These videos, by all accounts, were shown on the ship's internal television system, 6,000 people watching them. So, where was the captain at the time? Honors, this guy was the second in command. Where was he at the time? The captain, where was the admiral who was on board the ship even above them? Where were the Navy lawyers who go on the deployment. This is, rapidly, becoming an issue of what they call command climate, command environment. And the question will be whether this man is suitable to command the ship. And guess what? It is scheduled to deploy again to the war zone in just a few days.
VELSHI: All right. We'll keep on top of that with you, Barbara. Thanks very much. Barbara Starr, our Pentagon Correspondent.
Hey, our Sound Effect today, this is a real mystery. Who or what killed thousands of black birds and starlings in a single town, in a single night, in Arkansas? It happened just before town -- just before the town Bee rang in the new year. And the timing might be a clue. Wildlife experts theorize that the birds were, actually, scared. They were stressed by the fireworks.
Here's a spokesman for the Arkansas Game and Fish Commission, this morning, talking to CNN.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE, SPOKESMAN, ARKANSAS GAME AND FISH COMMISSION: This is a rural area. These black birds tend to congregate in areas where you're going to have grains from agricultural fields in -- on the ground that they'll be eating. So, in this instance, they would have been all together. You don't, typically, see these in urban areas. These are more rural areas, and they're more concentrated. So, if somebody was to shoot a firework in that area that they were roosting, while they were asleep, then that could have been what caused their deaths.
(END VIDEO CLIP)
VELSHI: Now, you may also have heard of a mysterious fish kill also in Arkansas. An estimated 100,000 dead drum fish in a 20 mile stretch of the Arkansas River. Now, disease is the likely culprit, there.
Some other headlines for you. Another crop of governors being sworn in today across the country. New to the State House, Scott Walker in Wisconsin, Matt Mead in Wyoming, Mark Dayton in Minnesota, Brian Sandoval in Nevada. Also, incoming Jerry Brown in California, although he gets an asterisk next to the new, I guess, since he's already held the job. Governor elect Brown takes the oath next hour. We're going bring it to you, live, because California, well, he's got a lot of issues to deal with as he comes into office.
More than nine years after 9/11, President Obama signed in to law health coverage for first responders to ground zero. The measure got through Congress as its lame duck session wound down last month, you'll remember, but they didn't get the final official parchment copy to the President before he left for vacation. And the 10-day window to sign it was closing. So, an aide traveled to Hawaii, brought it out, just in time, it allots more than $34 billion for health consequences related to work rescuers at the World Trade Center disaster.
Pharmaceutical giant Johnson and Johnson is teaming up with researchers on a super sensitive cancer blood test. Scientists at Massachusetts General Hospital have already developed the prototype. It's a microchip that can detect trace amounts of cancer. Now, they've experimented with it pretty successfully. Now this $30 million deal with J&J is aimed at refining the technology for commercial use. In other words, making it even better and, hopefully, cheaper. The hope is that doctors will be able to use to personalize and monitor people's treatment.
And cheap airfares may be a thing of the past. Why it may be more difficult for you to buy low-cost flights online. I'll discuss that next.
(COMMERCIAL BREAK)
VELSHI: Can't get enough traveling stories on this show. There is a brouhaha brewing between airlines and discount travel sites, or online travel sites, I should call it. And, for you, it could make finding the cheap flight a little bit harder, maybe a whole lot harder.
Here's the latest news. It's been going on for a while, but Expedia.com has taken American Airlines fares and schedules off its site. Expedia says the pricing system is, quote "anti-consumer and anti-choice." American Airlines pulled itself off Orbitz.com, earlier in December.
Henry Harteveldt is the vice president and principal analyst at Forester Research. He follows this stuff all the time. He joins me from San Francisco. Henry, good to see you. Thank you for being with us. For people following the story, what on earth does this mean for regular travelers?
HENRY HARTEVELDT, VICE PRESIDENT AND PRINCIPAL ANALYST, FORESTER RESEARCH: It means it's going to be harder and more difficult for you to find American Airline site -- American Airlines fares and schedules on the major online travel company sites. You're going to have to work a lot harder to find those fares and, potentially, visit different sites.
VELSHI: Now, sometimes you have to do that. There are some discount airlines, for instance, that don't put themselves on all of the sites. So, some people are used to that. What is the issue behind this? Because it's not just Expedia and measure airlines. It's been brewing for a while. What's the background?
HARTEVELDT: It really goes to money. It's the cost for airlines to sell through travel agencies, and, really, the issue is less between airlines and the travel sites, like Expedia and Orbitz, and more about some electronic intermediaries between these sites. But for consumers, what you want to , if you like American Airlines, go to AA.com and book those flights. If you want to compare American's fares and schedules with other airlines, Bing Travel, Farecompare.com, Kayack, and Travelocity, can all still help you do that.
VELSHI: Why are they not affected the same way that Orbitz, why did American Airlines want to pull out of Orbitz but not the other ones that you just mentioned?
HARTEVELDT: It comes down to the contracts, basically. American Airlines had a legal loophole to exit Orbitz, and, also, its contract with Expedia expired at the end of December -- at the end of 2010.
VELSHI: So, are we likely to expect airlines to be doing this more frequently to try and pull off of these aggregate sites or these online sites to push people to their own Web sites?
HARTEVELDT: Near term, no. Long term, probably. The airlines tend to have contracts with these electronic intermediaries. They're called global distribution systems. And most airlines have those running through 2013. But, you know, the airlines all want consumers to go direct anyway. So, you should expect airlines to offer more incentives and do more advertising and marketing to encourage customers to book directly.
VELSHI: Is that a trend that makes sense, the idea that the airlines want people to go directly to their sites? Because what if I just don't have the time to go to three sites. I'll go to the global distribution site, I'll go to the Expedia or Travelocity because I can see most of the flights available and make my choice there. Is it a good business decision for airlines to want people to use their own Web sites?
HARTEVELDT: It saves the airlines money, but it comes at the expense, as you pointed out, of doing more work to find that.
For example, right now, if you want to find Southwest fairs, and book those fairs, the only place you can book Southwest is on the airline's own Web site. That works for Southwest. But I don't position it's going to be as successful, right now, for American to do that. You know, I think American has put more than $2 billion worth of its revenue at risk by not selling through Orbitz and Expedia. VELSHI: All right. Let's talk a little later. We're going to talk a little bit about what we're likely to see with prices, and what we're likely to see with this increase in oil prices and gas prices that we're seeing, how travel can be effected. We'll talk to you more later on. Henry Harteveldt is the vice president and principal analyst with Forester Research.
Hey, Facebook has over 500 million users, and according to a recent hit why (ph) study, it passed Google as the most visited site in 2010. So, I ask you this. How much is Facebook worth? $100 million? $500 million? A billion dollars? Or $50 billion? I'm going to tell you when we come back.
(COMMERCIAL BREAK)
VELSHI: All right, some breaking news we're just getting in. An ex-aide to President Bush the first, has been found dead, killed and dumped in a Delaware River landfill. John Parson's Wheeler III, a Vietnam veteran, who served in three Republican presidential administrations, and who chaired the committee that raised funds from businesses, agencies and prominent Americans to get the Vietnam Memorial -- Vietnam Veterans Memorial built on The Mall in Washington was found dead in a landfill a few miles from his New Castle, Delaware, home. This is according to Newark, Delaware, police. They say this is a homicide.
We are getting more information on this as we speak. But as of now, what we know from the Newark, Delaware, police is that John Parsons Wheeler III, an aide to President Bush the first, has been found dead in a landfill in -- near his home in New Castle, Delaware, according to the Newark, Delaware, police. We'll keep you posted on anything more we get on that information.
Now before the break I asked you how much you thought FaceBook was worth. How valuable is it to you to post your vacation pictures, keep in touch with high school buddies, avoid friend requests from my boss Kelly (ph)? According to reports, the social media site is now worth $50 billion. $50 billion with a "b". "The New York Times" reports that an investment by Goldman Sachs and an unnamed Russian investor of $500 million basically values the company at $50 billion. That makes it worth more than media companies like Time Warner, the parent company of CNN, bigger than eBay, bigger than Yahoo!.
Joining me from New York to discuss what this means for you is Christine Romans, my good friend and host of "Your Bottom Line."
What it means it me, Christine, is that when this company goes public, as it inevitably will, and there will be an IPO, an initial public offering, it will have the youngest investors known to man. There will be 12-year-olds wanting to buy stock in FaceBook.
CHRISTINE ROMANS, HOST, "YOUR BOTTOM LINE": And it means the founders will be richer than they already are.
VELSHI: Right. ROMANS: And that's very, very rich. Look, we don't know anything more, Ali, about when there could be an initial public offering of this company. No indication of that at all. We don't know what role Mark Zuckerberg would have in any kind of IPO. Those are the kinds of things people speculate about endlessly.
What we do know is that this doesn't change what your FaceBook looks like today. It looks exactly the same. Any changes that you're probably seeing are because of some new kind of telling the story -- a story line about (INAUDIBLE) some new software that they have already announced that is going to be coming out to most people starting early this year. So you're probably seeing some changes along those lines. But this really tells you that the power of FaceBook, something that we didn't even know about seven years ago --
VELSHI: Yes. Yes.
ROMANS: Wasn't even born, is now -- people -- FaceBook on its own would be the third largest country in the world behind China and India. Five hundred and fifty million people making a connection on this site and it didn't even exist seven years ago. So it's a really remarkable turn for what has been a remarkable company.
VELSHI: How do you price a private company? How do you determine a value for a private company, generally?
ROMANS: Well, that's -- I mean that's a very good question because we're all looking at what this investment is and then extrapolating out what that means --
VELSHI: Right.
ROMANS: What that means that this company could be worth, because we don't know what this company is worth. You look at the revenue of a company. You look at how much money it's -- you know, what its sales are. But if you're not a public company, you don't have to report to the SEC, or the Securities and Exchange Commission, every three months, right, Ali, what you're doing.
VELSHI: Right.
ROMANS: So that's why so many people want to see what this says about the size of this company and the scope of this company for making money.
VELSHI: And, of course, when it goes public, that price on that first day that that stock starts to trade will determine it. If it's a company like Google, I mean it just kept on going higher and higher and higher.
Now, Mark Zuckerberg, everybody in the world must know his name at this point. He was the "Time" "Person of the Year." But we knew him before. He was featured in the movie "The Social Network." He's now -- he was already, from the research we did, the youngest self-made billionaire in the world or the first, you know, he's the guy who made his first billion at the earliest age. What does it do for him? ROMANS: It makes him even more of a bazillionaire (ph). I mean it makes him even richer. It makes him even more powerful. It makes him even more precient (ph). I mean, look, you've got a huge investment from Goldman Sachs and we're told or, you know, reports are that there's a big Russian investor who has gone in there as well.
I mean the Goldman Sachs investment could actually be hundreds if not thousands of other investors who are investing through Goldman Sachs. I mean these people betting on this guy's vision and what he's done with this company to get it to this point. And also betting on him as the future of this company, as well. I mean this is a young guy who had a really great idea and has managed to follow through.
Now, I'll tell you, I'll tell you the thing for founders and inventors that's the real hard part, and in techs this has been fascinating to watch, how do you take the idea and move it into a company and then still continue to innovate and grow it forward from there.
VELSHI: Right.
ROMANS: Bill Gates was able to do that, right? I mean he really ran that company for a very long time. I mean you look at some of the real big brains in tech, they managed to be founders and continue to be executives for a very long time. I don't know what Zuckerberg's plans are. I'm just saying.
VELSHI: It's a very young company with a lot of young people. We'll watch it with great interest.
Christine, as always, thank as million. Great to see you.
ROMANS: Sure.
VELSHI: Hey, be sure to tune in to "Your Bottom Line" each Saturday morning at 9:30 Eastern. Christine anchors that. And watch "Your Money" Saturdays at 1:00 p.m. Eastern and Sundays at 3:00.
All right, time to give you your top stories. Twenty-three minutes after the hour. Let me bring you up to speed with some of the things that we're following here at CNN.
As I told you a few moments ago, a Vietnam veteran who served in three Republican administrations has been found dead in a landfill near his home in Delaware. John Parson Wheeler III was an aide to former President George W. Bush and chaired the committee that raised funds for the Vietnam Veteran Memorial.
Now if you're looking for a job, make a bee line to Dollar General. The discount retailer says it will open 625 new stores and hire 6,000 workers in 2011. Sort of makes sense, right, the way the economy is. Dollar General says the openings will be in 35 states where it currently operates and in three new states, Connecticut, Nevada, and New Hampshire.
And the Navy is investigating lewd videos produced and shown to the crew of the aircraft carrier Enterprise. The Navy says the videos are full of anti-gay remarks and simulated sex acts. They feature a man identified as Captain Owen Honors, who was the second in command at the time when the videos were made and is now in charge of the ship. The Navy says it does not endorse or condone the videos.
On the political front, five new governors are taking the oath of office today. One Republican on the way out, Arnold Schwarzenegger of California. Democrat Jerry Brown taking over. The days are numbered for the so-called Governator memorabilia shop at the state capital. A Democrat is also taking over from a Republican in Minnesota. Republicans are taking over the reins in Wisconsin and Wyoming. And a Republican is handing over power to a GOP colleague in Nevada.
Well, the president is getting closer to naming his economic right hand man. Why his choice will shape our economy for years, when we come back.
(COMMERCIAL BREAK)
VELSHI: This is usually the time we check this with our old pal Ed Henry for the stakeout for the biggest stories coming out of the White House. Ed deserves a vacation. The poor guy's been sweating it out in Hawaii for the last couple of weeks. Look at that. I missed that, by the way. I missed his hula less. Quite remarkable. Nice job, if you can get it. We will carry on without him today, although I'm quite sure I can't repeat what you're watching on TV. I could try, I suppose. I suppose I could try. All right, never mind.
Listen, I want to talk about an important addition expected this week in the president's economic team. A really important one. So don't glaze over. You need to know about this. The decision is expected soon on the director of the National Economic Council. This was Larry Summer who is departing. They've not figured out a replacement for him.
Let me just tell you what the director of the National Economic Council does. The National Economic Council -- sort of a right hand -- every business has one of these, right, the boss has a strategy. Says I want this happening. And then there's someone to make sure that all the divisions are actually aligning to what the boss wants.
So the National Economic Council deals with the White House, it deals with Congress, it deals with the Treasury, which deals with many financial matters. But also the Labor Department. Obviously that is a department with lots of financial involvement. Housing and Urban Development. That was the cause of this recession was a housing bust. So housing is important. And Health and Human Services. So all of these departments coordinate through the National Economic Council. The director of that is the key adviser to the president.
Now, let me tell you a little bit about what that person has to do. They basically have to coordinate what these activities are to make sure that they're in line with what the administration wants. So they coordinate policy making for domestic and international economic issues. They coordinate economic policy advice for the president, so they see what's going on out there and they let him know. They insure that policies are consistent with the president's economic goals and they monitor implementation of the president's economic policy agenda. So this is a big, important job. And we want to find out exactly who's going to get it.
Let me give you some sense of who's in the running for this job right now. Now, one of the names that you'll expect to see is Gene Sperling. He is an adviser, right know, to Treasury Secretary Tim Geithner. He was the head of the NEC under President Clinton.
Another name you've heard, Ed Henry's told us about, this is Roger Altman. He runs an investment firm. There are a lot of people who think it should be a business person in this job. He was a former deputy Treasury Secretary under President Clinton, as well. So both of these two guys have been in the Clinton administration.
And another name that's being considered is Richard Levin. He is currently the president of Yale University. He's been there since about 1993. He's a member of the board of directors of American Express. So he comes from academia.
So you've got different people with different qualifications all being considered. Expect something to come of this in the next few days. We'll keep you posted on it.
Now, have you been to the doctor in the last few days? Lots of big changes in health insurance as a result of the health care reform bill that was passed last year. I'm going to tell you the laws that kicked in with the new year, where you might save, where you might pay more. Stay with me.
(COMMERCIAL BREAK)
VELSHI: Hey, by the way, if you drive, you've been to a gas station lately. You know the price of gas has been going up consistently. In just a few minutes I'm going to be speaking to the U.S. Secretary of Energy, Stephen Chu, about that and other things having to do with your energy.
But first, I want to bring you up to speed with some of the stories that we're following right here at CNN. A Vietnam veteran who served in three Republican administrations has been found dead in a landfill near his home in Delaware. John Parsons Wheeler III was an aide to Ronald Reagan, as well as George H.W. Bush, and his son George W. Bush. He also chaired the committee that raised funds for the Vietnam's Veteran Memorial.
Another crop of governors being sworn in today across the country. New to the statehouse, Scott Walker in Wisconsin; Matt Meade in Wyoming; Mark Dayton, in Minnesota; and Brian Sandoval in Nevada. Also coming in, Jerry Brown in California. But he gets an asterisk next to his name because he's -- he's not really new. He's held the job before for many years. Governor-elect Brown takes the oath next hour. We're going to bring it to you live.
More than nine years after 9/11, President Obama signed in to law health coverage for the first responders to Ground Zero. The measures got through Congress as its lame duck session wound down last month. But they didn't get the final, official, parchment copy to the president before he left for vacation. And the 10-day window to sign was closing. So an aide traveling to Hawaii brought it out just in time. The bill gives more than $4 billion for health consequences related to the World Trade Center disaster.
Well, it's a new year. And remember all that talk last year about health care? Well, a lot of those changes in the health care bill are taking effect now and they have an impact on your medical care.
Andrew Rubin is the vice president for Medical Center Clinical Affairs and Affiliates for NYU Langone Medical Center. He's also the host of "Health Care Connect" on Sirius XM radio.
Andrew, good to see you. Good to see you again.
ANDREW RUBIN, NYU LANGONE MEDICAL CENTER: Good to see you, too.
VELSHI: All right. Let's talk about some of the changes going into effect. There are a bunch of them having to do with Medicare. Let's start with the donut hole. Tell us about what's happening with the donut hole?
RUBIN: This is the biggest one and probably the most confusing to so many seniors. The donut hole is the portion of Medicare Part D where you lose your health insurance coverage for prescription drugs. Right now it's about $2,880 for this year. Starting on January 1st, anytime you enter that hole, which is from $2,880 to about $4,000 plus, half of the costs of the drugs you spend will be reimbursed by the government.
VELSHI: All right. And it's a different amount, whether you guy brand name or generic. If you buy generic drugs, the discount is smaller.
RUBIN: Right. It's seven percent discount on generics and 50 percent of all the drugs you spend in the donut hole.
VELSHI: All right. Very good. And this will increase each year after 2011. Let's talk about Medicare premiums, Andrew. Are they increasing?
RUBIN: They are. So what they did was for anyone making -- individuals making $85,000 or less, or couples at $170,000, they're holding the premiums. These are Part D premiums, the portions that you pay for doctor visits. Anybody who makes more than that, they're going to go up by about 4.4 percent.
VELSHI: All right. And there are also changes to preventive care coverage. This is obviously been a big discussion that we've had in the past.
What changes with respect to care that you undergo to help you not get sick? RUBIN: Ali, this is a big deal. Now, remember last year the whole conversation was about cutting fees -- all physicians fees -- and that was fixed by Congress last year. This is basically part of the health care reform law that's designed to make sure seniors have access to primary care physicians. There's a 10 percent fee enhancement for any physician who basically offers primary care services within their practice. And it includes surgeons, too, as long as at least 60 percent of their practice is spent on primary care services.
VELSHI: That's an interesting development. All right. Let's talk about stuff that affects everybody? What have we got there?
RUBIN: Again, some big changes, and we've talked about these and a lot of people like these. This is where children under age 26 -- dependent children -- get to stay on their parents' policies. That's a big one.
Children can't be denied any more for pre-existing conditions if they have that. There are some preventive screening services that are now covered. So if you're in Medicare, you get a free annual checkup, free being defined as no co-insurance, no co-pays, no deductibles. And that applies to a lot of private employer plans, as well. No co- pays for mammograms, colonoscopies; no co-insurance for those services. So, again, some big changes that apply to everyone.
The one that people don't like is you can no longer buy over the counter drugs from your flexible spending account. That was one of the downsides of the health care reform.
VELSHI: Is there a difference there if your doctor has prescribed an over the counter drug? The doctor says you got to have this DM or something --
RUBIN: Exactly. Exactly. You know, Motrin, Advil, sometimes you get a prescription strength of that. But, if there is a prescription, then you can get that covered for your flexible spending account. Except most doctors tend to not do that.
VELSHI: Andrew, what do you do -- what do people do when they were following the news about these lawsuits and changes that the Republicans want to make to health care.
Should you just carry on as if nothing's changing?
RUBIN: Yes. For now, basically, what the big debate happens to be over right now is this individual mandate, which is where everybody is required to have health insurance. And that doesn't kick in until 2014. So the Supreme Court -- what people heard on the news was the Supreme Court is going to have to decide this over the next couple years.
Until then, health care reform continues as is. Now, Congress may try to block some of the funding for its implementation. But as of now, it continue its as is and nothing changes until 2014, when that's when you'll be able to buy insurance on state exchanges, sort of opening up the insurance markets. And there will be elimination of pre-existing conditions for people buying insurance.
VELSHI: Andrew, good to see you, as always. Thanks very much for helping us clear this up.
Andrew Rubin is the vice president for Medical Center Clinical Affairs and Affiliates. He's also the host of "Health Care Connect" on Sirius Satellite XM radio.
Good to see you, Andrew.
Time for Globe Trekking.
First devastating flooding in Australia's Queensland State. The entire town of Rock Hampton and its 75,000 residents are now cut off by raging waters triggered by monsoon rains. Military planes are flying relief supplies to hard hit communities. And at least nine people have been killed since the rain began falling two weeks ago.
Officials say the flood area is now larger -- get this -- than France and Germany combined, affecting some 200,000 people. The worst is far from over. Today's forecast calls for heavy rain and new flash floods. Queensland officials say recovery could take weeks.
Let's go to Ben Wedeman. We're going to come back in a moment. I'm going to go to Ben Wedeman and tell you about some explosions in Egypt over the weekend. Ben is standing by. We'll take a break and we'll be right back.
(COMMERCIAL BREAK)
VELSHI: Well, I want to bring you up to speed with some of the developments in our top stories right now.
Police in Newark, Delaware say the body of a former White House aide has been found dead in a landfill. They identified him as John Parsons Wheeler, a former Vietnam vet, who was instrumental in raising money for the Vietnam Veterans Memorial. Wheeler served in various capacities in the Reagan administration and both Bush administrations. We'll keep you updated with new information as we get it.
In money news, one of president's top economic advisors says it will be catastrophic if Congress doesn't increase the debt ceiling. But some Republicans are already pushing back. Right now the debt ceiling is at $14.3 trillion. The federal government could hit that soon. If Congress doesn't raise it, the U.S. could default for the first time in history.
And the Navy is investigating lewd videos produced by and shown to crew of the aircraft carrier Enterprise. The Navy says the videos are full of anti-gay remarks and simulated sex acts. They feature a man identified as Captain Owen Honors, who was second in at the time the videos were made and is now in charge of the ship. The Navy says it does not endorse or condone the videos.
Well, a powerful partnership could move an experimental blood test for cancer, closer to reality. Johnson & Johnson is teaming with researchers at Massachusetts General Hospital to further develop a prototype they made to detect small traces of cancer cells in the blood. The technology has shown some success in smaller studies, but is likely still many years away from being widely used.
Well, in today's Big I we are talking about energy. Energy touches your life in three major ways. The first one is substantially obvious. You consume it all the time. You drive your car, you turn on your lights, you heat your home and, by the way, it's used to make everything that we buy, to transport everything that we purchase in stores.
The second way it touches your life, you can invest in it. It's not only good for the environment, it's actually can be good for your bank account. Energy investments have done fairly well.
And third, and probably the most important, in the economy that we've got right now, it means jobs. The government is investing huge amounts of money -- so is the private sector -- in energy. Businesses are doing the same.
Here to walk us through it is the Department of Energy Secretary Steven Chu.
Pleasure to have you here, Dr. Chu. Thank you for being with us.
By the way, in setting up this discussion, I learned something very interesting about you, that you taught yourself how to pole vault as a young man. Is that true?
STEVEN CHU, U.S. ENERGY SECRETARY: Well, but I was a pretty bad pole vaulter so we can't talk about that.
VELSHI: Let's hope that you have better success with the Energy Department.
Let's talk about something else you've done a lot of. You've written a great deal on what may be the topic of the decade -- alternative energy. Tell me what the future of alternative energy consumption in the United States really is going to look like, five years, ten years, twenty -- whatever you'd like. But, tell me what you think alternative energy is really going to mean for us.
Well, I think it's going to grow -- it's going to grow for a number of reasons. But it's really what we want the future of our energy sources to be. The fossil fuel that we use today is finite, and although we'll have decades of transition period, one wants to look to a future where alternative energies, renewable energies, are going to be a major part of our energy supply.
VELSHI: Well, that transition may be decades long, but it will either be sped up or slowed down largely by the price of oil. Oil prices on the rise again as of course, our gasoline prices. A gallon now, national average, is $3.07. I paid a lot more for it this morning in Atlanta.
What's your sense of oil prices and where they're likely to go? We're at 90 and some dollars for a barrel of oil right now.
CHU: It's really hard to predict what's going to be the immediate future of oil prices. A lot of conditions affect oil prices. But over the long term, it's safe to say that oil prices will go higher, increasing demand of developing countries, particularly India and China. The transition to more challenging environments to find oil, the multinationals. All those conspire to say that oil prices in the mid- and long- term future will be higher.
And I think the United States should prepare for that and take the steps necessary to use the oil we need as efficiently as possible and also to begin to transition away from oil. For example, electrification of vehicles and things like that.
VELSHI: Well, tell me about that. Because we've seen the Volt come out, we've seen the Nissan Leaf come out, we've seen Ford getting ready to introduce something in terms of electric cars. But all of them make the point that this is sort of a niche product. It will maybe - I mean, Nissan's CEO Carlos Ghosn told me maybe in a few years, 10 percent of all cars. How big can electric cars get?
CHU: Well, the hope is that they can become more than a niche product in the near term future. By near term, I mean three, four, five years. Certainly the battery technology has to improve. But on the other hand, I'm seeing a lot of great ideas in the development of new batteries and companies like Nissan and GM and others are really betting that this battery technology will improve greatly. The electric vehicles they're introducing today are great, but in the coming years, we'll see even better ones.
VELSHI: And that brings me to the next issue that so many of my viewers will be interested in. All of us are consumers of energy, but some would like to be investors in energy or we would like to get jobs in energy. So, what's the best way to incentivize innovation for alternative energy? Is it prizes like the X prize? Is it tax credits? Is it best done at the state or municipal level or best done by the federal government? Private enterprise? How do we do this?
CHU: Well, first, how do you incentivize it? All the above. I think prizes are part of it. The fact that - I think the biggest incentive is the United States should sit back and say, what's the future going to be? The future is going to be higher oil prices, the future is going to be a lot of the other things. I think the future will actually have to incorporate something about carbon dioxide emissions.
And given that that's the future, how does the United States best prepare themselves? How do individual consumers and businesses best prepare themselves for this future? And, once you recognize that's the future, you take steps to do this. In terms of alternative energy, that's one of the things. Energy efficiency, a very, very big deal where the greatest savings of your own money can be had just by saving it.
VELSHI: Right. What are your thoughts on cap and trade legislation? Are we going to get to it a point in the U.S. where we're going to set limits on how much carbon companies and industries can emit and that there will be a market for the right to emit more than that limit?
CHU: I think eventually there's going to have to be some sort of limitation on carbon dioxide. In the near term future, I think this doesn't look like it's in the cards. But, again, I think the United States should prepare for what's going to be happening and start to make this transition.
Many, many companies around the world, most notably, recently China is making this transition. It recognizes what the future is. It recognizes the opportunity for more economic prosperity because the country that develops these technologies are going to be the country or countries that develop the technologies are going to be the countries that will be exploiting these technologies and gaining wealth. And I think the United States is still the greatest innovation machine in the world, and why should we sit idly by while other countries race ahead?
VELSHI: All right. And other countries are doing things. There are alternatives out there. You are a Nobel Prize winner. You are studied in math and physics, so I'm going to ask you because you're one of the smartest guys we have on this show.
For my viewers who either want to invest in alternative energy or who want to retrain, maybe they're out of work or they want to retrain into a renewable energy alternative job, what the president often calls green jobs, specifically what types of industries should they be investing in or training in?
CHU: Well, it covers the entire sector of what we have. If you look at, for example, what we need to do, we have an electricity transmission distribution system that needs upgrading, major upgrading just for reliability's sake but also to incorporate more renewable energies. We need to improve our entire building stock, both commercial and residential so they're more efficient. We need to develop newer sources of power. We're seeing big installations of wind. We think the solar industry, the photovoltaic industry, is going to see dramatic reductions in cost prices. All of these industries are going to be growth industries.
VELSHI: Secretary Chu, always a pleasure to talk to you. Thank you for being with us. We hope that the future does hold some of the things that you discuss. It will be better for all of us.
Steven Chu is the U.S. secretary of energy. Thank you for being with us.
CHU: Thank you.
VELSHI: All right. One new governor is making immediate changes to his state's bottom line. He's starting at the top. Your CNN political update, up next.
(COMMERCIAL BREAK) VELSHI: Time now a CNN political update. New York's new governor has already unveiled big cost cutting plans for the new year. CNN chief national correspondent John King joins me live now from the CNN Political Desk in Washington. First time I'm seeing you this year. Happy new year, John.
JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Happy new year to you, my friend. And as you've been noting, it's not just Washington. States across the country have these huge budget crises, and the new Democratic governor of New York, Andrew Cuomo, son of a former governor of New York. He says he's going to lead by example. He's got a $9 billion budget gap in the state of New York. He said he's going to cut his pay by five percent and his top staff across the new state administration will cut their pay by 5 percent as well, Ali. Return that money to the government.
That as "The New York Times" reports the new governor prepares to be yet another governor in a showdown with the state's public employees labor unions. The governor, we are told, -- I mean, "The New York Times" is told -- is going to seek a pay freeze there. So, that's a big battle ahead in New York and many other states as well.
Also live this hour, the five people who would like to be the next chairman of the Republican National Committee, they are having a debate in Washington. Among them, the current RNC chairman, Michael Steele. He is trying to hold his job, Ali. You know this controversy very well.
Most of the Republican establishment privately say they don't want Michael Steele to stay on but he's fighting to keep his job. You see the live debate there. That is the former chairman of the Michigan Republican party -- Saul Anuiz is right now. He's one of the five candidates involved as the RNC prepares to make that decision. That chairman will be in power during the 2012 presidential campaign.
Another item on our political ticker today, one of the prospective Republican candidates - take a look at him right here. He's Mitch Daniels. He's the Republican governor of the state of Indiana. He says he doesn't like how he's portrayed as dull and boring sometimes in all these national profiles. But Ali, as he prepares to make his decision about whether or not to seek the Republican presidential nomination, he says his family is, quote, "scared to death" at the prospect of a national campaign and he says you know what? They should be. It's tough sledding.
VELSHI: John, thank you so much. Good to see you as always. And we will see you again. Your next political update from The Best Political Team on Television is just an hour away.
Well, it's prime real estate as it has been for years. That's it right now. The White House. But the White House isn't as white-hot as it used to be. We'll tell you what it's worth when I come back.
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VELSHI: You see that beautiful picture of Atlanta? Not a cloud in the sky. Time for some Odds & Ends.
If your home has lost a ton of value since the housing bubble burst, you have got good company. Really good company, actually. According to the Web site zillow.com, where you can look up homes' estimated value, the White House has lost almost a quarter of its value over the last three years. Back in the good old days, it would get almost $332 million on the open market. These days, $253 million. Pretty sure the president is not under water, though, and the house isn't up for sale last we checked.
Just ahead, what you -
(COUGHS)
VELSHI: Pardon me, what would have been his 100th birthday -- pardon me -- they've won another one for the Gipper. A float commemorating former president Ronald Reagan took home some honors at this weekend's Tournament of Roses Parade. Judges gave it the trophy for the best depiction of life in the United States, past, present or future. The 55-foot-long float featured 65,000 red roses.
But what's really cool about that - I'm going to take a swig of water first -- those black-and-white pictures of different moments in Mr. Reagan's life. Hmm. Got something stuck in my throat. They're made of poppy seeds and rice. But no numbers. How about that?
Anyway, I'm going to get rid of this little cough, and we'll be back in just a moment.
